Crisil Cement Industry Report PDF

Cement
Summary Annual Review March 2013
Demand for cement is estimated

to grow at a robust 7-8 per cent
over the next 5 years. We
expect demand to improve
gradually from 2013-14, with the
revival in construction activity in
key consuming segments -
housing and infrastructure. Over Contents
the next 5 years, the pace of
capacity additions is likely to Part A: Opnion
Executive summary A-1
decelerate as the industry
Demand A-3
approaches the end of its Supply A-15
investment cycle. Cement Operating Rates A-21
operating rates are expected to Prices A-27
Costs & Profitability A-29
pick up from 2013-14.
Pan-India average cement Part B: State of the industry
prices are forecast to rise Evolution of the Cement Industry B-1
moderately by 4-5 per cent in Manufacturing Process B-5
2013-14. However, operating
Industry Structure B-15
Regional scenario B-19
margins in the industry are likely
Demand dynamics B-35
to decline marginally by 100 bps Cost structure B-43
in 2013-14 as the increase in Types of cement B-47
realisations would be completely Ready mix concrete B-53
Player Profiles B-57
offset by spiralling input costs.
Part C: Industry statistics C-1
This document has been prepared by Sonali Salgaonkar, Jayashri Dasgupta and Ajay Srinivasan (Director,
Research Execution). For any queries please get in touch with our client servicing desk. (clientservicing@crisil.com.
Ph +91 22 3342 3561)
Opinion
Sections
1.0 Summ ary A-1
2.0 Dem and A-3
3.0 Supply A-15
4.0 Operating Rates A-21
5.0 Prices A-27
6.0 Costs & Profitability A-29
i
CRISIL Research: Cement Annual Review
1.0 Summary
u
Demand for cement is expected to grow at a healthy pace of around 7-8 per cent CAGR over the next 5 years, primarily
led by increased consumption from the infrastructure segment. On the supply front, CRISIL Research forecasts almost
70 million tonnes of cement capacity to get commissioned at the pan-India level, over the next 5 years. We expect
industry capacity utilisation to bottom out at almost 71 per cent in 2012-13 and gradually recover thereafter to almost 82
per cent in 2016-17.
On the realisation front, CRISIL Research believes that average pan-India cement price is likely to increase sharply
by 15-16 per cent y-o-y in 2012-13 and rise moderately by 4-5 per cent in the subsequent year. The industry's operating
margin is likely to improve as the sharp price rise would offset escalating input costs, especially freight expenses, in
2012-13. However, in 2013-14, the industry's operating margin is estimated to marginally decline by 100 bps as
the moderate increase in prices would be offset by rising energy and freight costs.
Infrastructure investments to drive demand for cement

CRISIL Research expects cement demand to grow by around 7-8 per cent CAGR over the next 5 years, largely driven
by demand from the infrastructure segment. Between 2012-13 and 2016-17, the infrastructure segment is forecast to
account for around 23 per cent of the overall cement demand, up from almost 20 per cent in the previous 5-year period.
In terms of demand from the housing segment, an increase in independent housing projects, particularly in the semi-
urban and rural areas, is expected to further boost cement demand.
Industry approaching end of investment cycle

CRISIL Research expects around 70 million tonnes of cement capacities to be added at an industry level between 2012-
13 and 2016-17. With the industry approaching the end of its investment cycle, this number is sharply lower than the
capacity additions of close to 155 million tonnes over the past 5 years. As capacity additions significantly outpace cement
demand, operating rates are expected to bottom out at 71 per cent in 2012-13. Nevertheless, by 2016-17, operating
rates are expected to recover gradually to around 82 per cent.
Prices to increase sharply in 2012-13

CRISIL Research expects the average pan-India cement price to increase by 15-16 per cent y-o-y in 2012-13
and rise moderately by 4-5 per cent in 2013-14. Extensive interaction with industry participants indicates that despite the
Competition Commission of India's (CCI) ruling, cement prices will continue to rise in 2012-13 on account of the
escalation in input costs, especially freight expenses.
Steep price rise to enhance industry profitability in 2012-13

CRISIL Research expects the cement industry's operating margin to improve from 21 per cent in 2011-12 to 24 per cent
in 2012-13 and marginally decline to 23 per cent in 2013-14. The industry's operating margin is likely to improve in 2012-
13, as the sharp hike in prices would offset escalating input costs, especially freight. However, in 2013-14, the operating
margin is estimated to marginally decline by 100 bps as the moderate increase in prices would be offset by rising energy
and freight costs.
A-1
This page is Intestinally Left Blank
2.0 Demand
Region-Wise Demand
Demand to gain traction from 2013-14; grow robustly over next 5 years
Pan-India demand for cement is estimated to grow at a robust CAGR of 7-8 per cent over the next 5 years, to about 321
million tonnes in 2016-17 from almost 225 million tonnes in 2011-12. In 2012-13, demand growth is estimated to
be subdued at about 5 per cent y-o-y. However, subsequently, CRISIL Research expects cement consumption
to increase gradually over the medium term, largely spearheaded by the government's focus on infrastructure
development. Over the next 5 years, housing would remain the largest end-user of cement; within the sector, individual
housing projects, especially in rural and semi-urban areas, are likely to drive incremental demand.
During the first half of 2012-13, cement demand grew by a healthy 7 per cent y-o-y. However in the third quarter of the
financial year, cement demand is estimated to have marginally declined y-o-y, owing to muted traction from key end-user
segments - housing and infrastructure. A severe winter in the North and issues related to sand availability in
the West weighed on cement demand during the quarter. Moreover, political instability in Andhra
Pradesh impacted cement demand in the state and consequently in the southern region.
From 2006-07 to 2011-12, demand for cement grew at a healthy 8 per cent CAGR. While demand remained
robust during 2006-07 to 2009-10, it slumped in 2010-11, as prolonged monsoons slowed down construction activity
during the year. In 2011-12, as construction activity revived, albeit moderately, growth in pan-India cement
demand stood at 6.6 per cent y-o-y.
A-3
Growth in cement demand
P: Projected
Source: CRISIL Research
Key demand drivers
North: Individual housing projects, especially in rural and semi-urban regions

CRISIL Research expects cement demand in the northern region to grow at a 7.0-7.5 per cent CAGR from 2011-12 to
2016-17, as compared to an 8.0 per cent CAGR recorded in the previous five years. Rajasthan, Punjab, Haryana and
Delhi are likely to remain the key cement-consuming centres.
A-4
Cement production and consumption
P: Projected
Growth in demand is expected to be led by the housing and infrastructure segments. There has been a spurt in
independent housing projects in semi-urban and rural areas, especially in Punjab and Haryana. On the infrastructure
front, investments in urban infrastructure projects in cities such as Delhi and Chandigarh are also expected to boost
cement demand. Moreover, several hydel power projects (which have a high cement intensity) are likely to be
implemented in Himachal Pradesh over the next 5 years. We also anticipate strong demand for cement from road
projects in this region over the coming years.
South: Irrigation, power and individual housing projects

CRISIL Research expects demand for cement in the southern region to grow at a muted CAGR of 5.0-5.5 per cent from
2011-12 to 2016-17. In view of the political instability in Andhra Pradesh, which is the key cement consumer in the South,
we expect demand growth to be relatively subdued over the near term. Demand would be primarily driven by
independent housing and infrastructure projects. On the infrastructure front, investments in irrigation projects in Andhra
Pradesh and power projects, especially in Tamil Nadu, are likely to drive demand. Further, independent housing projects,
especially in semi-urban and rural areas will aid consumption growth over the next 5 years.
Over 2006-07 to 2011-12, cement demand in the South grew at a muted 4.5 per cent CAGR. Growth in the IT/ITeS
sectors in the southern region led to an increase in residential and commercial construction, resulting in healthy demand
growth for cement. However, the years 2010-11 and 2011-12 witnessed a de-growth in cement demand, mainly due to
political instability in Andhra Pradesh. Further, the global economic downturn weighed on the inflow of remittances into
Kerala. Both factors proved detrimental to the cement demand growth.
A-5
P: Projected
With substantial capacities commissioned in the South over the past 3-4 years, this region is currently facing a supply
glut. This has led players to transport excess cement output to other regions, especially the western and the central
regions. Over the next 5 years, we expect outbound movement from the southern region to increase further.
East: Infrastructure and individual housing projects

CRISIL Research expects cement demand in the eastern region to grow at a healthy CAGR of 8.5-9.0 per cent from
2011-12 to 2016-17 as compared to a 9.2 per cent CAGR over 2006-07 to 2011-12. Over the next 5 years, demand is
set to be largely driven by investments in infrastructure and industrial projects by individual state governments. A spurt in
individual housing projects in Bihar and West Bengal would also support demand growth over the medium term.
A-6
Cement production and consumption in the East
P: Projected
Demand in the eastern region is driven by industrial projects that are being implemented in the mineral resource-rich
states of Orissa, Jharkhand and Chhattisgarh, as well as housing projects in rural and semi-urban areas. Infrastructure
(road and power) projects provide further impetus to cement demand.
West: Infrastructure and housing, especially in urban areas

CRISIL Research expects cement demand in the western region to grow at a CAGR of 8.5-9.0 per cent from 2011-12 to
2016-17 as compared to a 10.6 per cent CAGR recorded over 2006-07 to 2011-12. During the next 5 years, CRISIL
Research expects demand to be primarily driven by investments in housing and infrastructure projects, especially in
urban areas.
A-7
P: Projected
Cement demand in the western region has increased mainly on account of the real estate boom in cities such as
Mumbai, Pune, Ahmedabad and Surat. There has also been strong demand from infrastructure and commercial
construction segments in Mumbai, Ahmedabad and Pune. Pune has emerged as an important destination for India's
major IT companies, which has led to large investments in the commercial real estate space. Investments in urban
infrastructure projects, roads and metro rail project in Mumbai are also likely to propel cement demand.
Central India: Infrastructure projects

CRISIL Research expects cement demand in the central region to grow at a CAGR of 7.5-8.0 per cent from 2011-12 to
2016-17, as compared to a 10.2 per cent CAGR recorded over 2006-07 to 2011-12. Demand is set to be primarily driven
by infrastructure projects, especially road projects in Madhya Pradesh. Hydel power projects being implemented in Uttar
Pradesh would also boost demand, given that the cement intensity is the highest in hydel power projects.
A-8
P: Projected
Rural housing is likely to contribute to healthy growth in demand for cement, as a large section of the rural population in
the region is expected to benefit from higher farm incomes, loan waiver schemes and alternative avenues of income
as government spending through the National Rural Employment Guarantee Scheme (NREGS) increases. This region is
likely to also witness higher traction in implementation of key central infrastructure projects like Pradhan Mantri Gram
Sadak Yojna (PMGSY) etc, and rural infrastructure schemes.
A-9
Segment-Wise Demand
Over 2011-12 to 2016-17, CRISIL Research expects cement demand to grow robustly at a CAGR of 7-8 per cent,
primarily driven by demand from infrastructure projects in urban areas and independent housing projects in both urban
and rural areas.
Infrastructure development to propel demand for cement

Demand from the infrastructure segment is projected to grow at a robust CAGR of 10-11 per cent over the next 5
years, supported mainly by the government's thrust on infrastructure development. We expect this segment to account
for about 23 per cent of total cement demand over 2012-13 to 2016-17. Between 2007-08 and 2011-12, infrastructure
accounted for 20 per cent of total cement demand. During this period, demand from this segment registered a CAGR
of 11-12 per cent.
Breakup of cement demand by end-user segments
P: Projected
An increase in investments on improving the road network and the higher cement intensity of road projects are expected
to drive growth in cement demand from the infrastructure segment. Ongoing investments in sectors such as power,
railways and increasing spends on urban infrastructure and irrigation projects (especially in the southern region) are also
expected to boost demand growth.
A - 10
Roads to remain key demand driver within infrastructure
In absolute terms, cement demand from road projects is expected to increase at a CAGR of 15-16 per cent over 2011-12
to 2016-17. The share of roads in the overall infrastructure pie is also likely to increase by 300 bps to almost 36 per
cent over the next 5 years.
Breakup of cement demand from infrastructure segment
The following factors are likely to drive cement consumption by road projects:
Higher spends on road projects owing to greater private sector participation on a build-operate-transfer basis.
Higher cement intensity in construction of roads because of:
- Increase in the proportion of concrete roads as compared to bituminous roads
- Use of paver blocks and concrete tiles
- Construction of flyovers and structures
Housing segment to continue to account for lion's share in cement demand

Though the housing sector will continue to be the dominant consumer of cement, CRISIL Research expects its share to
drop marginally to about 58 per cent over the next 5 years from 61 per cent over the past 5 years.
A - 11
Demand from urban housing is estimated to grow at a CAGR of 5-6 per cent over the next 5 years, largely led
by new projects. Demand from rural housing projects is likely to grow at a CAGR of 4-5 per cent, as rising rural incomes
and higher government investments boost cement demand in the rural and semi-urban regions.
Over the past 5 years, urban housing projects propelled cement demand from the housing segment. While demand from
rural housing projects grew at a CAGR of 6-7 per cent, urban housing demand witnessed a CAGR of 8-9 per cent during
the same period. The urban housing market has boomed over the last few years owing to increasing affordability, better
finance penetration, change in demographic patterns and an increase in the number of nuclear families due to
urbanisation.
Share of commercial construction in overall cement demand to remain stable

Over 2011-12 to 2016-17, demand from the commercial construction segment is forecast to grow by 6-7 per cent CAGR,
primarily led by development of office spaces across businesses and a likely pick-up in hiring across sectors. CRISIL
Research expects the share of the commercial construction segment in overall cement demand to remain stable at 12
per cent during the period.
The commercial construction segment can be broadly classified into office space, malls & multiplexes, hotels and civil
structures such as hospitals and educational institutes. Of these sub-segments, demand from office space accounts for a
substantial portion of overall demand from the commercial construction segment.
Research methodology: End-user model

To arrive at cement demand from various end-user segments, CRISIL Research has estimated consumption by each of
these segments: housing, infrastructure, commercial construction and industrial.
To estimate cement demand from these segments, we have applied cement intensity on various sub-segments.
Housing demand: A demography-based income distribution model has been used to estimate demand for
housing in square feet terms. Subsequently, cement intensity has been applied to arrive at the demand for
cement.
A - 12
Infrastructure demand: The investments on various infrastructure segments such as roads, power, irrigation,
etc have been estimated, and then depending on the cement intensity of each sub-segment, we have arrived at
the demand for cement from the infrastructure segment. Infrastructure investments have been estimated based
on CRISIL Research's internal coverage of many of the sub-sectors.
Commercial construction: Demand for cement has been estimated on the basis of expected consumption by
construction projects relating to office spaces, retail spaces, educational institutions, hotels and hospitals.
Industrial demand: Industrial demand has been estimated based on the capital expenditure plans of various
industries.
A - 13
3.0 Supply
Capacity Additions
Cement industry approaching end of investment cycle

CRISIL Research expects around 70 million tonnes of cement capacities to be commissioned from 2012-13 to 2016-17.
This is close to one-fifth of India's current cement capacity (India's total installed cement capacity stood at 315-320
million tonnes in 2011-12).
Installed capacity additions over the next 5 years are likely to be sharply lower as compared to the past 5 years. From
2007-08 to 2011-12, significant cement capacity of close to 155 million tonnes got commissioned at a pan-India level.
The cement industry is currently approaching the end of the investment cycle; cement investment cycle is characterised
by more-than-commensurate capacity additions and consequently declining operating rates. The typical duration of the
industry's investment cycle is 6-8 years.
Trend in installed capacity additions (2006-07 to 2016-17)
P: Projected
At an aggregate level, the capacities announced by cement companies are higher than CRISIL Research's estimate of
around 70 tonnes over the next 5 years. However, we expect lower capacity additions due to:
Deferment / cancellation of expansion plans because of huge oversupply in select regions

Issues of land acquisition and limestone mining leases
Equipment orders not placed with manufacturers
A - 15
South to account for bulk of capacity additions
Over the next 5 years, CRISIL Research expects almost one third of the capacities to be added in the southern region
alone. The abundant availability of limestone - the key raw material - is the primary driver of these incremental capacity
additions. Two large limestone clusters - Nalgonda and Yeraguntla - are situated in Andhra Pradesh. Hence, in order to
capitalise on these natural resources, many players are keen on commissioning cement capacities in the southern
region.
Over the past 5 years, the southern region has accounted for around 40-45 per cent of the 155 million tonnes of cement
capacities added in the industry between 2007-08 and 2011-12. Sizeable capacity additions are also expected to be
commissioned in the western and eastern regions of India. These regions are likely to witness high demand growth over
the medium term. Hence, to support this incremental demand, players are set to add cement capacities in these regions
over the next 5 years.
Region-wise share in installed capacity addition (2012-13 to 2016-17)
A - 16
Region-wise installed capacity additions
P: Projected
Lion's share of cement capacities to be added by existing players

In the previous capital expenditure cycle (during 1998 to 2003), several new players had set up cement capacities.
However, in the current cycle, existing players are expected to account for over three-fourth of the total capacity
additions. Moreover, with mid-sized and small-sized players collectively accounting for around 40 per cent of the
incremental capacities, the market share of larger pan-India players is likely to decline slightly over the medium term.
A - 17
Player-wise capacity additions (2012-13 to 2016-17)
A - 18
Blending
Blending ratio to improve marginally over next 5 years

As demand and operating rates improve gradually, the blending ratio in the cement industry is expected to increase to
around 1.36 in 2016-17 from 1.27 in 2011-12. The blending ratio would increase primarily due to higher acceptance and
applications of blended cement. Cement manufacturers blend cement to control costs and improve profitability. By
blending fly ash or slag with Ordinary Portland Cement (OPC), cement producers can lower power, fuel and raw material
costs, thereby improving operating margins.
In 2009-10, the blending ratio dipped significantly to around 1.25 from 1.34 in 2008-09. Cement players had lowered the
blending ratio during the year on account of decline in cement demand and increased clinker production. Apart from this,
the large-scale capacity additions witnessed over the previous 2 years also pulled down the blending ratio. Thereafter,
the industry blending ratio increased marginally to 1.27 times in 2010-11 and remained stable during 2011-12 .
Blending ratio and share of blended cement
To forecast blending ratios, CRISIL Research has analysed the availability of blending materials, primarily fly ash and
slag, in conjunction with the expected cement capacity additions. We have mapped the availability of blending materials
to various cement production clusters and looked at the potential increase in availability over the next few years.
A - 19
4.0 Operating Rates
Cement demand to outpace supply over the medium term
In 2012-13, CRISIL Research expects cement capacity additions to significantly outpace incremental cement demand.
However, as the cement industry approaches the end of its investment cycle, this trend is likely to reverse and operating
rates are expected to gradually improve from 2013-14, as incremental capacity additions decline over the medium term.
Over 2007-08 to 2011-12, effective capacity additions outpaced incremental cement demand. Consequently, pan-India
cement operating rates dipped to almost 74 per cent in 2011-12 from about 95 per cent in 2007-08.
Incremental demand and effective capacity additions
P: Projected
Note: Effective cement capacity is calculated on a pro-rata basis, taking into account the month
in which the capacity becomes operational.
Cement operating rates to rise from 2013-14 onwards

Over 2012-13 to 2016-17, CRISIL Research expects about 70 million tonnes of cement capacities to get
commissioned across India. Of these, almost 35 per cent are likely to come onstream in 2012-13 itself. Consequently,
CRISIL Research estimates industry operating rates to decline and subsequently bottom out in the current fiscal.
However, with incremental supply additions declining from 2013-14 onwards, cement operating rates are likely to
gradually recover to about 82 per cent by 2016-17.
CRISIL Research has calculated operating rates based on effective cement capacities. To estimate production at a
regional level, we have forecast cement exports and imports based on opportunity, considering inter-regional (inbound
A - 21
and outbound) movement, depending on the proximity, capacities in competing production clusters and the presence
of cement manufacturers in different regions.
Trend in cement operating rates
P: Projected
South to witness lowest operating rates

Over the next 5 years, the South is expected to record the maximum capacity additions, accounting for about 35 per
cent of the total expected capacity addition of nearly 70 million tonnes. The West and the East are also likely to have a
24 per cent share each. On the other hand, the share of North and Central India is expected to be relatively lower - at
about 7 per cent and 11 per cent, respectively.
With capacity additions significantly outpacing incremental demand over the next 5 years, the South is likely to record the
lowest operating rates as compared to other regions. However, though operating rates in the South are anticipated
to test new lows in 2012-13, they are likely to rise over the medium term, as demand traction improves gradually.
On the other hand, operating rates in the North are expected to witness the highest operating rates, reaching almost 99
per cent by 2016-17. Topographically, the North is largely isolated. Since it receives a limited quantity of excess cement
from other regions, the North is largely self-sufficient in terms of cement demand and supply.
A - 22
Trends in operating rates
North
P: Projected
East
P: Projected
A - 23
West
P: Projected
South
P: Projected
A - 24
Central region
P: Projected
A - 25
5.0 Prices
Long Term Outlook
Pan-India price rise in 2011-12, driven by steep price hike in the South
In 2011-12, demand for cement increased at a subdued pace of around 6-7 per cent y-o-y. Despite sluggish demand and
an overcapacity scenario, the average pan-India cement prices rose by around 14 per cent y-o-y during
this period, mainly driven by the steep price rise in India's southern region (to the tune of around 23 per cent y-o-
y). While the average price increased by around 13-14 per cent y-o-y in the North and West in 2011-12, the price rise
was not as steep in the East and Central regions.
In the South, a marginal decline in demand growth and the existing supply glut dragged down average cement operating
rates in the region to around 60 per cent during the year. Despite such a weak operating environment, cement prices in
the South rose sharply, primarily triggered by constraints in cement supply in the region. CRISIL Research's extensive
interaction with cement manufacturers and dealers reveals that this supply crunch is the result of production cuts
by many cement players in the region.
In spite of subdued demand and declining industry operating rates, cement prices continued to rise in 2011-12.
This proved to be the key cause of concern for the Competition Commission of India (CCI), which launched a probe into
the sharp increase in prices and subsequently came out with a ruling in June 2012. (For further details of the CCI order ,
please refer to Impact Analysis section)
Pan-India prices to rise sharply in 2012-13 as well

CRISIL Research expects the average pan-India cement price to increase sharply by almost 15-16 per cent y-o-y in
2012-13.
Pan-India cement price has risen by almost 18 per cent on a y-o-y basis during the first half of 2012-13. Our extensive
interactions with cement manufacturers and dealers indicate that post such a steep run-up during the first half of the
year, cement prices are likely to witness only a marginal upside from current levels during the second half of 2012-13.
Our interaction also indicated that cement prices would increase on account of escalation of key input costs, especially
freight expenses.
Post the steep price rise in 2012-13, CRISIL Research estimates cement prices to increase moderately by 4-5 per cent in
2013-14.
A - 27
Trend in cement operating rates and prices
P: Projected
Note: Cement prices are average retail cement prices on an pan-India level and are indexed to base April 2005.
Price hike to be sharpest in East, lowest in South

Over the next 2 years, the eastern region is likely to witness the maximum price increase as compared to the other
regions. The East is plagued by supply constraints resulting from shortage in availability of railway wagons. This is likely
to remain the key bottleneck in this region over the near term, thus pushing up cement prices, especially during 2012-13.
In the South, on the other hand, prices are expected to rise at a relatively low pace as compared to other regions over
the next 2 years. In view of the tepid demand growth, existing supply glut and consequently lower operating
rates witnessed by the southern region, we believe that cement prices are unlikely to rise from current levels.
Region-wise price outlook
A - 28
6.0 Costs & Profitability
Hike in freight rates with higher lead distance to push up freight costs
CRISIL Research expects freight cost per bag for the cement industry to increase significantly by around 14 per cent
CAGR to around Rs 51 per bag in 2013-14 from around Rs 40 per bag in 2011-12. Hike in freight rates, especially
railway freight rates, coupled with an estimated rise in lead distance is likely to lead to a sharp rise in freight costs for
cement players over the next 2 years.
Freight cost accounts for 20-25 per cent of a cement player's cost of sales. For cement companies, rail transportation
was more economical than road transportation. However, recently, the share of rail transport has marginally declined due
to constraints in the availability of railway wagons. Moreover, railway freight rates have been hiked by close to 25 per
cent in March 2012. Currently, majority of cement dispatches (almost 60 per cent) takes place by road; the share of road
transport is expected to increase marginally, going forward. Further, due to the overcapacity scenario in the
industry, players would need to foray into new markets. Consequently, cement would need to be transported across
longer distances, thereby increasing the lead distance traveled.
Thus, in our opinion, higher lead distance coupled with the hike in freight rates will lead to an increase in freight
costs, thereby further affecting the cement industry's profitability.
Softening prices of imported coal to prune energy costs in 2012-13

CRISIL Research estimates the industry's power and fuel costs to dip from Rs 51 per bag in 2011-12 to around Rs 50
per bag in 2012-13 and subsequently rise to almost Rs 55 per bag in 2013-14. Softening prices of imported coal would
prune energy costs in 2012-13, but an estimated increase in prices of both linkage as well as imported coal is likely to
push up power and fuel costs in 2013-14.
While 50-55 per cent of the cement industry's coal requirement is met through linkages, around 30-35 per cent
is imported and the remaining demand is met through coal available in the open market. Of late, the cement industry has
been facing issues in securing coal for cement production as well as for captive power. Hence, in our opinion, the
industry will increasingly opt for imported coal to meet the incremental necessity of coal.
CRISIL Research foresees prices of imported coal to correct in 2012-13, leading to improvement in industry energy
costs. However, in the subsequent year, with the prices of both imported as well as linkage coal estimated to increase,
energy costs for the cement industry are likely to rise. But the incremental rise in energy costs in 2013-14 is expected to
be partially cushioned by efficiencies resulting from increased usage of captive power by cement players.
Sharp rise in cement prices to boost margins in 2012-13

CRISIL Research expects the operating margins of the cement industry to improve from 21 per cent in 2011-12 to
24 per cent in 2012-13 and marginally decline to 23 per cent in 2013-14.
CRISIL Research estimates the average pan-India cement prices to rise sharply by 15-16 per cent y-o-y in 2012-13 and
witness a moderate rise of 4-5 per cent in the subsequent year. Pressure on margins, on account of accelerating input
costs (especially freight costs), would be completely offset by a sharp increase in cement prices in 2012-13. However,
A - 29
in 2013-14, higher energy and freight costs would more-than-offset the upside from rise in prices, causing industry
operating margins to decline marginally by 100 bps.
Operational performance of cement companies
A - 30
State of the industry
Sections
1.0 Evolutio n of the Cem ent Ind ustry B-1
2.0 Man ufacturin g Process B-5
3.0 Industry Structure B-15
4.0 Regio nal scena rio B-19
5.0 Dem and dynam ics B-35
6.0 Cost structure B-43
7.0 Types of cem ent B-47
8.0 Read y m ix concrete B-53
9.0 Player Profiles B-57
i
1.0 Evolution of the Cement Industry
u
The cement industry is one of India's core sectors. The country's first cement plant was set up in Porbandar, Gujarat in
1914. Earlier, the government regulated the industry with licensing, price and distribution controls. A gradual removal of
these controls resulted in rapid capacity creation. Following this, the country moved from a cement scarcity situation to a
surplus position. As of March 2012, the pan India total installed cement capacity stood at around 325-330 million tonnes.
Currently, India is the second-largest producer of cement in the world.
The evolution of the cement industry in India can be broadly divided into three periods - the period of total government
control (up to 1982), the period of partial decontrol (1982 to 1989) and the period of total decontrol (after 1989).
Period of total government control
Events during the period of government control
B-1
This period marked the beginning of cement industry where government, with an intention to promote the sector,
exercised strict control over the industry. It set out production limits, price as well as the distribution channels that should
be employed to sell cement. This was aimed at ensuring fair prices to producers and consumers across the country, thus
reducing regional imbalances. The fixed price at which producers would sell cement was based on the cost of production
of cement throughout the country plus a marginal profit. This price contained a freight component that was averaged over
the country as a whole. If the actual freight component of a manufacturer was lower than that included in the uniform
price, producers had to pass on the amount to the pool sum, representing the difference between the uniform price
freight component and the freight costs incurred by them. On the other hand, if the actual freight incidence was higher
than the freight element accounted for in the uniform price, producers were reimbursed the difference.
This freight pooling system encouraged producers to set up manufacturing plants across the country. Before this system,
the industry was concentrated in the eastern part of the country where accesses to raw materials were readily available.
However, a drawback of this system was the lack of incentive to producers to minimise costs since they would be
reimbursed by the uniform pricing system. As a result, the average cost of production as well as demand for scarce
railway capacity increased.
Period of partial government decontrol
Events during the period of partial decontrol
On account of inefficiencies of the uniform price system, the government introduced a system of partial decontrol in
1982. A levy quota of 66.6 per cent for sales to the government was imposed on existing units while for new and sick
units the quota was lowered to 50 per cent. The balance 33.4 per cent could be sold in the open market to general
consumers. A ceiling price was set for sales in the open market to protect consumers from unreasonable high pricing.
During this period, cement producers were able to earn profits from the levy sale to government at fixed prices. But for
the non-levy sales, profits decreased as there was a sudden increase in cement supply in the open market which led to
greater competition among the manufacturers. During this period, the government gradually reduced the levy quota and
increased retention prices in order to increase the profitability on sales in the open market.
B-2
Period of total decontrol
Events post decontrol
In 1989, the government removed all price and distribution controls. The system of freight pooling was scrapped and a
subsidy scheme, to ensure availability of cement at reasonable prices in remote and hilly regions, was implemented. This
opened up opportunities in the industry and was marked by huge investments in the coming years.
B-3
2.0 Manufacturing Process
Cement manufacturing process
The following is a flow chart of cement manufacturing process
Flow Chart
Raw materials
Limestone or chalk is used as the essential raw material in producing clinker for cement. Clinker, the intermediate
product acts as a raw material for manufacturing cement with additives such as bauxite, iron ore, and gypsum. The
quality of the product depends on the grade of limestone and additives such as silica, alumina, and iron ore.
Fuels like coal, pet coke, natural gas or oil can be used. The industry has even started considering the usage of alternate
fuels like agro wastes, waste oils, animal meal, rice husk, etc owing to the shortage of fuels like coal coupled with rising
fuel prices. The choice of fuel depends on the availability of fuel, its cost, the efficiency level and the process used.
The general process of manufacturing cement from mining limestone from the quarry to the final product is as follows:
B-5
Limestone benching, drilling and blasting

In order to make cement, the company first takes a sample of the limestone that is found at various levels in the form of
steps, which are called benches. The quality of cement is assessed and quality assurance is obtained and compared
with the standard required for making cement. This is known as limestone benching. Limestone benching is done so that
additives can be added accordingly, for qualifying the basic characteristics.
Once the limestone is benched, it is drilled with the drilling equipment and broken into small pieces. This is known as
blasting. There are two kinds of blasting 1) Primary blasting and 2) Secondary blasting. Primary blasting is the process
where the limestone quarry is blasted for the first time and limestone is broken into pieces. Usually, primary blasting
suffices in making the pieces small. If these are not small enough, a second blasting process is undertaken.
After blasting, the site is excavated and limestone is extracted. Following this, limestone is transported to the factory for
the next stage of crushing.
Crushing
Limestone is crushed and reduced to a size suitable for storage and blending. All the raw materials are then ground in a
grinder. The size of the crushed material required depends on the type of the grinding mill used. Generally, crushing is
done in two stages, in a primary crusher and a secondary crusher. The primary crusher could be a fully mobile and self-
propelled unit operating near the quarry face, a semi-mobile unit moved at infrequent intervals, or a static unit. The
secondary crusher is a static unit and is used if required.
Pre-homogeneous stage
The crushed limestone is packed and transported to the reclaimer stage. This is a pre-homogeneous stage, where
additives like silica, alumina, and iron ore are added to spread it in such a way so as to make it in uniform quality. This
helps in reducing the variations in the chemical characteristics of limestone.
Raw mill grinding

Reclaiming is followed by the raw milling stage. In the raw milling stage, the raw meal is ground into a fine powder (so
that it reacts fully) to be burnt in the kiln.
There are various types of milling systems with different equipment, namely, vertical roller mill (used for bigger capacity)
and ball roller mill (used for smaller capacity). The selection of a particular mill is influenced by the type of raw material
available, power consumed and the project outlay. Modern milling systems use separators/classifiers, which separate the
fine product and return the coarse materials to the grinding unit.
Blending and storage

Raw milling is followed by blending and storage. Blending is done in silos. Typically, two or more silos are used in a
series or in parallel with a total capacity of at least one day's raw meal feed. The raw meal is continuously circulated and
blended in the first silo; it then passes to the second silo for further homogenisation (perfect blending and mixing of
various constituents). Alternatively, blending and storage may be combined in a single large silo wherein the blending
occurs on extraction through a series of orifices in the base, with limited fluidisation.
B-6
Pre-heating stage and kiln
After the raw meal is blended, it is heated in a rotary kiln. In modern cement plants, before the heat treatment in the kiln,
the raw meal is heated in a pre-heater or/and a precalcinator system, in order to ensure a higher degree of burning and
enhance the product quality. Vertical cyclone chambers are used where the raw material passes through the kiln and the
hot gases are used to pre-heat the material as they swirl through the cyclones.
The kiln is a refractory, lined with refractory bricks for insulation throughout its high-heat zones. The kiln is cylindrical and
marginally inclined to a horizontal position (typically with a gradient of 3-4 degrees), and rotates at 2-4 revolutions per
minute. It is an important part of the cement-making process.
The solid material passes down the kiln while it rotates. Solid material flows in the direction opposite to the flame. Gas,
oil, or pulverised coal is used to ignite the flame at the lower or front-end of the kiln. Various processes occurring in the
kiln include evaporation of water, thermal decomposition of clay minerals (at 300-650 degree Celsius), calcite formation
(at 800-950 degree Celsius), liquid formation (at around 1,250 degree Celsius), and the formation of clinker (at over
1,400 degree Celsius).
Clinker from the kiln passes into a cooler, where convective airflow cools the clinker for subsequent handling and
grinding. The heat is reclaimed and recycled to the kiln as secondary combustion air. Other gases reclaimed from the
suspension pre-heater (SP), precalcinator systems, and the cooler are used as primary combustion air in the kiln. The
excess air from the cooler is cleaned and released into the atmosphere.
Process profile
There are four processes of heat treatment. These include dry process, wet process, semi-wet process, and semi-dry
process. Until the 1970s, wet process technology was predominantly used in the cement industry, but the use of the dry
process increased significantly since the early 1980s.
In 1950, there were only 33 kilns in India, out of which, 32 were wet-based and one was running on the semi-dry
process.
However, in 2009, there were 164 kilns, out of which, 139 were based on the dry process, 20 on the wet process and 5
on the semi-dry process.
B-7
Production break-up of processes
Source: CMA, CRISIL Research
Dry process
The dry process is commonly used across the world to manufacture cement. In this dry process, the kiln feed has
moisture content of around 0.5 per cent.
Dry process
B-8
The kiln feed is fed into a suspension pre-heater, which consists of a system of cyclones. In the cyclone system, the kiln
feed is re-circulated and heated by a mixture of counter-current and co-current flow of exhaust gases coming from the
kiln. The gas temperature at the pre-heater inlet and exit are typically around 50 degree Celsius and 350 degree
Celsius, respectively. At the kiln inlet, the temperature is above 750 degree Celsius for solids and 1,200 degree
Celsius for gases.
Alternately, the ground raw meal is fed into a pre-calcinator. In a pre-calcinator, the raw meal is partly calcined (by up to
90 per cent) by burning over 50 per cent of the total fuel requirement. Calcination is de-carbonation of the calcium
carbonate content in the ground raw meal. De-carbonation can be achieved in less than a minute in a pre-calcinator.
The temperature of the kiln feed entering the kiln could be above 900 degree Celsius. The rotary kiln, in which the
remaining heat treatment occurs, is shorter, as compared to that used in the wet process. The length/diameter ratio (L/D)
is 15-18. The maximum temperature that the material attains on passing through the hottest zone of the kiln is around
1,450 degree Celsius. The nodules of clinker formed are in a molten state. The surface temperature of the clinker
reduces to around 1,100 degree Celsius, before it passes on to a cooler.
Wet process
Wet process
In the wet process, the kiln feed has a moisture content of 30-40 per cent and deflocculants to enable pumping. The
slurry feed is fed directly through the upper-end of the kiln. Generally, the kiln has a diameter of around 6 metres and is
around 200 metres in length. Steel chains are hung in the dry zone near the upper end of the kiln to transfer heat from
the hot gases to the moist slurry feed. Towards the end of the chain (located at the upper end of the kiln), the slurry feed
forms nodules, which are dried and partly de-carbonated. Further down the kiln, the feed is fully de-carbonated to form
clinker.
B-9
Semi-wet process
The semi-wet process is a modification of the wet process. The slurry is dehydrated in a filter press to form a cake with
moisture content of around 20 per cent. The kiln feed is fed directly into a long-chained kiln or a pre-heater and a short
kiln. (The pre-heater could be a moving Lepol grate or disintegrator cyclone system.)
Semi-dry process
In the semi-dry process, the raw meal is pre-treated as in the dry process. In an inclined rotating dish or drum, the raw
meal is made into nodules of around 15 mm spheres, with moisture content of around 12 per cent. The nodules are then
fed into a moving grate, where partial drying, pre-heating, and partial de-carbonation take place prior to the kiln stage.
The subsequent treatment is similar to that in the dry process.
Cement grinding
Cement is produced by grinding cooled clinker with gypsum (hydrated calcium sulphate). Either naturally available
gypsum or chemically manufactured gypsum is used. Gypsum is added to regulate the setting time of cement. The
clinker is ground in a ball mill, which is a tubular mill partly filled with steel balls.
Vertical Roller Mills (VRM) have provided a breakthrough in the grinding process. Apart from its higher drying capacity,
the VRM draws 20-30 per cent lesser electricity as compared to the ball mill system.
Another breakthrough in the cement industry is the application of the High Pressure Grinding Rolls (HPGR). HPGR has
been widely used in the Indian cement industry for upgrading the existing ball mill systems. There are two basic cement
grinding systems: open-circuit and closed-circuit, which are used in HPGR. The open circuit system is found in old
cement plants and mini cement plants. In this system, the material is not re-circulated after passing through the grinding
mill. The diameter of the mill is up to 2.5 metres, with a length to diameter (L/D) ratio of around 5.5 times.
Modern cement plants use the closed-circuit system. In this system, the material from the grinding mill is taken to an air
separator or a classifier. Here, based on the particle's size, it is separated into a 'fine product' stream and a 'coarse
reject' stream. The 'coarse reject' stream is returned to the grinding mill for regrinding. The diameter of the mill is up to
4.5 metres, with a length to diameter (L/D) ratio of around 3. The 'coarse reject' stream is recirculated at a rate similar to
that of the clinker feed.
The closed circuit grinding system is more efficient than the open circuit system on account of the re-circulation of the
'coarse reject' feed (resulting in lower wastage) and lower power consumption (especially for higher compression
cements). However, for OPC-33, there is no significant saving in energy since power is required to operate the air
separator and ancillary equipment, such as elevators. The overall power consumption is 35-40 kWh/tonne of cement for
open and closed circuit grinding systems. In the case of cement with higher compression strength, such as rapid
hardening cement (over 400 kg/cm2), OPC-43 and OPC-53 grades, 3-5 per cent of energy is saved, as compared to the
open circuit grinding system, where the energy consumption is 55 kWh/tonne.
The following chart depicts the cement manufacturing process, right from quarrying the raw material to packing the
cement in bags.
B - 10
Cement manufacturing process
B - 11
Manufacturing process of mini-cement plants
In India, most mini-cement plants use the vertical shaft kiln (VSK) technology, which is different from the technology used
by the large cement plants. The VSK technology uses the semi-dry process, which involves the following steps:
Crushing of limestone and other raw materials to a size of up to 12 mm.

Proportioning of the raw material and fuel (in general, coke breeze) based on the raw meal composition.
Preparing nodules by adding water to the raw meal in a pan-type noduliser.
Feeding the nodules to the vertical shaft kiln. In the kiln, the nodules are dried, calcined, sintered and cooked as
the nodules travel down the kiln and get converted to clinker.
Grinding the clinker and gypsum in a grinding mill to obtain ordinary Portland cement.
Use of alternate fuels

The cement industry predominantly uses thermal energy. The average heat generated during the process is 3,200-3,300
kilo joules/kg. Burning fossil fuels such as pulverised coal/oil in the rotary kiln, generates high-grade heat. But, as these
fuels are progressively becoming expensive and difficult to procure, there is an increasing need for alternate fuels for
kilns. Alternate fuels like agro wastes, waste oils, animal meal, rice husk etc are being tested and on the basis of the
method used for manufacturing, its cost-effectiveness and availability, these alternate fuels will be used.
Usage of fly ash and slag in blended cement

In the last few years, blended cement has increasingly gained popularity over ordinary Portland cement (OPC) due to
advantages like higher production, low cost of production and less pressure on natural minerals like limestone, etc.
Further, concerns regarding the quality and properties of blended cement have decreased as it is being accepted all
across India now. This increased acceptance is a positive sign for the cement industry as they can produce more cement
with the current capacity by increasing their blending ratio. Basically, there are two types of blending material that are
used by the cement industry:
Fly ash
Fly ash is a finely divided residue resulting from the combustion of pulverised bituminous coal or sub-bituminous lignite in
thermal power plants which consist of inorganic mineral constituents of coal and organic matter that are not fully burnt. It
is generally grey in colour and refractory in nature.
Owing to its pozzolanic properties, fly ash can be mixed with clinker to form Portland pozzolana cement (PPC). When fly
ash is added to cement it improves its strength, durability and reduces emission of carbon dioxide but there is a limit to
which cement manufacturers can use fly ash per tonne of cement. This is because, beyond a level, the properties of
cement start changing. The Bureau of Industrial Standards (BIS) has defined this limit as 35 per cent.
Slag
After fly ash, slag produced as a waste material by steel plants, is the next best option for blending material. Slag is a
non-metallic product consisting of glass containing silicates of lime and other bases and is obtained as a byproduct in the
manufacture of pig iron in blast and electric furnaces. Granulated slag is used in the manufacture of Portland Slag
Cement (PSC). Slag cement can be used for all plain and reinforced concrete constructions, mass concrete structures
such as dams, reservoirs, swimming pools, river embankments, bridge piers, etc. It is advantageous to use slag cement
where low heat of hydration and resistance to alkali-silica reaction are preferred for structures in aggressive
B - 12
environments where chemical and mildly acidic waters are encountered (where the use of OPC is not recommended)
and for marine constructions, dykes, wharves, etc where sulphatic water is encountered. In short, PSC can be used
wherever OPC is used.
Slag adds strength and durability to concrete. Slag cement also improves concrete's plastic properties, such as
workability and finishability. From an environmental perspective, the use of slag in concrete only makes concrete greener
- not only is it a recycled material, but, for each cubic yard of concrete in which it replaces portland cement, slag cement
significantly reduces energy consumption and greenhouse gases emitted in the production of concrete raw materials.
The upper limit specified by the Bureau of Industrial Standards (BIS), in case of slag cement, is around 65 per cent.
Although the cement industry has largely tried to be energy efficient there is still some need for improvement. The
cement industry needs to look at the ways of appropriate pre-blending facilities for raw material, energy-efficient
equipment for the auxiliary/minor operations. They should also look at building bulk loading and transportation facilities,
as well as advance computerised kiln control systems.
B - 13
3.0 Industry Structure
Porter five force analysis
Source : CRISIL Research
B - 15
Industry structure
As of March 2012, the total installed cement capacity in India stood at approximately 325-330 million tonnes. The
industry can be broadly classified into pan-India, regional and standalone players.
Pan-India players include large players like Holcim group companies- ACC and Ambuja and Aditya Birla group
company- UltraTech Cement (including Samruddhi Cement) . Companies of both these groups are adding capacities
through either greenfield or brownfield expansions.
Players whose presence is restricted to one or two regions, with a stronghold in the markets of their respective
operations are included in the category of regional players. Key examples of players included in this segment are
Jaiprakash Associates (North and Central), Lafarge (concentrated in the East), India Cement (South), Shree Cement
(North), Binani Cement (North), Kesoram Industries (South), Chettinad Cement (South), Dalmia Cement (South), Madras
Cement (South) etc.
Players like Panyam Cement, Penna Cement, etc, are concentrated and operational in few states within a region. Owing
to their largely local reach, these players are classified as standalone players.
Industry structure as of March 2012
B - 16
Industry status
Consolidation in cement industry
The Indian cement industry can be categorized as a highly fragmented industry with the presence of few large
players and many small players. However, the top two players- Holcim group and Aditya Birla group account for
almost 32 per cent of the total market share.
The past decade has witnessed many large mergers and acquisitions in the Indian cement industry. These have mostly
been in the form of global companies acquiring domestic players rather than consolidation in the domestic market itself.
Examples of some of the major deals in the past decade are listed below:
B - 17
Key mergers and acquisitions in the cement industry
B - 18
4.0 Regional scenario
North
States included: Uttarakhand, Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Chandigarh and
Rajasthan.
Over the past five years, from 2006-07 to 2011-12, cement demand in the northern region grew at a CAGR of around 8
per cent.. This was led by demand from infrastructure projects and independent housing especially from urban areas.
Over the same period, cement capacity rose at a higher CAGR of almost 16 per cent with major capacity additions over
the last 4 years. As capacity additions largely outpaced growth in demand, cement utilisation rates in the North sharply
declined from 96 per cent in 2006-07 to 79 per cent in 2011-12.
Clinker capacity/ production/ operating rate
Cement - Demand- Supply scenario
Source: Industry, CRISIL Research
B - 19
Key markets
Rajasthan, Punjab, Delhi and Haryana are the key markets in the northern region. These states collectively account for
more than 85 per cent of the overall cement consumption in the region. Demand is mainly driven by increase in
construction of roads, projects like concretisation and interlinking village roads and rural housing projects.
North: Market share break-up
Key players
Holcim Group (ACC & Ambuja) is the market leader in the North, followed by Shree Cement, UltraTech Cement,
Jaiprakash Associates and Binani Cement. The top five players collectively account for around 81 per cent of the market
share in the northern region, thus making the region reasonably consolidated.
B - 20
Prices in North region
Demand drivers:
Demand in the northern region has been primarily driven by road projects across various states as well as hydel power
projects, especially in states like Jammu and Kashmir and Himachal Pradesh. Investments in urban infrastructure
projects , especially in in Delhi and Chandigarh, coupled with the implementation of high-intensity hydel projects in states
like Himachal Pradesh is likely to further propel cement demand in the northern region.
B - 21
South
States included: Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Andaman and Nicobar Islands, and Pondicherry.
Owing to abundant raw material availability i.e. large limestone reserves located in the region, South India enjoys the
highest share of cement capacities in India. It also accounts for the lion's share in terms of cement consumption in India.
Over the past five years, during 2006-07 to 2011-12, cement demand in the region grew at a subdued CAGR of 4-5 per
cent. Growth in the IT / ITeS sector in the southern region led to an increase in the residential and commercial
construction thereby boosting the demand for cement in the region. However, cement offtake recorded decline over the
past couple of years, primarily owing to political instability in Andhra Pradesh, which is the key cement-consuming state
in the southern region.
During 2006-07 to 2011-12, while cement demand witnessed muted traction, cement capacities in the region
witnessed significant growth of around 16 per cent CAGR, dragging down cement operating rates from almost 91 per
cent in 2006-07 to around 59 per cent in 2011-12. These are the lowest levels of operating rates that the region has
witnessed over the past decade. On account of prevailing overcapacity scenario, the southern region supplies cement to
other regions as well, prominently to the western and central regions.
B - 22
Cement: Demand-Supply scenario
Key markets
Tamil Nadu, Andhra Pradesh and Karnataka are the key consuming markets. Tamil Nadu and Karnataka have witnessed
relatively faster growth in the region compared to other states. Over the last two years, demand for cement in Andhra
Pradesh has declined significantly due owing to political instability in the state.
Key players
The southern region is relatively more fragmented compared to the other regions, with the top five players
accounting for a around 52 per cent of the total market share. The top five players in the South are UltraTech
Cement, India Cements, Madras Cement, Dalmia Cement and Chettinad Cement.
B - 23
Player wise Market share
Prices
B - 24
Demand drivers
Cement demand in the region has been primarily driven by increasing focus on housing, especially in rural areas as well
as an increase in infrastructure spending, especially in irrigation projects. Besides, the growth in IT / ITeS sector in the
region has led to an increase in residential and commercial construction, resulting in healthy demand for the
commodity. However, over the past couple of years, the demand growth in this region was marred on account of the
political instability in Andhra Pradesh, the key cement-consuming state in the region. Going ahead, we believe this region
will register muted growth over the near term largely due to the political scenario in Andhra Pradesh. The key drivers for
demand offtake over the next 5 years would be independent housing and infrastructure projects, especially in the key
states of Tamil Nadu and Karnataka.
B - 25
East
States included: Chhattisgarh, West Bengal, Bihar, Jharkhand, Orissa, Meghalaya, Assam, Arunachal Pradesh, Sikkim,
Mizoram, Nagaland, Tripura, and Manipur.
The eastern region is largely an industrial belt owing to abundant availability of raw material reserves in the region. Over
the past five years, from 2006-07 to 2011-12, cement demand grew at a CAGR of 9 per cent, largely spearheaded by
government focus on housing and infrastructure projects.
During the same period, cement capacities increased at around 9 per cent CAGR. While cement operating rates in the
eastern region remained largely stable at around 84-86 per cent from 2006-07 to 2010-11, they dropped to almost 81 per
cent in 2011-12 due to slower than commensurate increase in cement production as compared to the increase in cement
capacities.
Cement: Demand-Supply scenario
B - 26
Key markets
Over the last five years, the eastern region registered healthy growth in cement consumption, due to a good demand
from states such as Orissa, Bihar , Jharkhand and Chattisgarh.
Key players
Holcim Group companies (ACC & Ambuja) enjoy the largest market share in the region, followed by Ultratech Cement.
Lafarge, Century Textiles and OCL are the other key players. The eastern region demonstrates relatively higher level of
consolidation as compared to other regions, with the top five players accounting for almost three fourth of the market
share.
Player wise market share
B - 27
Prices
Demand drivers
Demand in the eastern region is largely driven by several industrial projects that are being implemented in the mineral
resource-rich states such as Orissa, Jharkhand and Chattisgarh. Housing projects in the rural and semi-urban regions
are also driving the demand for cement in the region. Further, a spurt in individual housing projects in Bihar and West
Bengal would support demand growth over the medium term.
B - 28
West
States included: Maharashtra,Gujarat & Goa
Over the past five years, from 2006-07 to 2011-12, cement demand in the western region grew at a robust CAGR of 11
per cent largely driven by spurt in housing , especially in semi-urban and urban areas, as well as
augmented infrastructure spending , especially in the urban areas. During the same period, cement capacities have
grown at a relatively lower pace of around 7 per cent CAGR.
Despite consumption growth outpacing capacity additions, average cement operating rates stood at around 88 per cent
over the past five years. This was mainly on account of the excess cement supply to the West from other regions,
especially from the South (which suffers from significant overcapacity).
Clinker Capacity/ Production/ Operating rate
Cement: Demand Supply scenario
B - 29
Key markets
Maharashtra is one of the key cement consuming states in India and the largest cement consumer in the western
region. Cement demand in Gujarat is also high with cement consumption witnessing fast growth over the past few years
on account of high infrastructure spending in the state.
Key players
Ultratech Cement and the Holcim group have large presence in the western market, with collective market share
of almost 52 per cent. Other key players in the western market are Kesoram Industries, Jaiprakash Industries and Orient
Cement.
Player wise market share
B - 30
Prices
Demand drivers
Demand from the western region has been growing on account of demand from commercial construction (complexes
and shopping malls) and housing demand, especially in urban areas as well as increased investments in infrastructure.
Cities such as Pune have become a hub for IT/ITeS parks and commercial complexes. Moreover, investment in urban
infrastructure projects, roads and the metro rail project in Mumbai is expected to drive demand for cement
in Maharashtra. Further, with an increase in housing and infrastructure spending in Ahmedabad and other key cities of
Gujarat, there would be strong demand for cement in the state as well.
B - 31
Central
States included: Uttar Pradesh and Madhya Pradesh
In the central region, Madhya Pradesh (MP) has large limestone deposits in the Satna cluster and most clinker plants are
located here. Although there are no major limestone reserves in Uttar Pradesh (UP), players have set up grinding units in
the state as it is one of the key consuming market.
Over the past five years, from 2006-07 to 2011-12, cement demand in the central region has witnessed a healthy CAGR
of around 10 per cent, primarily driven by an increased infrastructure spending, especially on road projects. Over the
same period, cement capacities have increased at a CAGR of around 10 per cent. The average cement utilisation rates
in the region have stood at almost 95 per cent over the past five years.
Clinker capacity/production/Utilization
Cement : Demand-Supply scenario
B - 32
Key markets
UP is the second-largest cement consuming state in the country with a share of around 10-12 per cent in the pan-
India cement consumption. Cement demand emanating from the state has followed an upward trajectory over the past
five years, increasing at a healthy pace.
Key players
Holcim Group (ACC and Ambuja) is the largest player in the region with a market share of almost 18 per cent, closely
followed by Jaiprakash Associates with a market share of around 16 per cent. Other prominent players in the region are
Ultratech Cement, Prism Cement and Shree Cement. The top five players in the region account for over 65 per cent of
the total market share.
Player wise market share break-up
B - 33
Prices
Demand Drivers
Demand in the region is primarily driven by infrastructure investments. Roads and hydel power projects are the key
drivers within the infrastructure segment. Going forward, the region is expected to witness robust demand led by the
implementation of road projects in MP and hydel power projects in UP. Further, demand emanating from rural housing
projects would also add to the healthy growth in cement demand in the region.
B - 34
5.0 Demand dynamics
Demand dynamics closely related to construction sector

Demand for cement is closely related to growth in the construction sector. Over the past five years, from 2006-07 to
2011-12, cement demand grew at a robust CAGR of around 8 per cent, largely led by increased focus on infrastructure
development coupled with high demand emanating from the housing sector and industrial projects.
B - 35
Factors influencing cement demand
B - 36
Demand drivers
Demand for cement is primarily derived from four segments, namely housing (60-65 per cent), infrastructure (20-25 per
cent), commercial construction (10-15 per cent) and industrial segments (5-10 per cent).
Housing: Main driver of cement demand

Housing sector acts as the major demand driver for cement industry in India, accounting for around two-third of the
overall cement demand. Over the last five years, urban housing boosted cement demand in the housing segment. While
the urban housing demand grew at a CAGR of 8-9 per cent, rural housing demand rose at a CAGR of 6-7 per cent during
the period 2006-07 to 2011-12. The urban housing market has witnessed a boom over the last few years on the back of
increasing affordability, change in the demographic pattern and the growing number of nuclear families due to
urbanisation as well as increasing finance penetration.
Infrastructure: Increasing government thrust on infrastructure

Over the past 5 years, infrastructure segment accounted for nearly one-fifth of the total cement demand in India. The
segment grew at a CAGR of 9-11 per cent during this period. Over the next few years, higher investments in as well
as increased cement intensity in road projects is likely to act as the primary driver for cement demand from the
infrastructure segment. Besides, continuing investments in the power sector, railways and increasing spend on urban
infrastructure projects is expected to further propel cement demand.
Infrastructure spending in India
Commercial construction - Development of office space to drive growth

The commercial construction sector segment can be classified into office space, malls & multiplexes, hotels and other
civil structures such as hospitals and educational institutes. Of these, demand from office space accounts for a
considerable portion of the overall commercial construction demand. Over the medium term, demand from the
B - 37
commercial construction segment is expected to grow at a moderate pace on the back of expected development of office
spaces across businesses and likely pickup in hiring across sectors.
End-users
The main buyers of cement are government, institutional buyers and retail buyers.
Government
The government obtains cement at very competitive prices due to its purchase process. It buys cement through two
routes: direct tenders, or purchase through the Director General of Supplies and Disposals (DGS&D). The DGS&D
receives cement rates from various cement companies, selects the vendor, and distributes it among government
agencies registered with DGS&D. The government gets a significant portion of its total requirement through the direct
tendering process, and the remainder through the DGS&D.
Institutional buyers (other than the government)

Institutional buyers such as builders buy cement from either cement companies or wholesalers. Bulk purchases cost
lower than retail purchases. Generally, civil engineers and contractors decide on the variety and brand of cement to be
purchased.
Retail buyers
Retail buyers include the housing segment. They buy from retailers as they have low requirements. Consequently, retail
buyers have lesser pricing flexibility than institutional buyers, who make bulk purchases. In case of retail buyers, the
mason decides the variety and brand of cement to be purchased.
Supply
Demand growth and level of consolidation in the region influences supply in the cement industry. In 2011-12, capacity
utilisation of the cement industry stood at around 74 per cent.
B - 38
Factors affecting domestic cement supply
B - 39
Seasonality of demand and cyclicality of the industry

Demand declines during monsoons due to slowdown in construction activity, consequently, making demand for cement
seasonal. Monsoons typically extend from June to September across India (except in parts of Tamil Nadu and Kerala,
where they last from November to January). Consequently, demand is lowest during the July-September quarter and
highest during the January-March quarter. Demand peaks in March and is low in August.
In addition, the cement industry, like most capital-intensive commodity industries, is cyclical in nature, especially with
respect to supply. Given the high gestation period of 24-30 months, there is a time lag between the capacity build-up and
cement demand (approximately 24-30 months). Demand for cement is linked to economic growth. Hence, when the
economy is strong, demand increases. As a result, the profitability of players increases, leading to capacity additions by
existing players and the entry of new players. However, since it takes around 2-3 years to build a cement plant, it is likely
that demand could either decrease or stagnate, or capacity additions could exceed demand before completion of these
capacities. This could lead to decrease in cement prices with the industry facing a downturn, and players reducing
operating rates or shutting their plants.
Cement industry - Regional in nature

Cement is a high-volume and low-value commodity. Transporting cement beyond a distance makes it unviable for end-
users, thus making the cement industry largely regional in nature. Cement consumption varies region-wise because the
demand-supply balance, per capita income and level of industrial development differ in each state and consequently, in
each region.
In 2011-12, the South accounted for the largest share of consumption (around 27 per cent), followed by the West
(around 21 per cent), North (around 20 per cent), East (around 17 per cent) and the central region (around 16 per cent)
regions.
B - 40
Region-wise cement consumption
B - 41
6.0 Cost structure
Cost structure
The four major costs associated with cement production are:
1. Power and fuel costs
2. Raw material cost
3. Selling expenses
4. Other expenses
B - 43
1. Power and fuel
The cement industry is notably power intensive, with power and fuel cost accounting for around 30-35 per cent of the
total cost of sales of cement players. Coal is used to fire the kiln as well as to generate power for grinding the clinker.
Power requirement of cement plants varies in accordance with the heat treatment process used viz., dry process or wet
process. While the wet process requires almost 1,300-1,600 kcal/kg of clinker and 110-115 kwh of power to manufacture
1 tonne of cement, the dry process requires 750-950 kcal/kg of clinker and 120-125 kwh of power. Thus, although dry
process consumes more electricity, wet process consumes relatively more fuel and is therefore more energy intensive
than the former.
Power and fuel requirements in cement manufacturing process
Historically, a significant portion of the industry's power requirement was met through grid power supplied by the state
electricity boards. However, over the past 5 years, cement companies are increasingly opting for captive power plants in
order to reduce their cost of production and dependence on grid power. Since manufacturing cement is a continuous
process, frequent power cuts affect operating efficiency of cement players, acting as the main deterrent for dependence
on grid power. This is evident from the fact that the percentage of total power requirement met through captive power
has risen from around 48 per cent in 2004-05 to almost 65-68 per cent in 2011-12.
The Indian cement industry primarily uses fuels such as coal, pet coke and lignite to fulfill its fuel requirement. The
government allocates specific quotas for coal, on a sector-wise basis. However, such receipts prove insufficient for the
cement industry leading the players to resort to open market for meeting their incremental fuel requirements. In our
country, coal is primarily allocated to power and steel sectors; the cement industry only gets about 3-4 per cent of the
country's total production.
B - 44
Coal requirement versus coal allocation
2. Raw material
After power and fuel cost, raw material cost constitutes the second largest component in cement production. Raw
material cost accounts for around 25-30 per cent of cost of sales of players. Limestone accounts for the major raw
material cost. Cement plants are generally located near limestone quarries as limestone cannot be transported over long
distances. Limestone is essentially found in 10 clusters viz., Satna, Gulbarga, Chandrapur, Bilaspur, Chanderia,
Nalgonda, Yerraguntla, Saurashtra, Himachal Pradesh and Thiruchirapalli. Other raw materials used in the cement
industry include fly ash, slag, gypsum etc..
3. Selling expenses
Limestone availability is largely confined to its cluster regions. Moreover, limestone is considerably bulky in nature and
thus is cost inefficient to be transported over long distances. Consequently, cement manufacturing plants are largely
located in the vicinity of limestone reserves leading the end product to be transported over long distances in order to
reach its end-users. Since cement is a low value high volume commodity, freight costs constitute a significant proportion,
around 25-30 per cent, of the total cost of sales.
There are three major modes of transport used by the cement industry i.e. road, rail and sea, Rail is the preferred mode
of transport for long distance transportation owing to lower freight cost; however, availability of wagons and the extent of
last mile connectivity needs to be taken into consideration. Road transportation is beneficial for short distances and bulk
transportation as it minimises secondary handling and secondary freight costs. Sea mode is the cheapest source of
transportation. However, only coastal-based players can take advantage of this mode as they can transport clinker and
B - 45
cement more economically within the country and to other regions as well. Currently, road and rail collectively contributes
more than 95 per cent of the total dispatches in the country.
In order to control freight costs, companies strategically try to locate plants close to raw material sources and end-user
segments by opting for split location units. Therefore, companies set the clinker unit closer to limestone reserves while
setting up grinding units near markets as transporting clinker is more economical than transporting cement. In addition,
blending material like fly ash or slag may not be available near limestone reserves.
4. Other expenses
Other expenses include employee cost, administration expenses, repair and maintenance charges, etc. These account
for around 10-15 per cent of the cost of sales.
B - 46
7.0 Types of cement
Cement is classified into various categories based on its composition and specific end-uses. Primarily cement is
classified into Portland, blended and speciality cement.
Portland cement
Portland cement is the most common type of cement in general usage, as it is a basic ingredient of concrete. A mixture
of limestone and clay is ground and burnt at a very high temperature to form clinker. The clinker is ground to a fine
powder with the addition of gypsum (up to 5 per cent) to form Portland cement. The essential ingredients of Portland
cement are lime, silica, alumina and iron oxide.
There are different types of Portland cement, which differ based on their chemical composition. However, the
manufacturing process remains the same. Portland cement consists of tricalcium silicate or C3S, dicalcium silicate or
C2S, tricalcium aluminate or C3A, and tetracalcium aluminoferrite or C4AF [C = CaO - calcium oxide (calcia), S =
SiO2 - silicon dioxide (silica), A = Al2O3 - aluminium oxide (alumina), F = Fe2O3 - iron oxide (ferric oxide)]. The
varying proportion of these constituents imparts diverse properties to the different types of Portland cement.
Ordinary Portland Cement (OPC)

The Ordinary Portland Cement is popularly known as grey cement. Although OPC is suitable for all types of civil
engineering works, it cannot be used for mass concrete work like multi-storeyed buildings.
Moderate Heat Portland Cement (MHPC)

OPC, when mixed with water and allowed to hydrate, generates a lot of heat, which is not suitable for mass concrete
work. However, heat generated during hydration can be lowered by altering the chemical composition of the cement.
Such cement is called MHPC. This cement is more resistant to sulphate, as compared to OPC.
Rapid Hardening Cement (RHC)

Rapid hardening cement is a special purpose cement used for urgent repairs (such as airport runway repairs). It is similar
to OPC, except that it is ground much finer, so that the compressible strength increases rapidly upon casting. RHC or
high early strength cement develops compressive strength within 24 hours, as compared to 28 days in the case of OPC.
They generate more heat in the early stages and can be useful in concretisation in cold weather regions. However, their
principal use is in manufacturing pre-cast concrete units where the high early strength of the concrete permits quick re-
use of moulds and formwork.
Sulphate-resistant cement (SRC)

The compressive strength of concrete, which is made using OPC, MHPC and RHC, deteriorates on account of continued
contact with soil and water, which are rich in sulphates.
SRC is a type of Portland cement, which contains less than 5 per cent tricalcium aluminate (C3A) and other chemical
constituents are similar to OPC. SRC is used for marine construction or in places, which are rich in sulphates.
B - 47
Oil well cement (OWC)

This is a special kind of cement used during drilling of wells to fill the space between steel lining tubes and the wall of the
well. Oil wells are drilled at depths of 500 metres or more below the ground surface. After the drilling operation, wells are
lined with an annulus made of cement concrete. Since the temperature at these depths is over 1,000 degree Celsius, if
Portland cement grout is pumped into the well, it would set instantly, and obstruct the 'cementation' or setting process.
Hence, the cement used for lining oil wells, should be able to withstand the setting time by up to 40-120 minutes, and
thereafter, set within 24 hours. In addition, it should have strength of over 100 kg/cm. In OWC, the percentage of
tricalcium aluminate (C3A) is reduced to less than 3 per cent in its total composition in order to control/modify the setting
time. In India, according to the Bureau of Industrial Standards (BIS), there are nine types of OWC, depending on the type
of construction and the specific application.
White cement
Introduction
White cement has all the physical properties of ordinary Portland cement (OPC, which is also called grey cement), and
can be substituted for OPC. However, its use is limited to tiling, flooring or for decorative purposes as it is more
expensive.
White cement is produced under a fixed manufacturing process, with smaller quantities of iron and manganese. Although
white cement and grey cement have similar physical properties, they cannot be produced in the same plant. White
cement is mainly used to enhance the aesthetic value in tiles and for flooring. It is much more expensive than grey
cement.
OPC is grey in colour, due to the chemical complexes formed with iron oxide present in the cement raw meal. Moreover,
haematite, bauxite and limestone are heated using coal, which gives cement its dark colour. When the proportion of iron
oxide in cement is reduced to less than 0.4 per cent, cement becomes white in colour. Thus, the use of haematite is
minimised for manufacturing white cement, and it is replaced by pure silica or sand. Also, the clinker for white cement is
burnt using fuel oil instead of coal. Special cooling techniques are also used to manufacture white cement.
White cement in India

In India, white cement is primarily used as filler between ceramic tiles or for decorative purposes. For cement to retain its
whiteness, the ash content in coal has to be minimal. However, as the ash content of domestic coal is high, gas or oil is
used as a fuel to manufacture white cement. The white cement market in India is very small, as it is nearly three times
more expensive than grey cement. White cement is expensive because the usage of pure silica adds to the production
costs, this apart, freight costs are higher owing to the limited supply and spread-out markets. The excise duty on an ad
valorem basis and higher temperature (requiring more oil) further add to production costs.
Players
UltraTech Cement and JK Synthetics are the two major players in the white cement market. UltraTech's white cement
plant at Khangar in Rajasthan is the largest cement plant in India. The total installed capacity of white cement is around 1
million tonne.
B - 48
White cement - Capacity and production
Blended cement
In order to produce blended cement, certain natural or fabricated compounds, such as pozzolona, slag and sandstone,
are mixed with Portland cement clinker and ground finely. Blended cement is more suitable for certain applications as
compared to Portland cement.
Blended cement is also called low-heat cement as it generates lesser heat during hydration as compared with OPC. This
cement is used for large concrete works, such as dams and piers. Blended cement minimises the risk of developing
contraction cracks on account of the lower heat of hydration of these cements.
Portland blast furnace slag cement (PBFSC)

Blast furnace slag (a waste product of the pig iron furnace) can be used to produce slag cement. However, blast furnace
slag does not have cementitious properties if it is cooled slowly and ground finely. Hence, it is cooled quickly or
quenched and subsequently ground to acquire cementitious properties. The quenching process is called 'granulation',
and the slag is known as granulated blast furnace slag.
Granulated blast furnace slag is mixed with lime or OPC clinker and ground to form slag cement. Portland blast furnace
slag cement (PBFSC) is the most widely used slag cement, and contains 25-65 per cent of slag, 5-6 per cent of gypsum
and Portland cement clinker. Apart from having the properties of OPC, PBFSC has other properties, such as lower heat
of hydration and higher sulphate resistance.
Super sulphate cement, another type of slag cement, is prepared by grinding granulated slag, anhydrite and clinker (in
the proportion of 70:15:15). This cement is more sulphate-resistant, than PBFSC or SRC.
B - 49
Portland pozzolona cement (PPC)

Pozzolona is a clay matter (natural or synthetic), which when ground with lime/clinker and mixed with water, produces
cementitious compounds. Highly reactive pozzolona or fly ash is mixed with Portland cement clinker and ground with 5-6
per cent gypsum to form PPC. PPC contains up to 25 per cent pozzolona or fly ash. PPC has a lower heat of hydration,
as compared with OPC and is also relatively more resistant to sulphates. As a standard, fly ash can be used to the extent
of 15-35 per cent.
It has the physical properties of OPC, and hence, can be used for all types of construction work for which OPC is used.
However, in PPC, the shrinkage is lesser, as compared with OPC.
Masonry cement
Most varieties of cement, when mixed with sand and water get converted into mortar, which is coarse and not water
retentive. Masonry cement is a more plastic mortar and is used for masonry work, such as laying, binding and plastering
bricks. Portland clinker is ground with limestone, sandstone or granulated slag in the proportion of 1:1 to produce
masonry cement. Some quantities of hydrated lime and/or a plasticiser are added to impart higher plasticity.
Speciality cement
Speciality cements have several special properties and are used in specific applications.
Expansive cement/Shrinkage compensated cement

Concrete prepared from Portland cement or blended cement, shrinks on setting and hardening. Cement should expand
on setting and hardening when it is used for pre-stressed, pre-fabricated concrete products and as a grout for filling
cracks. This cement is prepared by increasing the proportion of gypsum and aluminous cement clinker to Portland
cement clinker while grinding.
Super high strength cement

This type of cement is required for the urgent repairs of important concrete structures, such as foundation pillars. This
cement is prepared in jet mills by finely grinding Portland cement clinker with a higher proportion of tricalcium silicate.
The tricalcium silicate content is around 60 per cent of the clinker and its fineness should be at least 600 kg/cm2.
Alinite cement
A special low-energy cement process has been developed to manufacture cement, in which, over 5 per cent calcium
chloride is added to the raw meal while grinding. As the burning point of raw meal is lowered significantly, less fuel is
required for burning. The calcium chloride is vapourised and condensed in the kiln dust, which is re-circulated. A part of
the chloride gets attached to the clinker components, and increases its compressive strength.
This process, which is still in its development stage, would be viable if sufficient byproduct waste and calcium chloride
are available at a low cost.
B - 50
Product mix - Shift from OPC to PPC
The cement industry has seen some major changes as far as production of various varieties i.e. OPC, PPC, PBFS is
concerned. The following graphs indicate the share of various types of cement in overall production in 2011-12 as
compared to 2005-06.
Variety-wise cement production
2005-06
2011-12
B - 51
It can be clearly seen from the above graph that cement producers have shifted from manufacturing OPC to increasing
production of blended cement in the last 5-6 years. The proportion of blended cement has increased from 60 per cent in
2005-06 to approximately 68 per cent in 2011-12, primarily due to better margins offered in PPC, growing acceptability in
the market and less pressure on the natural reserves of limestone.
B - 52
8.0 Ready mix concrete
Introduction
Ready mix concrete consists of cement, aggregates, water and other ingredients, which are weighed and batched at a
centrally located plant and directly placed at the construction site, without undergoing any further treatment. Operations
are carried in factory-like conditions and are completely automated. Hence, RMC is a value-added, semi-finished
product, and results in superior quality concrete.
RMC is used extensively in many countries, such as the US, Australia, New Zealand and England, where 70-95 per cent
of all the concrete comes from central batch plants. In India, a few large projects have operated RMC plants for many
years. However, the first commercial RMC plant was set up in 1992 at Pune.
Demand
Main factors influencing domestic demand for RMC:
Consumer (contractors and engineers) education by RMC suppliers

Competitive pricing of RMC could lead to higher offtake, if the price difference between RMC and SMC (site
mixed concrete) is reduced
Emergence of high cement consuming centres around the metro cities
Increasing quality consciousness of the user segment
Entry of multinational construction agencies and foreign consultants
Entry of private players in infrastructure projects (RMC demand from sub-contractors is likely to improve, if the
government sub-contracts infrastructure construction projects on a turnkey basis to contractors, who are
responsible for material supplies)
Increased supply of the product would result in higher offtake. At present, there are very few RMC suppliers in
India.
Process
Cement is stored in silos, and aggregates (sand and stone chips) are stored in stockpiles or hoppers. These are then
transported to an elevated tower for batching. The batched materials are then fed into the mixer, where they are mixed at
a regulated speed, in order to obtain the concrete mix of the desired quality.
Plant and equipment

A typical RMC facility includes a central batching and mixing plant, revolving transit mixers, and concrete pumps and
conveyors.
The following operations are carried out at the central batching and mixing plant:
Storage of materials
Weighing as per the required proportion mix
Discharging the weighed materials to the mixer
Mixing
B - 53
Batching and control operations are completely automated. A batching and mixing plant can store around 100 mixes (a
mix is a particular proportion of cement and aggregates).
The revolving transit mixer could be a truck mixer or truck agitator, which is used to transport RMC to the construction
site. The mixer continuously agitates the mix to prevent early stiffening.
Concrete pumps and conveyors are used to pump concrete at the construction site.
The daily output of a RMC plant is not directly dependent on the capacity of the batching unit. Instead, it is influenced by
the per truck capacity, the number of trucks and the daily number of trips. The daily number of trips is determined by the
transport time, which depends on the distance between the RMC plant and construction site, transportation bottlenecks
and road conditions. In general, three round trips are undertaken daily.
Types of RMC
There are two types of RMC:
Central mixed RMC

o Mixing is done at the central plant. The mixed concrete is transported in an agitator truck, which
revolves slowly, in order to prevent segregation and early stiffening of the mix. In most developed
countries, 70-95 per cent of all concrete comes from central batch plants.
Transit mixed RMC
o The materials are batched at the central plant. However, they are mixed in a mixer truck at the site or
mixed immediately before the concrete is discharged.
Advantages of RMC
RMC offers certain advantages over site mixed concrete (SMC)
Quality control: RMC ensures quality (in terms of strength, durability and performance), as all the constituents
are weighed in the required proportions and mixed at the RMC unit. This is especially useful for projects that
require high quality control. Moreover, the quantity of additives (fly ash, plasticisers and retarders) can be
monitored in order to ensure superior quality of the cement.
Faster speed of construction: This is due to the continuous mechanised operations, which is especially
important for large, time-bound construction projects.
Eco-friendly: RMC is considered to be a 'clean product' due to the absence of used cement bags and dust at the
construction site.
Convenience for congested sites: RMC eliminates the need to stockpile the raw materials, which are used to
make concrete at the project site.
Lower wastage: Cement wastage is minimised due to bulk handling and storage.
Simplifies procurement and storage of raw materials: The user is relieved of logistics of supply and storage of
multiple raw materials at the site.
Reduces manpower requirements: Manpower expenses are reduced due to lower labour and supervisory
requirements.
B - 54
Range of concrete grades: The RMC plant has the flexibility to manufacture a wide range of concretes, due to
the computerised batching process.
Correct proportions of ingredients: Computerised batching operations result in accurate proportions for the
various raw materials.
RMC market in India

RMC is still in a very nascent stage in India, as relatively small percentage of cement production is converted into RMC,
as against more than 50 per cent in the major developed countries. As of 2009, capacity of the RMC industry in
India was 21,739 cubic meters per hour.
The growth of RMC is predominantly driven by the demand in metro cities. Bengaluru is the largest market for RMC
owing to the many construction activities in the city (IT campuses, flyovers and government sponsored infrastructure
projects). Bengaluru continues to lead the consumption of RMC in the country. High consumption in Bengaluru has led
cement majors like ACC Ltd, RMC Ltd, Grasim Industries and L&T to set up RMC plants in the city.
Reasons for retarded growth in RMC consumption

Initial controls on cement pricing and distribution did not benefit the RMC business owing to the shortage of cement
(cement is an important component of RMC). Besides having easy access to cement, RMC also requires technical
competence to manufacture the concrete (to ensure mixes with the desired properties). Presently, the usage of RMC is
restricted because of its higher price vis-a-vis SMC, and the inadequate facilities at construction sites to utilise RMC
effectively. In addition, in India, labour is less expensive as compared to developed countries. As a result, most medium
and small-scale builders opt for the conventional method of SMC. Logistics proves to be another hurdle for RMC, as it is
difficult for RMC trucks to pave through small and narrow roads where the building is being raised. These agitator trucks
being very huge, occupy a large part of the road, causing traffic bottlenecks. Apart from this, the additional taxes on RMC
also prove to be an impediment.
New marketing initiatives also need to be undertaken because either users are unaware of the product or are not
convinced of its benefits. This is important as RMC supply should match the potential demand. If the supply is less than
the demand, there is a potential loss of business. However, if supply exceeds demand, the per unit cost of concrete
increases due to idle capacity. Moreover, RMC is considered economically viable only if it is sold within a radius of 30-40
km from the plant. If the distance between the plant and construction site is more, the wet concrete would harden in the
mixer itself.
The only positive development has been the mandatory usage of RMC in time-bound projects.
Essential requirements to set up new plant
Adequate water supply at the plant site. If potable water is not available in and around the location of the plant,
water has to be transported from distant locations, thereby pushing up costs further.
Projects for concrete consumption around the site.
B - 55
Players
UltraTech Ltd, RMC Readymix (India) Pvt Ltd, Grasim Industries, and ACC are the large players in the domestic RMC
market.
B - 56
9.0 Player Profiles
ACC Ltd
Background
Year of inception 1936
Plant locations Orissa, Jharkhand, Maharashtra, West Bengal, Himachal Pradesh,
Chhattisgarh, Madhya Pradesh, Rajasthan, Tamil Nadu, Karnataka and
Uttar Pradesh
Key markets Pan-India presence
Year-ending Dec-31
Company description
ACC was formed in 1936 by amalgamating 10 cement companies promoted by the Tata, Khatau,
Dinshaw and Kellick families. Currently, Ambuja Cement India Pvt. Ltd,and Holcim, holds more than 48
per cent of the company's equity. ACCs core business is cement. It is present in the ready mix
concrete (RMC) business too. It also provides consultancy services, plant erection and plant
management contracts. ACC's operations are spread throughout the country with 14 modern cement
factories. ACC also has a subsidiary called ACC Concrete Ltd which has over 30 RMC plants all across
India. During the year 2010, company has acquired 100 per cent stake in Encore Cement and Additive
Pvt. Ltd. and 45 per cent stake in Asian Concretes and Cements Pvt. Ltd. Encore cement is engaged in
manufacturing and supply of ground slag and Asian Concretes is in cement manufacturing business.
Shareholding pattern % of total

as of Dec 31, 2012 shares
Promoters holding 50.3
Institutions 30.3
Mutual funds/UTI 2.0
Banks, FIs,Insurance Cos. 8.3
Central and state government 0.2
Foreign institutional investors 20.0
Non-institutions 19.4
Shares held by custodians 0.0
Total 100.0
B - 57
Financials (Rs Million) Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

Operating Income 70456.8 74385.1 81665.3 78631.3 95565.7
Cost of sales 50449.4 55657 55438.5 61172.5 77271
Raw material cost & Stores consumed 14,242 14,761 14,597 17,584 21,997
Power and fuel cost 11,946 15,990 15,397 15,987 21,832
Selling and distribution cost 11,179 12,010 12,554 12,568 16,204
Employee cost 3,527 4,130 3,677 4,619 5,257
Other operating costs 9,555 8,765 9,213 10,415 11,982
Operating profit 20007.4 18728.1 26226.8 17458.8 18294.7
Interest & Financial Charges 666 398 631 387 797
Depreciation 3,054 2,942 3,421 3,927 4,753
Non-operating income 944 1,143 945 1,048 2,066
Extra/Prior period 2,374 843 (164) 1,248 2,874
PBT 19605.6 17373.9 22956.6 15441.6 17685.4
Tax 5,224 5,246 6,889 4,242 4,433
PAT 14381.9 12127.9 16067.3 11200.1 13252.6
Key financial indicators
OPM Per cent 28.4 25.2 32.1 22.2 19.1
NPM Per cent 20.4 16.3 19.7 14.2 13.9
ROCE Per cent 45.1 33.9 37.4 22.2 23.8
ROE Times 39.6 26.9 29.5 18.0 19.4
Gearing Times 0.1 0.1 0.1 0.1 0.1
NCA/DEBT Times 4.3 2.2 2.5 1.6 2.3
Current ratio Times 1.3 1.0 1.0 1.1 1.1
Operational information Unit Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Capacity mtpa 22.4 22.6 26.2 27.1 28.7

Production mtpa 19.9 20.8 21.4 21.1 23.5
Operating rates per cent 88.9 92.1 81.7 78.1 81.8
Net realisations Rs per tonne 3,537 3,570 3,822 3,719 4,074
Cost of sales Rs per tonne 2,532 2,671 2,594 2,893 3,294
Financial parameters Unit Oct-Dec

2012 2011
Net sales Rs. Million 31,796 25,552
Operating profit Rs. Million 3,979 4,418
Net profit Rs. Million 2,392 4,704
Operating margin Per cent 12.5 17.3
Net Margin Per cent 7.5 18.4
B - 58
Break-up of sales
Source: CRISIL Research, Company
B - 59
Ambuja Cements Ltd
Background
Plant locations Gujarat, Chhattisgarh, Punjab, Himachal Pradesh, West Bengal,
Maharashtra, Rajasthan, Uttarakhand
Key markets North India, West India and East India
Year ending Dec-31
Company description
Gujarat Ambuja Cements was promoted as Joint Venture, in 1981, between Gujarat Industrial
Investment Corp and N S Sekhsaria The company predominantly operates in the Northern and
Western markets of India. It has a strong presence in Maharashtra, particularly in the lucrative Mumbai
market.The company also caters to the overseas market and was the largest exporter of cement from
India in 2007-08. In January 2006, Swiss-based global cement giant Holcim purchased 14.8 per cent
stake in Ambuja Cement from its promoters. The deal amounted to Rs 2,100 crore, translating into a
consideration of Rs 105 per share.The Holcim group held 45.4 per cent stake in the company as of
March 2011. Ambuja Cement has recently acquired 85 per cent stake in Nepal`s Dang Cement
Industries Pvt. Ltd.

As of Dec 31, 2012 shares
Institutions 38.3
Banks, FIs, Insurance Cos. 7.9
Total 100.0
B - 60
Financials (Rs million) Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Operating Income 56,907 61,975 71,181 74,205 85,122
Cost of sales 36,072 43,832 51,598 54,900 65,145
Raw material cost & Stores Consumed 9,598 12,431 17,595 15,211 18,360
Employee cost 2,095 2,669 2,832 3,449 4,349
Operating profit 20,835 18,143 19,583 19,305 19,977
Interest & Financial Charges 418 411 224 216 286
Depreciation 2,368 2,606 3,039 3,893 4,453
Non-operating income 4,436 1,569 768 2,248 2,304
Extra/Prior period 2,486 3,005 947 106 695
PBT 24,971 19,701 18,035 17,551 18,238
Tax 7,369 5,678 5,851 4,915 5,949
PAT 17602 14023 12184 12636 12289
OPM Per cent 36.6 29.3 27.5 26.0 23.5
NPM Per cent 30.9 22.6 17.1 17.0 14.4
ROCE Per cent 50.4 34.5 27.3 23.7 22.2
ROE Times 43.3 27.3 20.2 18.4 16.0
Gearing Times 0.1 0.1 0.0 0.0 0.0
NCA/DEBT Times 4.2 4.4 6.6 18.3 22.4
Operational information Unit Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

Capacity mtpa 18.5 22.0 22.0 25.0 27.4
Production mtpa 16.9 17.8 18.8 20.1 21.0

2012 2011
B - 61
Break-up of sales
Source: Company, CRISIL Research
B - 62
India Cements Ltd
Background
Plant locations Andhra Pradesh, Tamil Nadu
Key markets South India
Year ending Mar-31
Company description
India Cements Ltd came into existence in 1946 and is a part of the India Cement Group
with diversified businesses covering power generation, real estate, textiles and clinker
sales. India Cement is the largest cement manufacturer in South India with an annual
installed capacity of 14 million tonnes as on March 2011. Cement manufactured by India
Cements is marketed under the brand names of 'CoromandelKing', 'Sankar Sakti' and
'Rassi Gold'.

Institutions 47.7
Total 100.0
B - 63
Financials (Rs million) Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

Revenues 30,561 32,265 36,851 34,117 42,080
Cost of sales 19,603 22,980 29,412 30,611 32,949
Raw material cost 3,858 4,027 6,015 6,350 6,765
Employee cost 2,278 2,336 3,062 2,819 3,175
Interest 1,099 1,916 1,426 1,417 2,900
Depreciation 1,279 2,063 2,361 2,470 2,513
Non-operating income 599 1,147 1,631 1,251 92
PBT 9,178 6,453 5,283 869 3,810
Tax 2,803 2,161 1,770 218 880
Net profit 6,375 4,292 3,514 651 2,930
OPM Per cent 35.9 28.8 20.2 10.3 21.7
NPM Per cent 20.9 13.3 9.5 1.9 7.0
ROCE Per cent 25.6 18.3 12.8 4.1 11.3
ROE Times 29.0 16.7 11.2 2.1 8.8
Gearing Times 0.8 0.8 0.7 0.8 0.7
NCA/DEBT Times 0.4 0.3 0.2 0.1 0.2
Operational information Unit Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

Capacity mtpa 8.8 13.0 14.1 14.1 14.1
Production mtpa 9.2 9.1 10.5 10.0 9.5

2012 2011
Net profit Rs. Million 261 563
B - 64
Break-up of sales
B - 65
Cement dispatches by states
B - 66
Jaiprakash Associates Ltd
Background
Plant locations Madhya Pradesh, Uttar Pradesh, Haryana
Key markets Central India and North India
Year ending Mar-31
Company description
Jaiprakash Associates Ltd (JAL) is a part of the Jaypee Group, which was promoted in 1996. It was
formerly known as Jaypee Cement Ltd with its operations mainly in cement production. Presently
based in Lucknow, JAL is involved in the Engineering and Construction, Cement and Hospitality
businesses. Its cement business is progressing steadily with brands like Buland. JAL's key markets
are Uttar Pradesh and Madhya Pradesh.

Institutions 35.9
Mutual Funds/UTI 8.5
Total 100.0
B - 67

Revenues 39,883 57,898 99,958 127,865 128,017
Cost of sales 27,847 39,635 75,688 97,684 92,599
Employee cost 2,645 3,551 6,838 6,177 7,359
Interest 3,809 5,823 11,512 15,032 18,828
Depreciation 2,102 3,220 4,714 6,192 6,142
Non-operating income 2,309 3,369 15,812 8,729 2,696
PBT 8,434 12,589 23,856 17,686 13,145
Tax 2,337 3,540 6,733 6,008 2881
Net profit Unit 6,097 9,050 17,123 11,678 10,264
OPM Per cent 30.2 31.5 24.3 23.6 27.7
NPM Per cent 15.3 15.6 17.1 9.1 8.0
ROCE Per cent 9.8 9.5 13.6 10.7 9.3
ROE Times 15.7 14.7 21.0 12.8 8.5
Gearing Times 2.2 2.1 2.2 2.4 1.8
NCA/DEBT Times 0.1 0.1 0.1 0.1 0.1
Operational information Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

Cement capacity mtpa 7.0 14.1 19.1 21.5 33.3
Cement production mtpa 6.8 7.6 10.5 14.7 13.3
Cement operating rates per cent 96.8 93.0 55.1 68.3 39.9
Net realisations Rs/tonne 5,885 7,584 9,505 8,713 9,625
Cost of sales Rs/tonne 4,109 5,192 7,197 6,656 6,962
Note: JAL has exposure to businesses other than cement as well

2012 2011
B - 68
Break-up of sales
B - 69
B - 70
Madras Cements Ltd
Background
Plant locations Tamil Nadu, Andhra Pradesh, Karnataka
Year ending Mar-31
Company description
Madras Cements Ltd (MCL) was established in 1957. The company, a part of the Ramco Group,
is based at Rajapalayam, Tamil Nadu, and is the secong-largest cement producer in South India
after India Cements. Blended cement accounts for an average 90 per cent of the company's total
production. Its presence in the South is particularly confined to Kerala and Tamil Nadu. Apart
from cement, which constitutes almost 96 per cent of sales, the company also produces
readymix concrete and dry mortar products. The company exports cement and clinker to South
Africa, Sri Lanka, Bangladesh and the Gulf countries.

Institutions 29.5
Banks, FIs, insurance cos. 6.8
Total 100.0
B - 71

Revenues 20,075 24,316 27,839 26,110 32,667
Cost of sales 12,483 15,869 18,968 19,375 22,923
Employee cost 1,110 1,387 1,652 1,696 2,006
Other operating costs 416.8 116.8 647.9 699 1304
Interest 526 1,710 1,706 1,621 1,693
Depreciation 963 1,340 1,914 2,218 2,539
Non-operating income 65 57 53 77 63
PBT 6,168 5,454 5,304 2,973 5,574
Tax 2,085 1,819 1,768 863 1,723
Net profit 4,083 3,635 3,537 2,110 3,851
OPM Per cent 37.8 34.7 31.9 25.8 29.8
NPM Per cent 20.3 15.0 12.7 8.1 11.8
ROCE Per cent 25.9 19.3 17.1 10.2 15.3
ROE Times 42.9 29.2 23.0 12.4 19.3
Gearing Times 1.7 2.0 1.7 1.6 1.1
NCA/DEBT Times 0.3 0.2 0.2 0.1 0.3

Capacity mtpa 8.0 10.0 10.5 10.5 10.5
Production mtpa 5.8 6.5 8.0 7.3 7.5

2012 2011
B - 72
Break-up of sales
B - 73
B - 74
Shree Cement Ltd
Background
Plant locations Rajasthan, Haryana
Key markets North India
Year ending Mar-31
Company description
Shree Cement Ltd (SCL) is a part of the GD Bangur Group. The company began commercial
production in 1985. The cement plant of the company is situated at Beawar at Ajmer in
Rajasthan. SCL is the second-largest cement producer in North India after ACC. The company
mainly caters to the North Indian market with Rajasthan, Delhi and Haryana being its prime
markets. Other markets where it sells cement include Punjab, Western Uttar Pradesh and
Uttaranchal. It manufactures ordinary portland cement and pozzolana portland cement. Brands
under which cement is marketed include "Shree Ultra Cement" with different grades like 33, 43
and 53 and sub-brand names like "red oxide cement", "jung rodhak cement".

Institutions 13.0
Total 100.0
B - 75

Revenues 20,940 27,060 36,213 34,911 60,658
Cost of sales 12,455 17,829 21,216 26,520 44,307
Raw Material cost 3,197 4,502 6,214 7,631 14,209
Employee cost 790 1,134 1,586 1,985 3,195
Interest 762 774 1,433 1,775 2,366
Depreciation 4,788 2,059 5,736 6,758 8,731
Non-operating income 604 830 1,002 1,837 956
PBT 3,539 7,229 8,829 1,694 7,625
Tax 935 1,449 2,068 (403) 1,440
Net profit 2,604 5,780 6,761 2,097 6,185
OPM Per cent 40.9 34.1 41.4 24.0 27.0
NPM Per cent 12.4 21.4 18.7 6.0 10.2
ROCE Per cent 22.1 29.9 26.1 9.0 22.9
ROE Times 38.7 47.9 37.0 10.7 22.7
Gearing Times 1.9 1.2 1.2 1.0 0.6
NCA/DEBT Times 0.6 0.5 0.6 0.4 0.8

Capacity mtpa 6.8 6.8 9.1 13.5 13.5
Production mtpa 6.3 7.8 9.4 9.4 14.2

2012 2011
Net profit Rs. Million 2,174 592
B - 76
Break-up of sales
Source : Company, CRISIL Research
B - 77
Source : Industry, CRISIL Research
B - 78
Ultratech Cement Ltd
Background
Plant locations Andhra Pradesh, Chhattisgarh, Gujarat, Haryana, Karnataka,
Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan,
Uttar Pradesh, West Bengal, Tamil Nadu
Key markets Pan India
Year ending Mar-31
Company description
UltraTech Cement Ltd (UCL) was incorporated in 2000 as L & T Cement Ltd. In 2004, AV Birla
Group Company-Grasim Industries Ltd acquired management control and named it UltraTech
Cement Ltd. In July 2010, Grasim separated its cement division i.e. Samruddhi Cement and
merged it with Ultratech Cement . UCL produces different varieties of cement, namely, ordinary
Portland cement, Portland blast furnace slag cement and Portland pozzolana cement. After
consolidation with Samruddhi Cement division, Ultratech has a strong foothold in almost all the
markets in India.

Institutions 24.8
Total 100.0
B - 79

Revenues 54,821 63,533 70,019 132,997 184,106
Cost of sales 37,627 46,250 50,293 106,478 141,849
Power and Fuel cost 12,551 17,291 14,324 30,778 42,480
Employee cost 1,676 2,177 2,530 6,652 8,353
Interest 866 1,537 1,196 2,622 2,885
Depreciation 2,297 3,190 3,869 7,601 8,867
Non-operating income 995 1,058 1,222 2,793 3,524
PBT 15,028 13,615 15,883 19,088 34,029
Tax 4,952 3,844 4,951 5,046 9,567
Net profit 10,076 9,770 10,932 14,042 24,462
OPM Per cent 31.4 27.2 28.2 19.9 23.0
NPM Per cent 18.4 15.4 15.6 10.6 13.3
RoCE Per cent 35.8 26.4 27.5 14.5 20.1
ROE Times 37.4 27.2 23.8 13.2 19.0
Gearing Times 0.7 0.6 0.4 0.1 0.3
NCA/DEBT Times 0.7 0.6 0.9 1.5 0.8

Capacity mtpa 18.2 21.9 23.1 48.8 48.8
Production mtpa 15.1 15.9 17.6 32.9 39.8
Note: 2010-11 reflects post merger numbers of Samruddhi and Ultratech Cement

2012 2011
B - 80
Break-up of sales
B - 81
B - 82
Binani Cement Ltd
Binani Cement Ltd

Background
Plant locations Rajasthan
Key markets North India
Year ending Mar-31
Company description
Binani Cement Ltd is the subsidiary of Binani Industries Ltd, the flagship company of Braj Binani
group, incorporated in 1996. The company produces ordinary portland cement and pozzolana portland
cement. It has a fully integrated plant at Sirohi in Rajasthan. In 2008-09, the company expanded its
capacity from 2.2 million tonnes to 6 million tonnes. The company markets its cement under the
'Binani Cement' brand.

as of September 30, 2011 shares
Institutions 2.4
Banks, FIs,Insurance cos. 1.9
Foreign Institutional Investors 0.4
Total 100.0
B - 83
Financials (Rs million) Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

Revenues 6,742 9,566 14,814 18,495 17,215 20,315
Cost of sales 4,408 6,149 11,607 12,706 14,499 17,085
Raw Material cost 813 598 1,637 3,000 2,779 3,313
Power and fuel cost 1,420 2,356 5,360 4,299 5,130 6,026
Selling and distribution cost 1,626 2,317 3,449 3,947 4,799 4,918
Employee cost 188 255 295 345 413 500
Other operating costs 361.6 623.8 865.6 1115.6 1378.6 2328.7
Operating profit 2,334 3,417 3,207 5,789 2,717 3,230
Interest 329 465 974 838 1,051 1,770
Depreciation 437 564 803 917 995 1,036
Non-operating income -3 496 116 53 269 107
PBT 1,566 2,884 1,546 4,088 940 532
Tax 610 1,126 459 1,269 32 48
Net profit 956 1,758 1,087 2,819 908 484
OPM Per cent 34.6 35.7 21.7 31.3 15.8 15.9
NPM Per cent 14.2 18.4 7.3 15.2 5.3 2.4
ROCE Per cent 19.1 28.2 20.1 29.8 11.0 11.2
ROE Times 31.7 42.1 23.0 42.0 15.8 7.5
Gearing Times 2.3 1.8 1.7 1.5 2.2 1.9
NCA/DEBT Times 0.1 0.2 0.2 0.3 0.1 0.1
Current ratio Times 0.9 0.9 0.6 0.9 0.9 1.0
Operational information Unit Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

Capacity mtpa 2.3 6.0 6.0 6.3 6.3 -
Production mtpa 2.4 3.0 4.3 5.3 5.5 -
Operating rates per cent 107.9 49.3 71.5 84.5 87.3 -
Net realisations Rs per tonne 2,777 3,234 3,451 3,503 3,154 -
Cost of sales Rs per tonne 1,816 2,079 2,704 2,406 2,656 -
B - 84
Break-up of sales
B - 85
B - 86
Birla Corporation Ltd
Background
Plant locations Madhya Pradesh,Rajasthan,Uttar Pradesh,West Bengal
Key Markets North India, East India
Year ending Mar-31
Company description
Birla Corporation Ltd., incorporated in 1919, is the flagship company of the M P Birla
group. Cement manufactured by the company is marketed under the brand names of Birla
Cement Samrat, Birla Cement Chetak and Birla Cement Khajuraho. The company mainly
caters to the Northern, Eastern and Central markets in India and has seven cement plants
located at West Bengal, Rajasthan, Uttar Pradesh and Madhya Pradesh, with an annual
installed capacity of 6.1 million tonnes.

Institutions 20.7
Central & State Government 0.0
Foreign Institutional Investors 4.7
Total 100.0
B - 87

Revenues 17,045 17,767 21,361 21,247 22,753
Cost of sales 11,213 13,317 14,134 16,758 19,113
Power & Fuel cost 3,283 3,682 3,821 4,599 5,331
Selling & distribution cost 2,141 2,581 2,880 3,263 3,500
Employee cost 1,415 1,498 1,464 1,745 2,134
Other operating costs 945.6 1115.7 1343.3 1316.3 1480.6
Interest 225 245 279 620 656
Depreciation 414 434 556 648 800
Non-operating income 320 594 1,216 1,156 1,277
PBT 5,512 4,365 7,608 4,377 3,461
Tax 1,576 1,130 2,036 1,178 1,069
Net Profit 3,936 3,235 5,572 3,199 2,392
OPM Per cent 34.2 25.1 33.8 21.1 16.0
NPM Per cent 23.1 18.2 26.1 15.1 10.5
ROCE Per cent 47.1 30.7 32.5 16.8 11.7
ROE Times 39.5 25.3 31.3 15.6 10.7
Gearing Times 0.2 0.2 0.4 0.5 0.5
NCA/DEBT Times 1.8 1.5 0.9 0.4 0.2

Capacity mtpa 5.8 5.8 6.1 6.1 6.1
Production mtpa 5.3 5.3 5.7 5.9 5.9

2012 2011
Operating profit Rs. Million 594 723
B - 88
Break-up of sales
B - 89
B - 90
Dalmia Cement Bharat Ltd
Background
Plant locations Andhra Pradesh, Tamil Nadu
Year ending Mar-31
Company description
Dalmia Cement, a part of the Dalmia group, was incorporated in 1951. In September 2010, the
company split its cement and sugar business. While Dalmia Bharat Enterprises Ltd. (DBEL)
holds cement and power businesses, the company's sugar business is under Dalmia Bharat
Sugar & Industries Ltd. Further, Dalmia Cement Bharat Ltd. (DCBL) is a 85 per cent subsidiary
of DBEL. DBEL has a capacity of around 8 million tonnes in South India and is one of the
prominent players in the region along with India Cements & Madras Cements.

Institutions 12.2
Banks, FIs, Insurance cos. 3.0
Total 100.0
Note: Shareholding pattern is for the holding
company DBEL
B - 91
Financials (Rs million) Mar-11 Mar-12

Revenues 16769 22,880
Cost of sales 13489 17,497
Raw material cost 2450 3,117
Power and fuel cost 5527 7,090
Selling and distribution cost 3156 3,708
Employee cost 756 1,041
Other operating costs 1600.4 2,542
Operating profit 3280 5,383
Interest 1708 1,563
Depreciation 1540 1,604
Non-operating income 358 348
PBT 390 2,564
Tax 427 1,024
Net profit (36) 1,543
OPM Per cent 19.6 23.5
NPM Per cent -0.2 6.7
RoCE Per cent 4.7 8.9
RoE Times -0.1 5.7
Gearing Times 0.7 0.67
NCA/DEBT Times 0.1 0.16
Current ratio Times 2.9 4.33
Operational information Unit Mar-11 Mar-12

Capacity mtpa 8.2 8.2
Production mtpa 4.7 5.4
Operating rates per cent 56.9 65.6
Net realisations Rs per tonne 3,593 4,253
Cost of sales Rs per tonne 2,891 3,252
Note: Financials are for the cement subsidiary DCBL
B - 92
DCBL- Break-up of sales
B - 93
B - 94
Industry Statistics
Sections
1.0 Dem and Suppl y C-1
2.0 Costs C-7
3.0 Profitability C-1 3
4.0 Duties and Ta rrifs C-1 7
5.0 Com pany fina ncials C-2 1
i
1.0 Demand Supply
u
Playerwise operating rates (based on the installed capacity)

(per cent) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC 1 93.2 94.1 88.9 92.1 81.7 78.9 81.8
2
Ambuja Cement 96.3 95.4 91.1 80.7 85.6 80.5 76.7
Andhra Cements 52.7 36.1 108.4 82.8 69.7 15.5* -
Binani Cement 102.8 107.9 49.3 71.5 84.5 87.3 89.4
Birla Corp 89.1 90.9 91.3 91.5 93.9 97.6 102.2
Century Textiles 105.3 99.3 88.4 92.5 97.2 98.7 96.9
Chettinad Cement 118.0 134.2 145.3 78.7 61.6 53.7 60.5
Dalmia Cement (Bharat) 44.8 78.2 94.1 52.1 49.7 56.9 59.9
Heidelberg Cement 97.6 75.8 101.5 78.7 86.6 85.8 91.3
India Cements 94.4 98.8 104.8 70.4 74.7 71.0 67.4
JK Lakshmi Cement 111.0 83.7 93.8 77.9 87.6 82.0 88.9
JP Associates 84.4 95.4 96.8 51.9 55.1 68.3 40.1
KCP 106.3 91.7 111.7 109.1 122.4 110.0 52.5
Kesoram Inds 107.6 76.7 84.5 102.6 75.9 74.9 68.4
Lafarge 85.8 93.9 96.6 104.1 119.9 - -
Madras Cements 78.7 94.6 73.2 65.3 76.5 69.6 71.7
Mangalam Cement 158.0 68.0 150.7 84.8 81.8 75.7 81.7
OCL India 87.9 93.8 100.0 50.2 56.7 63.7 57.6
Shree Cement 117.5 101.6 92.9 113.8 91.9 69.8 82.3
Ultratech Cement 78.4 86.1 82.8 72.4 76.4 67.5 80.9
All India 3 85.9 92.2 95.3 87.8 84.8 77.3 73.6
Note
1
Production for the 2005-06 is for 9 months
2
Production for the 2006-07 is for 18 months
3
All India operating rates are based on effective capacity
ACC, Ambuja Cement and Heidelberg Cement are December ending company
Mangalam Cement and Andhra Cements were September ending company till 2006, and then
changed to March year ending
Grasim cement division has merged with Ultratech Cement during the year 2010-11
* Andhra Cements Operating rates for the 2010-11 is for 15 months
Source: Company reports, Industry and CRISIL Research
C-1
C-2
C-3
C-4
C-5
2.0 Costs
Playerwise coal consumption

Units 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC kCals per kg of clinker 739.0 736.0 752.0 754.0 746.0 750.0 742.0
Ambuja Cement kCals per kg of cement 715.0 730.0 742.0 744.0 755.0 750.0 739.0
Andhra Cements per cent of clinker 25.0 25.0 27.0 26.0 24.0 20.0
Binani Cement tonnes per tonne of cement n.a. 0.1 0.1 0.1 0.1 0.1 0.1
Birla Corp tonnes per tonne of cement n.a. 0.1 0.1 0.1 0.1 0.1 0.1
Century Textiles tonnes per tonne of cement 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Chettinad Cement tonnes per tonne of cement 10.2 10.4 10.7 10.8 12.0 - -
Dalmia Cement (Bharat) tonnes per tonne of cement - - - - - 1020.0 970.0
India Cements tonnes per tonne of clinker n.a. n.a. 15.6 16.9 16.4 15.8 16.21
JK Lakshmi cement tonnes per tonne of cement 0.1 0.1 0.1 0.1 0.1 0.1 -
JP Associates per cent of clinker 14.0 14.0 14.0 15.0 14.0 14.0 14.0
KCP tonnes per tonne of cement 0.2 0.2 0.2 0.2 0.2 0.4 0.3
Madras Cements per cent of clinker 11.5 12.9 14.1 14.2 14.2 14.0 12.2
Mangalam Cement tonnes per tonne of cement 0.3 0.3 0.2 0.2 0.3 0.3 0.2
OCL India tonnes per tonne of cement 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Rain Commodities tonnes per tonne of cement - - 16.8 16.9 15.3 14.0 -
Shree Cement per cent of clinker 10.4 11.7 11.3 10.8 10.6 11.7 -
Shree Digvijay KCals per kg of clinker 779.0 781.0 792.0 802.0 811.0 835.0 854.0
Ultratech Cement Ltd kCals per kg of cement - - - - 709.0 708.0 711.0
Note:
ACC, Ambuja Cement, Rain Commodities and Shree digvijay Cements are December ending company
Mangalam Cement and Andhra Cements w ere Septemeber ending company till 2006, and then changed to March
year ending
Grasim cement division has merged w ith Ultratech Cement during the year 2010-11
Source: Com pany reports and CRISIL Research
C-7
Playerwise coal costs

(Rs/tonne of cem ent) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC 268 276 334 404 407 396 523
Ambuja Cement 274 315 307 395 392 444 536
Andhra Cements 381 381 483 619 413 326 -
Binani Cement n.a 391 612 1033 615 654 747
Birla Corp 364 430 492 535 506 572 699
Century Textiles 326 341 388 674 724 739 978
Chettinad Cement 405 384 491 727 756 909 1077
Dalmia Cement (Bharat) - - - - - 694 -
India Cements 395 381 471 693 626 687 786
Jaiprakash Associates 342 940 468 557 735 796 962
JK Lakshmi Cement 307 299 538 719 544 821 641
KCP 406 - 538 752 534 763 979
Madras Cements 281 288 435 595 442 522 597
Mangalam Cement 476 261 489 535 805 898 937
OCL India 201 194 226 300 344 421 -
Shree Cement 253 302 380 527 437 613 -
Ultratech Cement Ltd 328 396 463 754 616 764 895
Note:
ACC, Ambuja Cement are December ending company
Mangalam Cement and Andhra Cements w ere September ending company till 2006, and then changed
to March year ending
* Andhra Cements Coal cost for the 2010-11 is for 15 months
Source: Com pany reports, Industry and CRISIL Research
C-8
Playerwise Limestone Cost
(Rs/tonne of lim estone) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC 42.7 46.0 86.6 - - - -
Ambuja Cement - - - - 460.8 443.1 567.1
Andhra Cements 98.6 109.0 111.6 128.9 139.9 n.m. -
Binani Cement 80.1 91.2 80.5 81.9 92.6 102.1 -
Birla Corp 125.8 130.5 135.7 145.0 176.8 200.7 -
Century Textiles 126.8 131.8 136.9 137.3 161.3 176.5 -
Chettinad Cement 180.5 234.8 303.6 241.1 213.2 - -
Dalmia Cement (Bharat) - - - - - 153.2 -
Heidelberg Cement 190.5 212.0 98.8 125.4 105.0 150.2 159.4
India Cements 135.1 140.1 142.4 181.0 179.0 192.7 207.2
J K Lakshmi Cement 104.8 108.5 118.4 133.4 148.5 163.5 -
Jaiprakash Associates 99.4 106.0 116.3 123.0 138.6 135.2 141.2
KCP 137.8 173.6 233.7 316.1 293.3 344.6 -
Kesoram Industries 114.3 125.5 112.4 117.5 120.7 147.5 147.3
Madras Cements 141.0 157.8 170.8 174.9 207.6 231.5 -
Mangalam Cement 169.9 191.4 227.5 240.5 254.5 295.2 -
OCL India 162.6 207.1 197.8 319.7 325.4 329.5 -
Prism Cement 100.4 122.1 130.3 153.8 167.0 157.2 -
Rain Commodities - - 45.4 45.4 54.8 66.3 -
Shree Cement 126.3 132.0 124.9 118.1 129.5 141.8 -
Ultratech Cement Ltd 78.3 84.6 86.6 87.5 109.9 125.0 -
Note:
ACC, Ambuja Cement, Heidelberg Cement and Rain Commodities are December ending company
Mangalam Cement and Andhra Cements w ere Septemeber ending company till 2006, and then
n.m. - Not meaningful
* Andhra Cements Limestone cost for the 2010-11 is for 15 months
C-9
Playerwise Coal Cost

(Rs/tonne of coal) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
1
ACC 1,953 2,181 2,178 3,697 3,852 4,012 5,053
Ambuja Cement 503 503 601 819 877 848 1,034
Andhra Cements 2,004 2,004 2,719 3,603 3,367 3,137 -
Binani Cement n.a. 3,440 4,396 6,561 4,873 6,343 7,110
Birla Corp 2,068 2,268 2,508 2,957 2,745 3,456 4,610
Century Textiles 2,024 2,142 2,365 2,954 3,177 3,455 4,643
Chettinad Cement 3,533 4,076 4,785 4,844 4,629 5,593 6,919
Dalmia Cement (Bharat) 3,431 3,551 4,349 6,923 4,076 6,068 8,044
Heidelberg Cement 570 638 - 743 670 779 1,083
India Cements 3,192 3,183 3,863 5,359 4,629 5,670 6,378
Jaiprakash Associates 2,071 2,230 2,441 2,964 3,277 3,932 5,219
JK Lakshmi Cement 3,308 4,000 4,783 5,364 4,476 6,797 6,764
KCP 2,479 2,742 3,476 4,464 3,855 4,570 5,749
Kesoram Inds 1,815 1,876 2,506 3,218 3,013 3,386 4,613
Madras Cements 3,159 3,393 4,158 5,541 4,435 4,892 6,554
Mangalam Cement 2,652 2,635 2,713 3,506 3,333 3,640 5,133

OCL India 1,488 1,617 2,058 3,075 2,913 3,310 3,686
Prism Cement 2,198 2,382 2,831 3,233 3,221 3,761 5,396
Rain Commodities - - 2,335 2,505 3,865 3,528 -
Shree Cement 3,118 3,610 4,590 5,925 4,779 6,589 6,865
Ultratech Cement Ltd 1,888 2,396 2,671 3,897 3,090 4,263 5,181
Note:
1 Figures for ACC from 2005-06 are as of December
ACC, Ambuja Cement, Heidelberg Cement and Rain Commodities are December ending company
Mangalam Cement and Andhra Cements were Septemeber ending company till 2006, and then
Source: Company reports and CRISIL Research
C - 10
Playerwise Power Consumption
(kWh/tonne of Cement) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC 86 88 88 89 87 85 87 84
Ambuja Cements 84 - 86 84 86 86 86 85
Andhra Cements Ltd. 85 - 113 104 97 78 85 -
Binani Cement 77 - 75 71 75 74 77 76
Birla Corp 85 84 83 84 86 88 86 90
Century Textiles 79 76 79 83 81 77 77 78
Chettinad Cement 73 71 74 71 71 82 79 77
Dalmia Cement (Bharat) - - - - - - 76 73
India Cements 125 130 130 89 91 93 93 92
JK Lakshmi Cement 84 82 83 79 80 79 79 78
JP Associates 86 87 86 84 88 91 89 87
KCP 83 85 89 95 92 86 133 188
Kesoram Inds 76 78 77 78 78 74 79 77
Madras Cements 72 72 73 78 79 83 83 78
Mangalam Cement 182 179 91 - - 176 177 178
OCL India 91 85 87 85 76 76 79 73
Rain Commodities - - - 84 89 90 88 -
Shree Cement 75 73 74 79 77 75 79 77
Shree Digvijay Cement 94 98 104 111 105 102 104 102
Ultratech Cement Ltd 87 89 87 85 85 83 82 81
Note:
ACC, Ambuja Cement, Rain Commodities and Shree Digvijay Cementare December ending company
Mangalam Cement and Andhra Cements were September ending company till 2006, and then
Grasim cement division has merged with Ultratech Cement during the year 2010-11
Source: Company reports & CRISIL Research
C - 11
3.0 Profitability
Cement - Trend in Net Sales

(Rs m illion) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC 1 32,036 58,035 69,368 72,957 80,812 77,550 94,555
Ambuja Cement 2 26,166 62,905 56,216 62,052 71,249 74,398 85,602
Andhra Cement - 1,012 4,430 3,699 2,968 648 -
Binani Cement 4,923 6,760 9,641 14,940 18,580 17,296 20,315
Birla Corp 12,119 15,601 17,223 17,932 21,573 21,337 22,753
Century Textiles 26,629 32,350 35,669 39,726 46,203 48,351 48,750
Chettinad Cement 4,926 7,318 9,305 11,248 13,660 15,457 20,675
Dalmia Cement (Bharat) - - - - - 16,890 22,880
Heidelberg Cement 4,271 4,173 5,964 7,832 9,420 8,707 9,907
India Cements 15,316 22,584 30,641 33,009 37,772 35,030 42,080
JK Lakshmi Cement 5,841 8,435 11,110 12,264 14,926 13,200 17,275
KCP 1,672 2,500 3,442 3,496 3,596 3,070 6,005
Kesoram Industries 16,400 22,348 30,201 39,446 47,896 54,755 59,456
Madras Cements 9,994 15,654 20,118 24,393 27,953 26,206 32,667
Mangalam Cement 3,045 2,285 5,423 6,180 6,706 4,954 6,310
OCL India 5,948 7,878 7,586 11,127 13,679 14,736 14,697
Prism Cement 4,415 5,728 7,680 6,497 28,372 33,786 45,038
Rain Commodities - - 4,625 10,051 8,458 3,335 2,396
Shree Cement 6,921 13,958 21,178 27,291 36,356 34,973 60,658
Shree Digvijay 2,169 2,632 2,561 3,083 2,651 2,962 3,358
Ultratech Cement Ltd 33,274 49,353 55,612 64,393 70,874 133,360 184,106
Net sales excludes indirect taxes.
1
Financial for the year end 2005-06 are for the period of 9 months
2
Note:
ACC, Ambuja Cement, Heidelberg Cement, Rain Commodities and Shree Digvijay are December
ending company Mangalam Cement and Andhra Cements w ere Septemeber ending company till
2006, and then changed to March year ending H & R Johnson has merged w ith Prism Cement in
the year 2009-10
C - 13
Playerw ise Return on Capital Em ployed

(per cent) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC 1 15.1 35.4 37.1 29.4 33.6 20.6 23.2
Ambuja Cement 2 16.3 41.6 45.9 31.3 24.2 21.4 21.0
Andhra Cement - 39.2 39.2 19.0 2.4 -3.6 -
Binani Cement 10.5 17.5 22.0 16.3 27.0 8.8 11.2
Birla Corp 24.1 49.4 43.5 28.5 30.5 15.7 11.7
Dalmia Cement (Bharat) - - - - - 4.6 8.9
Heidelberg Cement -27.4 18.3 29.6 17.1 21.6 11.7 3.1
India Cements 7.2 17.7 23.4 15.5 12.0 3.8 11.3
KCP 16.0 33.8 38.2 31.6 18.5 11.9 16.6
Kesoram Industries 9.0 24.9 27.8 16.1 12.3 0.7 -5.1
Madras Cements 12.6 31.2 22.6 17.0 14.9 8.9 15.3
Mangalam Cement 19.0 26.6 46.5 34.6 43.9 9.9 16.4
OCL India 11.4 17.4 18.0 14.6 17.2 11.6 6.6
Prism Cement 11.7 24.3 62.4 21.0 20.1 8.8 8.1
Rain Commodities - - 16.9 15.1 23.4 4.5 7.7
Shree Cement 4.5 12.9 22.4 29.3 26.1 9.2 22.9
Shree Digvijay 47.9 44.5 22.3 13.0 20.1 7.3 5.0
Ultratech Cement Ltd 12.2 32.0 31.7 22.9 24.1 12.4 20.1
n.m.: Not meaningful
Note:
1
2
ACC, Ambuja Cement, Heidelberg Cement, Rain Commodities and Shree Digvijay are December ending
company Mangalam Cement and Andhra Cements w ere Septemeber ending company till 2006, and then
C - 14
Cement: Operating profit margins of companies
(per cent) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC 1 18.7 29.9 28.9 25.9 32.7 23.9 19.6
Ambuja Cement 2 28.7 35.5 36.5 29.1 27.5 25.6 23.2
Andhra Cement - -30.2 18.6 14.1 -0.6 -27.4 -
Binani Cement 27.7 34.6 36.0 21.9 31.2 15.8 15.9
Birla Corp 15.7 32.1 34.0 25.0 33.7 21.2 15.9
Dalmia Cement (Bharat) - - - - - 20.0 23.5
Heidelberg Cement -5.4 13.4 20.4 14.7 18.5 12.4 7.2
India Cements 17.5 33.1 36.3 30.6 22.4 12.5 21.7
KCP 16.7 32.2 31.4 28.1 29.0 28.1 19.0
Kesoram Industries 8.5 19.4 23.0 18.2 15.6 5.1 -0.4
Madras Cements 21.5 35.9 37.7 34.6 31.8 25.7 29.8
Mangalam Cement 12.0 30.2 29.9 22.1 29.7 12.8 16.5
OCL India 15.5 21.6 29.6 27.7 30.3 23.0 16.7
Prism Cement 22.9 26.5 43.2 26.1 17.8 10.0 7.3
Rain Commodities - - 29.7 19.3 24.6 5.0 -1.0
Shree Cement 28.7 44.4 41.3 34.5 41.5 24.0 27.0
Shree Digvijay 19.2 22.1 15.3 12.8 16.0 7.7 5.3
Operating profit margin has been calculated as profit before depreciation, interest and tax divided by
net sales.
1
2
Note:
ACC, Ambuja Cement, Heidelberg Cement, Rain Commodities and Shree Digvijay are December
ending company Mangalam Cement and Andhra Cements w ere Septemeber ending company till
2006, and then changed to March year ending
C - 15
Cement - Net profit margins of companies

(per cent) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
ACC 1 17.0 21.2 20.7 16.6 19.9 14.5 14.0
Ambuja Cement 2 17.9 23.9 31.5 22.6 17.1 17.0 14.4
Andhra Cement - 39.7 16.7 10.4 16.1 -38.0 -
Binani Cement 10.8 14.1 18.2 7.3 15.2 5.3 2.4
Birla Corp 10.4 20.9 22.9 18.0 25.8 15.0 10.5
Chettinad Cement 8.1 15.7 17.6 -0.3 7.9 4.9 9.1
Dalmia Cement (Bharat) - - - - - -0.2 6.7
Heidelberg Cement -21.1 -2.4 16.4 16.0 14.2 7.3 2.9
India Cements 3.0 21.2 20.8 13.0 9.3 1.9 7.0
KCP 10.5 19.3 19.3 18.9 16.7 13.5 10.3
Kesoram Industries 2.8 11.9 12.7 9.6 5.0 -3.8 -6.4
Madras Cements 7.9 19.7 20.3 14.9 12.7 8.1 11.8
Mangalam Cement 5.5 18.4 20.9 15.7 17.7 7.7 8.9
OCL India 6.4 9.8 15.3 10.4 12.0 7.8 2.2
Prism Cement 5.9 10.8 25.1 14.8 8.9 2.9 -0.7
Rain Commodities - - 5.5 8.5 18.3 -54.8 12.3
Shree Cement 2.7 12.7 12.3 21.2 18.6 6.0 10.2
Shree Digvijay 22.5 20.5 -5.5 7.0 13.5 0.3 2.8
n.a.: Not available
Net profit margin has been calculated as profit after tax divided by net sales.
1
2
Note:
ACC, Ambuja Cement, Heidelberg Cement, Rain Commodities and Shree Digvijay are
December ending company Mangalam Cement and Andhra Cements w ere Septemeber
ending company till 2006, and then changed to March year ending
C - 16
4.0 Duties and Tarrifs
Cement - Customs duty

(per cent) BD SD AD Surcharge SACD
1994-95 65 - - - -
1995-96 50 - - - -
1996-97 40 2 - - -
1997-98 40 2 - - -
1998-99 40 2 3 - 4
1999-00 40 - - - 4
2000-01 35 - - 10 4
2001-02 25 - - - 4
2002-03 20 - - - 4
2003-04 30 - - - 5
2004-05 20 - - 2 5
2005-06 15 - - 2 4
2006-07 0 - - 0 4
2007-08 0 - - 0 0
2008-09 0 - - 0 0
2009-10 0 - - 0 0
2010-11 0 - - 0 0
2011-12 0 - - 0 0
AD: Additional duty; BD: Basic duty; SACD: Special additional customs duty;
SD: Special duty
Note:
Education cess of 2 per cent has been added to the excise duty for 2004-05 and 2005-06, as per the
Budget provisions
C - 17
Cement - Excise duty

(Rs/tonne) Rate Large cem ent plants Mini cem ent plants White cem ent
(per cent)
1993-94 Specific 330 n.a 40

1994-95 Specific 330 180 40
1995-96 Specific 350 180 40
1996-97 Specific 350 180 30
1997-98 Specific 350 200 25
1998-99 Specific 350 200 25
1
1999-2000 Specific 350 200 24
1
2000-01 Specific 350 200 242
1
2001-02 Specific 350 200 322
3
2002-03 Specific 400 200 162
3
2003-04 Specific 400 250 162
4
2004-05 Specific 408 250 16.3
4
2005-06 Specific 408 350 16.3
4
2006-07 Specific 408 350 16.3
2007-08 (Retail prices <= Rs190/- per 50 kg bag) Specific 360.5 226.65 16.5
2007-08 (Retail prices > Rs190/- per 50 kg bag) Specific 618 3815 16.5
2008-09(Retail prices > Rs190/- per 50 kg bag) Specific 618 3815 16.5
2010-11 (Retail prices > Rs190/- per 50 kg bag) Specific 10.30% 324.5 16.5
2011-12 (Retail prices <= Rs190/- per 50 kg bag) Specific 10.3% + Rs.80 per tonne 10.30% 16.5
2011-12 (Retail prices > Rs190/- per 50 kg bag) Specific 10.3% + Rs.160 per tonne 10.3% + Rs.30 per tonne 16.5
2012-13 (Retail Prices < Rs. 190/- per 50 kg bag) Specific 12% + Rs. 120 PMT 6% + Rs. 120 PMT 12.4
2013-14 Specific 12% + Rs. 120 PMT 6% + Rs. 120 PMT 12.4
1
Excise duty is Rs 332 per tonne of portland cement, bagged outside the factory premise
2
The abatement rate is 30 per cent
3
Excise duty is Rs 382 per tonne of portland cement, bagged outside the factory premises
4
Education cess of 2 per cent has been added to the excise duty for 2004-05 as per the
Budget provisions
In the Union Budget 2007-08, the cess has been increased to 3 per cent w hich has been added to the excise
duty from 2007-08 onw ards
Source: CRISIL Research, Industry
C - 18
Statew ise value added tax (VAT)
Region States VAT in (%)
North Uttarakhand 12.5
Haryana 12.5
Punjab 12.5
Chandigarh 12.5
Delhi 12.5
Rajasthan 14.0
Himachal Pradesh 13.8
Jammu & Kashmir 13.5
East Assam 13.5
Meghalaya 13.5
Manipur 13.5
Tripura 13.5
Bihar 13.5
Orissa 13.5
West Bengal 13.5
Sikkim 12.5
Mizoram 12.5
Jharkhand 14.0
Chattisgarh 14.0
Nagaland 13.3
West Goa 12.5
Maharashtra 12.5
Gujarat 12.5
South Kerala 12.5
Karnataka 12.5
Tamil Nadu 12.5
Andhra Pradesh 14.0
Cetral Uttar Pradesh 12.5
Madhya Pradesh 13.0
Note:
Sales tax applies for Maharashtra state
C - 19
Royalty charges - From 1971 to 2002

Coal group Coal royalty rates Coal royalty rates Coal royalty rates Coal royalty rates
(Rs per tonne) w .e.f. w .e.f. w .e.f. w .e.f.
February 13, 1981 August 1, 1991 October 11, 1994 August 16, 2002
Group-I Coking Coal SG-I, II WG-I 7 150 195 250
Group-II Coking Coal WG-II, III 6.5 120 135 165

Non-Coking A, B Semi-Coking Gr.-I,
Semi-Coking Gr II
Group-III Coking Coal WG-IV, 5.5 75 95 115

Non-Coking-C
Group-IV Non-Coking D, E 4.5 45 70 85
Group-V Non-Coking F, G 2.5 25 50 65
Group-VI Coal Produced in AP 5 70 75 90

Note:
The 1981 coal royalty rates are still continuing for West Bengal on the ground that the government of West Bengal is
continuing to levy cesses on coal, w hich have been w ithdraw n by other state governments
Source: Ministry of Coal and Com pany reports
C - 20
5.0 Company financials
Cem ent Industry Aggregates - Annual

Financial (Rs m illion) 2011-12 2010-11 2009-10 2008-09 2007-08
Net sales 640,242 506,383 456,964 388,360 339,588
Other operating income 13,440 10,859 8,201 6,842 4,523
Total Operating Revenue 653,682 517,243 465,165 395,202 344,111
Total cost of sales 518,511 412,529 330,168 286,442 229,296
Raw material consumed 153,890 123,737 103,331 78,761 62,145
Pow er & fuel 154,908 120,076 94,611 95,923 69,577
Labour cost 34,896 28,600 21,862 18,885 15,908
Selling & distribution 127,796 100,370 80,325 66,951 59,265
Other cost 47,474 39,898 30,181 25,986 22,539
Expenditure capitalised (452) (152) (142) (64) (139)
EBITDA 135,171 104,714 134,997 108,760 114,815
Interest & Finance charges 19,162 13,364 9,981 10,003 7,163
Depreciation 40,598 36,242 28,741 22,582 19,062
OPBT 75,412 55,108 96,275 76,175 88,591
Non operating income 12,196 9,195 5,811 5,662 7,479
Cash/Non-cash adjustment 5,881 5,034 1,299 667 (1,677)
Extra-ordinary Income/(Expenses) 1,049 (4,347) (90) 3,580 4,264
PBT 94,538 64,989 103,294 86,084 98,656
Tax 26,039 17,039 29,816 24,176 27,591
PAT 68,499 47,950 73,478 61,908 71,064
Nos. of com panies 20 20 20 20 20
Continued
C - 21
continued
Financial (Rs m illion) 2011-12 2010-11 2009-10 2008-09 2007-08
Key Ratios
Net sales grow th Per cent 26.4 10.8 17.7 14.4 29.1
EBITDA grow th Per cent 29.1 (22.4) 24.1 (5.3) 32.1
EBITDA margins Per cent 20.7 20.2 29.0 27.5 33.4
Net profit margins Per cent 10.5 9.3 15.8 15.7 20.7
RoCE Per cent 16.9 13.8 24.6 25.5 35.6
Tangible Net Worth Rs Million 454,847 399,339 319,675 250,845 200,663
Capital Employed Rs Million 709,615 633,786 505,125 416,883 336,090
Gearing Times 0.5 0.5 0.5 0.6 0.6
Net Cash Accrual/total debt Times 0.4 0.3 0.6 0.5 0.7
Interest coverage Times 8.1 8.6 14.2 11.9 17.4
Assets turnover ratio Times 1.0 0.9 1.1 1.1 1.1
Debtor Days Days 15 15 13 13 12
Creditor Days Days 202 190 171 206 210
Days Inventory Days 54 59 55 57 61
Com panies included in aggregate
ACC Ltd
Ambuja Cements Ltd
Andhra Cements Ltd
Anjani Portland Cement Ltd.
Binani Cement Limited
Chettinad Cement Corporation Ltd
Deccan Cements Ltd
HeidelbergCement India Ltd
JK Lakshmi Cement Ltd
Kakatiya Cement Sugar & Industries Ltd
Madras Cements Ltd
Mangalam Cement Ltd
Prism Cement Ltd
Rain Commodities Ltd
Sanghi Industries Ltd
Shree Cement Ltd
Shree Digvijay Cement Co. Ltd.
The India Cements Ltd
UltraTech Cement Ltd
C - 22
Playerw ise financial perform ance-Annual
2011-12 2010-11 2009-10 2008-09 2007-08
ACC Ltd
Net Sales Rs. Million 94,267 77,026 79,876 71,786 69,101
Net Sales Grow th Per cent 22.4 (3.6) 11.3 3.9 21.8
EBITDA margin Per cent 19.2 22.3 32.3 25.4 28.6
Net profit margin Per cent 13.9 14.2 19.7 16.3 20.4
Am buja Cem ents Ltd
Net Sales Grow th Per cent 15.3 4.3 14.2 10.5 (10.4)
EBITDA grow th Per cent 3.1 (1.4) 8.1 (12.6) (5.3)
Andhra Cem ents Ltd
Net Sales Rs. Million - 628 2,931 3,673
Net Sales Grow th Per cent (100.0) (78.6) (20.2) (16.9)
EBITDA grow th Per cent (182.9) (1,125.0) (103.3) (36.8)
EBITDA margin Per cent (3,828.6) (27.5) (0.6) 14.2
Net profit margin Per cent 2,509.6 (38.0) 16.2 10.3
Anjani Portland Cem ent Ltd.
Net Sales Grow th Per cent 69.0 42.5 (5.1) 25.3 53.3
EBITDA grow th Per cent 65.8 46.4 (31.3) 20.2 77.3
Binani Cem ent Lim ited
Continued
C - 23
continued
2011-12 2010-11 2009-10 2008-09 2007-08
EBITDA grow th Per cent (20.6) (38.8) 61.4 (22.9) 16.6
Chettinad Cem ent Corporation Ltd
Net Sales Grow th Per cent 33.7 11.0 21.0 21.3 27.5
EBITDA grow th Per cent 45.6 (8.8) 9.0 35.8 44.0
Net profit margin Per cent 8.1 4.9 7.9 (0.3) 17.6
Deccan Cem ents Ltd
Net Sales Grow th Per cent 52.0 15.0 64.8 (2.2) 33.3
HeidelbergCem ent India Ltd
Net Sales Rs. Million 9,829 8,642 9,361 7,612
Net Sales Grow th Per cent 13.7 (7.7) 23.0 28.2
EBITDA grow th Per cent (32.2) (35.7) 70.3 (8.3)
EBITDA margin Per cent 7.3 12.3 17.7 12.7
Net profit margin Per cent 2.9 7.3 14.2 16.3
JK Lakshm i Cem ent Ltd
Continued
C - 24
continued
2011-12 2010-11 2009-10 2008-09 2007-08
Kakatiya Cem ent Sugar & Industries Ltd
Net Sales Rs. Million 1,681 841 1,129 1,642 1,338
Net Sales Grow th Per cent 100.0 (25.6) (31.2) 22.7 24.3
EBITDA grow th Per cent 254.2 (53.8) (42.3) 3.6 7.6
Madras Cem ents Ltd
Mangalam Cem ent Ltd
Prism Cem ent Ltd
Net Sales Grow th Per cent 33.2 18.7 350.9 (28.4) 14.3
Net profit margin Per cent (0.7) 2.9 8.9 15.3 27.5
Rain Com m odities Ltd
Net Sales Grow th Per cent (28.0) (60.5) (24.2) 140.4
EBITDA grow th Per cent (115.3) (92.2) 7.8 40.0 29,517.1
EBITDA margin Per cent (1.0) 4.8 24.4 17.2 29.5
Net profit margin Per cent 12.3 (55.8) 18.3 7.6 5.4
Continued
C - 25
continued
2011-12 2010-11 2009-10 2008-09 2007-08
Net Sales Grow th Per cent 8.3 37.8 (17.7) (6.1) 3.4
EBITDA grow th Per cent 24.1 (10.7) (18.6) (21.3) (10.6)
Net profit margin Per cent 8.3 (3.3) 13.6 6.5 12.4
Shree Cem ent Ltd
Shree Digvijay Cem ent Co. Ltd.
Net Sales Grow th Per cent 13.7 11.4 (14.1) 20.9 (0.5)
EBITDA grow th Per cent (18.9) (45.9) 10.2 (1.0) (31.9)
Net profit margin Per cent 2.8 0.3 13.5 7.0 (5.7)
The India Cem ents Ltd
EBITDA grow th Per cent 72.5 (45.0) (16.2) (6.0) 49.8
UltraTech Cem ent Ltd
Net Sales Grow th Per cent 37.6 87.5 10.3 15.8 12.3
EBITDA grow th Per cent 52.6 33.4 12.9 1.1 22.6
C - 26
Cem ent Industry Aggregates - Quarterly
(Figures in Rs. Million) Dec-12 Sep-12 Jun-12 Mar-12 Dec-11
Net sales 175,779 164,899 181,187 186,572 159,457
Total expenditure 144,720 129,643 135,693 144,172 127,208
|Increase|: Decrease in stock (1,259) (3,347) (1,315) 1,770 756
Raw Material consumed 27,521 23,398 24,200 25,306 21,153
Traded Goods purchased 3,759 3,434 3,310 5,151 3,905
Staff Expenses 10,278 9,209 8,956 8,556 8,812
Pow er & Fuel Expenses 39,663 39,284 39,680 42,504 37,553
Other Expenditures 64,758 57,665 60,862 60,885 55,029
EBITDA 31,059 35,256 45,494 42,400 32,249
Interest 4,286 4,088 3,879 3,864 3,550
PBDT 26,773 31,168 41,615 38,536 28,699
Depreciation 10,542 9,835 9,398 11,451 10,494
Amortisation
Other Income 3,240 2,725 2,919 4,790 2,443
Extraordinary Income : |Expenses| (124) 7 (201) (6,607) (243)
PBT 19,347 24,065 34,935 25,268 20,405
Tax 5,078 6,871 9,846 6,912 2,460
PAT 14,269 17,194 25,089 18,356 17,945
Nos. of com panies 15 15 15 15 15
Key ratios Y-o-Y Q-n-Q

Dec-12 Dec-11 Dec-12 Sep-12
Net sales Rs.million 175,779 159,457 175,779 164,899
Net sales grow th Per cent 10.2 28.3 6.6 (9.0)
EBITDA grow th Per cent (3.7) 43.2 (11.9) (22.5)
EBITDA margin Per cent 17.7 20.2 17.7 21.4
Net profit margin Per cent 8.1 11.3 8.1 10.4
Y-o-Y : Year on year; Q-n-Q : Quarter on quarter
Com panies included in aggregate
ACC Ltd
Ambuja Cements Ltd
Anjani Portland Cement Ltd.
Chettinad Cement Corporation Ltd
Deccan Cements Ltd
HeidelbergCement India Ltd
JK Lakshmi Cement Ltd
Madras Cements Ltd
Mangalam Cement Ltd
Prism Cement Ltd
Shree Cement Ltd
The India Cements Ltd
UltraTech Cement Ltd
C - 27
Playerw ise financial perform ance-Quarterly

Dec-12 Sep-12 Jun-12 Mar-12 Dec-11
ACC Ltd
Net sales Rs. Million 31,796 24,739 28,154 28,891 25,552
EBITDA grow th Per cent (9.9) 45.5 18.7 11.3 29.9
Am buja Cem ents Ltd
Net sales grow th Per cent (1.0) 18.6 17.8 19.7 29.0
Anjani Portland Cem ent Ltd.
Net sales Rs. Million 616 668 696 879 637
Net sales grow th Per cent (3.3) (5.8) (4.2) 31.8 51.1
EBITDA grow th Per cent (1.0) (23.0) (18.7) 3.6 7.6
EBITDA grow th Per cent (17.4) 240.6 (12.9) (0.6) (28.3)
Chettinad Cem ent Corporation Ltd
EBITDA grow th Per cent (12.8) (3.6) 8.9 23.6 (8.2)
Net profit margin Per cent (0.3) 7.9 10.1 5.0 4.9
Continued
C - 28
continued
Deccan Cem ents Ltd
EBITDA grow th Per cent (40.5) (37.9) (24.3) 15.0 25.4
HeidelbergCem ent India Ltd
Net profit margin Per cent (2.8) 2.9 6.3 4.0 (0.7)
JK Lakshm i Cem ent Ltd
Madras Cem ents Ltd
Mangalam Cem ent Ltd
EBITDA grow th Per cent (18.8) 344.3 70.6 22.7 1,298.9
Continued
C - 29
continued
Prism Cem ent Ltd
EBITDA grow th Per cent (90.4) (213.1) 66.1 20.1 72.0
Net profit margin Per cent (4.6) (2.9) 1.0 2.7 2.0
Shree Cem ent Ltd
The India Cem ents Ltd
EBITDA grow th Per cent (1.4) (18.2) 14.4 20.3 53.0
UltraTech Cem ent Ltd
C - 30
Note
Note

Crisil Cement Industry Report PDF

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Crisil Cement Industry Report PDF

Enviado por

Direitos autorais:

Formatos disponíveis

Cement

Summary Annual Review March 2013

Demand for cement is estimated

Part C: Industry statistics C-1

1.0 Summ ary A-1

2.0 Dem and A-3

3.0 Supply A-15

4.0 Operating Rates A-21

5.0 Prices A-27

6.0 Costs & Profitability A-29

Infrastructure investments to drive demand for cement

Industry approaching end of investment cycle

Prices to increase sharply in 2012-13

Steep price rise to enhance industry profitability in 2012-13

Growth in cement demand

Key demand drivers

North: Individual housing projects, especially in rural and semi-urban regions

South: Irrigation, power and individual housing projects

Cement production and consumption

East: Infrastructure and individual housing projects

West: Infrastructure and housing, especially in urban areas

Cement production and consumption

Central India: Infrastructure projects

Infrastructure development to propel demand for cement

Breakup of cement demand by end-user segments

Breakup of cement demand from infrastructure segment

Source: CRISIL Research

- Increase in the proportion of concrete roads as compared to bituminous roads

- Use of paver blocks and concrete tiles

- Construction of flyovers and structures

Housing segment to continue to account for lion's share in cement demand

Share of commercial construction in overall cement demand to remain stable

Research methodology: End-user model

Cement industry approaching end of investment cycle

Trend in installed capacity additions (2006-07 to 2016-17)

Deferment / cancellation of expansion plans because of huge oversupply in select regions

South to account for bulk of capacity additions

Region-wise share in installed capacity addition (2012-13 to 2016-17)

Source: CRISIL Research

Lion's share of cement capacities to be added by existing players

Player-wise capacity additions (2012-13 to 2016-17)

Source: CRISIL Research

Blending ratio to improve marginally over next 5 years

Blending ratio and share of blended cement

Source: CRISIL Research

Cement demand to outpace supply over the medium term

Incremental demand and effective capacity additions

Cement operating rates to rise from 2013-14 onwards

Trend in cement operating rates

Source: CRISIL Research

South to witness lowest operating rates

Source: CRISIL Research

Long Term Outlook

Pan-India prices to rise sharply in 2012-13 as well

Trend in cement operating rates and prices

Price hike to be sharpest in East, lowest in South

Region-wise price outlook

Softening prices of imported coal to prune energy costs in 2012-13

Sharp rise in cement prices to boost margins in 2012-13

Operational performance of cement companies

1.0 Evolutio n of the Cem ent Ind ustry B-1

2.0 Man ufacturin g Process B-5

3.0 Industry Structure B-15