An Overview

Cement is one of the core industries which plays a vital role in the growth and expansion of a nation. It
is basically a mixture of compounds, consisting mainly of silicates and aluminates of calcium, formed
out of calcium oxide, silica, aluminium oxide and iron oxide. The demand for cement, depends
primarily on the pace of activities in the business, financial, real estate and infrastructure sectors of
the economy. Cement is considered preferred building material and is used worldwide for all
construction works such as housing and industrial construction, as well as for creation of
infrastructures like ports, roads, power plants, etc. Indian cement industry is globally competitive
because the industry has witnessed healthy trends such as cost control and continuous technology
upgradation.
The Indian cement industry is extremely energy intensive and is the third largest user of coal in the
country. It is modern and uses latest technology, which is among the best in the world. Also, the
industry has tremendous potential for development as limestone of excellent quality is found almost
throughout the country.
Current Scenario
The Indian cement industry is the second largest producer of quality cement. Indian Cement Industry
is engaged in the production of several varieties of cement such as Ordinary Portland Cement (OPC),
Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid
Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement, etc. They are
produced strictly as per the Bureau of Indian Standards (BIS) specifications and their quality is
comparable with the best in the world.
The Indian cement industry is the second largest in the world. It comprises of 140 large and more
than 365 mini cement plants. The industry's capacity at the beginning of the year 2009-10 was 217.80
million tonnes. During 2008-09, total cement consumption in India stood at 178 million tonnes while
exports of cement and clinker amounted to around 3 million tonnes.The industry occupies an
important place in the national economy because of its strong linkages to other sectors such as
construction, transportation, coal and power. The cement industry is also one of the major
contributors to the exchequer by way of indirect taxes.
Cement production during April to January 2009-10 was 130.67 million tonnes as compared to 115.52
million tonnes during the same period for the year 2008-09. Despatches were estimated at 129.97
million tonnes during April to January 2009-10 whereas during the same period for the year 2008-
09,it stood at 115.07 million tonnes.
Over the last few years, the Indian cement industry witnessed strong growth, with demand reporting
a compounded annual growth rate (CAGR) of 9.3% and capacity addition a CAGR of 5.6% between
2004-05 and 2008-09. The main factors prompting this growth in demand include the real estate
boom during 2004-08, increased investments in infrastructure by both the private sector and
Government, and higher Governmental spending under various social programmes. With demand
growth being buoyant and capacity addition limited, the industry posted capacity utilisation levels of
around 93% during the last five years. Improved prices in conjunction with volume growth led to the
domestic cement industry reporting robust growth in turnover and profitability during the period
2005-09.
Consumption Growth during 2008-09
Even during the economic slowdown in 2008-09, growth in cement demand remained at a healthy
8.4%. In the current fiscal (2009-10) cement consumption has shot up, reporting, on an average,
12.5% growth in consumption during the first eight months with the growth being aided by strong
infrastructure spending,especially from the govt sector. The trends in all-India consumption and the
growth in consumption in the major cement-consuming States over the last five years are presented in
below table:
Growth in Cement Demand
Figures in Million Tonnes

2008-09 Apr-Nov 09
Domestic Consumption 178 100
Year-on-Year Growth (%) 8.4 12.5
Source: Cement Manufacturers Association (CMA), ICRA Research
Key Drivers of Cement Industry
Buoyant real estate market
Increase in infrastructure spending
Various governmental programmes like National Rural Employment Guarantee
Low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru National
Urban Renewal Mission (JNNURM) and Indira Aawas Yojana
Technological Advancements
Modernization and technology up-gradation is a continous process for any growing industry and is
equally true for the cement industry. At present, the quality of cement and building materials
produced in India meets international standards and benchmarks and can compete in international
markets. The productivity parameters are now nearing the theoretical bests and alternate means.
Substantial technological improvements have been brought about and today, the industry can
legitimately be proud of its state-of-the-art technology and processes incorporated in most of its
cement plants. This technology up gradation is resulting in increased capacity, reduction in cost of
production of cement.
Future Outlook
Growth in domestic cement demand is expected to remain strong, given the revival in the housing
markets, continued Government spending on the rural sector, and the gradual increase in the number
of infrastructure projects being executed by the private sector. Thus, the trend in demand growth seen
during the last five years is expected to continue over the medium term. Also, with Government
targeting an over 8% GDP growth rate, cement demand should grow at 8-10% over the next few
years.
The industry may be expected to add another 130-135 million tonnes of cement capacity in phases
over the next four years, that is, during the period 2009-10 to 2012-13.
Major Players
Ultratech Cement
Century Cements
Madras Cements
ACC
Gujarat Ambuja Cement Limited
Grasim Industries
India Cements Limited
Jaiprakash Associates and
JK Cements.
Holcim
Lafarge
Heidelberg Cemex
Italcementi
Statistics

Cement Production & Despatches (P)
Description Jan-10 Dec-09 Jan-09
2009-10 2008-09
(Apr-Jan)
Cement Production
Cement Despatches
14.54

164.53
14.03
14.26
12.67
12.66
130.67
129.97
115.52

115.07
Source: Cement Manufacturers Association