Assessment of Competition in Cement Industry in India PDF

ASSESSMENT OF COMPETITION IN CEMENT
INDUSTRY IN INDIA
RESEARCH PROJECT REPORT

SUBMITTED TO THE COMPETITION COMMISSION OF INDIA
SUBMITTED BY:
SUMIT PAL SINGH
MBA (2011-2013)
VINOD GUPTA SCHOOL OF MANAGEMENT, IIT KHARAGPUR
ACKNOWLEDGMENT
I extend my sincere gratitude to The Competition Commission of India, for giving me an
opportunity to intern at the commission. In specific, I thank Mr. Rakesh Kumar, Joint Director
(Eco) for being a guiding force throughout this submission and being instrumental in the
successful completion of this project. Without him every effort of mine would have been in
vain. He has been kind and patient throughout, to share with me his precious time, thoughts
and insights.
Sumit Pal Singh
Vinod Gupta School of Management, IIT Kharagpur
ii
DISCLAIMER
This project report/dissertation has been prepared by the author as an intern under the
Internship Programme of the Competition Commission of India for academic purposes only.
The views expressed in the report are personal to the intern and do not reflect the view of the
Commission or any of its staff or personnel and do not bind the Commission in any manner.
This report is the intellectual property of the Competition Commission of India and the same or
any part thereof may not be used in any manner whatsoever, without express permission of the
Competition Commission of India in writing.
iii
TABLE OF CONTENTS
1.
INTRODUCTION ............................................................................................................................. 1
1.1
SCOPE AND OBJECTIVE OF THE RESEARCH PAPER ..................................................... 1
1.2
MOTIVATION FOR THE RESEARCH PAPER ..................................................................... 2
1.2.1 HISTORY OF COMPETITION ISSUES IN CEMENT INDUSTRIES IN THE WORLD..... 2

1.2.2 NEWSPAPERS DOTTED WITH SUSPICION OF CEMENT CARTEL IN INDIA ............. 2
1.2.3 REPORTS ON INDIAN CEMENT INDUSTRY USE SUSPICIOUS LANGUAGE ............. 3
1.3
RESEARCH METHODOLOGY ............................................................................................... 4
1.4
RESEARCH QUESTIONS........................................................................................................ 4
2. CEMENT INDUSTRY IN INDIA ........................................................................................................ 5

2.1 HISTORICAL DEVELOPMENT ................................................................................................... 5
2.2 CURRENT INDUSTRY OVERVIEW ........................................................................................... 7
2.2.1 DEMAND DRIVERS FOR CEMENT IN INDIA ................................................................... 8
2.2.2 CEMENT INDUSTRY STRUCTURE ..................................................................................... 9
2.2.3 TOP CEMENT COMPANIES ALL INDIA DATA .............................................................. 12
2.3 CEMENT MARKET DIVISION IN INDIA ................................................................................. 15
2.3.1 NORTH ZONE ....................................................................................................................... 17
2.3.2 WEST ZONE .......................................................................................................................... 18
2.3.3 CENTRAL ZONE .................................................................................................................. 20
2.3.4 EAST ZONE ........................................................................................................................... 22
2.3.5 SOUTH ZONE........................................................................................................................ 24
3. COMPETITION ISSUES IN THE CEMENT INDUSTRY ................................................................ 27
4. CEMENT CARTEL CASES ACROSS THE WORLD ...................................................................... 39
4.1 PAKISTAN CEMENT CARTEL .................................................................................................. 39
4.2 SOUTH AFRICA CEMENT CARTEL ......................................................................................... 41
4.3 GERMANY CEMENT CARTEL ................................................................................................. 44
5. CONCLUSION .................................................................................................................................... 46
6. REFERENCES .................................................................................................................................... 48
APPENDIX A .......................................................................................................................................... 50
APPENDIX B .......................................................................................................................................... 59
iv
1. INTRODUCTION
Concrete is second only to water as the most consumed substance on earth, with nearly one ton
of the material used annually for each person on the planet. Cement is the critical ingredient in
concrete, locking together the sand and gravel constituents in an inert matrix; it is the glue
which holds together much of modern societys infrastructure.
Cement is a global commodity, manufactured at thousands of local plants. Because of its
weight, cement supply via land transportation is expensive, and generally limited to an area
within 300 km of any one plant site. The industry is consolidating globally, but large,
international firms account for only 30% of the worldwide market. In many developed
countries, market growth is slow or nil whereas in developing markets, growth rates are more
rapid. China is the fastest growing market today. Because it is both global and local, the
cement industry faces a unique set of issues, which attract attention from communities near the
plant, at a national and an international level 1.
1.1 SCOPE AND OBJECTIVE OF THE RESEARCH PAPER
The scope of the research paper is to analyse the cement industry in India in terms of the
industry structure, demand supply factors with appropriate statistical data, aggregation or
segregation of cement markets across India, and assessing the state of competition in the Indian
cement industry.
The objective of the research paper is to analyse the state of competition in the Indian cement
industry and to point out any competition issues and suggest The Competition Commission of
India to take corresponding steps within the purview of The Competition Act 2002.
http://www.unep.fr/scp/csd/wssd/docs/further_resources/related_initiatives/WBCSD/WBCSD-cement.pdf
1.2 MOTIVATION FOR THE RESEARCH PAPER

1.2.1
HISTORY OF COMPETITION ISSUES IN CEMENT INDUSTRIES IN THE WORLD
For a Competition Commission or Competition Regulatory body in any country across the
world, one of the first and most sought after competition issues is detection of cartel(s) in the
cement industry of the country. The geographical concentration of raw materials required for
cement production coupled with the bulky nature of cement make the cement market
concentrated in few geographical locations or divides the market in terms of geographical
supply and demand of cement. Coupling the above mentioned point with the fact that cement
has practically no substitutes, increases the power of suppliers and decreases the power of
buyers, thereby providing ripe conditions for cartel formation through price control and market
sharing mechanisms. Some cement cartel cases are discussed in Section 4.
In 2001, Richard Whish, Professor of Law at King's College London since January 1991,
famously said, The first thing for any new competition regulator is to go out and find the
cement cartel. Because my experience of this subject is, it is always there, somewhere. The
only countries in which I had been unable to find the cement cartel is where there is a national
state-owned monopoly for cement.
1.2.2 NEWSPAPERS DOTTED WITH SUSPICION OF CEMENT CARTEL IN INDIA
Over the past years, the Indian print media has been filled with news signalling possibility
cartel in the Indian cement market. Following are some examples:
1. Taking on cement cartels, The Financial Express, 6th July, 2007. The article strongly
indicates cartel type behaviour prevalent in the Indian cement market and also cries foul
of nothing being done to deal with it.
2. Brakes on cement cartelization, Business Standard, New Delhi, 5th December, 2007.
The news comes in on the Government saying that it will keep prices low by ensuring
adequate supply 2.
3. Cement cartel rigged prices for 17 years, Hindustan Times, New Delhi, 20th
December, 2007. The news comes after the Commission issued a cease and desist
order against 41 cement companies 3.
4. Government examining SFIO report on cement makers, The Economic Times, 4th
August, 2011. News pours in after Serious Fraud Investigation Offices (SFIO) report
on cement industry is submitted with the Ministry of Corporate Affairs.
5. Muted demand, overcapacity to plague cement industry, The Hindu, 6th May, 2012.
The article, by a Director in Crisil Research, mulls on the lowering capacity utilization
levels in cement industry across all the regions.
1.2.3 REPORTS ON INDIAN CEMENT INDUSTRY USE SUSPICIOUS LANGUAGE
Reports on the cement industry by renowned companies mention their views in certain manner
that should be taken note of by The Competition Commission of India. Following are a couple
of examples:
1. Ernst & Youngs report on the cement industry in India states, Though the demand
growth remained subdued, the cement manufacturers have observed supply discipline
involving curtailment of production by companies in order to narrow the demandsupply gap. The self-discipline imposed by the cement manufacturers is yet to stand the
test of time 4.
Business Standard, New Delhi, 5th December, 2007

Hindustan Times, New Delhi, 20th December, 2007
4
Ernst & Youngs report Cement-ing Growth, Page 60
3
2. Indian Brand Equity Foundations (IBEF) report on cement industry in India states,
The Indian cement market is oligopolistic in nature, characterised by tacit collusion,
where large players partially control supply for better price discipline 5.
1.3 RESEARCH METHODOLOGY
The researcher has adopted analytical, descriptive and comparative methodology for this
report; reliance has been placed on data from the Centre of Monitoring Indian Economy
(CMIE) databases and data from the annual reports of the companies observed. The views and
research reports in the public media have been studied coupled with the discipline of
Competition Law.
1.4 RESEARCH QUESTIONS
1. What is the structure of Indian cement industry?
2. Where does the Indian cement industry stand with respect to competition issues with
respect to The Competition Act, 2003?
3. What are the economic/financial indicators of anti-competitive behaviour in an
industry?
IBEFs report Cement November 2011, Page 15, under Inter-firm rivalry
2. CEMENT INDUSTRY IN INDIA

2.1 HISTORICAL DEVELOPMENT 6
1. Era of Dominant Imports 1914-1924
During this period of 10 years, the total cement consumption was around 2 million tonnes: of
which nearly 50 per cent consisted of imports. Beginning with a production of 1000 tonnes in
the year 1914, the indigenous production touched nearly a quarter million tonnes in the first
decade. In 1924 against the capacity of half a million tonne only 0.26 million tonne was
produced.
The low capacity utilisation and persistent problem of marketing affected the financial viability
of the cement plants to a great extent. Moreover, there was widespread prejudice against the
use of indigenous cement. Severe competition among producers resulted in continuous cutting
down of prices. Some of the companies went into liquidation. The cement industry was
fighting for its very existence.
2. Era of Struggle and Survival - 1924-1941
During these 18 years, there was a gradual increase in indigenous production and decrease in
cement imports. But severe competition amongst producers very nearly threatened the cement
industry. Indigenous production went up from 3.661akh tonnes in 1925 to 18.30 lakh tonnes in
1941. Imports dwindled from 69.000 tonnes in 1925 to 21,000 tonnes in the pre-war year 1938
and were only a few thousand tonnes in 1941. Imports contributed to less than 7 per cent of
total cement consumption during 1924-1942.
In 1936, war clouds began gathering over Europe and recession had set in. Industries in India
were under considerable strain. The very survival of Indian cement industry was in doubt.
http://www.cmaindia.org/portal/static/DynamicHistory.aspx
Though the Cement Marketing Co. and Concrete Association of India had played their role for
the betterment of cement industry it was still far below the expectations of the cement industry.
Problems of marketing and pricing still continued to plague the industry. One industrialist F. C.
Dinshaw - a man of great vision and foresight - saw considerable potential for a united cement
industry. It was at this juncture that F.C. Dinshaw brought together the cement companies
belonging to his own group, Tatas, Khataus and Killick Nixon under one banner of Associated
Cement Companies Ltd. (ACC).
3. Era of Price Controls Pre-plan 1942-1951
During 1942-1946 cement production came under the purview of Defence of India Rules for
production, price and distribution control. Major portion of cement produced then was
earmarked for Defence purposes and only around 10 per cent was released for private
consumption.
During this period, production was stepped up from 1.8 million tonnes in 1942 to 3.2 million
tonnes in 1951. Imports practically dwindled to less than 2.5 per cent of the total consumption.
In the next ten years up to 1956 Government of India exercised informal control by fixing
prices from time to time.
4. Era of Planning and Controls 1951-1982
The Five Year Plans were launched from 1951-52: cement was brought under the purview of
Cement Control Order of 1956 both for price and distribution. The control on carnet continued
till 1982 when partial decontrol policy was announced (cement was decontrolled for a brief
period during the two years 1966 and 1967). Meantime there was "Growth" in cement capacity
but not at the requisite pace; this resulted in perpetual "Shortage" till 1986.
5. Era of Partial Decontrol 1982-1988
6
In 1977, Government announced 0.12 per cent post tax return on net worth to boost cement
capacity: this was followed by Partial Decontrol in 1982. Consequently there was Quantum
Jump in capacity and production during 1982-88.
6. Era of Total Decontrol March 1989
Cement was totally decontrolled with effect from 1st March 1989. The Industry recorded an
exponential growth with the introduction of partial decontrol in 1982 culminating in total
decontrol in 1989.
2.2 CURRENT INDUSTRY OVERVIEW
India ranks second in world cement producing countries. While it took 8 decades to reach the
1st 1000 Lakh tonne capacity, the 2nd 1000 Lakh tonne was added in just 10 years. The
capacity, which was 29 Million tonne in 1981-82, rose to 2190 Lakh tonne at the end of FY09 7.
12.00
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
100
9.52
9.58
9.34
92.68
8.52
6.76
8.03
91.82
88.5
84.88
85.65
95
90
85
85.09
Cement
Production
% change
India's GDP
% change
80
75
11.16
9.77
8.13
7.78
10.64
4.50
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
GDP Data: Central Statistics Office (CSO)

Cement Production and Capacity Utilization Data: CMIE database
Capacity
Utilization India
70 Capacity Utilization
%
Figure 1: All India Cement Production (Percentage change) vs. All India Cement Capacity Utilization vs. India
GDP (Percentage change) (2004-05 base)
Since the demand of cement is seasonal in nature, declines during the monsoon (July-Sept)
quarter and increases during Jan-March quarter, figure 1 shows yearly cement production
7
http://www.cmaindia.org/portal/static/DynamicFacts.aspx
percentage change. As seen in figure 1, lesser increases in all India cement production numbers
(Mar-08, Mar-09, and Mar-10) indicate lower demand for cement. While from late 2007 to
early 2009, the decrease in percentage increase of cement production numbers can be attributed
to the global crisis, due to which commercial and housing real-estate industry saw a decrease in
demand (refer to Section 2.2.1 to see impact of real estate on Indian cement industry), the
capacity utilization levels also declined to 85% level signalling supply constraints exercised by
cement manufacturers. In 2011, the capacity utilization has gone up to 92% which could be on
the back of very less increase cement capacities on the back of declining increases in cement
demand.
2.2.1 DEMAND DRIVERS FOR CEMENT IN INDIA
Figure 2 illustrates that residential real
Demand Break-up
by Segments (FY06-FY10)
estate sector contributed towards 63%
Industrial,
4%
Figure 2, Source: Crisil Research
of the total domestic cement demand in

the
country
According
to
during
the
FY06-10.
report
of
the
Residential
Real
Estate,
63%
Commerci
al Real
estate,
13%
Infrastruct
ure, 20%
Technical Group on estimation of housing shortage constituted in the context of formulation of

the Eleventh Five-Year Plan, housing shortage is estimated to be around 247.1 lakh units.
During the Eleventh Plan period, total housing requirement, including the backlog, is estimated
at 265.3 lakh units 8.
During the economic slowdown, demand for commercial real estate dropped sharply leading to
sharp correction in lease rentals since the second half of 2008. Lease rentals have corrected in
the range of 25-50 per cent during the first half of 2008. With demand slowing substantially,
most of the urban cities are faced with a humungous oversupply of office space. Subdued
8
Eleventh Five Year Plan, Chapter 11
demand and rentals has impacted the execution adversely in addition to cancellation of many
projects 9. The organised retail real estate industry in India has witnessed a slowdown in the
past year after increasing at a CAGR of 28 per cent in 2005-08. The industry is expected to
increase at a CAGR of 14 per cent in the short term and 19 per cent over the next 5 years 10.
Going forward, between 2009-10 and 2013-14, hotel industry (part of commercial real estate
industry) demand is anticipated to outstrip supply growth. Demand is expected to increase at a
CAGR of 15 per cent while room availability is expected to record a CAGR of 9 per cent
across premium segment 11.
Investment in infrastructure is projected to grow to Rs. 2056150 crores in the Eleventh Five
Year Plan (2007-2012) from an anticipated investment of Rs. 871445 crores in the Tenth Five
Year Plan (2002-2007) 12. This represents a compounded annual growth rate of 18.71%. As on
January 2011, 373 SEZs had been notified and the Board of Approvals had granted formal
approvals to 581 SEZs and in-principle approvals to 154 13. The industrial sector contributed
towards 4% of the total domestic demand for cement in the country.
Overall the Indian cement industry is expected to grow comfortably above the GDP growth
level and may even register double digit annual growth numbers in the coming years.
2.2.2 CEMENT INDUSTRY STRUCTURE
The Indian cement industry is weakly oligopolistic in nature on a national level with top 11 to
12 firms among more than 100 firms capturing 70% of the cement market. This nature has
been consistent through the years as figure 3 (next page) and figure 4 (on page 11) show
Crisil Research: India Real Estate Overview

11
12
Numbers at 2006-07 Prices, Source: Government of India, Eleventh Five Year Plan.
13
Cement-ing Growth, Ernst & Young report, Page 16
10
number and names of firms with concentration of 70% in terms of the production of cement in
March 2006 and March 2011 respectively.
The major players are
ACC
Ltd.,
Ambuja
Cements Ltd., Ultratech

Cement
Ltd.,
India
Cements Ltd., Century

Textiles & Inds. Ltd.,
Jaiprakash
Associates
Ltd., Birla Corporation

Ltd., Lafarge India Pvt.
Ltd., Madras Cements Ltd., Shree Cement Ltd., Binani Cement Ltd., and Kesoram Industries
Ltd. The shares, in terms of all India cement production, of these top companies have
fluctuated by small amounts in the last six years (since ACC Ltd. and Ambuja Cements Ltd.
were taken over by Holcim Group). Ultratech Cement Ltd.s production share has increased as
it parent company, Birla Aditya Group, has stopped cement business in one of its companies,
Grasim Industries Ltd., and has used the cement manufacturing plants of Grasim Industries
Ltd. under Ultratech Cement Ltd from FY2010 onwards 14. Notable movers in production
percentage in terms of overall Indian market are Shree Cement Ltd., and Kesoram Industries
Ltd.
Figure 5 on the next page gives a holistic overview of the Indian cement industry using Porters
Five Forces Model.
14
Annual Reports, 2011, Grasim Industries Ltd. and Ultratech Cement Ltd.
10
11
2.2.3 TOP CEMENT COMPANIES ALL INDIA DATA
In this section, we take a look at the financial performance of top cement companies in the
country alongside their production and capacity utilization numbers from March 2006 to March
2011.
The figures, figure 30 to figure 50, in Appendix A show financial data (operating profit margin
and profit after tax) with the cement production data and the capacity utilization data of each of
the top 13 cement producers in the country. All the numbers in the graphs in Appendix A
represent all India data
The operating profit margin is in percentage terms, which gives the cost of running the core
business of a company. Profit after tax (PAT) and cement production numbers are indexed
from March 2005 level, at which each of the PAT and cement production numbers is listed at
100. The following years show the increases in PAT and cement production numbers with
respect to March 2005 level. Also, the capacity utilization is in percentage terms, which is the
percentage of cement produced by a company with regards to the capacity of cement
production installed at its plant(s).
Overall trend among companies:
The period of 2005 to 2011 has seen increasing cement production numbers from all of the
players in the Indian cement industry. On an all India level the capacity utilization levels in this
period for a large numbers of top 13 firms have been on the higher side with capacity
utilization crossing 100 for most part of the given period for companies like Ambuja Cement
Ltd., Grasim Industries Ltd., Century Textiles & Inds. Ltd., Lafarge India Pvt. Ltd., Birla
Corporation Ltd, and Kesoram Industries Ltd.
The Mar 2011 capacity utilization for Kesoram Industries Ltd. is 75% which is far below its
average over the preceding five years. Cement production numbers for Kesoram Industries Ltd.
12
are almost same for Mar-10 and Mar-11 indicating that they have added capacity but not used
it which has been reflected in a negative PAT index for Mar-11 and an operating profit margin
of just 4% for Mar-11.
ACC Ltd. and Jaiprakash Associates Ltd. show a steady enough capacity utilization trend that
can be mapped to the fluctuations in the demand-supply dynamics on an all India level.
Capacity utilization numbers for Ultratech Cement Ltd., India Cements Ltd., Shree Cements
Ltd., and Madras Cements Ltd. show a cause for concern in terms of competition in the
markets.
Ultratech Cement Ltd.s capacity utilization has never been above 90% with the March11 figure at 78% even after almost doubling their cement production in 2010-11 from
2009-10. This indicates a huge capacity build up by Ultratech Cement Ltd., and their
increasing PAT index does not correspond to decreasing operating profit margin and
capacity utilization levels.
As for India Cements Ltd., their capacity utilization levels have declined to 75% and
69% in Mar-10 and Mar-11 respectively, from being at 103% in Mar-08. This on the
top of their highest production levels in the period of 2007-2010.
Capacity utilization for Shree Cement Ltd. seems to fall abruptly with a decrease in
prices in 2009 and late 2010 (Mar-11 period), being at 77% in Mar-11 from 103% in
Mar-10, on the back of almost same production level. Such a sharp fall indicates
(happened previously also: from 97% in Mar-08 to 85% in Mar-09) a supply constraint
being deliberately exercised in order to decrease cement supply in the market.
The case for Madras Cements Ltd. is even worse with the capacity utilization falling
continuously from 2008 onwards to 56% in Mar-11. The cement production also fell
from an index of 213 in Mar-10 to 195 in Mar-11.
13
Such low utilization levels raise eyebrows on the functioning and intent of the cement
manufacturers with respect to competition in the market.
During 2005-06 to 2010-11, the operating profit margin all the companies has soared to reach
new highs during Mar-2008, but has come back to 2005-06 levels or even below those levels
for individual companies across the board. It may well be an indicator that the cost of
production and operation are higher from 2009-10 onwards and though the slight decrease in
selling price of cement must also contribute to the low operating profit margin levels, this
much amount of fluctuation in operating profit margins (around 15% for most of the
companies) on an annual basis points out a strong suspicion that the price levels during the up
period (2005 to 2008-09) were extraordinarily high.
Also, the Profit after Tax (PAT) for all the companies closely resembles the path of the
operating margin, though for most of the cases, the PAT is still well above the 2005 levels
(except for Kesoram Industries Ltd., for which Mar-11 PAT index was at -627 against Mar-05
PAT index of 100). Only Ultratech Cement Ltd. has recorded an almost non-decreasing PAT
index over the base index of 100 in Mar-05 with a PAT index of 49271 in Mar-11 even though
its operating profit margin has dipped considerably to 19% in Mar-11 from 31% in Mar-08.
14
2.3 CEMENT MARKET DIVISION IN INDIA

The cement industry in India is fragmented into five different regions because of the following
reasons:
-
Bulky nature of cement and limestone (a key ingredient in manufacturing cement)

makes it very hard to transport over long distances.
High freight costs involved in transportation of these commodities.
A cement plant is generally located near limestone deposits and cement produced in a
particular region is mainly consumed in that region. Over the years the operating costs of
Indian cement companies has grown at a CAGR of 7.03% from Rs. 1330 per tonne in FY05 to
Rs. 1868 per tonne in FY10 15. Over the years, the share of freight costs has increased as shown
in figure 6 and figure 7 16.
Figure 6
15
16
Figure 7
Data taken from Cement-ing Growth, Ernst & Young report, Page 32
Data taken from Cement-ing Growth, Ernst & Young report, Page 32
15
Figure 8 below shows the division of cement production and cement market on the map of
India.
As shown in Figure 8, there are broadly five regions in India which have mainly independent
demand-supply factors and numbers, combined with different industry structure in each region.
16
2.3.1 NORTH ZONE
The top 5 companies in terms of cement production in north zone produced 77% of the total
cement produced in 2011, out of a total of more than 15 companies, which represents an
oligopolistic market. Major players are Shree Cement Ltd., Ambuja Cement Ltd., ACC Ltd.,
Ultratech Cement Ltd., JK Lakshmi Cement Ltd. and Jaiprakash Associates Ltd. Over the last 6
years, the top 5 or 6 companies have captured over 75% production of cement, with virtually
the same names appearing in the top 5 or 6; refer to figures 9, 10 and 11. Zonal production data
for ACC Ltd. and Ambuja Cements Ltd. is not available 2010 onwards, thus there is shuffling
of companies and their cement production percentage. Grasim Industries Ltd. exit from the
cement market in 2010 and with its production capacities under Ultratech Cement Ltd. (Grasim
Industries Ltd. and Ultratech Cement Ltd. are under the Birla Aditya Group) also contributed to
this shuffling, but the market remains oligopolistic nonetheless.
17
Figure 12 shows the cement production numbers as indexed from a base of 100 with the base
100 representing Mar-2005 numbers. Similarly it shows the price of 50 Kg bag of cement as
indexed from a base of 100 with the base 100 representing Mar-2005 numbers.
180.00
160.00
101.23
140.00
105.00
North Zone
100.00
98.82
95.13
120.00
95.00
100.00
Price Change
90.87 90.00
80.00
85.97
60.00
85.00
40.00
Capacity
Utilization
80.00
20.00
75.00
0.00
Mar-06
Mar-07
Mar-08
Cement
Production
change
Mar-09
Mar-10
Capacity
Utilization
Figure 12: North Zone Cement Production vs. North Zone Cement Capacity Utilization vs. Delhi Retail Prices
(Rs. /50Kg bag), Source: CMIE data
Figure 12 shows capacity utilization in north zone declined to 86% in Mar-09 after being at
101% in Mar-06. In March 2010, north zone recorded a capacity utilization of 91%, which is
reasonable when one considers cyclical nature of the cement industry and the decrease in the
demand of cement due to global effects of recession and housing crisis.
2.3.2 WEST ZONE
The top 4 companies in terms of cement production in west zone produced 73% of the total
cement produced in 2011, out of a total of 15 companies, which represents an oligopolistic
market. Major players are Ambuja Cement Ltd., Ultratech Cement Ltd., Sanghi Industries Ltd.,
Century Textiles & Inds. Ltd., and Jaiprakash Associates Ltd. Over the last 6 years, the top 5 or
6 companies have captured around 80% production of cement, with virtually the same names
appearing in the top 6; refer to figures 13, 14 and 15. Zonal production data for Ambuja
18
Cements Ltd. is not available 2010 onwards, thus there is shuffling of companies and their
cement production percentage. Grasim Industries Ltd. exit from the cement market in 2010 and
with its production capacities under Ultratech Cement Ltd. (Grasim Industries Ltd. and
Ultratech Cement Ltd. are under the Birla Aditya Group) also contributed to this shuffling, but
the market remains oligopolistic nonetheless.
180.00
105.00
West Zone
160.00
140.00
100.00
97.99
120.00
95.00
94.35
100.00
60.00
Price Change
90.00
89.13
80.00
Cement
Production
Change
86.16
83.96
40.00
85.00
Capacity
Utilization
80.00
20.00
0.00
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
75.00 Capacity
Utilization
19
Figure 16: West Zone Cement Production vs. West Zone Cement Capacity Utilization vs. Mumbai Retail Prices
Figure 16 shows capacity utilization in west zone having steadily declined to 84% in Mar-10
after being at 98% in Mar-08. This can be owed to production levels remaining virtually the
same through years 2007-08 to 2009-10 while capacity being added up as shown by the
production numbers. Such a trend is a cause for concern in terms of competitive behaviour in
the market as firms might be holding back production in order to constrain supply in the
western market.
2.3.3 CENTRAL ZONE
The top 3 companies in terms of cement production in central zone produced 70% of the total
cement produced in 2011, out of a total of at-least 8 companies, which represents an
oligopolistic market. Major players are Jaiprakash Associates Ltd., ACC Ltd., Century Textiles
& Inds. Ltd., and Ultratech Cement Ltd. Over the last 6 years, the top 4 companies have
captured around 80% production of cement, with virtually the same names appearing in the top
4; refer to figures 17, 18 and 19. Zonal production data for ACC Ltd. and Ambuja Cements
Ltd. is not available 2010 onwards, thus there is shuffling of companies and their cement
production percentage. Grasim Industries Ltd. exit from the cement market in 2010 and with its
production capacities under Ultratech Cement Ltd. (Grasim Industries Ltd. and Ultratech
Cement Ltd. are under the Birla Aditya Group) also contributed to this shuffling, but the
market remains oligopolistic nonetheless.
20
Central Zone
180.00
160.00
110.00
105.17105.00
140.00
100.00
120.00
100.00
80.00
60.00
94.18
94.22
95.00
92.51
Cement
Production
Change
Price Change
90.00
89.11
85.00
40.00
Capacity
Utilization
80.00
20.00
0.00
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
75.00 Capacity
Utilization
Figure 20: Central Zone Cement Production vs. Central Zone Cement Capacity Utilization vs. Delhi Retail Prices
21
In figure 20, since the north zone is the major supplier of cement to the central zone 17, Delhi
cement retail prices are considered for analysis here as no cement price data could be gathered
from CMIE database for a central Indian city.
Figure 20 shows a reverse trend in capacity utilization of the central zone with respect to other
regional zones in the country. Capacity utilization has been on the increase in the last 5 years
with a slight dip in Mar-09 owing to global and housing crisis pressures.
2.3.4 EAST ZONE
The top 4 companies in terms of cement production in east zone produced 81% of the total
cement produced in 2011, out of a total of 17 companies, which represents an oligopolistic
market. Major players are Lafarge India Pvt. Ltd., Ultratech Cement Ltd., OCL India Ltd.,
ACC Ltd., Ambuja Cements Ltd., and Century Textiles & Inds. Ltd. Over the last 6 years, the
top 5 companies have captured around 75% production of cement, with virtually the same
names appearing in the top 5 to 6; refer to figures 21, 22 and 23. Zonal production data for
ACC Ltd. and Ambuja Cements Ltd. is not available 2010 onwards, thus there is shuffling of
companies and their cement production percentage. Grasim Industries Ltd. exit from the
cement market in 2010 and with its production capacities under Ultratech Cement Ltd. (Grasim
Industries Ltd. and Ultratech Cement Ltd. are under the Birla Aditya Group) also contributed to
this shuffling, but the market remains oligopolistic nonetheless.
17
IBEFs report Cement November 2011, Page 10
22
160.00
105.00
East Zone
140.00
100.00
120.00
95.00
100.00
Price Change
80.00
60.00
Cement
Producion
Change
90.00
85.74
87.85
86.39
87.16
84.84 85.00
40.00
80.00
20.00
75.00
0.00
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Capacity
Utilization
Capacity
Utilization
Figure 24: East Zone Cement Production vs. East Zone Cement Capacity Utilization vs. Kolkata Retail Prices (Rs.
/50Kg bag), Source: CMIE data
23
Figure 24 shows capacity utilization in east zone steadily remaining at around 85% level for
the years 2005-06 to 2009-10. Though increases in production and corresponding increases in
retail prices of cement in the graph indicate slightly abnormal behaviour as capacity utilization
should be up when the prices are rising along with the production levels of cement. Such a
trend is again a cause for concern in terms of competitive or collusive behaviour.
2.3.5 SOUTH ZONE
South Zone has the largest capacity of limestone in India and is the largest producer of cement
in India. It has considerably larger number of companies operating than in other zones across
India. The top 7 companies in terms of cement production in south zone produced 74% of the
total cement produced in south zone 2011, out of a total of 25 companies, which represents an
oligopolistic market. Major players are India Cements Ltd., Ultratech Cement Ltd., Madras
Cements Ltd., ACC Ltd., Ambuja Cement Ltd., Kesoram Industries Ltd., Dalmia Bharat Sugar
& Inds. Ltd., Chettinad Cement Corpn. Ltd., and Penna Cement Inds. Ltd. Over the last 6
years, the top 8 companies have captured around 75%-80% production of cement, with
virtually the same names appearing in the top 8; refer to figures 25, 26 and 27. Zonal
production data for ACC Ltd. and Ambuja Cements Ltd. is not available 2010 onwards, thus
there is shuffling of companies and their cement production percentage. Grasim Industries Ltd.
exit from the cement market in 2010 and with its production capacities under Ultratech Cement
Ltd. (Grasim Industries Ltd. and Ultratech Cement Ltd. are under the Birla Aditya Group) also
contributed to this shuffling, but the market remains oligopolistic nonetheless.
24
180.00
105.00
South Zone
160.00
100.00
140.00
120.00
93.22
100.00
80.00
95.00
94.40
Price Change
90.00
89.14
88.07
Cement
Production
Change
85.00
60.00
40.00
Capacity
Utilization
80.00
20.00
76.03
0.00
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
75.00
Capacity
Utilization
Figure 28: South Zone Cement Production vs. South Zone Cement Capacity Utilization vs. Chennai Retail Prices
(Rs. /50 Kg bag), Source: CMIE data
25
Figure 28 shows capacity utilization in south zone sharply dipping to 76% in Mar-10 after
reaching the highs of 94% in Mar-08. With such a low capacity utilization rate in the south,
and price level well above 2005, 2006, 2007 level when capacity utilization was up and above
90% for these years, and increasing or slightly decreasing prices in period of large dip in
capacity utilization calls for concern and deeper observation of the capacity utilization numbers
of individual firms.
The above analysis in section 2.3.1 to section 2.3.5 leads us to question the workings of the
regional cement markets in India. The competition issues like agreeing to an anti-competitive
agreement or presence of a cement cartel cannot be ignored under such workings of regional
cement markets in India. In Section 3, the report observes competition issues and looks at
detailed analysis of each company in the questionable regional cement markets in India.
26
3. COMPETITION ISSUES IN THE CEMENT INDUSTRY

The Competition Act, 2002 under Chapter II prohibits certain agreements, abuse of dominant
position and regulates combinations with the power to lay charges and impose considerable
fines on individual(s) and enterprise(s).
The analysis of Section 2 as a whole and particularly Section 2.2.2 and Section 2.3 raises
questions over the integrity of the cement market(s) in India, especially at the geographical
(zonal) level. The cement market in India (as a whole and on regional levels) is highly
concentrated with few players controlling the production of cement. Thus under the
Competition Act, 2002 this research report thrives to take a deeper look into the cement
industry under Section 3, anti-competitive agreements. Under Section 3, subsection (1) of the
Competition Act, 2002, no enterprise or association of enterprises or person or association of
persons shall enter into any agreement in respect of production, supply, distribution, storage,
acquisition or control of goods or provision of services, which causes or is likely to cause an
appreciable adverse effect on competition within India. Also, under Section 3, subsection (3)
of the Competition Act, 2002, Any agreement entered into between enterprises or associations
of enterprises or persons or association of persons or between any person and enterprise or
practice carries on, or decision taken by, any association of enterprises or association of
persons, including cartels, engaged in identical or similar-trade of goods or provision of
services, which
(a) directly or indirectly determines purchase or sale prices;
(b) limits or controls production, supply, markets, technical development, investment or
provision of services;
(c) shares the market or source of production or provision of services by way of allocation
of geographical area of market, or type of goods or services, or number of customers in
the market or any other similar way;
27
(d) directly or indirectly results in bid rigging or collusive bidding, shall be presumed to
have an appreciable adverse effect on competition:
Section 4, Abuse of dominant position, and Section 5, Combination under the Competition
Act, 2002 are not applicable to the cement industry, at-least under the analysis done in Section
2 and Section 3 of this research report, as any regional cement market has at-least three major
players, and there have not been noticeable/suspicious combinations lately in the cement
industry in India.
Therefore, this research report tries to venture into finding any semblance of collusive
behaviour or anti-competitive agreement among the cement manufacturers. Here, we look at
certain conditions that are conducive for cartel formation and observe the findings of the
cement industry and its players within the framework of those conditions.
Conditions conducive for cartel formation 18:
1. High concentration - Few players in the market
The Indian cement market is divided into five regional markets: North, West, Central, East,
and South, which have been observed in detail in Section 2.3 of this report. The regional
cement markets indeed have high concentration of firms. According to figure 11 of this
report, the top 5 companies in terms of cement production in north zone produced 77% of
the total cement produced in 2011, out of a total of more than 15 companies. Figure 15
shows that the top 4 companies in terms of cement production in west zone produced 73%
of the total cement produced in 2011, out of a total of 15 companies. Figure 19 shows that
the top 3 companies in terms of cement production in central zone produced 70% of the
total cement produced in 2011, out of a total of at-least 8 companies. Figure 23 shows that
18
First six headings (points) taken from Provisions Related to Cartels Competition Act, 2002, Advocacy series,
December 2011, Competition Commission of India
28
the top 4 companies in terms of cement production in east zone produced 81% of the total
cement produced in 2011, out of a total of 17 companies. And figure 27 shows that the top
7 companies in terms of cement production in south zone produced 74% of the total cement
produced in south zone 2011, out of a total of 25 companies.
2. Excess capacity
According to the Section 2.3 of this report, the capacity utilization levels having been
declining in three of the five regional markets across India. Figure 12 in section 2.3.1
shows capacity utilization in north zone declined to 86% in Mar-09 after being at 101% in
Mar-06. In March 2010, north zone recorded a capacity utilization of 91%, which is
reasonable when one considers cyclical nature of the cement industry and the decrease in
the demand of cement due to global effects of recession and housing crisis.
Figure 16 in section 2.3.2 shows capacity utilization in west zone having steadily declined
to 84% in Mar-10 after being at 98% in Mar-08. This can be owed to production levels
remaining virtually the same through years 2007-08 to 2009-10 while capacity being added
up as shown by the production numbers. Such a trend is a cause for concern in terms of
competitive behaviour in the market as firms might be holding back production in order to
constrain supply in the western market.
Figure 20 in section 2.3.3 shows a reverse trend in capacity utilization of the central zone ,
it has been on the increase in the last 5 years with a slight dip in Mar-09 owing to global
and housing crisis pressures.
Figure 24 in Section 2.3.4 shows capacity utilization in east zone steadily remaining at
around 85% level for the years 2005-06 to 2009-10. Though increases in production and
corresponding increases in retail prices of cement in the graph indicate slightly abnormal
29
behaviour as capacity utilization should be up when the prices are rising along with the
production levels of cement. Such a trend is again a cause for concern in terms of
competitive or collusive behaviour.
Figure 28 in Section 2.3.5 shows capacity utilization in south zone sharply dipping to 76%
in Mar-10 after reaching the highs of 94% in Mar-08. With such a low capacity utilization
rate in the south, and price level well above 2005, 2006, 2007 level when capacity
utilization was up and above 90% for these years, and increasing or slightly decreasing
prices in period of large dip in capacity utilization calls for concern and deeper observation
of the capacity utilization numbers of individual firms.
The above analysis leads us to question further the high level of prices in four out of the
five zones (except the central zone), which is done in our analysis in point 9 under this
section.
3. High entry and exit barriers
Figure 5 clearly illustrates that the entry and exit barriers for the cement industry are high
due to very high cost of cement production plants, be it cost of setting up new plants or
operational costs of existing plants. To exit a losing position in the cement industry would
incur huge losses for the firm(s) as
4. Similar production costs
The cement manufacturers share in the market has remained steady at the national level
and also at the regional levels for most part of six years. The similarity in the pattern of
increasing (and decreasing) Operating profit and Profit after Tax of cement manufacturers
shows that production costs for them in the same markets are highly similar. Shree
Cements Ltd. has been noted for their high operational efficiency and thus reasoning their
30
extraordinary rise in the cement market in India. Shree Cements Ltd. deployed better and
technologically superior methods of production of cement in the mid-2000s, but the
operational efficiency gap between the them and the rest of the manufacturers had
decreased a lot due to others adopting newer technology and production methods.
5. High dependence of consumers on the product
Cement, practically, has no substitutes and thus cement industry traditionally has high
degree of supplier power. Alternatives, if any, are at a nascent stage of use and do not pose
a visible threat to the supremacy of cement as the sole product providing its kind of use and
value to the consumers and the nations as a whole.
6. History of collusion in the industry
Section 1.2.1 and Section 4 look into the history of collusion in the cement industry in
various countries in the world and section 1.2.2 looks into the history of collusion India
through media reports and clippings. Cement as an industry has been known to have
collusive behaviour among firms operating in the same market.
7. Existence of effective trade association in the industry
As seen in the Pakistan cement cartel case, the presence of a trade association in the cement
industry provided the common grounds for the cement manufacturers in Pakistan to agree
to marketing agreements which fixed the production percentage of each member of the
trade association and control prices in collusion with each other (refer to Section 4.1).
In India, most of the cement manufacturers are registered with the Cement Manufacturers
Association, CMA, which was established in 1961. Though, in this report we do not take a
look into the role of CMA in India over the years, but the presence of such an association
can always fuel collusion among member firms.
31
In addition to these factors, shareholding pattern data for some of the major companies also
contribute to the suspicion of inherent collusion among some of the players in the cement
market.
8. Shareholding pattern data
Figure 29 shows the major crossholdings among companies belonging to the same parent
groups but individually competing in same and/or different regional cement markets across
India.
Birla
Aditya
Group
Holcim
Group
Birla B.K.
Group
Ambuja
Cement India
Pvt. Ltd. has
50.01%
shareholding in
ACC Ltd.
Grasim Industries
Ltd. has 60.33%
shareholding in
Ultratech
Cements Ltd.
Century Textiles &

Inds. Ltd, has
4.66%
shareholding in
Kesoram Inds. Ltd.
and 2.95% viceversa
Dalmia Cement
Ltd. has 45.37%
shareholding in
OCL India Ltd.
Dalmia
Group
Figure 29: Cross-Holdings among major Cement companies for March 2012, Source: Annual Shareholding
Reports of the respective companies for the concerned quarter/year.
This, increases suspicion of collusive behaviour between firms that have crossholdings
between them. Notably, ACC Ltd. and Ambuja Cement Ltd. operating across India in
almost every zone, Dalmia Cement Ltd. and OCL India Ltd. with Dalmia Cement Ltd.
operating in the southern zone and OCL India Ltd operating the eastern zone, Grasim
Industries Ltd. and Ultratech Cement Ltd. operating across India in almost every zone
(though from 2011 onwards, Grasim has pulled out of the cement market, with its
32
production capacities going over to Ultratech Cement Ltd.), and Century Textiles & Inds.
Ltd. and Kesoram Industries Ltd., with Kesoram Industries operating mainly in southern
India and Century Textiles & Inds. Ltd. operating across most zones in India.
9. Unusually high price per unit of cement
It is not straightforward to determine whether the cement prices have been fixed by the
companies or not. Changes in demand-supply dynamics of each region can result in
significantly different prices of different regions. To gain insight into such demand-supply
dynamics, it is imperative to observe financial numbers of each of the firms with respect to
capacity utilization and cement production numbers and then try to see whether the
fluctuations of retail prices in corresponding geographical zones provide any depth into
suspicion of collusive behaviour among firms from an economics point of view. Appendix
B contains all the relevant graphs with the relevant data for major companies across each of
the geographical zones.
An important point to re-consider is the operating profit margin and the PAT index of
the top companies across the zones in India. As these values are company specific and
on the national level, they will not change for the regional markets. Thus recapturing
what has analysed about the same in section 2.3.3 of this report:
During 2005-06 to 2010-11, the operating profit margin all the companies has soared to
reach new highs during 2007-2008, but has come back to 2005-06 levels or even below
those levels for all the companies. It may indicate that the cost of production and
operation are higher from 2009-10 onwards and though the slight decrease in selling
price of cement must also contribute to the low operating profit margin levels, this
much amount of fluctuation in operating profit margins (around 15-20% for almost all
33
of the top companies in north zone) on an annual basis points out a strong suspicion that
the price levels during the up period (2005 to 2008-09) were extraordinarily high.
Also, the Profit after Tax (PAT) for all the companies closely resembles the path of the
operating margin, though for most of the cases, the PAT is still well above the 2005
levels. Any exceptions to the above mentioned details on operating profit margin and
PAT will be captured in the following analysis.
Here is zone-wise company analysis to what outlook all the data provides, north zone first.
The retail price for a 50 Kg cement bag was 1.6 times more in Delhi in Mar-10 and
Mar-11 than in Mar-05. The retail price increased rapidly in 2005, 2006 and 2007,
decreased ever so slightly in 2008-09 due to real estate crisis resulting in lower demand.
The production of cement has seen a healthy increase by all the major companies in the
north zone.
Price increase is driven by high demand growth and high capacity utilization, but in
contrast to this, during the period (2008-2011), the capacity utilization has decreased
for ACC Ltd., Shree Cement Ltd., Grasim Industries Ltd., and JK Lakshmi Cement
Ltd., when retail prices have been steady (decreased ever so slightly in 2008-09 due to
economic crisis) if not increased in the same period. Capacity utilization levels for
Ultratech Cement Ltd. remain high and low for Binani Cement Ltd. due to late entrance
in the north zone market (2008-09).
Capacity utilization for Shree Cement Ltd. seems to fall abruptly with a decrease in
prices in 2009 and late 2010 (Mar-11 period), being at 77% in Mar-11 from 103% in
Mar-10, on the back of almost same production level. Such a sharp fall indicates
(happened previously also: from 97% in Mar-08 to 85% in Mar-09) a supply constraint
being deliberately exercised in order to decrease cement supply in the market.
34
Capacity utilization for JK Lakshmi Cement Ltd. seems to fall abruptly to 92% in 200910 and to 81% 2010-11, even though prices and cement production levels are relatively
stable. This is accompanied by a sharp fall in operating profit margin and PAT in 201011 only.
Moving on to the west zone:
The retail price for a 50 Kg cement bag was 1.53 times more in Mumbai in Mar-10 and
Mar-11 than in Mar-05. The retail price increased rapidly in 2005, 2006 and 2007, and
has stabilised to a price index of around 150 for the last four years. The production of
cement has seen a healthy increase by all the major companies in the west zone. The
production of cement has seen a healthy increase by all the major companies in the west
zone.
for Sanghi Industries Ltd. to be around 70% for the last two years from a high of 97%
in Mar-08. The production level for Sanghi Industries Ltd. have decreased considerable
over the last three years to be at a production index of 150 in Mar-11 from an index of
over 200 in Mar-08, thus signalling possible supply/production control of cement to
maintain the price level.
Capacity utilization levels remained high for Ultratech Cement Ltd., Ambuja Cements
Ltd., Grasim Industries Ltd., and Century Textiles & Inds. Ltd. over the period.
Ultratech Cement Ltd.s capacity utilization has never been above 85% with the March11 figure at 80% even after increasing their cement production consistently over the last
six to seven years. This may indicate a huge capacity build up by Ultratech Cement
35
Ltd., and their increasing PAT index does not correspond to decreasing operating profit
margin and capacity utilization levels.
Moving on to the east zone:
The retail price for a 50 Kg cement bag was 1.5 times more in Kolkata in Mar-10 than
in Mar-05 but decreased somewhat to 1.35 times of Mar-05 level in Mar-11. The retail
price increased rapidly in 2007, 2008 and 2009, decreased in 2010-11. The production
of cement has seen a healthy increase by all the major companies in the east zone.
for OCL India Ltd., ACC Ltd., and Ambuja Cement Ltd. The capacity utilization levels
for OCL India Ltd. have been alarmingly low in the last two years (57% in Mar-10 and
64% in Mar-11), even though it has seen tremendous growth in production numbers
(production index at 252 in Mar-11, and 225 in Mar-10, from 148 in Mar-08). Thus
there is strong suspicion of production control in order to control price movement in the
market.
Capacity utilization levels remained high for Ultratech Cement Ltd., Grasim Industries
Ltd., Century Textiles & Inds. Ltd. and Lafarge India Pvt. Ltd. over the period.
Moving on to the south zone:
The retail price for a 50 Kg cement bag was 1.6 times more in Chennai in Mar-09 and
Mar-11 than in Mar-05. The retail price increased rapidly in 2006, 2007 and 2008,
decreased considerably in 2009-10 due to real estate crisis resulting in lower demand.
The production of cement has seen a healthy increase by all the major companies in the
south zone.
36
considerably for India Cements Ltd., Madras Cement Ltd., Kesoram Industries Ltd.,
Dalmia Bharat Sugar & Inds. Ltd., Ultratech Cement Ltd., Chettinad Cement Corpn.
Ltd. and Penna Cement Inds. Ltd. Only ACC Ltd. and Grasim Industries Ltd. seem to
have appropriate capacity utilization levels along with their financial numbers.
India Cements Ltd.s capacity utilization levels have declined to 77% and 72% in Mar10 and Mar-11 respectively, from being at 103% in Mar-08. This on the top of their
highest production levels in the period of 2007-2010. Such a decline has heavily
impacted their operating profit margin which is below Mar-05 levels and the companys
PAT, though they still have a PAT index of 1487 in Mar-11.
Ultratech Cement Ltd.s capacity utilization has hardly been above 90% with the
March-10 figure at 66% and Mar-11 figure at 74%, even after almost doubling their
cement production in 2010-11 from 2009-10. This indicates a huge capacity build up by
Ultratech Cement Ltd., and their increasing PAT index does not correspond to
decreasing operating profit margin and capacity utilization levels.
The case for Madras Cements Ltd. is even worse with the capacity utilization falling
continuously from 2008 onwards to 59% in Mar-11. The cement production also fell
from an index of 213 in Mar-10 to 195 in Mar-11, though it is still at a very healthy
level indicating capacity build up by Madras Cements Ltd.
Capacity utilization for Kesoram Industries Ltd. has dipped sharply in Mar-11 to 75%
from over 90% in Mar-10. Consistent cement production levels in the last three years
indicate that falling capacity utilization is due to capacity build up in order to maintain
prices. Kesoram Industries Ltd. have faced the damaged caused by their low utilization
37
levels as seen in their PAT index, which was at -627 for Mar-11 against Mar-05 PAT
index of 100.
Capacity utilization for Dalmia Bharat Sugar & Inds. Ltd. has seen a dramatic decrease
to 50% in the last two years after being above 90% for most of the concerned period.
This has been on the back of increasing production index to 361 in Mar-11 from being
262 in Mar-09. Another instance of excess capacity through capacity build up by a
company. The PAT index has taken the hit in Mar-11 with it being at 10.
Capacity utilization for Chettinad Cement Corpn. Ltd. has dipped sharply in Mar-10
and Mar-11 to 71% and 55% respectively. Capacity utilization was well above 100% in
the rest of the previous years. Consistently increasing cement production levels in the
last three years indicate that falling capacity utilization is due to capacity build up in
order to maintain prices. The fall in capacity utilization may also have been triggered
by a negative PAT index in Mar-09.
Penna Cement Inds. Ltd. capacity utilization levels seem to follow in line with their
production trend and prices of cement but utilization levels of 77% in Mar-09 and 62%
in Mar-11 are too low for the liking in the period of production growth and steady state.
38
4. CEMENT CARTEL CASES ACROSS THE WORLD

In this section, we look at three cement cartel cases around the world, and understand the basis
of the cartel formation and the fines levied by the respective competition regulatory body.
4.1 PAKISTAN CEMENT CARTEL
The Competition Commission of Pakistan found the cement cartel to be operative by fixing
prices across the country through the All Pakistan Cement Manufacturers Association. On 20
March 2008, a news item appearing in the daily Jang and on the website of Geo News
revealed that the price of cement was raised by Rupees fifteen (Rs.15) to Rupees twenty
(Rs.20) per bag across the country, pursuant to the Agreement 19.
In the wake of the above news and the past trading practices in the cement industry in Pakistan,
The Competition Commission of Pakistan authorized a team to search the office of All
Pakistan Cement Manufacturers Association in Lahore. Importantly, evidence recovered
included a marketing arrangement entered into by the members of the All Pakistan Cement
Manufacturers Association and the Association itself, on 8 May 2003. The agreement
contained such clauses/rules by virtue of which, quotas with respect to production and supply
of cement were fixed in order to maintain the desired and targeted price level amongst the
members of the association. Some of the select terms of the agreement are as follows 20:
-
Each members capacity for calculating monthly quota will be on the basis of the
attached annexure A.
19
BEFORE THE COMPETITION COMMISSION OF PAKISTAN IN THE MATTER OF SHOW CAUSE NOTICES ISSUED TO
ALL PAKISTAN CEMENT MANUFACTURERS ASSOCIATION AND ITS MEMBER UNDERTAKINGS (UF. No.
4/2/Sec.4/CCP/200UU8U), Page 3
20
4/2/Sec.4/CCP/200UU8U), Page 5, 7, 8
39
The Chairmans decision regarding fixation of monthly quota shall be binding on all
members. He may consult members on quantity of quota to be fixed each month but
will have the final say in this regard.
Any increase or decrease in monthly quota shall be effective on prospective and not on
retrospective basis. Any increase or decrease in monthly quota shall be at the sole
discretion of the Chairman and binding on all members in order to maintain the desired
and targeted price level.
The Competition Commission of Pakistan took suo moto action and issued a Show Cause
Notice to the All Pakistan Cement Manufacturers Association and all its members as The
Commission sought to show that the agreement of the cement manufacturers was a prohibited
agreement. On examining the actual dispatches of cement companies in the year 2003, it was
observed by The Competition Commission of Pakistan that the actual dispatches closely match
with the allocated quotas. By using the same capacity based allocation of quotas method, the
year-wise cement dispatches of each member of the All Pakistan Cement Manufacturers
Association from year 2003 to year 2008 was analysed and it was observed that the percentage
share of each member in the total cement dispatches very closely matches with the percentage
share of the member in the total production capacity of all the members of the Association,
demonstrating the fact that the agreement was in existence and was being implemented
effectively in the years under review 21.
Cartel cases outcome
The Competition Commission of Pakistan, by an order dated 27-08-09, imposed a penalty of
Rs 6.3 Billion on 20 units of the cement industry, at the rate of 7.5% of their respective
21
4/2/Sec.4/CCP/200UU8U), Page 54
40
turnover, during the year 2007-08. The penalty was imposed on the assumption of an alleged
document signed by the members of cement industry in May, 2003, discovered by CCP on a
raid to the office of the APCMA on 24th April, 2008. During 2003-2004, the CCP ordinance
was not in force. The ordinance came into force on 2nd October, 2007. The CCP choose to
impose the penalty in spite of the fact that in a research paper, prepared by its own member
(Research and Advocacy) on 11th April, 2008, concluded that there was no cartel in the cement
industry: According to the research paper available on CCP's website, it was a snapshot study
conducted in March, 2008 22. The research paper sought the increase in the cost of the inputs as
the reason behind the cement price hike on March 20, 2008.
No money has been received from such companies/members of the supposed cartel as yet as
they have seemed to obtained stay orders 23.
4.2 SOUTH AFRICA CEMENT CARTEL 24
On the June 24 2008, the Competition Commission in South Africa conducted a highly
successfully search and seizure operation (commonly known as raids) on the premises of
Pretoria Portland Cement Company Ltd (PPC), Lafarge Industries South Africa (Pty) Ltd,
Afrisam South Africa (Pty) Ltd and NPC-Cimpor (Pty) Ltd. This was against the backdrop of a
complaint pro-actively initiated by Commissioner, on the 2nd June 2008 against all four
cement producers active in South Africa and a cement extender company known as Slagment
(Pty) Ltd, which was previously jointly owned by all cement companies. The complaint
initiation which triggered the raids was largely based on findings of the Commissions
economic research report into inputs used in the government and State Owned Enterprises
(SOE) infrastructure programme. The research was conducted, inter alia, with a view of
22
Cement cartel - a CCP study, Abdur Razzaq Thaplawala

http://www.cementchina.net/news/shownews.asp?id=9533 , retrieved on 6th June, 2012
24
Most of the section contains direct references from Competition News, The official newsletter of the
Competition Commission of South Africa, Edition 33, December 2009
23
41
identifying possible anti-competitive behaviour in the construction industry. The research

focused on key products which form inputs to the infrastructure programme such as cement,
aggregates, bricks and steel. The review concluded that anti-competitive behaviour in some of
these products and markets could be substantially increasing not only the costs of the
infrastructure programme but also other projects that rely on these key inputs and as such
raising costs in the economy more widely.
With respect to cement, the economic analysis essentially concluded that even though the
legally sanctioned cement cartel was disbanded in 1996, the four cement producers still
operated in same historic locations, with low levels of competition between them. Cement
prices had doubled since 2001, with pricing movements in steps every six months, giving rise
to a genuine concern that the high cement prices could be attributable to collusion. The cement
producers tend to increase cement prices around the same time (January and July each year)
and the magnitude of such price increases appeared to be similar overall, thus giving rise to
concerns that the price increases could be a result of collusion/coordinated behaviour by the
cement producers. In addition, information gathered from the market indicated that
independent downstream market participants are struggling to procure sufficient quantities of
cement extenders such as blast furnace slag, whilst the cement producers enjoy abundant
supplies of cement extenders. This therefore gave rise to a concern that the cement producers in
cahoots with cement extender companies could be limiting the amount of cement extenders
available in the market in order inhibit competition from independents.
It also appeared that PPC, being a leading cement producer in the South African market with
estimated market share of over 35%, could have abused its position of dominance in the market
by treating its customers differently in terms of price. The Commissioner accordingly based the
investigation on possible contraventions of section 4(1) (b), 5(1) and 8(c) of the Competition
Act. Following information gathering and consultations with industry informants and experts,
42
and other competition authorities, it was resolved to make use of the Commissions search and
seizure powers to obtain information that we may not otherwise have obtained given the
cement cartels modus operandi. In essence, in cement cartels uncovered in other countries (in
which several of the multinational producers in South Africa had been implicated) it appeared
that there were only irregular meetings, physical records were not kept of cartel arrangements,
or were destroyed, and where information is stored electronically, codes and fictitious names
are used to conceal its true nature. Five locations were searched by teams from the
Commission. These teams involved a substantial number of Commission staff, together with IT
specialists and police officers to assist with the execution of the search warrants and access to
the buildings. In contrast with the previous cement raids, no party has challenged the raids in
court.
Effect of the raids by the South African Competition Commission
Subsequently, PPC applied for leniency and confirmed the existence of a cartel among the four
cement producers. In its application for leniency PPC confirmed the existence of a cartel to
divide markets among the four cement producers. According to this information, the four
cement producers agreed to divide the cement market amongst themselves in order to maintain
the market shares that each producer held prior to 1996 when a lawful cement cartel existed
and was regulated by exemptions to the competition legislation. The agreement was
implemented up until this year through highly disaggregated sales information each producer
submitted to the Cement and Concrete Institute of South Africa (C&CI) through an audit
firm appointed by C&CI. The four cement producers are the main members of C&CI. In
43
addition, there was an agreement that PPC would not compete in the Northern Natal market in
exchange for Lafarge not competing with PPC in the Botswana market 25.
PPC has since been granted conditional leniency after confirming the existence of a cartel to
divide the markets among the four cement producers. The Commission also entered into a
settlement agreement with Afrisam in November 2011, in which the company admitted that it
took part in a cement cartel. Afrisam agreed to pay a penalty of R124 878 870.00 representing
3% of its 2010 cement annual turnover in the Southern African Customs Union 26.
The Competition Commission also reached a settlement with Lafarge Industries South Africa
Limited on 8 March 2012, in which Lafarge admits that it took part in the cement cartel in
South Africa. Lafarge agreed to pay a penalty of R148 724 400 which represents 6% of its
2010 annual turnover in South Africa Customs Union region 27.
4.3 GERMANY CEMENT CARTEL 28
Bundeskartellamt, the competition authority in Germany, imposed fines totaling approx. 660
million Euros in its cartel proceedings against six largest German cement manufacturers, Alsen
AG, Dyckerhoff AG, HeidelbergCement AG, Lafarge Zement GmbH, Readymix AG and
Schwenk Zement KG. The accused companies operated anti-competitive market allocation and
quota agreements, some of them since the 1970s, and continued to do so until 2002. The
geographic markets affected were the four regional cement markets eastern Germany,
Westphalia, northern Germany and southern Germany.
25
Press Release, Competition Commission of South Africa, 11 November 2011, PPC confesses to being part of a
cement cartel and gets conditional leniency
26
Media Release, Competition commission of South Africa, 1 November 2011, Commission settles with Afrisam
on cement cartel
27
Media Release, Competition commission of South Africa, 8 March 2012, Lafarge settles its cement cartel case
with a R149 million fine
28
Bundeskartellamt news, 14 April 2003, Bundeskartellamt imposes fines totalling 660 million Euro on
companies in the cement sector on account of cartel agreements
44
Following information obtained from the construction industry, the Bundeskartellamt carried
out a nation-wide search of 30 cement companies in July 2002. This was followed in January
2003 by further searches of eight small and medium-sized cement manufacturers in the
southern German area. The evidence seized during the searches and the confessions by the
large manufacturers, some of which fully confessed, confirmed the existing suspicions. The
President of the Bundeskartellamt in Bonn, Ulf Bge, attributed the successful breaking up of
the cartel mainly to the leniency programme published in 2000 and the establishment in 2002
of the Bundeskartellamts Special Unit for Combating Cartels.
45
5. CONCLUSION
On the back of the analysis in section 3 and section 2.2.3 of this report, there is a suspicion of a
functioning cement cartel in the zonal markets in India except for the central zone market. The
suspicion is well placed since most of the conditions for cartel formation are strongly satisfied
in the cement markets in India. With the findings of the data analysed in the report, there is a
strong suspicion of the presence of price control and market sharing in the zonal markets,
especially in an industry like cement industry with high amount of crossholding of shares
between some of the companies. The suspicion of price control is evident from 2007-08
onwards till the period Mar-2011, and that of market sharing is fuelled by the near constant
market shares of individual companies over the last six years.
Signs of collusion are there especially on the zonal level with capacity utilization and
production levels of companies in zones moving in tandem with each other (as shown in graphs
in Appendix B) and operating profit margins of almost all the companies being highly volatile.
On the all India level, suspicion hovers above Ultratech Cement Ltd., ACC Ltd., India Cement
Ltd, Shree Cement Ltd., and Madras Cements Ltd. While in the north zone, strong suspicion
hovers over ACC Ltd., Shree Cement Ltd., Grasim Industries Ltd. and JK Lakshmi Cement
Ltd., whereas in the west zone, Ultratech Cement Ltd. and Sanghi Industries Ltd should be
under the scanner of the Commission. In the east zone, OCL India Ltd., Ambuja Cement Ltd.
and ACC Ltd. show signs of collusion. The south zone provided the highest amount of
suspicion with as many as seven players controlling production. The players are India Cements
Ltd., Madras Cements Ltd., Ultratech Cement Ltd., Kesoram Industries Ltd., Dalmia Bharat
Sugar Inds. Ltd., Chettinad Cement Corpn. Ltd. and Penna Cement Inds. Ltd.
46
The CCI can take the following steps to ascertain the presence of the cement cartel or make
progress into unlocking the cement cartel:
Look at plant level cement production and capacity utilization data, especially for firms
over which considerable suspicion is already there.
Look into the timing of the capacity additions done by various players in the market.
As done by competition regulatory authorities in cement cartel cases in Pakistan, South

Africa and Germany, the CCI should look to raid important offices of companies in
question and also offices of Cement Manufacturers Association in order to find any
circumstantial evidence of an agreement among any of the cement manufacturers.
Leniency policy in the Competition Act, 2002 can be made to be on the lines of
European Competition Law in order to voluntarily cause break-up in cartels. The
German Competition Commission acknowledged the pivotal role of the improved
leniency programme in busting up the German cement cartel.
47
6. REFERENCES
I.
The Competition Act, 2002
II.
Press Releases and news items
1. Bundeskartellamt news, 14 April 2003, Bundeskartellamt imposes fines totalling 660

million Euro on companies in the cement sector on account of cartel agreements.
2. Media Release, Competition commission of South Africa, 8 March 2012, Lafarge
settles its cement cartel case with a R149 million fine.
3. Media Release, Competition commission of South Africa, 1 November 2011,
Commission settles with Afrisam on cement cartel.
4. Press Release, Competition Commission of South Africa, 11 November 2011, PPC
confesses to being part of a cement cartel and gets conditional leniency.
5. Competition News, The official newsletter of the Competition Commission of South
Africa, Edition 33, December 2009.
6. BEFORE THE COMPETITION COMMISSION OF PAKISTAN IN THE MATTER
OF SHOW CAUSE NOTICES ISSUED TO ALL PAKISTAN CEMENT
MANUFACTURERS ASSOCIATION AND ITS MEMBER UNDERTAKINGS
(UF.No. 4/2/Sec.4/CCP/200UU8U).
7. "Taking on cement cartels, The Financial Express, 6th July, 2007.
8. "Brakes on cement cartelization, Business Standard, New Delhi, 5th December, 2007.
9. Cement cartel rigged prices for 17 years, Hindustan Times, New Delhi, 20th
December, 2007.
10. Government examining SFIO report on cement makers, The Economic Times, 4th
August, 2011.
11. Muted demand, overcapacity to plague cement industry, The Hindu, 6th May, 2012.
48
III.
Industrial Databases
1. Centre for Monitoring Indian Economy Pvt. Ltd., CMIE: Prowess database and
Industry Analysis Service database.
IV.
Industry and government reports

1. Government of India, Eleventh Five Year Plan.
2. Crisil Research: India Real Estate Overview.
3. Annual Reports all companies observed in in the research report.
4. Last available shareholding pattern reports of all companies observed in the research
report.
5. Cement-ing Growth, Ernst & Young report.
6. IBEFs report Cement November 2011.
7. Provisions Related to Cartels Competition Act, 2002, Advocacy series, December
2011, Competition Commission of India.
8.
V.
Cement cartel - a CCP study, Abdur Razzaq Thaplawala

Websites
1. http://www.cmaindia.org/portal/static/DynamicFacts.aspx
2. http://www.cmaindia.org/portal/static/DynamicHistory.aspx
3. http://www.unep.fr/scp/csd/wssd/docs/further_resources/related_initiatives/WBCSD/W
BCSD-cement.pdf
4. http://moneycontrol.com , used for gathering financial data
5. http://www.cementchina.net/news/shownews.asp?id=9533 , retrieved on 6th June, 2012
49
APPENDIX A
The following figures, figure 30 to figure 50, show financial data (operating profit margin and
profit after tax) with the cement production data and the capacity utilization data of each of the
top 13 cement producers in the country. The operating profit margin is in percentage terms,
which gives the cost of running the core business of a company. Profit after tax (PAT) and
cement production numbers are indexed from March 2005 level, at which each of the PAT and
cement production numbers is listed at 100. The following years show the increases in PAT
and cement production numbers with respect to March 2005 level. Also, the capacity
utilization is in percentage terms, which is the percentage of cement produced by a company
with regards to the capacity of cement production installed at its plant(s). All the numbers in
the graphs in Appendix A represent all India data.
Figure 30: ACC Ltd., Change in PAT vs. Change in Production vs. Capacity Utilization vs. Operating Profit
Margin, Source: Financial data: moneycontrol.com, other: CMIE data
50
Figure 31: Ambuja Cement Ltd., Change in PAT vs. Change in Production vs. Capacity Utilization vs. Operating
Profit Margin, Source: Financial data: moneycontrol.com, other: CMIE data
Figure 32: Grasim Industries Ltd., Change in PAT vs. Change in Production vs. Capacity Utilization vs. Operating
51
Figure 33: Century Textiles & Inds. Ltd., Change in PAT vs. Change in Production vs. Capacity Utilization vs.
Operating Profit Margin, Source: Financial data: moneycontrol.com, other: CMIE data
Figure 34: Lafarge India Pvt. Ltd., Change in PAT vs. Change in Production vs. Capacity Utilization vs.
52
Figure 35: Ultratech Cement Ltd., Change in Production vs. Capacity Utilization vs. Operating Profit Margin,
Source: Financial data: moneycontrol.com, other: CMIE data
Figure 36: Ultratech Cement Ltd., Change in PAT, Source: moneycontrol.com
Figure 37: Jaiprakash Associates Ltd., Change in Production vs. Capacity Utilization vs. Operating Profit Margin,
53
Figure 38: Jaiprakash Associates Ltd., Change in PAT, Source: moneycontrol.com
Figure 39: India Cements Ltd., Change in Production vs. Capacity Utilization vs. Operating Profit Margin, Source:
Financial data: moneycontrol.com, other: CMIE data
Figure 40: India Cements Ltd., Change in PAT, Source: moneycontrol.com
54
Figure 41: Shree Cement Ltd., Change in Production vs. Capacity Utilization vs. Operating Profit Margin, Source:
Figure 42: Shree Cement Ltd., Change in PAT, Source: moneycontrol.com
55
Figure 43: Madras Cements Ltd., Change in Production vs. Capacity Utilization vs. Operating Profit Margin,
Figure 44: Madras Cements Ltd., Change in PAT, Source: moneycontrol.com
Figure 45: Birla Corporation Ltd., Change in Production vs. Capacity Utilization vs. Operating Profit Margin,
56
Figure 46: Birla Corporation Ltd., Change in PAT, Source: moneycontrol.com
Figure 47: Binani Cement Ltd., Change in Production vs. Capacity Utilization vs. Operating Profit Margin,
57
Figure 48: Binani Cement Ltd., Change in PAT, Source: moneycontrol.com
Figure 49: Kesoram Industries Ltd., Change in Production vs. Capacity Utilization vs. Operating Profit Margin,
Figure 50: Kesoram Industries Ltd., Change in PAT, Source: moneycontrol.com
58
APPENDIX B
The following figures, figure 51 to figure 103, show financial data (operating profit margin and
profit after tax) with the cement production data and the capacity utilization data of each of the
top cement producers in the North, West, East and South Zones of the country. Along-with this
data, retail price in Rs. of 50 Kg cement bag in each of the zones is also considered in the
graphs. The operating profit margin is in percentage terms, which gives the cost of running the
core business of a company. Profit after tax (PAT), retail price of 50 Kg cement bag and
cement production numbers are indexed from March 2005 level, at which each of the PAT,
retail price of 50 Kg cement bag and cement production numbers is listed at 100. The
following years show the increases in PAT, retail price of 50 Kg cement bag and cement
production numbers with respect to March 2005 level. Also, the capacity utilization is in
percentage terms, which is the percentage of cement produced by a company with regards to
the capacity of cement production installed at its plant(s).
PAT and operating profit numbers in the graphs for each company in Appendix B represent all
India data. Whereas cement production, capacity utilization and retail price numbers in the
graphs in Appendix B represent zonal data. There are two graphs for each of the companies
with respect to each of the zones.
The companies in the north zone that have been analysed are ACC Ltd., Ambuja Cement Ltd.,
Shree Cement Ltd., Grasim Industries Ltd., JK Lakshmi Cement Ltd., and Binani Cement Ltd.
Following are the graphs of companies in the north zone:
59
180
ACC Ltd.
North Zone
160
33
30
140
100
29
120
117
112
100
19
120
152
141
159
159
25
23
Capacity
Utilization
20
20
90
88
Price Change
30
151
26
88
35
80
15
60
Change in
Production
10
40
5
20
100
Mar-05
114
Mar-06
120
Mar-07
138
Mar-08
144
Mar-09
Mar-10
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 51: ACC Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs. Operating Profit
Cement production and capacity utilization data for ACC Ltd. is given up to March 2009 in
CMIE database.
140
350
300
250
117
112
295
226
244
223
88
200
120
265
88
90
100
80
60
50
100
30
26
19
40
33
29
23
20
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Change in PAT
206
150
100
ACC Ltd.
North Zone
Mar-10
Mar-11
Capacity
Utilization
Operating
Profit Margin
20
& Operating Profit
Margin
Figure 52: ACC Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source: Financial data:
moneycontrol.com, other: CMIE data
60
Ambuja Cement Ltd.

North Zone
180
160
36
140
141
99
103
96
159
159
151
120
100
95
100
152
29
31
120
40
38
35
30
28
26
95
25
23
20
80
15
60
10
40
20
100
Mar-05
115
Mar-06
118
Mar-07
125
Mar-08
130
Mar-09
Mar-10
Price Change
Capacity
Utilization
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 53: Ambuja Cement Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs. Operating
Cement production and capacity utilization data for Ambuja Cement Ltd. is given up to March
2009 in CMIE database.
400
321
350
95
300
120
Ambuja Cement Ltd.

North Zone
378
103
99
300 96
100
95
270
260
263
80
250
200
60
150
100
36
100
38
31
40
29
28
50
26
23
20
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Change in PAT
Capacity
Utilization
Operating
Profit Margin
Capacity Utilization
& Operating Profit
Margin
Figure 54: Ambuja Cement Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
61
Shree Cement Ltd.

North Zone
350
42
300
45
41
41
40
35
250
35
30
32
29
200
152
141
150
116
100
100
120
107
100
97
159
159
151
85
25
Mar-05
107
Mar-06
159
Mar-07
210
20
103
Mar-08
Mar-09
311
Mar-10
Change in
Production
15
77
258
Capacity
Utilization
25
10
50
100
Price Change
313
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 55: Shree Cement Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs. Operating
2500
140
Shree Cement Ltd.

North Zone
2326
103
97
100
1500
120
1988
107
116
2000
100
85
80
77
896
1000
609
32
29
500
100
42
60
41
35
41
721
40
25
63
0
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Capacity
Utilization
Operating
Profit Margin
20
0
Mar-05
Change in PAT
& Operating Profit
Margin
Figure 56: Shree Cement Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
62
Grasim Industries Ltd.

North Zone
250
35
33
Price Change
32
30
30
28
200
26
150
141
21
120
100
83
100
25
159
159
Capacity
Utilization
20
111
106
100
24
151
152
81
15
91
Change in
Production
10
50
5
100
Mar-05
121
Mar-06
128
Mar-07
142
Mar-08
161
Mar-09
240
Mar-10
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 57: Grasim Industries Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs.
Grasim Industries Ltd. stopped producing cement from 2010 onwards. Its parent group, Birla
Aditya Group, transferred the cement production capacities to Ultratech Cement Ltd.
250
106
200
100
83
231

North Zone
100
186
173
120
236
111
91
81
80
133
150
100
60
97
100
40
50
Change in PAT
26
21
28
30
33
32
24
20
0
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Capacity
Utilization
Operating
Profit Margin
& Operating Profit
Margin
Figure 58: Grasim Industries Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
63
JK Lakshmi Cement Ltd.

North Zone
180
32
30
160
152
141
140
120
110
100
100
80
30
30
108
Capacity
Utilization
20
92
81
14
14
60
Price Change
25
101
21
151
159
25
128
120 119
35
159
15
Change in
Production
10
40
5
20
100
Mar-05
109
Mar-06
116
Mar-07
140
Mar-08
150
Mar-09
147
Mar-10
140
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 59: JK Lakshmi Cement Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs.
1000
128
859
900
800
700
119
110
684
140
JK Lakshmi Cement Ltd.
120 North Zone
926
101
108
686
100
92
600
81
500
300
200
100
80
60
400
227
213
100
14
21
30
32
25
40
30
14
0
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Capacity
Utilization
Operating
Profit Margin
20
0
Mar-05
Change in PAT
& Operating Profit
Margin
Figure 60: JK Lakshmi Cement Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
64
Binani Cement Ltd.

North Zone
250
40
34
35
35
31
200
27
150
30
151
152
141
14
159
159
21
120
16
100
100
25
87
72
87
20
15
10
50
5
100
Mar-05
103
Mar-06
108
Mar-07
132
Mar-08
192
Mar-09
236
Mar-10
244
Mar-11
Price Change
Capacity
Utilization
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Margin
Figure 61: Binani Cement Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs. Operating
Capacity Utilization Data for Binani Cement Ltd. in north zone is available from April 2008
onwards.
5000
100
4371
4500
87
4000
90
87
72
3500
3000
50
1500
24
1000
821
27
1482
34
35
1685
31
21
40
1403
30
16
100
0
Mar-05
Mar-06
Mar-07
Change in PAT
60
2500
500
80
70
2726
2000
Binani Cement Ltd.

North Zone
Mar-08
Mar-09
Mar-10
Mar-11
20
Capacity
Utilization
Operating
Profit Margin
10
0
& Operating Profit
Margin
Figure 62: Binani Cement Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
65
The companies in the west zone that have been analysed are Ultratech Cement Ltd., Sanghi
Industries Ltd., Century Textiles & Inds. Ltd., Ambuja Cement Ltd., and Grasim Industries
Ltd. Following are the graphs of companies in the west zone:
Ultratech Cement Ltd.
West Zone
200
180
29
160
117
120
100
100
14
80
Price Change
28
150
149
142
140
35
31
27
149
25
19
76
82
78
77
80
Capacity
Utilization
20
17
69
60
30
153
15
80
Change in
Production
10
40
20
100
Mar-05
110
Mar-06
114
Mar-07
119
Mar-08
121
Mar-09
127
Mar-10
142
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 63: Ultratech Cement Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs.
60000
50000
90
82
78
76
77
69
35355
27448
30000
80
60
34281
50
40
31
20000
10000
14
8062
17
29
27
30
28
19
20
Change in PAT
Capacity
Utilization
Operating
Profit Margin
10
100
Mar-05

West Zone
70
38359
40000
49271
80
80
0
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
& Operating Profit
Margin
Figure 64: Ultratech Cement Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
66
Sanghi Industries Ltd.

West Zone
200
40
37
180
160
32
29
140
120
100
100
150
149
142
117
14
30
25
97
86
70
60
153
26
93
80
149
26
35
71
17
20
72
15
47
40
10
5
20
100
Mar-05
149
Mar-06
196
Mar-07
205
Mar-08
181
Mar-09
150
Mar-10
152
Price Change
Capacity
Utilization
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Margin
Mar-11
Figure 65: Sanghi Industries Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs. Operating
3000
2500
97
93
86
70
1500
47
1000
21
100
2099
1609
2000
500
120
2816
1756
71
37
29
80
72
1036
32
26
100
17
0
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Operating
Profit Margin
Mar-11
-500
-1000
Capacity
Utilization
20
0
Mar-05
Change in PAT
60
40
26
Sanghi Industries Ltd.

West Zone
-20
-583
-40 & Operating Profit
Margin
Figure 66: Sanghi Industries Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
67
160
Century Textiles & Inds. Ltd.

West Zone
142
18
140
117
120
100
100
80
149
20
108
107
96
96
150
149
20
Price Change
20
17
89
11
25
153
15
93
15
97
12
10
60
40
20
100
Mar-05
113
Mar-06
100
Mar-07
114
Mar-08
118
Mar-09
123
Mar-10
128
Capacity
Utilization
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Margin
Mar-11
Figure 67: Century Textiles & Inds. Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs.
350
300
96
96
89
277
257
250
120
325
107
108
100
93
242
97
80
219
200
100
100
11
18
99
20
20
15
17
12
Capacity
Utilization
20
0
50
Change in PAT
60
40
150
Century Textiles
& Inds. Ltd.
West Zone
Operating
Profit Margin
-20
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Margin
Figure 68: Century Textiles & Inds. Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin,
68
200
Ambuja Cement Ltd.

West Zone
180
40
36
14
160
38
149
29
142
140
120
100
100
105
117
115
103
115
153
149
150
28
104
35
30
25
26
23
20
80
15
60
10
40
20
100
Mar-05
98
Mar-06
110
Mar-07
113
Mar-08
113
Mar-09
Mar-10
Price Change
Capacity
Utilization
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Margin
Mar-11
400
378
115
321
350
105
300
140
115
100
300
103
120
104
270
260
263
250
60
200
150
100
80
31
38
36
40
29
28
100
26
23
20
0
50
Ambuja Cement Ltd.

West Zone
Change in PAT
Capacity
Utilization
Operating
Profit Margin
-20
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Margin
69
180

West Zone
160
142
26
140
100
100
90
28
149
150
30
33
Price Change
32
30
24
117 21
120
149
35
153
103
98
104
25
104
99
Capacity
Utilization
20
80
15
60
Change in
Production
10
40
5
20
100
Mar-05
108
Mar-06
114
Mar-07
112
Mar-08
84
79
Mar-09
Mar-10
Operating
Profit
Margin
0 Operating Profit
Margin
Mar-11
250
103
200
231
104
104
98
90
99
186
173
80
Change in PAT
60
150
100
120
West Zone
100
236
133
26
100
28
97
33
30
21
40
32
Capacity
Utilization
20
24
50
Operating
Profit Margin
-20
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Margin
70
The companies in the east zone that have been analysed are Ultratech Cement Ltd., Lafarge
India Pvt. Ltd., Century Textiles & Inds. Ltd., OCL India Ltd., Ambuja Cement Ltd., ACC
Ltd., and Grasim Industries Ltd. Following are the graphs of companies in the east zone:
East Zone
200
180
35
31
29
Price Change
27
160
148
140
114
120
100
100
97
89
80
96
109
122
105
135
128
96
30
28
104
25
19
20
100
17
15
14
60
Capacity
Utilization
Change in
Production
10
40
20
100
Mar-05
108
Mar-06
122
Mar-07
121
Mar-08
130
Mar-09
142
Mar-10
198
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
60000
120
109
105
104
50000
40000
89
96
96
35355
100
38359
20000
8062
10000
100
14
Mar-05
29
100
80
34281
27448
30000
49271
60
40
31
27
17
28
19
20
0
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11

East Zone
Change in PAT
Capacity
Utilization
Operating
Profit Margin
& Operating Profit
Margin
71
Lafarge India Pvt. Ltd.

East Zone
160
148
140
135
128
122
114
120
100
100
97
88
91
94
104
103
97
Price Change
97
Capacity
Utilization
80
60
40
Change in
Production
20
100
Mar-05
104
Mar-06
106
114
Mar-07
Mar-08
121
Mar-09
145
Mar-10
154
Mar-11
Figure 75: Lafarge India Pvt. Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs.
Operating Profit Margin, Source: CMIE data
There
was
no
operating
profit
margin
data
for
Lafarge
India
Pvt.
Ltd.
on
www.moneycontrol.com, though the CMIE database gave PAT data upto March 2008.
700
641
105
103
104
600
471
500
97
95
94
400
300
97
471
Change in PAT
90
91
88
85
200
100
100
Lafarge India
Pvt. Ltd.
East Zone
100
80
Capacity
Utilization
75
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Figure 76: Lafarge India Pvt. Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
CMIE data
72
160
Century Textiles & Inds. Ltd.

East Zone
25
148
20
20
140
18
120
100 104
100
80
11
114
97 95
128
17
122
100
102
93
Price Change
135
20
95
15
98
15
12
10
60
40
20
100
Mar-05
100
Mar-06
105
Mar-07
112
Mar-08
114
Mar-09
120
Mar-10
Capacity
Utilization
116
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Margin
Mar-11
Figure 77: Century Textiles & Inds. Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs.
350
300
104
102
100
95
93
277
98
257
250
120
325
242
100
95
219
200
80
100
100
11
18
99
20
20
15
17
12
Capacity
Utilization
20
0
50
Change in PAT
60
40
150
Century Textiles
& Inds. Ltd.
East Zone
Operating
Profit Margin
-20
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Margin
Figure 78: Century Textiles & Inds. Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin,
73
OCL India Ltd.

East Zone
250
30
28
26
200
Price Change
24
25
20
21
20
148
150
124
14
100
114
104
97 14
100 106
122
111
135
128
15
105
5
100
Mar-05
117
Mar-06
139
Mar-07
148
Mar-08
204
Mar-09
225
Mar-10
Change in
Production
10
64
57
50
Capacity
Utilization
252
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 79: OCL India Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs. Operating Profit
700
140
600
106
500
124
57
134
100
14
Mar-05
26
14
20
24
64
60
40
28
21
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Capacity
Utilization
Operating
Profit Margin
20
0
Mar-06
Change in PAT
80
275
300
100
406
411
412
200
120
111
105
400
100
581
104
OCL India Ltd.

East Zone
& Operating Profit
Margin
Figure 80: OCL India Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source: Financial
data: moneycontrol.com, other: CMIE data
74
Ambuja Cement Ltd.

East Zone
160
140
100
97
135
128
122
114
108
100
92
40
148
36
31
120
38
29
30
28
26
93
91
25
23
81
80
35
20
60
15
40
10
20
5
100
Mar-05
99
Mar-06
117
Mar-07
129
Mar-08
151
Mar-09
Mar-10
Price Change
Capacity
Utilization
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
400
321
350
300
120
378
108
300
92
81
250
100
93
91
270
260
263
80
200
60
150
100
36
100
38
31
40
29
28
50
26
23
20
0
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Ambuja Cement Ltd.

East Zone
Mar-10
Mar-11
Change in PAT
Capacity
Utilization
Operating
Profit Margin
& Operating Profit
Margin
75
160
ACC Ltd.
East Zone
140
33
30
29
100
97
19
80
135
128
122
114
108
120
100
92
35
148
26
30
25
23
93
91
Price Change
20
20
81
Capacity
Utilization
15
60
Change in
Production
10
40
20
100
Mar-05
110
Mar-06
120
Mar-07
127
Mar-08
129
Mar-09
Mar-10
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
CMIE database.
350
295
300
250
86
80
91
265
226
89
100
90
91
244
223
206
80
70
60
200
50
150
100
50
ACC Ltd.
East Zone
Change in PAT
Capacity
Utilization
40
30
100
33
29
26
30
23
20
19
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Operating
Profit Margin
20
10
0
& Operating Profit
Margin
76

East Zone
160
30
140
28
100
100
122
114
26
120
97 97
84
35
148 33
128
Price Change
32
30
24
97
96
135
25
91
84
21
Capacity
Utilization
20
80
15
60
Change in
Production
10
40
20
100
Mar-05
115
Mar-06
114
Mar-07
118
Mar-08
122
Mar-09
132
Mar-10
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
250
96
200
84
97
120
East Zone
100
236
231
97
173
186
91
84
80
133
150
100
50
Change in PAT
60
97
100
26
21
28
30
33
40
32
24
20
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Capacity
Utilization
Operating
Profit Margin
& Operating Profit
Margin
77
The companies in the south zone that have been analysed are India Cements Ltd., Ultratech
Cement Ltd., Madras Cements Ltd., Kesoram Industries Ltd., Dalmia Bharat Sugar & Inds.
Ltd., Chettinad Cement Corpn. Ltd., Penna Cement Inds. Ltd., ACC Ltd., and Grasim
Industries Ltd. Following are the graphs of companies in the south zone:
India Cements Ltd.
South Zone
200
180
33
160
139
126
120
100
100
80
74
60
30
28
25
21
103
99
95 96
35
163
160
150
140
40
36
88
20
77
17
72
12
15
10
10
40
20
100
Mar-05
130
Mar-06
135
Mar-07
142
Mar-08
140
Mar-09
154
Mar-10
144
Price Change
Capacity
Utilization
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 87: India Cements Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs. Operating
16000
99
14000
10000
10455
74
9436
6000
33
4000
77
12
100
Mar-05
28
21
989
1487
10
Mar-07
Mar-08
60
40
36
17
Mar-06
80
72
7737
8000
2000
100
88
96
12000
120
13920
103
Mar-09
Mar-10
Mar-11
20
India Cements Ltd.

South Zone
Change in PAT
Capacity
Utilization
Operating
Profit Margin
& Operating Profit
Margin
Figure 88: India Cements Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
78
Madras Cements Ltd.

South Zone
250
40
37
35
31
200
150
21
21
100
100
95
30
163
139
126
99
25
24
20
88
93
83
31
160
150
35
80
67
15
59
10
50
5
100
Mar-05
124
Mar-06
148
Mar-07
153
Mar-08
171
Mar-09
212
Mar-10
189
Price Change
Capacity
Utilization
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 89: Madras Cements Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs. Operating
800
93
600
100
100
632
80
80
377
67
59
300
200
650
88
551
83
500
400
730
99
700
120
35
21
100
141
37
21
40
31
31
60
24
20
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Madras Cements Ltd.

South Zone
Change in PAT
Capacity
Utilization
Operating
Profit Margin
& Operating Profit
Margin
Figure 90: Madras Cements Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
79
Kesoram Industries Ltd.

South Zone
200
180
160
140
126
120
108
95
100
100
Price Change
160
19
148
25
22
163
150
16
122
139
14
15
100
98
93
75
80
60
10
5
4
20
100
Capacity
Utilization
Change in
Production
40
20
Mar-05
100
Mar-06
113
Mar-07
144
Mar-08
175
Mar-09
179
Mar-10
174
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 91: Kesoram Industries Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs.
1400
1200
148
122
1000
800
108
600
98
793
0
-200
100
708
100
93
75
400
200
Kesoram Industries Ltd.

South Zone
150
1130
1144
100 7
Mar-05
136
Mar-06
19
Mar-07
22
Mar-08
14
16
Mar-09 Mar-10
4
Mar-11
-400
-600
-800
50
Capacity
Utilization
0
-50
-627
Change in PAT
-100
Operating
Profit Margin
& Operating Profit
Margin
Figure 92: Kesoram Industries Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin, Source:
80
Dalmia Bharat
Sugar & Inds.Ltd.
South Zone
400
350
35
32
Price Change
300
30
29
26
25
22
250
Capacity
Utilization
20
200
14
150
100 105
100
15
160
150
126
95
126
139
92
94
78
163
15
10
10
52
47
50
100
Mar-05
120
Mar-06
212
Mar-07
255
Mar-08
262
Mar-09
315
Mar-10
361
Change in
Production
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 93: Dalmia Bharat Sugar & Inds. Ltd., Change in Price vs. Change in Production vs. Capacity Utilization
vs. Operating Profit Margin, Source: Financial data: moneycontrol.com, other: CMIE data
1200
1000
1125
150
105
126
800
600
92
78
14
400
200
94
742
15
26
32
100
47
514
29
22
444
52
50
10
-50
10
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Change in PAT
Capacity
Utilization
275
100
Dalmia Bharat
Sugar & Inds.Ltd.
South Zone
Mar-11
Operating
Profit Margin
-100
& Operating Profit
Margin
Figure 94: Dalmia Bharat Sugar & Inds. Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit
81

South Zone
300
29
250
35
31
Price Change
30
28
27
25
200
17
150
100
84
163
139
20
19
126
14
100
160
150
95
15
91
90
86
79
66
5
100
Mar-05
95
Mar-06
103
Mar-07
106
Mar-08
120
Mar-09
154
Mar-10
Change in
Production
10
74
50
0
Capacity
Utilization
290
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
49271
50000
86
84
40000
90
90
38359
79
30000
91
35355
34281
66
27448
100
80
74
70
40
20000
10000
8062
14
29
27
30
28
19
17
100
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Change in PAT
60
50
31

South Zone
Mar-11
20
Capacity
Utilization
Operating
Profit Margin
10
0
& Operating Profit
Margin
82
ACC Ltd.
South Zone
200
180
29
160
140
100
100
95
89
80
91
25
20
23
89
30
139
26
126
19
Price Change
163
160
150
30
120
35
33
20
90
83
Capacity
Utilization
15
60
Change in
Production
10
40
20
100
Mar-05
102
Mar-06
96
96
Mar-07
Mar-08
104
Mar-09
Mar-10
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
CMIE database.
350
300
89
100
295
89
91
83
90
90
265
250
80
244
223
226
70
206
200
150
100
50
30
40
33
29
30
23
26
20
19
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Change in PAT
60
50
100
ACC Ltd.
South Zone
Mar-10
Mar-11
20
Capacity
Utilization
Operating
Profit Margin
10
0
& Operating Profit
Margin
83

South Zone
200
30
180
140
26
120
114
21
100 99
100
126
150
119
Price Change
32
30
163
160
28
160
35
33
139
24
25
116
96
95
Capacity
Utilization
20
94
15
80
60
Change in
Production
10
40
20
100
Mar-05
115
Mar-06
120
Mar-07
120
Mar-08
123
Mar-09
120
Mar-10
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
250
114
231
119
116
200
173
99
140
236
120
186
96
Change in PAT
80
150
100
100
94

South Zone
133
100
97
28
26
32
24
21
50
33
30
60
40
20
Capacity
Utilization
Operating
Profit Margin
0
0
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
-20
& Operating Profit
Margin
84
Chettinad Cement
Corpn. Ltd.
South Zone
250
200
37
161
149
131
123
150
160
30
30
139
20
71
55
Mar-05
Mar-06
121
Mar-07
131
Mar-08
142
Mar-09
181
Mar-10
Change in
Production
15
10
50
107
Capacity
Utilization
25
95
100
Price Change
35
163
159
126
24
100 22
100
40
37
33
150
45
41
208
Operating
Profit
Margin
0 Operating Profit
Mar-11
Margin
Figure 101: Chettinad Cement Corpn. Ltd., Change in Price vs. Change in Production vs. Capacity Utilization vs.
586
600
149
500
400
123
131
180
161
160
159
140
410
120
346
100
0
143
100
24
Mar-06
41
33
60
37
Mar-07
Mar-08
55
30
37
22
Mar-05
-100
80
71
200
Mar-09
-15
Mar-10
Change in PAT
100
269
300
Chettinad Cemeent
Corpn. Ltd.
South Zone
Mar-11
40
20
Capacity
Utilization
Operating
Profit Margin
0
-20
& Operating Profit
Margin
Figure 102: Chettinad Cement Corpn. Ltd., Change in PAT vs. Capacity Utilization vs. Operating Profit Margin,
85
250
Penna Cement
Inds. Ltd.
South Zone
201
200
150
163
160
150
Price Change
139
126
100
100
95
93
107
105
91
77
62
Capacity
Utilization
50
100
Mar-05
116
Mar-06
133
Mar-07
139
Mar-08
171
Mar-09
203
Mar-10
199
Change in
Production
Mar-11
Figure 103: Penna Cement Inds. Ltd., Change in Price vs. Change in Production vs. Capacity Utilization Source:
CMIE data
Financial data for Penna Cement Inds. Ltd. is not available on www.moneycontrol.com.
86

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ASSESSMENT OF COMPETITION IN CEMENT

RESEARCH PROJECT REPORT

SCOPE AND OBJECTIVE OF THE RESEARCH PAPER ..................................................... 1

MOTIVATION FOR THE RESEARCH PAPER ..................................................................... 2

1.2.1 HISTORY OF COMPETITION ISSUES IN CEMENT INDUSTRIES IN THE WORLD..... 2

RESEARCH METHODOLOGY ............................................................................................... 4

2. CEMENT INDUSTRY IN INDIA ........................................................................................................ 5

1.2 MOTIVATION FOR THE RESEARCH PAPER

HISTORY OF COMPETITION ISSUES IN CEMENT INDUSTRIES IN THE WORLD

Business Standard, New Delhi, 5th December, 2007

2. CEMENT INDUSTRY IN INDIA

GDP Data: Central Statistics Office (CSO)

Figure 2 illustrates that residential real

estate sector contributed towards 63%

Figure 2, Source: Crisil Research

of the total domestic cement demand in

Technical Group on estimation of housing shortage constituted in the context of formulation of

Eleventh Five Year Plan, Chapter 11

Crisil Research: India Real Estate Overview

Cements Ltd., Ultratech

Cements Ltd., Century

Ltd., Birla Corporation

2.2.3 TOP CEMENT COMPANIES ALL INDIA DATA

2.3 CEMENT MARKET DIVISION IN INDIA

Bulky nature of cement and limestone (a key ingredient in manufacturing cement)

High freight costs involved in transportation of these commodities.

2.3.1 NORTH ZONE

IBEFs report Cement November 2011, Page 10

3. COMPETITION ISSUES IN THE CEMENT INDUSTRY

Century Textiles &

Moving on to the west zone:

Moving on to the south zone:

4. CEMENT CARTEL CASES ACROSS THE WORLD

Cement cartel - a CCP study, Abdur Razzaq Thaplawala

identifying possible anti-competitive behaviour in the construction industry. The research

As done by competition regulatory authorities in cement cartel cases in Pakistan, South

The Competition Act, 2002

Press Releases and news items

1. Bundeskartellamt news, 14 April 2003, Bundeskartellamt imposes fines totalling 660

Industry and government reports

Cement cartel - a CCP study, Abdur Razzaq Thaplawala

Figure 36: Ultratech Cement Ltd., Change in PAT, Source: moneycontrol.com

Figure 38: Jaiprakash Associates Ltd., Change in PAT, Source: moneycontrol.com

Figure 40: India Cements Ltd., Change in PAT, Source: moneycontrol.com

Figure 42: Shree Cement Ltd., Change in PAT, Source: moneycontrol.com

Figure 44: Madras Cements Ltd., Change in PAT, Source: moneycontrol.com

Figure 46: Birla Corporation Ltd., Change in PAT, Source: moneycontrol.com

Figure 48: Binani Cement Ltd., Change in PAT, Source: moneycontrol.com

Figure 50: Kesoram Industries Ltd., Change in PAT, Source: moneycontrol.com

Ambuja Cement Ltd.

Ambuja Cement Ltd.

Shree Cement Ltd.

Shree Cement Ltd.

Grasim Industries Ltd.

Grasim Industries Ltd.

JK Lakshmi Cement Ltd.

Binani Cement Ltd.

Binani Cement Ltd.

Ultratech Cement Ltd.

Sanghi Industries Ltd.

Sanghi Industries Ltd.

Century Textiles & Inds. Ltd.