EMIS Insight - India Cement Production Report

Cement
Production
India
February 2014
Produced by:
Any redistribution of this information is strictly prohibited.

Copyright 2014 EMIS, all rights reserved.
-1-
Table of Contents
I. Cement Sector Overview
II. Cement - Regional Performance
1. Sector Highlights
2. Key Indicators
3. Economic Links
4. Forecasts
5. Porters Five Forces Model
6. Production
7. Production (contd)
8. Capacity
9. Consumption
10.Cement Prices
11.Production Costs
12.Trade
13.Trade (contd)
14.Energy Efficiency
15.Foreign Direct Investment
16.Government Policy

1.
2.
3.
4.
5.
Northern Region
Eastern Region
Southern Region
Western Region
Central Region
III.Clinker
1. Clinker
2. Clinker (contd)
IV. Main Players

1. M&A Activity
2. UltraTech
3. UltraTech (contd)
4. Ambuja Cements Ltd.
5. Ambuja Cements Ltd. (contd)
6. ACC Limited
7. ACC Limited (contd)
8. Shree Cement
9. Shree Cement (contd)
10.Ramco Cement
11.Ramco Cement (contd)
-2-
I. Cement Sector Overview
Indias fiscal year runs from Apr 1 to March 31. Thus, FY 2014 (also called fiscal 2014) means Apr 1, 2013 Mar 31, 2014. In Indian documents, FY (fiscal) 2014 is also labeled FY13-14.
The remaining nine months of calendar 2014, i.e. Apr-Dec, belong to fiscal year 2015.
In order to better align with calendar years and make international comparisons more meaningful, in the Major Players section of this report, Emerging Markets Insight has chosen to label data by
the year in which most of the result occurred. Unless otherwise stated, in the Major Players section of this report, 2012, for example, means the 12 months between Apr 1, 2012 - Mar 31, 2013, or
what in India is referred to as FY 2013. This applies to Indian companies only and may not apply to companies with global operations, which may be presented in this report.
When sources have not provided details on their year labeling policy, year labels in graphs and tables featured in this report appear as provided by the source.

-3-
Sector Highlights
Sector Dynamics
India is the world's second-largest cement manufacturer after China, accounting for about 7% of the global production. The country is also among the leading
exporters worldwide. Since cement is a cyclical commodity, the dynamics of production are highly dependent on the overall economic activity in India. Thus, the
recent slow-down in GDP growth and especially the unstable situation in the construction sector have resulted in decreasing demand and excess capacities.
Demand
The housing sector is the main driver of demand for cement manufacturing, as over 67% of the production is directed to housing construction. Another 13% are
used in the commercial construction and 11% in infrastructure projects, with approximately 9% of the cement used in industrial construction.
The demand for cement was affected by the economic slowdown in recent years, subdued construction activity and delays in execution of infrastructure projects.
Prolonged monsoon periods also had a negative effect on the sector. The capacity has reached around 240mn tonnes in FY 2012, while utilisation fell to 75%,
reflecting the still existing mismatch in supply-demand.
Market Segmentation
Cement production in India is a fragmented industry with more than 160 players. However, the sector is rather oligopolistic in nature as the top 10 producers
control about 70% of the domestic market. The recent slowdown in demand has affected negatively the sector but small producers experienced the biggest
reduction in capacity utilisation, suggesting there is a scope for consolidation in the industry.
The sector is dominated by private entities, as less than 5% of the manufacturers are state-owned. A number of foreign companies have entered the market French cement maker Lafarge, Germany's HeidelbergCement, Italy's Italcementi and Swiss cement maker Holcim.
Regional Presence
With cement being a bulk, transport-expensive commodity, the production has been concentrated on regional basis. India is divided into five main regions
northern, eastern, western, southern and central. The southern has the highest installed capacity and production there exceeds consumption.
The main cement production states in India are Andhra Pradesh, Tamil Nadu (both in the southern region) and Rajasthan(northern region).

-4-
Key Indicators
Main Indicators
Product
2007
2008
2009
2010
2011
Cement Production (mn tonnes)
168.3
181.6
160.8
168.3
179.9
Cement Despatches (mn tonnes)
167.7
181.2
159.8
167.2
179.0
Cement Installed Capacity (mn tonnes)
178.8
206.6
199.2
224.4
241.9
94
88
83
76
75
164.0
178.0
158.3
165.6
177.4
Cement Export (mn tonnes)
3.7
3.2
1.6
1.5
1.6
Cement Closing Stock (mn tonnes)
1.1
1.1
1.3
1.6
1.3
Clinker Production
129.7
138.8
128.3
131.7
137.1
Clinker Ground (mn tonnes)
124.2
133.7
121.2
126.2
134.0
Clinker Export (mn tonnes)
2.4
2.9
3.1
2.6
1.9
Clinker Closing Stock (mn tonnes)
5.5
5.5
6.3
6.5
5.6
Cement, plaster, concrete etc.( % of manufacturing

output)
3.6
3.2
3.3
2.9
2.8
Cement,plaster,concrete etc. (% of world output)
2.6
2.6
3.1
2.9
2.8
Cement,plaster,concrete etc., real output (USD bn)
0.6
0.5
0.5
0.5
0.4
Cement Capacity Utilisation, %

Cement Consumption (mn tonnes)
Source: CEIC, Oxford Economics

-5-
Economic Links
GDP at factor costs (INR tn, constant prices)
9.3%
8.6%
Cement, plaster and concrete VA output, % of manufacturing
9.3%
3.59
3.16
6.7%
3.26
2.90
2.83
2.80
2010
2011
2012
6.2%
5.0%
39.0
41.6
45.2
49.4
52.4
55.1
2007
2008
2009
2010
2011
2012
GDP
yoy change
2007
Construction and GDP development (real yoy growth %)

10.8%
8.6%
9.3%
6.7%
6.7%
2009
Comments
10.2%
9.3%
Construction (incl. real estate, infrastructure etc.), which determines

the overall cement production dynamics, outpaced GDP growth in the
pre-crisis period, but has slowed down in recent years.
6.2%
5.6%
5.3%
2008
5.0%
4.3%
As demand for cement declined in the past few years, cement

production also lost share in the total country output.
2007
2008
2009
GDP
2010
2011
Construction
2012
Source: MOSPI, Oxford Economics

-6-
Forecasts
Key macroeconomic indicators forecast
Indicator
2013
2014
2015
2016
2017
2018
GDP real growth, %
3.8
5.1
6.3
6.5
6.7
6.7
Investment,% GDP
35.0
35.1
35.2
35.4
35.6
35.8
CPI, average %
10.9
8.9
7.5
7.0
6.8
6.7
Population
(mn persons)
1,243
1,260
1,276
1,293
1,310
1,327
Cement forecast
2014 2015 2016 2017 2018 2020 2025 2030 2035
Cement, plaster,
concrete etc.,
% of manufacturing
2.77
2.75
2.76
2.77
2.79
2.83
2.96
3.05
3.01
Cement, plaster,
concrete etc.,
% of world output
2.76
2.84
2.94
3.04
3.14
3.35
3.90
4.31
4.54
Cement, plaster,
concrete etc.,
real output, USD bn
0.42
0.42
0.42
0.43
0.43
0.43
0.45
0.44
0.42
Source: IMF, Oxford Economics, IBEF

-7-
In the medium term, the increase in GDP, rising

population and high interdependence between economic
growth and infrastructure development suggest stable
expansion of the cement demand. Moreover forecasts
are for reduction in the inflationary pressure, which will
increase households disposable income. The economic
growth and urbanisation will push the demand for
commercial and retail real estate, again having positive
effect on cement sector.
In the short-run however, the dynamics are not so clear.
Although forthcoming state and national elections could
result in increased spending and, along with Government
attempts to spur infrastructure, could lead to pick up in
construction activity, the problems with oversupply of
cement and high production costs persist. The slight
increase in consumption will be probably offset by new
capacity additions.
Cement demand will grow by a compound rate of 8% in
2013-2015, according to trust foundation India Brand
Equity Foundation (IBEF).
Porter's Five Forces Model for India's Cement Industry
Entry Barriers
High initial capital investment, long gestation period and required economies of scale form high barriers for entry. Moreover the
scarce free resources and experienced domestic companies make the entry of new players more difficult.
Problems with land acquisition are reported by producers as major obstacle for expansion. As a result, many of the investments
are made in brownfield manner.
Supplier Power
Coal and freight are among the main ingredients of the cement industry mix. The government is the body that controls licensing
of coal and limestone reserves. Some of the leading companies reported inordinate delays in conversion of allotted linkages
and deteriorating quality. The use of imported coal has increased, making production more dependent on international coal
price movements and forex fluctuations.
Buyer Power
Cement producers are highly concentrated in the different regional markets, thus reducing the power of the consumer.
Inter-firm
Rivalry
In spite of the big number of players, the Indian cement industry is rather oligopolistic in nature with regional segmentation.
Treats of
Substitutes
There are no materials that can substitute cement. There are shifts between cement varieties as a result of differences in
energy and cost efficiency of production.

-8-
Production
Comments
Top cement producers 2012, mn tonnes (estimated)

2,150
India cement manufacturing expanded at a compound rate of 5.4% in

the period between 2003 and 2011. Fuelled by the construction boom
in 2004-2008 the sector growth averaged 9.1%. A drop of 11.5%
followed in 2009, but production rose again in 2010 and accelerated
in 2011.
250
Domestic production grew by a modest 3.9% during H1 FY 14

primarily due to weak demand from end-user industries, according to
credit ratings and research provider ICRA Ltd.
China
Cement production in India
155.7 9.8%
168.3
181.6
8.1%
7.9%
70
US
Brazil
6.3%
Northern
23.5%
2008
Production, mn tonnes
2009
2010
2011
Southern
33.8%
Change, yoy %
Source: CEIC, US Geological Survey (Jan 2013), The Economic Times

60
60
52
Iran Vietnam Russia Turkey Japan
Western
13.7%
Eastern 13.7%
-11.5%
2007
65
Central 15.3%
179.9
5.3%
2006
65
Cement production regional structure, 2011
169.2
160.8
India
74
-9-
Production (cont'd)
Cement production by variety, mn tonnes
200
180
160
0.7
13.6
0.6
15.2
0.7
11.8
0.6
11.8
0.6
12.4
140
120
100
111.2
120.8
100.2
102.4
110.1
80
60
40
20
42.8
45.1
48.2
54.4
56.9
2007
2008
2009
2010
2011
Cement production by variety, %, 2011

Ordinary
Portland
Cement 31.6%
Others
Portland
Blast
Furnace
Slag
Portland
Pozzolana
Cement
Portland
Pozzolana
Cement 61.2%
Ordinary
Portland
Cement
Portland Blast
Furnace Slag
6.9%
Others 0.3%
Comments
The Ordinary Portland Cement (OPC) was the main variety produced in India in the early 2000s, but the industry went through a shift in the production mix.
With the reduction in OPC output in 2005-2007 and the expansion of Portland Pozzolana Cement (PPC) at a CAGR of 10.1% in 2004-2010, the latter
variety took the leading role. The share of OPCs dropped to about 25% in 2007 from over 60% in 2000. At present, more than 60% of the cement produced
in India is PPC.
Sector companies also manufacture Sulphate Resistance Cement and IRST 40, but their share represents less than 0.3% of the total production.
Source: CEIC
- 10 -
Capacity
Comments
Installed capacity, mn tonnes
Due to the long-period needed for set-up of new capacities, they are
usually created ahead of demand. Thus, new capacities continued to
be installed after the market started to contract.
The pace of capacity additions has slowed down in 2011, though
overcapacity still poses problems for the industry. The over-supply
led to shrinking capacity utilisation and in 2011 it fell to 79%.
The level dropped the most in the southern region, which registered
the highest levels of consumption in the pre-crisis period. At the same
time, utilisation in the western region where the productionconsumption gap is the largest continued to rise.
151.7
157.6
165.9
2004
2005
2006
Installed capacity by region, mn tonnes

250
27.2
200
150
26.0
27.6
24.0
32.3
26.5
29.3
68.3
100
57.4
50
27.6
29.9
28.7
92.3
31.4
30.5
96.6
83.6
26.3
28.2
31.7
38.3
48.4
38.9
49.5
51.7
2007
2008
2009
2010
2011
199.2
2008
2009
2010
241.9
2011
Capacity utilisation, %
Product
2007
2008
2009
2010
2011
Northern Region
95
86
92
78
83
Eastern Region
86
87
85
85
80
Southern
Region
Southern Region
94
88
72
66
63
Eastern
Region
Western Region
98
89
79
76
81
Northern
Region
Central Region
96
94
106
98
89
India average
94
89
87
81
79
Central
Region
Western
Region
Source: CEIC
206.6
178.8
2007
225.8
- 11 -
Consumption
Consumption and production, mn tonnes
Per capita consumption 2012, kg
177
2011
1,581
180
167
168
2010
158
2009
744
161
178
2008
402
182
China
Production
Consumption by region, mn tonnes

180
120
26.2
23.8
32.2
100
80
191
129
Indonesia
India
Pakistan
168
Consuption
140
202
164
2007
160
330
49.2
60
34.0
54.4
25.0
27.4
Central
Region
35.8
Western
Region
28.1
31.5
52.7
51.0
50.9
Southern
Region
25.9
29.2
30.0
Eastern
Region
Northern
Region
40
28.2
20
33.5
35.1
26.7
27.5
30.8
2007
2008
2009
2010
2011
Brazil
India's cement production fully meets domestic demand.

The per capita consumption in the country is substantially below the
world average and far lower than the consumption in India's main
competitor China, suggesting good potential for expansion.
Source: CEIC, International Cement Review (Sep 2013)

Russia
Comments
29.9
25.3
Turkey
- 12 -
Cement Prices
Cement and Lime Wholesale Prices, annual change %
25
20
15
10
5
0
10.2013
7.2013
4.2013
1.2013
10.2012
7.2012
4.2012
1.2012
10.2011
7.2011
4.2011
12.201
10.2010
7.2010
4.2010
1.2010
10.2009
7.2009
4.2009
1.2009
10.2008
7.2008
4.2008
1.2008
10.2007
7.2007
4.2007
1.2007
-5
Comments
Cement prices showed a steady upward trend from 2003 to H1 2008 due to expansion of the construction sector and supply gap. Although installed
capacity has outstripped demand by 2009, much of those capacities were in stabilisation phase i.e. the effective capacity was lower than the capacity
utilisation level suggested. In the following years, however, with most of the capacities being fully operational, pricing pressures started to build. The
unstable local construction sector and lower demand also affected cement prices.
The price of cement rose in end-2011- mid 2012 period, following a slight recovery in demand. The increase decelerated again in end 2012 and was on a
downward path in the last months of 2013.
Source: CEIC, Emerging Markets Insight calculations
- 13 -
Production Costs
Fuel, Freight and Electricity Prices (WPI, yoy change %)
30
Coal
Electricity
Mineral Oils
20
10
0
-10
4.2012
6.2012
8.2012
10.2012
12.2012
2.2013
4.2013
6.2013
8.2013
10.2013
12.2013
6.2013
8.2013
10.2013
12.2013
Inflation and Exchange Rate Movements

12
0
-12
-24
WPI, yoy %
-36
4.2012
6.2012
8.2012
USD/INR
10.2012
12.2012
2.2013
4.2013
Comments
The development of the sector and especially its profitability is dependent on the investment costs (land costs, inflation, environmental regulations) and operating costs
(coal, electricity, oil). The latter have been quite volatile recently, rising more often than not, reflecting high inflation and tax hikes.
International coal prices declined substantially in 2013, leading to higher imports of the raw material and relatively lower prices for the import dependent companies. The
price decline was however partially offset by the weak rupee.
In May 2013, Coal India Ltd reduced the prices of premium varieties of coal by 10% in line with decline in international coal prices. To offset this, CIL increased the prices of
low grade coal -varieties that are commonly used by Indian cement companies - by an average 10% . The increase in coal prices affected the power and fuel cost for
cement companies and was more pronounced on companies which depend more heavily on domestic coal.
The costs pressure is expected to continue in the short-to-medium term and will carry a downside risk for the sector development.
Source: CEIC, X-Rates.com, ICRA
- 14 -
Trade
Main exporters in value terms, calendar 2012
India cement trade balance, USD mn
7.4%
Apr-Sep'13
6.3%
2012
5.3%
3.4%
2009
India
USA
Japan
Vietnam
2008
Pakistan
134.0
2010
1.5%
China
83.5
2011
3.4%
2.5%
Turkey
70.6
2007
124.8
21.4
111.6
149.2
Comments
India is among the world's top ten exporters of cement both in value and volume terms. However, it lost market share in 2012 when the country's exports
accounted for 1.5% of the global trade, down by 1% compared to 2011.
The country has a positive trade balance with traditionally high cement exports and relative product imports.
Source: Emerging Markets Insight calculations, Department of Commerce of India

- 15 -
Trade (cont'd)
India - Export of cement
203.7
0.125%
202.1
188.3
Main export markets in value terms, Apr-Sep 2013
213.5
Others
178.2
140.3
0.102%
0.079%
0.081%
0.070%
96.6
0.059%
South Africa
1.0%
Comoros
1.1%
Tanzania
0.064%
7.1%
Myanmar
2.7%
3.9%
2012
Share in total, %
0.021%
79.5
0.016%
1.2%
Malaysia
1.3%
Germany
1.8%
0.011%
UAE
2.2%
26.0
Egypt
94.7
0.019%
Others
Vietnam
Apr-Sep'13
2012
2011
2010
2009
2008
2007
Netherlands
Import, USD mn
China
Bangladesh
Pakistan
Share in total, %
Source: Department of Commerce, Emerging Markets Insight calculations, Data for HS 2523
43.6%
Main import markets in value terms, Apr-Sep 2013
118.9
77.3
26.2%
Sri Lanka
0.041%
0.025%
76.7
9.7%
Nepal
India - Import of cement
0.022%
54.5
4.6%
Bhutan
Apr-Sep'13
Export, USD mn
2011
2010
2009
2008
2007
Saudi Arabia
- 16 -
3.1%
3.7%
9.6%
11.3%
26.8%
38.9%
Energy Efficiency
Weighted average electric energy consumption, kWh/tonne
India
China
EU-27
World
72.6
73.2
72
75.6
75.9
72
72.8
73.7
2007
76.2
2011
72.7
71.9
73.7
87.3
102
114
107
2010
76.4
94.5
102
116
110
2009
73
72.9
73.7
92.3
103
113
110
2008
77.1
90.8
103
111
111
2007
74.3
74.1
74.1
91.2
105
109
112
Weighted average clinker to cement ratio, %
2008
2009
2010
2011
India
China
EU-27
World
Comments
According to data from the Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development, India performs well in terms
of energy efficiency.
Despite the fact that fast capacity accumulation has led to lower utilisation, the recent expansion of the industry provides efficiency as modern plants are
more efficient than older ones.
Source: Cement Sustainability Initiative, GNR Project

- 17 -
Foreign Direct Investment

FDI Inflows Cement and Gypsum Products (calendar years)
Sector-wise distribution of equity FDI (2000-Nov2013)
674.9
2.9%
617.5
Telecommunic
ations 6.2%
Construction
11.0%
2.0%
Camputer
software 5.9%
Cement and
Gypsum
products 1.4%
1.4%
252.6
214.0
0.8%
96.6
0.4%
80.7
0.3%
2008
2009
2010
2011
2012
Services
18.6%
Oct'13
FDI in cement and gypsum products, USD mn

Cement and gypsum products in total FDI
Source: CEIC, Ministry of Commerce and Industry of India, Department of Industry Policy and Promotion
- 18 -
Pharmaceutica
ls 5.5%
Government Policy
Cartels and
competition
In June 2012, the Competition Commission of India (CCI) imposed fines worth a total of USD 1.1 billion on eleven local cement
manufacturers for price fixing.
The watchdog said the companies colluded to underuse their plants and create an artificial shortage of cement. The companies were
fined the equivalent of 50% of their net profit for the fiscal years ending in March 2010 and March 2011.
Budget
India's 2013-2014 national budget features several projects designed to boost construction sector development and, consequently,
cement demand. Among them are projects for building of roads in North-eastern states and connecting them with Myanmar; 3,000km
of road projects in Gujarat, Madha Pradesh, Maharashtra, Rajastan and Uttar Pradesh, two new major ports in the states of West
Bengal and Andhra Pradesh and a new harbour in Tamil Nadu. About INR 200bn were to be allocated to the Rural Infrastructure
Development Fund.
The budget also levied 2% custom duty on steam and bituminous coal. Coal is among the main raw material in cement production, as
the annual requirement exceeds 50mn tonnes. Administrative, environmental and legal delays in adding new mines and expanding
existing ones has increased India's dependence on coal imports and the country is currently the third largest importer of the raw
material.
12th Five-Year
Plan
The growth of the Indian cement sector is closely related to the development of the local construction sector. The 12th Five Year Plan
suggests doubling the funds allocated for infrastructure in 2013-2017 to INR 56tn (USD 1tn). It includes projects for freight corridors,
upgraded and new airports and ports, large number of highway, which are expected to enhance economic activity and lead to increase
in cement demand. According to official estimates, there will be a shortage of 40mn dwelling units in rural areas and 29mn units in
urban area, which will drive housing demand.
The construction sector is expected to grow by accumulated 10% in the period. To cater for the rising demand the government projects
that cement capacity has to increase to about 480mn tonnes per annum i.e. approximately additional 150mn tonnes are to be installed
and operationalized in the coming years.
But considering the average annual consumption, the current low utilisation levels and history of underachievement and delays of the
government construction projects, the achievement of these ambitious targets is doubtful.
Source: Planning Commission for 12th Plan estimates

- 19 -
II. Cement - Regional Performance
Indian fiscal year 2013 ends in March 2013 and the remaining nine months of calendar 2013 belong to fiscal year 2014.
In order to better align with calendar years and make international comparisons more meaningful, Emerging Markets Insight has chosen to label data by the year in which most of the result
occurred. Unless otherwise stated, in charts throughout this report, 2011, for example, means the 12 months between Apr 1, 2011 - Mar 31, 2012, or what in India is referred to as fiscal 2012.

- 20 -
Northern Region
Production and consumption, mn tonnes
2008
2009
Production
2010
30.8
15.3%
2011
Consumption
Installed capacity (mn tonnes) and capacity utilisation (%)

60
95.0
40
30
20
92.0
86.0
1.0
50
0.7
6.2
6.2
33.0
26.2
1.0
0.3
32.8
78.0
1.0
2.0
83.0
1.0
2.1
Other
39.2
40.9
Punjab
4.2
0.4
4.8
2.5
1.8
2.5
1.8
2.6
1.8
3.0
2007
2008
2009
2010
2011
9.6%
About 80% of the production in the Northern region is concentrated in

Rajasthan. The state is the production hub for white cement in India.
The share of this cement variety in consumption is still relatively low.
This could be explained with the higher price compared with grey
cement and the price conscious demand in the country.
Himachal
Pradesh
Rajasthan
About 77% of the cement produced in the Northern Region in 2011

was manufactured by 5 companies.
Capacity
Utilization
Source: CEIC, Competition Commission of India - Assessment of Competition in Cement Industry

10.7%
Comments
Haryana
10
14.9%
JK
Lakshmi
Cement
2007
27.5
Jaipraka
sh
Associat
es
26.7
Ultratech
Cement
34.1
Binani
Cement
35.1
33.5
26.4%
42.2
37.9
Shree
Cement
36.5
41.2
Top cement producers, 2011
- 21 -
Eastern Region
23.825.3
26.0
28.2
25.9
21.4
29.2
23.2

30.3%
30.0
26.7%
24.6
15.2%
Production
2010
2011
Consumption
Century
Textiles
and
Industries
2009
OCL
India Ltd.
2008
Lafarge
India
2007
Ultra
Tech
Cement
8.9%
Comments
35
30
25
20
87.0
86.0
2.7
11.1
15
10
5
0
2.8
85.0
2.8
12.0
9.4
85.0
2.9
Others
The Eastern region is the only region in India, where cement

consumption outstrips production. Despite the capacity addition in the
past years, the supply-demand gap has been increasing.
Chhattisgarh
11.6
10.5
5.4
4.0
4.8
3.6
4.6
6.4
6.4
5.1
5.2
3.8
3.6
2007
2008
2009
2010
5.1
3.2
West Bengal
4.8
80.0
6.4
5.7
2011
Orissa
Nonetheless, the levels of utilisation seam relatively low in

comparison with other regions as well as in light of the uncovered
demand.
Jharkhand
Capacity
Utilization

- 22 -
Southern Region
Consumption

120
94.0
100
0.6
0.6
13.1
40
20
0.6
0.6
72.0
80
60
88.0
17.4
14.8
13.0
28.7
14.5
66.0
0.6
14.3
32.3
63.0
34.4
44.9
47.2
26.4
32.6
2007
2008
0
2009
2010
2011
Kerala
Karnataka
Tamil Nadu
Andhra
Pradesh
7.8%
6.8%
Being the region with the highest consumption in the pre-crisis period,
the Southern region also had the highest capacity installed. In recent
years, however, there was practically no demand growth due to lack
of infrastructure and housing projects .The demand contraction
resulted in substantial decline in utilisation level.
With excess capacities, the producers in the region are faced with
downward price pressures.
Capacity
Utilization

7.9%
Comments
20.2
41.2
9.2%
Penna Cement
2011
11.8%
Chettinad cement
Production
2010
50.9
Dalmia Bharat
Sugar & Inds.
2009
14.4%
Kesoram Cement
2008
15.9%
60.8
Ultra Tech cement
2007
54.4
60.2
51.0
59.3
52.7
India Cement
54.2
49.2
59.9
Madras Ceents
- 23 -
Western Region
35.8
2007
2008
2009
Production
24.7
21.7
20.8
2010
2011
Consumption
9.0%
8.8%
7.0%
Jaiprakash
Associates
28.1
Century Textiles
and Industries
28.5
47.7%
31.5
Sanghi Industries
34.0
Ultra Tech- Gujarat
32.2
28.8
Comments
35
30
89.0
25
20
11.9
13.1
17.4
79.0
11.3
15
10
Maharashtra
98.0
19.2
15.2
76.0
11.8
According to the country's competition watchdog, in 2011 four

companies accounted for 77% of the total cement output in the
Western region. The production is almost equally spread between the
two main states Gujarat and Maharashtra.
81.0
11.8
Gujarat
16.9
18.7
In 2011, the Western region registered growth in demand of 13.7%,

reflected in higher utilisation levels despite the capacity additions.
Capacity
Utilization
0
2007
2008
2009
2010
2011

- 24 -
Central Region
29.9
27.4
27.6
2011
Consumption
15.6%
13.0%
Ultratech Cement
Production
2010
41.5%
Century Textiles
2009
26.2
25.0
25.1
26.2
2008
Jaiprakash
Associates
2007
26.0
23.8
25.0
Comments
35
30
106.0
Madhya
Pradesh
25
20
18.4
19.4
15
94.0
94.0
98.0
19.2
Uttar
Pradesh
17.8
The market is highly oligopolistic, with 3 companies accounting for

70% of the cement output.
89.0
10
5
Production in the Central region almost entirely covers consumption,

underpinning the high capacity utilisation level.
22.3
7.7
8.3
6.3
8.0
9.1
2007
2008
2009
2010
2011
Capacity
Utilization

- 25 -
III. Clinker

- 26 -
Clinker
Clinker capacity in 2012, mn tonnes (estimated)
Clinker export, thou tonnes
1,750
3,121
2,899
2,673
2,375
1,879
250
880
105
80
75
68
66
57
55
557
55
2007
1,042
997
510
2008
Total clinker export
2009
2010
2011
Clinker export to Nepal
Comments
India is the second-largest producer of clinker in the world behind China. As the country uses almost all of the manufactured quantity in the production of
cement, it exports just about 2% of its total clinker output.
The main export markets in volume terms are Nepal, followed by Sri Lanka and Mozambique.
Source: US Geological Survey, CEIC

- 27 -
Clinker (cont'd)
Comments
Clinker production
7.0%
6.5%
Clinker production rose at an average rate of 6% in the period 20032007 but slowed down to 1.4% in 2007-2011.
2.7%
138.8
129.7
Most of the clinker is ground in the Southern region.
131.7
128.3
4.1%
137.1
-7.6%
2007
Region-wise production, 2011
2010
Change, yoy %
140
120
Western
12.9%
100
18.4
17.8
22.9
17.9
17.1
23.5
18.7
17.9
19.7
20.4
80
60
40
Eastern 9.3%
20
Southern
38.2%
42.1
14.4
46.6
15.3
- 28 -
Central
Region
Western
Region
47.8
Southern
Region
13.0
13.8
15.0
Eastern
Region
Northern
Region
46.9
47.6
26.5
30.5
26.4
28.2
31.1
2007
2008
2009
2010
2011
Source: CEIC
2011
Region-wise clinker grinding (mn tonnes)
Central 16.2%
Northern
23.3%
2008
2009
IV. Main Players

- 29 -
M&A Activity
Recent Mergers and Acquisitions
Date
Target Company
Deal Type
Buyer
Country of
Buyer
Deal Value USD (mn)
Stake %
11.09.2013
Gujarat plants of Jaypee Cement

Corp Ltd
Acquisition
Ultratech Cement Ltd
India
23.4
100.0
29.08.2013
Century Textiles & Industries Ltd
Open market
purchase
Private Investors
2.3
0.8
12.08.2013
Sree Jayajothi Cements Ltd
Acquisition
CRH Plc
Ireland
230.0
68.0
24.07.2013
ACC Ltd
Acquisition
Ambuja Cements India Ltd
India
2,467.6
50.0
27.06.2013
Sree Jayajothi Cements Ltd
Acquisition
Vicat Group
France
50.0
21.05.2013
Cement grinding facility of

Heidelberg Cement
Acquisition
JSW ISPAT Steel Ltd
India
100.0
15.05.2013
Lafarge India Pvt Ltd
Minority stake
purchase
Baring Private Equity Asia Ltd
Hong Kong
260.0
14.0
19.01.2013
India Cements Ltd.
Block trade
Undisclosed investors
3.3
9.8
Source: DealWatch
- 30 -
UltraTech
Income and profit (INR bn)
Highlights
200.2
181.7
UltraTech is the largest cement producer and clinker exporter in

India and is among the leading cement producers globally. Along
with the Indian market, the company operates also in Bahrain,
Bangladesh, Sri Lanka and the UAE.
UltraTech is active in the cement and concrete production,
building products and building solutions.
In the cement segment, the companys assortment includes
Ordinary Portland Cement, Portland blast furnace slag cement
and Portland Pozzolona Cement.
As at March 2013, the company had production capacity of
53.9mn tonnes of cement per annum (51mn tonnes in India and
3mn tonnes in subsidiaries abroad). In the financial 2013,
UltraTech commissioned a 3.3mn tonne clinkerisation plant at
Rawan, Chhattisgarh, a 1.55mn tonne grinding unit at Hotgi,
Maharashtra and additional 0.6mn tonne cement grinding
capacity at Gujarat. The company invested also in a wall-care
putty plant of 0.4mn tonnes at Katni, Madhya Pradesh and port
based bulk terminal of 0.5mn tonnes per annum at Cochin.
UltraTech plans to expand its cement production to 64.45mn
tonnes by 2015.
In September 2013, Ultra Tech acquired the Gujarat Cement Unit
of JCCL with 3.6mn tonnes clinker and 2.4mn tonnes cement
capacity, as well as, a grinding cement unit with 2.4mn tonnes
capacity. After the acquisition the companys debt-to-equity ratio
was 0.54.
In December 2013, UltraTech announced plans for an INR 50bn
investment in two cement plants in Uttarakhand. The new units
will have capacity of 3.5mn and 2mn tonnes per annum.
As at end of fiscal 2013, the company had a work force of 12,660
employees.
UltraTech is listed on the Bombay Stock Exchange (BSE) and the
National Stock Exchange (NSE).
2008
28.2
14.0
45.2
24.5
70.5
20.9
10.9
18.1
9.8
63.8
2009
2010
Net Sales
49.8
26.6
132.1
2011
EBITDA
2012
Net Profit
Key Performance Indicators

Product
2008
2009
2010
2011
2012
Equity Share Capital (INR bn)
1.2
1.2
2.7
2.7
2.7
Capital Employed (INR bn)
64.7
70.4
165.4
187.5
225.5
Net worth (INR bn)
36.0
46.1
106.7
128.6
152.3
EPS
78.5
87.8
62.7
89.3
96.9
EBITDA margin, %
15.0
16.0
11.0
13.0
25.0
Debt Equity Ratio
0.6
0.4
0.4
0.3
0.4
Source: Company data; The Economic Times

- 31 -
UltraTech (contd)
2008
2009
2010
Production
2011
2012
2008
2009
Sales
2011
2012
yoy change,
%
Installed Clinker
Capacity (mn
tonnes/annu Grey Cement
m)
36.2
39.5
9.0
48.8
50.9
4.0
31.3
31.8
1.0
39.4
40.1
2.0
5.5
5.7
3.0
Clinker
0.9
0.9
1.0
Grey Cement
0.8
0.8
1.0
Capacity
31.3
31.8
1.0
0.5
2012
Sales
2011
2012
yoy change,
%
39.1
39.4
0.9
0.2
0.2
-15.8
39.3
39.6
0.8
0.7
0.7
4.2
0.8
0.3
-57.7
Total
1.5
1.1
-28.2
Sales Others White Cement (LMT)
0.56
0.57
2.0
Indicator
Grey cement
Domestic
Clinker
sales
Total
Clinker
Export sales Grey cement
Source: Company data; * Effective capacity

2011
Sales, mn tonnes
Indicator
Production
Grey Cement
(mn tonnes)
White Cement
2010
Production
Capacity and Production
Clinker
1.6
2.4
2.5
15.1
15.6
26.8
40.2
40.1
39.8
39.4
33.2
Clinker production and sales, mn tonnes
17.8
17.6
15.8
15.9
32.9
Cement production and sales, mn tonnes
- 32 -
Ambuja Cements
70.8
62.2
14.0
2008
12.6
12.2
2009
96.8
85.5
73.9
2010
12.3
Ambuja Cements was founded in 1983 as Gujarat Ambuja

Cements Ltd and entered the cement production segment
in 1986.
In 2006, global cement producer Holcim acquired
management control over Ambuja Cements Ltd (ACL) and
currently holds a majority stake in the Indian manufacturer.
ACL has five integrated cement manufacturing plants and
eight grinding units across India. The firm has also built a
port with three terminals on the western coastline and owns
its own fleet of ships.
In 2012, ACL put into operation a pre-grinder at its
Bhatpara unit worth approximately INR 400mn, thus
increasing the total cement grinding capacity of the
company to 27.95mn tonnes.
In January 2014, ACL completed a bulk packing terminal of
1mn tonne capacity at Mangalore, Karnataka.
In July 2013, Ambuja Cements announced plans to acquire
a 50.01% stake in local peer ACC Ltd for an estimated total
consideration of INR 147bn (USD 2.5bn). In November
2013, The Economic Times reported that state-owned
reinsurer General Insurance Corporation of India and four
other general insurers would vote against the deal, calling it
unfavourable to the minority shareholders. The main
institutional shareholder Life Insurance Corporation is still
undecided. A statement on the restructuring is expected by
the Gujarat High Court by April 2014.
ACL is listed on both leading bourses in India BSE and
NSE.
90.9
13.0
2011
Net Sales
Highlights
2012
12.9
2013
Net Profit

Product
2008
2009
2010
2011
2012
Net worth (INR bn)
56.7
64.7
73.3
80.7
88.1
Capital employed
(INR bn)
63.4
71.2
79.3
87.8
94.1
Debt Equity Ratio
0.05
0.03
0.01
0.01
0.00
EPS
9.21
8.00
8.28
8.02
8.43
Dividend per share
2.2
2.4
2.6
3.2
3.6
Source: Company data for year ending 31.12.

- 33 -
Ambuja Cements (contd)
21.6
21.0
20.1
Cement sales, mn tonnes
28.0
27.4
25.0
18.8
22.0
17.8
22.0
Cement production and capacity, mn tonnes
2012
21.3
2011
2008
2009
2010
Capacity
2011
2010
2012
Production
8.8
8.1
8.5 8.3
2011
West
2012
Export

Export
Ambuja Cements plans to complete 13 projects worth about

INR 2.72bn in early 2014. The projects are for efficiency
optimisation and are expected to pay back in 2.5 to 4 years.
The firm plans grinding capacity expansion of Rabriyawas unit,
Rajasthan by 0.3mn tonnes to a total of 0.8mn tonnes. The
project is worth INR 700mn and its completion is expected in
2014, although it was initially planned for 2013.
Expansion of Sankrail Grinding unit capacity by 0.8mn tonnes
is expected to be finalized in 2015.
0.5 0.4 0.1

East
2010
0.5
Investments projects and planned capacities installation
4.2
3.7 3.9
North
19.5
0.4
Domestic
Cement sales by region, mn tonnes

7.7 8.1
20.5
0.1
- 34 -
ACC Limited
2008
109.1
111.3
77.1
18.3%
Associated Cement Companies Ltd is among the top

cement producers in India. The company was
established in 1936 and operates in the cement and
ready-mix concrete manufacturing segments.
In 2005, after the acquisition of Ambuja Cement India
Ltd by the Swiss-based Holcim, the later made an
open offer to the shareholders of Associated Cement
Companies and through ACIL increases its holdings to
34.69% from 13.8%.
As of 2005, the financial accounting year of the
company was changed to match the calendar year.
In 2006, the company was renamed to ACC Limited.
In 2011, ACC installed the worlds largest kiln at its
cement plant in Wadi, Karnataka with a capacity of
12,500 tonnes per day.
Cement sales account for almost 95% of the
companys revenue. In 2013, cement sales amounted
to INR 106.2bn, while ready-mix concrete added INR
6.7bn in revenue.
ACC Limited share are traded on the Bombay Stock
Exchange and the National Stock Exchange of India.
3.3%
2009
Net Sales
2010
2011
Net profit
11.0
10.6
-30.3%
13.3
-19.9%
11.2
12.1
-15.7%
16.1
71.3
79.7
94.3
32.5%
Highlights
2012
2013
Profit, yoy change

Product
2008
2009
2010
2011
2012
2013
Operating EBITDA
margin, %
26.6
33.2
23.5
20.4
19.7
Return on Capital
employed,%
29
34
20
18
21
16
Debt equity ratio
0.10
0.09
0.08
0.07
0.02
0.004
EPS
65.0
86.0
60.0
71.0
56.5
58.4
Dividend per share
20.0
23.0
30.5
28.0
30.0

- 35 -
ACC Limited (contd)

Sales volume and growth
Cement production and capacity utilisation

93.0%
11.5%
91.0%
81.0%
79.0%
21.3
77.0%
Sales, mn tonnes
24.1
2011
23.5
2010
21.1
2009
21.4
2008
1.6%
20.8
21.5
-1.0%
23.7
21.0
2.3%
24.1
5.2%
2012
2008
2009
2010
2011
2012
yoy change, %
Assets
Number of employees at year-end

1.8
1.5
1.3
2012
1.4
2011
1.2
47.2
61.1
65.5
65.7
61.8
2010
2009
2008
2009
2010
2011
2012
2008
Net Fixed Assets, INR bn
Asset Turnover Ratio

Utilisation
Utilization
- 36 -
9,769
9,031
8,971
8,916
9,557
Shree Cement
Sales and profit (INR bn)
Highlights
64.8
40.1
61.5
Shree Cement is an Indian cement producer, whose

activities are concentrated in the northern region of the
country.
38.8
2008
2009
2010
Gross Sales
17.5
10.0
18.1
2.1
6.2
10.1
15.8
6.8
9.9
5.8
30.9
The company's cement plants are located in Beawar,

Ras, Khushkhera, Jobner (Jaipur) and Suratgarh in
Rajasthan and Laksar (Roorkee) in Uttarakhand.
Apr'11-Jun'12 Jul'12-Jun'13
Operating profit
As at June 2013, the cement production capacity of

Shree Cement was 13.5mn tonnes per annum. Among
the finalised projects in 2013 are clinker manufacturing
units with capacity of 2mn tonnes per annum in Ras.
Net profit
Key Indicators
Apr'08Mar'09
Apr'09-Mar'10
Apr'10Mar'11
EBITDA margin,
%
36.6
43.5
29.2
31.2
31.3
Return on Capital
employed,%
32.1
28.4
5.1
14.5
24.1
Debt equity ratio
0.88
0.89
0.84
0.56
0.2
Net fixed assets
11.1
17.2
22.0
17.9
22.5
EPS
165.9
194.1
60.2
177.5
288.2
Product
Apr'11- Jun'12Jun'12 Jun'13
Shree Cement also has a power generation capacity

of 570 MW with plants located in Beawar and Ras in
Rajasthan.
The company work force reached 4,200 employees as
at June 2013.
Shree Cement is listed on the Bombay Stock
Exchange and the National Stock Exchange.
Source: Company data

- 37 -
Shree Cement
Production (mn tonnes)
Sales
14.2
16
12.3
14
12.5
12
10.3
10.2
10
7.5
8.7
9.4
8.1
9.4
6.4
7.8
524
263.6
261.03
132.23
117.1
2010
Cement
100
0
2008
2009
300
200
0
2008
500
400
10.3
8.5
6
4
600
14.9
2009
2010
Apr-11-Jun-12 Jul'12-Jun'13
Apr'11-Jun'12 Jul'12-Jun'13
Clinker
Clinker and cement, mn tonnes
Power, MWh (rhs)
Comments
Shree Cement plans to commission two cement mills with total capacity of 4mn tonnes per annum, as a part of its Ras unit in 2014.
Another clinker manufacturing unit at Ras plant is also scheduled to be completed by June 2014.
The company has also planned to add split clinker grinding capacity at other locations in northern India and has initiated steps for acquiring land and
obtaining necessary clearances.
Shree Cement has started the work on setting up an integrated unit (clinkerisation with grinding) of 2mn tonnes in Baloda Bazar, Chhattisgarh, expected to
be completed by March 2015. A split grinding facility with 2mn tonnes per annum capacity at Bihar unit is also under construction and planned to be
launched by the end of the financial year.
- 38 -
Ramco Cement Limited

Sales and profit (INR bn)
Highlights
Ramco Cement is the fifth largest cement producer in
India. The company is the flagship firm of Ramco
Group and is headquartered in Chennai. The main
product of Ramco Cement is Portland cement,
manufactured in eight state-of-the-art production
facilities that includes integrated cement plants (three
in Tamil Nadu and one in Andhra Pradesh and
Karnataka) and grinding units (two in Tamil Nadu and
one in West Bengal) with a total production capacity of
16mn tonnes per annum. The firm also operates two
packing terminals and a research centre.
Ramco Cement also produces ready-mix concrete
and dry mortar products and operates one of the
largest wind farms in India.
In 2012, the company completed the projects for
installing a roll press mill at Ramasamy Raja Nagar
cement plant and for increasing the cement grinding
capacity at Salem grinding unit.
Ramco Cement plans to install its fourth grinding unit
at Vizag with a capacity to grind 1mn tonnes per
annum, at an investment cost of INR 3.60bn. The
project is expected to be commissioned in the second
quarter of the financial 2015.
Ramco Cement is listed on the Bombay Stock
Exchange and the National Stock Exchange of India.
38.7
32.6
28.2
24.7
3.6
2008
26.4
3.5
2009
2010
Income
4.0
3.9
2.1
2011
2012
Net profit
Key Indicators
Product
2008
2009
2010
2011
2012
Operating profit
margin,%
32.1
31.1
24.9
29.8
27.0
Net worth per share
52
65
73
86
100
EPS
15
15
16
17
Divident per share
1.25
1.25
Equity share
(INR bn)
0.03
0.03
0.03
0.2
0.2
Net Fixed Assets

(INR bn)
36.4
40.1
44.9
40.6
45.1

- 39 -
Ramco Cement Limited (contd)
2010
2011
2012
2008
Employees
2,626
2,593
2009
2008
2,583
2012
The sale value of cement for 2012, net of excise duty and VAT
amounted to INR 36.27bn compared to INR 30.94bn for the
previous year.
2,447

2011
In 2012, Ramco increased its cement sales by 10.7% year-onyear to 8.36mn tonnes. Out of the total sales for the year,
84,000 tonnes were exported compared to 46,000 tonnes
exported during the previous year. The export turnover of the
company for the year was INR 287mn compared with INR
142.6mn for the previous year.
2,787
2010
2010
Comments
2012
2011
2009
8.36
2009
8.48
2008
7.55
10.5
7.52
10.5
7.26
10.5
6.53
10.0
8.03
12.5
7.31
Cement production and sales (mn tonnes)

7.95
Capacity (mn tonnes)
- 40 -
Contact:
Corporate Headquarters
Nestor House
Playhouse Yard
London EC4V 5EX
UK
Voice: +44 207 779 8471
Fax: +44 207 779 8224
Asia Headquarters
Eucharistic Congress Bldg. No.
III
4th Floor, 5 Convent Street
Mumbai 400 001
India
Voice: +91 22 22881123
Fax: +91 22 22881137
Americas Headquarters
225 Park Avenue South
New York, New York 10003
US
Voice: +1 212 610 2900
Fax: +1 212 610 2950
Disclaimer:
The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness
of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional
Investor PLC take no responsibility for decisions made on the basis of these opinions.
Any redistribution of this information is strictly prohibited. Copyright 2014 EMIS, all rights reserved. A Euromoney Institutional Investor company.
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EMIS Insight - India Cement Production Report

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Cement

Any redistribution of this information is strictly prohibited.

II. Cement - Regional Performance

Any redistribution of this information is strictly prohibited.

IV. Main Players

I. Cement Sector Overview

Any redistribution of this information is strictly prohibited.

Any redistribution of this information is strictly prohibited.

Cement Production (mn tonnes)

Cement Despatches (mn tonnes)

Cement Installed Capacity (mn tonnes)

Cement Export (mn tonnes)

Cement Closing Stock (mn tonnes)

Clinker Ground (mn tonnes)

Clinker Export (mn tonnes)

Clinker Closing Stock (mn tonnes)

Cement, plaster, concrete etc.( % of manufacturing

Cement,plaster,concrete etc. (% of world output)

Cement,plaster,concrete etc., real output (USD bn)

Cement Capacity Utilisation, %

Source: CEIC, Oxford Economics

Cement, plaster and concrete VA output, % of manufacturing

Construction and GDP development (real yoy growth %)

Construction (incl. real estate, infrastructure etc.), which determines

As demand for cement declined in the past few years, cement

Source: MOSPI, Oxford Economics

GDP real growth, %

Source: IMF, Oxford Economics, IBEF

In the medium term, the increase in GDP, rising

Porter's Five Forces Model for India's Cement Industry

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Top cement producers 2012, mn tonnes (estimated)

India cement manufacturing expanded at a compound rate of 5.4% in

Domestic production grew by a modest 3.9% during H1 FY 14

Cement production in India

Source: CEIC, US Geological Survey (Jan 2013), The Economic Times

Iran Vietnam Russia Turkey Japan

Cement production regional structure, 2011

Cement production by variety, %, 2011

Installed capacity, mn tonnes

Installed capacity by region, mn tonnes

Per capita consumption 2012, kg

Consumption by region, mn tonnes

India's cement production fully meets domestic demand.

Source: CEIC, International Cement Review (Sep 2013)

Inflation and Exchange Rate Movements

India cement trade balance, USD mn

Source: Emerging Markets Insight calculations, Department of Commerce of India

Main export markets in value terms, Apr-Sep 2013

Main import markets in value terms, Apr-Sep 2013

India - Import of cement

Weighted average clinker to cement ratio, %

Source: Cement Sustainability Initiative, GNR Project

Foreign Direct Investment

Sector-wise distribution of equity FDI (2000-Nov2013)

FDI in cement and gypsum products, USD mn

Source: Planning Commission for 12th Plan estimates

II. Cement - Regional Performance

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Installed capacity (mn tonnes) and capacity utilisation (%)

About 80% of the production in the Northern region is concentrated in

About 77% of the cement produced in the Northern Region in 2011

Source: CEIC, Competition Commission of India - Assessment of Competition in Cement Industry