COMPANY INTRODUCTION

INDIA CEMENTS LIMTED was founded in the year 1946 by Mr.S.S.N.

SHANKARALINGA IYER, with the first plant set up at Thalaiyuthu in Tamil Nadu in
1949. The company is a Private run ownership and is operating in the business of
Cement and grinding units. Its operations is set majorly in the southern part of India (
TAMIL NADU, TELANGANA & ANDHRA PRADESH) and one plant operating in
the northern India (MAHARASHTRA) which have been contributing to the expansion
and diversification of the firm. It has also taken strides by diversifying itself in the
international borders by undertaking exports across several different countries thus
improving the relationships and getting a global business operations.

SEGREGATION OF THE BUSINESS FACTORIES

CEMENT FACTORIES OPERATING IN INDIA

STATE DISTRICT LOCATION

TAMIL NADU TIRUNELVELI SANKARNAGAR

TAMIL NADU SALEM SANKARI

TAMIL NADU ARIYALUR DALAVOI

ANDHRA PRADESH KADAPA CHILAMAKUR

ANDHRA PRADESH KADAPA YERRAGUNTLA

TELANGANA NALOGONDA VISHNUPURAM
TELANGANA RANGA REDDY MALKAPUR

GRINDING UNITS

STATE DISTRICT LOCATION

TAMILNADU TRIUVALLUR VALLUR

MAHARASHTRA BEED PARLI VAIJNATH

KEY PEOPLE: Sri. N Srinivasan- Vice chairman and Managing Director (CEO)

Smt. Rupa Gurunath- Whole Time Director

Sri R.Srinivasan- President (Finance & Accounts) (Chief Financial Officer)

NUMBER OF EMPLOYEES: More than 7,500

CORPORATE OFFICE: COROMANDEL TOWERS- CHENNAI

FINANCIAL ASPECTS

PARTICULARS VALUE IN LAKHS

TOTAL REVENUE 424,901

NET PROFIT 13781.27

TOTAL ASSETS 823431.45

EQUITY&LIABILITIES 823431.45

Over the years the company have been consistently growing and expanding their scale
of operations with the aim of being one of the best and reliable cement brands of India.
With a planned long term vision and making several changes in the strategic
implementations an approach is also made to improve their global business scale.

COMPANIES OPERATING AFFAIRS

EXPANSION AND DIVERSIFICATION: The Company has got sanctions from the
environmental authorities for instilling new energy efficient cement grinding industry
facility at Sankarnagar replacing some of the old cement mills. Also approvals were
made for the Sankari and Dalavoi plant.

SHIPPING DIVISION: The Company at present owns 2 shipping vessels which

carries all the activities of exporting to different countries. It has performed 45 voyages
mainly in coastal trade and tramping. The total earnings of the division were 40.71
crores, which was less when compared to the previous year earnings of 46.97 crores as
it showed a decline of 13% this was due to the deduction in the overall shipping freight
rates.

CHENNAI SUPER KINGS CRICKET LIMITED (CSKCL): The Company also

owns CHENNAI SUPER KINGS- which is one of the major cricket teams partaking in
the IPL franchise. It has sought after BCCI for the distribution of the teams shares by
the companys major holders to the non- promoter shareholders and ex- cricketers Trust.
The approval is still withheld but the chances are looking positive.

SUBSIDARIES

The companys operations in the northern region is solely managed by the factory that
is operating in Maharashtra. The Parli Vaijnath accounted for a reasonable growth of
around 8% of the cement production and is the only one to achieve significant strides
since its inception. It accounts for 2 major production:

1. Clinker- which was produced at 9.78 lakh tons in the year 2016.
2. Cement Grinding- which was at 13.46 lakh tons, with a capacity utilization of
90%.

The operating parameters improved with a higher and stronger bottom line, giving a net
profit of 9.32 crores as compared to the previous loss of (24.18) crores.

TRISHUL CONCRETE PRODUCTS LIMITED: As the demand for cement up

surged it made an impact on the demand for ready-made concrete mix with achieving
a sale of 2.54 lakh cubic meters as compared to the previous years volume 3.04 lakh
cubic meters. The estimated revenue was around Rs 103 crores against Rs 121 crores
of the previous year. With the selling price being maintained the only factor was the
decrease in the volume that lead to a low cash inflow thus making a notable change in
the net profit before tax to 67 lakhs as compared to the previous years 3.88 crores.

COROMANDEL ELECTRIC COMPANY LIMITED: This is has affected in

providing the utilization of the power consumption from the gas plant due to the load
levels that is imposed by the State Load Dispatch Centre of Tamil Nadu and hence it
was able to generate only 163 million KWH against 187 million KWH during the
previous financial year.

Out of the total 163 million KWH the company had sold 49 million KWH of power to

the Cement plants that is located in INDIA CEMENTS Tamil Nadu and the rest of 114

Million KWH of power was sold to the captive consumers, third party consumers and
the Tamil Nadu Generation and Distribution Corporation Limited which was issued on

the basis of short term tender quotation basis.

INDIA CEMENTS INFRASTRUCTURE LIMITED: The Company has decided to

undertake a joint project venture in Coimbatore and all the necessary approvals have

been sanctioned and work has started to commence. Based on the current market

conditions the company will decide to take up or venture into new projects.

MAJOR MILESTONES ACHIEVED

It is the largest producer of cement in the southern part of India

The company has a market share of around 28% in the South Indian states. It is

aiming to increase the market share to 35% over the next few years

The main objective of the company is to make use of the vast limestone resource

and expand the production by proper management and optimization of existing

plants

There are around 10,000 stockists who distribute the product and services of the

company

The company has its regional offices in all the states of south India and also in

Maharashtra.

PRODUCT AND SERVICES

The products and services offered by the company cater to the requirements of various

market and industrial segments in the country. They are designed in such a way as to

keep pace with the changing market trends and customers taste and preferences. Some

of the major and well-known brands that are produced by India Cements are:
 Sankar Sakthi, Raasi Gold and Coromandel King: These brands have high

strength in them to meet the requirements of the infrastructure and development

sector. The high capacity of the cement helps them to withstand high pressure

and be water resistant even in the case of rainy season. The cost of the brand is

also affordable which makes them very much preferred by the consumers all over

the country.

Blended Cement: The Company produces some of the most pure brands of

blended cement to fulfill the needs and preferences of the market. The blended

cement is produced by various technological methods with a combination of

mineral mixtures and gypsum. The produce goes through a stringent testing

process in high scale laboratories.

Sulphate Resisting Portland cement: It is mainly known as slag cement and is

very much required in case of the normal constriction process. All the plants use

advanced technology and services which meets the international standards. Due

to better management, supervision and maintenance the cost of production is also

significantly come down which has lowered the market price of the brand.

CAPACITY OF THE PLANTS

 CAPACITY UTILIZATION PER MILLION TONNES
CAPACITY

2.05 MT

1.85 MT

1.46 MT

0.73 MT
0.86MT

2.4 MT

2.5 MT

1.1 MT
1.1 MT
Axis Title

MALKAPUR VILLAGE

VISHNUPURAM
SANKARNAGAR

SANKARI WEST

YERRAGUNTLA
CHILAMKUR
LOCATION

DALAVOI

Series1

PARLI
VALLUR VILLAGE

0 0.2 0.4 0.6 0.8 1

Axis Title

MAJOR COMPETITORS

ACC LIMITED
SHREE CEMENTS
ULTRA TECH CEMENTS
AMBUJA CEMENTS
JK CEMENTS
STP OF INDIA CEMENTS

SEGMENT TIER 1/ 2/ 3 cities, Public Sector/ Private

Sector, Customer/ Builder
TARGET GROUP Customers and builders in both public and
private sector in all tier cities
POSITIONING Leader of the market

SWOT ANALYSIS

1. STRENGHTS:

Having an operational; experience.

Has 7 manufacturing plants in the country

Owns the Chennai Super Kings franchise that has helped them build a strong

brand value

One of the largest Cement Companies in India

Employees an efficient workforce of around 7500 employees

2. WEAKNESS:

Operations are majorly focused in South India and Maharashtra, so its

nationwide awareness is less. Strategies have been made to change this

situation.

Online presence is limited. The company should make more emphasis on this.

3. OPPORTUNITIES:
 Leverage leadership in the southern markets to expand its operation all over India

Focus on improving the exports to other countries

Policies of the government would be pro manufacturing sector which would help

the company grow

Acquisition synergies, international expansion and new technology is shaping

towards a better future operating prospects.

4. THREATS:

Faces strong Competition from global and Indian brands

Local players in the southern market are also posing a threat to the market

leader

Deficit in monsoon affects the demand for the cement

HOW TO RESEARCH THE CEMENT SECTOR (KEY POINTS)

Supply

The demand-supply situation is highly skewed with the latter

being significantly higher.

Demand

Housing sector acts as the principal growth driver for cement.

However, industrial and infrastructure sectors have also emerged as
demand drivers.

Barriers to entry

High capital costs and long gestation periods. Access to limestone

reserves (key input) also acts as a significant entry barrier.

Bargaining power of suppliers

Licensing of coal and limestone reserves, supply of power from

the state grid, etc. are all controlled by a single entity, which is the
government. However, many producers are relying more on captive
power.

Bargaining power of customers

Cement is a commodity business and sales volumes mostly

depend upon the distribution reach of the company. Cement is sold in
two segments - trade and non-trade. Trade cement is the one sold to the
dealers. Non-trade cement is sold directly to the consumers, mainly
institutional buyers. Trade cement sells higher compared to non-trade.
As such, companies that have a strong distribution network and retail
presence tend to have better cement realisations.

Competition

Intense competition with players expanding reach and achieving

pan India-presence. The industry is a lot more consolidated than a
couple of decades ago with a few large players controlling substantial
market share.

Challenges

The cement industry has excelled in areas which are within its control.
However, the constraints and limitations of the three main infrastructure
support needed, which are mainly in the public sector and under the
domain of the government , namely coal; transportation, particularly
railways, and power, have been severely impacting the growth of the
industry. Coal is one of the major raw materials needed by the industry,
both in the manufacturing of cement and also for generating power. In
the last couple of years, the supply position of coal to the cement
industry, as percentage of its total consumption of fuel, has been
declining at a faster pace year after year and this declining trend has
touched its nadir now with the supply position dropping to 34 per cent
from a comfortable 70 per cent in FY 2004. Cement companies,
therefore, have perforce to resort to either open market purchase or
imported coal which even after a steep drop in the prices of imported
coal today works out to nearly 50-60 per cent higher as against 2 to 2.5
times earlier of the domestic price or use of alternate fuels like petcoke,
lignite, etc, which also adds up significantly to the additional cost of
production. Cement industry which consumes just about 5 per cent of
the total coal production needs to be assured of full and consistent
supply of its coal requirement on a regular basis, along with having in
place regulatory measures conducive for encouraging the use of
alternate fuels which stands today at an abysmally low of less than one
per cent in India as against the maximum global thermal substitution
rate, which is as high as 83 per cent.

Rail transportation is yet another major bottleneck for the cement

industry. Although, rail transport is the logical and economical mode of
transport, non-availability of wagons, particularly in peak season,
coupled with infrastructure constraints at terminals and the slant in some
of the policies of the railways not only hamper the planned movement of
cement to the consumption centres, but also make the end cost of rail
transportation higher than road transport for a majority of market
centres.

Cement is one of the highly taxed commodities (at 60 per cent of the ex-
factory price), even more than luxury goods. It is ironic that the rate of
VAT charged on steel, a construction material like cement, is only 4 per
cent, whereas it is 12.5 per cent on cement / clinker which goes up-to
even 15 per cent in some of the states. If this industry has to grow and
also compete in the global market the government must consider
lowering the taxation burden on the cement industry by at least 20 -25
per cent from its present level apart from providing a level playing field
with the global cement exporters by re-imposing the basic import duty
on cement, which is presently nil.

The current economic slowdown has inevitably left a severe dent on the
growth of the cement industry as well. The decline of cement industry
from an average growth of around 8-9 per cent in the last couple of
years to the present low of 5 per cent has shown no sign of improvement
in capacity utilisation which is still a major cause of concern. Currently
the demand-supply situation of cement is highly skewed, with the latter
being significantly higher by over 90 million tonnes as the cement
demand projections made by the government earlier have not
materialised.
In the face of acute supply constraints of input materials and logistics
support to the cement industry which keep on aggravating every year,
the government has ambitious plans to enhance the share of
manufacturing in the GDP from present 16 per cent to 25 per cent by
2022. This means that the cement industry has to grow by at least 14 per
cent annually. This ambitious target of the government looks well-nigh
impossible of accomplishing unless and until its policies create a climate
which results in a committed increased cement demand and measures
are taken to ensure requisite supply of input materials and logistics
support, apart from lowering the taxation burden on the industry.

More specifically, although the government of India has recently moved

ahead with reforms needed to arrest the down-trend in the economy,
what is needed, amongst others is the timely execution of the policies
with adequate funding with regard to infrastructure sectors that includes
housing, irrigation, roads, ports, airports, etc, for the sustained and
inclusive growth of the economy.

The acute shortage of housing numbering around 27 million units in

urban India and 40 million units in rural India has been a major cause of
concern. In order to ease the housing problem, government must
encourage affordable housing for middle and low income groups as also
for the economically weaker sections with soft loans and enhanced tax
exemption limits.
Cement industry is highly transport intensive. It is estimated that by the
terminal year of the 12th Plan, cement industry will require to move
about 407 million tonnes of cement and another 35 to 40 per cent of this
tonnage as input materials. Therefore, for the haulage of this huge
quantity a multi-modal transport system (Rail, Road, coastal shipping
and IWT), apart from bulk movement needs to be encouraged with
attractive incentives, wherever private investments are made.

The end-cost in the case of rail transport has been unremittingly

increasing due to the freight-related policies of the Railways and
infrastructure constraints at the terminals. This is one of the reasons for
the continuously declining the rail share for cement year after year. The
rail coefficient in 2012-13 has come down to about 35 per cent now
from 57 per cent about a decade back. Railways, therefore, need to
come out with simple, clear and investor-friendly policies in addition to
assured and committed supply of wagons throughout the year. Apart
from this, there is need to promote bulk movement of cement which
stands at about 2 per cent of the total installed capacity at present, by
lowering tariff classification for bulk cement and also by providing
suitable freight discount to those who purchase special purpose wagons
for the entire life of wagons, which is 35-40 years as against the current
provision of 15 years.

Transportation by road is becoming very cumbersome due to the

pathetic conditions of roads.
Government's long cherished dream to provide world-class roads can be
fulfilled only if, taking a long-term view, the technologies of cement
concrete roads and white-topping (a technology on which a concrete
layer is laid on the existing bitumen road) are adopted in the country on
a larger scale in place of bitumen roads. It is axiomatic that cement
concrete roads are long-lasting, maintenance-free for 30-40 years and
today, in most of the cases, are even economical than bitumen roads in
the construction stage itself. Further, it is only cement roads which can
simultaneously address considerably, without entailing any extra
financial cost, some of the burning national problems pertaining to the
conservation of diesel and petrol; preservation of precious foreign
exchange being spent on the import of bitumen; conservation of
electricity used for street lights; protection of our quarries and mines;
protection of ambient temperature from increasing; generation of
substantial downstream employment and effective utilisation of fly ash
up to 35 per cent, disposal of which is a nuisance and a health hazard.
Another important mode of transport which needs to be developed and
encouraged for cement, wherever feasible, is Inland Water Transport
(IWT). IWT, apart from being energy efficient and environment
friendly, is also about 24 per cent cheaper mode of transport vis-a-vis
rail. It is estimated that one litre of fuel can move 24 tonne/km by road,
85 tonne/km by rail and 105 tonne/km by IWT. We strongly urge that
power houses should not charge but should continue to supply fly ash to
the cement industry free of cost as was being done earlier on the
globally accepted principle of 'polluter to pay' as the cement industry
has already made huge investments to the tune of more than Rs.1000
crore in the various processes that are required for the effective
utilisation of fly ash.

(The author, N.A. Viswanathan, is Secretary General of the Cement

Manufacturer's Association.)

Policy Recommendations

The Working Group on Cement Industry for the 12th Plan in its report
submitted to the Planning Commission, had made a host of
recommendations concerning to various Departments / Ministries for the
revival of the growth of the cement industry after critically examining
the whole gamut of the issues of this industry.
Cement industry and new pollution norms

The cement industry, one of the highest polluting industries, fails

to comply by the new pollution norms notified in May 2016, the
deadline for which was 31st March, 2017.

Even though the new pollution norms have relaxed emission limits
for Sulphur dioxide and nitrogen oxide, the industry complains they
need more time.

China, which is the largest producer of cement, has set the limit
for Sulphur dioxide to 200 milligrams per cubic meter (mg/Nm3).
Indias new norms, on the other hand, stipulate the emission limit for
Sulphur dioxide from 100-1,000 mg/Nm3.

Almost a year ago, the Union Ministry of Environment, Forest and

Climate Change (MoEF&CC) introduced new pollution norms, but the
Indian cement industry, which accounts for the worlds second largest
production of cement, is still struggling to meet the norms.

An industry official, who refused to be named, complained of limited

availability of technology suppliers and that technological and process-
related change required at least two years to comply. But the industry
was given ample time to comply.
Are the new norms lenient?

The new norms relaxed the emission limit of Sulphur dioxide and
nitrogen oxide, one of the two key polluting gases released from
industries. The limit of Sulphur dioxide emitted from a cement plant
was increased from 100 mg/Nm3 to 100-1,000mg/Nm3. This limit
depends on Sulphur content in limestone, a raw material for making
cement. The limit for nitrogen oxide was relaxed from 600 to 800
mg/Nm3 to 600-1,000 mg/Nm3. This should come as a surprise because
China, which is the largest producer of cement, has set the limit for the
former to 200 mg/Nm3 and for the latter to 400-800 mg/Nm3.

While normal cement plants just make cement, co-processing cement

plants also burn wastes, generating toxic pollutants such as hydrogen
fluoride, hydrogen chloride, total organic carbon, dioxins and furans and
heavy metals and their compounds, which require monitoring. Although
the ministry specified separate norms for these plants, the limits for
particulate matter, Sulphur dioxide and nitrogen oxide are the same as
the normal cement plants.

India needs to meet global standards

Countries like South Africa, Australia, Germany and many other

European countries have stipulated the emission limits for Sulphur
dioxide as low as 50 mg/Nm3. Similarly, countries like Colombia,
Germany and other European countries have nitrogen oxides emission
limit as low as are 200 mg/Nm3. Besides, many countries have
stipulated limits for mercury, which India is yet to do.

Despite the fact that these norms are far more relaxed compared to those
stipulated in other countries, Indian cement plants are trying to dilute the
norms. They should prepare a pragmatic action plan and implement it in
a time bound manner with proper consultation and approval from the
ministry.