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Private housing sector is the major consumer of cement (65%) followed by the government infrastructure sector at 15% 9down from 20%) < 1% of the cement produced is sold in bulk form unlike US & Japan Production Excess capacity exists, though some units are sick 99 - 2000 production expected to reach 95 mn tonnes ] Exports around 2 mn tonnes Cement manufactured through the wet, semi-dry or dry process. Dry process accounts for 90% of the installed capacity Wet process popular in the past - better control over mixing of raw material Dry process replacing wet process as it is space saving energy efficient and economical
Prices Price fluctuations high Essentially determined by demand Prices also vary with grades
Players
Over 370 companies in the organised sector However, industry dominated by 20 companies who account for over 70% of the market Individually no company accounts for over 12% of the market
Plants located close to limestone centres Resulted in cross regional movement 80% of the production consumed within the states except
Madhya Pradesh
Yerranguntla, AP (1.9 mntpa) Nalgonda, AP (5.85 mntpa) Bilaspur, MP (9.7 mntpa) Chandoria, Rajasthan/ MP (7.03
mntpa)
Ready Mix Concrete : Industry RMC - ready to use concrete, a blend of cement, sand and aggregate and water mixed in convenient proportion Launched first in Mumbai a few years ago is gaining ground in other metros in India Typical cost of a plant - Rs. 7-8 crs (US $ 1.6 to 1.8 mn) to set up a 100 cubic metre (cu m)plant with 4-5 transit mixers. Gestation period is around 3-4 months. Currently RMC is at a very nascent stage, accounts for 0.5% of the demand Companies planning to enter this market : Priyadarshini Cements in Hyderabad Saurashtra Cements in Navi Mumbai Pioneer a world leader entering the market Capacity additions expected in the next few years ACC plans to treble its capacities, Grasim is setting up four more plants L&T plans to add another eight more
Concerns Cement industry going through a consolidation phase in the last few years
Transportation Transportation costs high - freight accounts for 17% of the production cost Road preferred mode for transportation for distances less than 250kms. However, industry is heavily dependant on roads as the railway infrastructure is not adequate shortage of wagons.
Capacity additions Acquisitions have been the mainstay of the business Regional imbalance resulting in cross regional movement limestone availability in pockets has led to uneven capacity additions Capacity additions have slowed down
Industry inputs Highly capital intensive industry Nearly 55-60% of the inputs controlled by the government Facing problems due to power shortage Coal availability and quality affecting production Mini plants realisation of revenue lower than large plants, survival difficult
Future Demand drivers Infrastructure & construction sector the major demand drivers. Some demand determinants Economic growth Industrial activity Real estate business Construction activity Investments in the core sector
Future Signs of a revival growth in the housing sector central road fund established for national highways and railway over bridges to provide the necessary impetus expansion plans, greenfield projects on the anvil Capacity likely to be 126.9 mn. tonnes by 2000 - 2004 By 2000 - 1.9 mn tonnes addition expected 2000-2001 - 2 mn tonnes 2001 - 2002 - 5 mn tonnes Demand - supply balance expected in the next 12 - 15 months
Higher capacity utilisation likely in the future Encouraging trend in demand due to pick-up in rural housing demand and industrial revival Industry likely to grow at 8-10% in the next few years