A Detailed Synopsis on

A Study on Fundamental analysis of cement sector in India

Submitted for partial fulfillment of award of
Post Graduate Diploma in Management (PGDM)

Submitted by

Jitendra Kumar Singh Dr. Virendra Swarup Institute of Computer Studies, Kanpur Under the able Supervision of

Swapnil Garg Lecturer Dr. Virendra Swarup Institute of Computer Studies, Kanpur

Dr. Virendra Swarup Institute of computer Studies 801, W-1, Juhi Saket Nagar, Kanpur. (0512)2603080-81, www.vsicskanpur.com

CEMENT INDUSTRY IN INDIA

INTRODUCTION OF THE INDUSTRY Globally, India is the second largest cement producing country, after China and Cement industry stands the third place in the economic development of India. At present, there are about 60 cement companies with a capacity of around 147 millions tones. These companies have set up 130 cement plants by investment Rs. 30,000 crores. Prior to 80s the cement industries were under full control of government. The 80s came to the watershed of the cement industry. Partial de-control policy was announced on 28thFebruary 1982. This policy played an instrumental role in phenomenal growth of the cement industry. After March 1989 there was complete de-control of cement industries. Subsequent to complete de-control policy, the industry has not only made quantitative and qualitative jumps in matter of addition of capacity and adoption of new technologies but also experienced a totally free market. The decade of 90s was a decade of growth in capacity and consolidation through maximum acquisitions and mergers. Presently there are 134 cement plants in India with total overall installed capacity of 147 Million Ton (MT). The state-wise distribution of cement plant across India is annexed herewith in Annexure-1 Annexure-1 Table Showing Cement plant in each state together with their capacity.

State Andhra Pradesh Assam Bihar

No. of Plants 24 1 1

Capacity (MT) 23.96 0.20 1.00

Chhattisgarh Delhi Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Meghalaya Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal Total

9 1 12 1 4 1 5 9 1 12 8 1 3 3 14 13 7 4 134

10.36 0.50 17.12 0.17 4.06 0.20 4.57 10.07 0.42 16.39 10.95 0.20 2.76 2.84 17.95 14.79 5.07 3.13 146.71

Major Players of the industry: List of Top 10 Cement Companies in India 1. ACC Limited 2. Ambuja Cements Limited 3. UltraTech Cement Limited 4. India Cement Limited 5. Shree Cement Limited 6. Rain Cement Limited 7. Prism Cement Limited 8. Madras Cement Limited 9. Birla Cement Limited 1.10. JK Cement Limited 1) 2) 3) 4) 5) ACC Cement Limited Birla Cement Limited Jay Pee Cement Limited Prism Cement Limited JK Cement Limited

Origin and History of industry: - In the 18th century a big effort started in Europe to understand why some limes possess hydraulic properties.

John Smeaton often referred to as "father of civil engineering in England" concentrated his work in this field.

The French Engineer Louis Vicat, inspired by the work of Smeaton and Parker, began a study of hydraulic limes in 1812 (published in 1818 as "Recherches experimentales sur les chaux de construction". He reported that in the absence of naturally occurring argillaceous components in limestone, quality hydraulic limes could be prepared by the calcination of fixed ratios of clay proportioned with quicklime.

In 1818 an English patent was granted to Maurice Leger for "Improvement method of making lime" (Leger used Vicat's method).

In 1822, the production of "British Cement" had been started by James Frost at Swanscombe

based

on

patent

for

"a

new

cement

or

artificial

stone".

The invention of Portland Cement is generally credited to Joseph Aspedin, an English Bricklayer in 1824. It involves a double kilning such as was described by Vicat.

In 1838 a young chemical engineer, Isaac Johnson, burned the cement raw material at high temperature until the mass was nearly vitrified producing the modern Portland Cement.

The German Chemist Wilhelm Michaelis proposed the establishment of cement standards in 1875.

The earliest kiln is one of William Aspedin's bottle kilns from Robins & Aspedin factory at Northfleet.

The earliest bottle or dome kilns were open kilns with tapered chimney to increase the draft. They were burned in a batch rather than in a continuous fashion and were charged with alternating layers of raw feed and solid fuel.

The chamber kiln was an improved design developed and patented by Mr. Johnson. The combustion gases from the kiln dried the raw material so that when the kiln was burned out a new charge of dried material is immediately ready for use.

The time and heat losses resulting from drawing the clinker, recharging the kiln, and then heating it again led to the design of shaft kiln with continuous burning of the materials, one of the main problem of the new kiln operation was the difficulty of obtaining an even clinker burning, as some of the product would be greatly under-burnt and others be much more heavily clinkered.

In 1898 Atlas Portland cement company according to Lewis improved the design by using what is called a rotary kiln, this improvement was a big revolution in the cement industry because the new kiln could produce 200 cement barrels per day compared to a shaft kiln which produced only 40 to max 80 barrels per day; in addition to quick improvement in this new design regarding
5

the mixing, grinding equipments for raw material, grinding equipments for coal, belt conveyor using mix kind of fuel such as natural gas (1904, Iola Portland cement, Iola Kansas).

In practice, the operation with the first generation of rotary kiln (Ransone kiln) was very difficult due to problem of maintaining a sufficient and uniform kiln temperature with excessive balling of raw feed and sticking on the Frederick lining.

In 1899 Atlas Cement Company improved the technology of the rotary kiln and fuel economy by replacing fuel oil with powdered coal dust. Furthermore, modifications to the kiln were made by addition of two auxiliary clinker coolers, in which the first hot discharged clinker was received as it fell from the kiln and air flowing over it was heated and helped to ignite the coal dust in the rotary kiln.

The new clinker produced from the new kiln technology was different than the old clinker especially from the setting time (much faster setting time). The French chemist Pierre Giron solved this problem by adding gypsum to the cement in order to control the setting time.

After 1900 there was rapid growth in both rotary kiln and auxiliary equipment technology in the United States. Coal grinding mills were developed and coal burning in cement kilns became the predominant combustion process in the industry. All the equipments related to cement production crusher, raw mill, belt conveyors, bucked elevators were improved.

Improvement in the following fields pertaining to cement manufacturing from material science technology has been an ongoing process for 200 years.

PRESENT SCENARIO OF THE INDUSTRY:

The five years period, from 2004 to2009, saw the flurry of activity in acquisitions and mergers. There were 14 acquisitions, which was the highest in the history of Indian Cement Industry. During this period, India Cements acquired four more cement plants, Vishaka Cements, CCIYerraguntla, Rassi Cement & Shri Vishnu cement, Gujarat Ambuja two companies Modi Cement and DLF Cement, ACC one-Damodar Cement, L&T one - Narmada Cement Company, Grasim one-Shree Digvijay Cement. Lafarge the French cement multinational, entered into India by acquiring TISCOs two cement units. Later, Lafarge also acquire Raymond Cement Plant. Madras Cements took over mini plants - Karnataka minerals and expanded its capacity.

The Indian cement industry has witnessed considerable capacity build up over last five year, with the installed capacity of more than 200 million tones. According to Cement Manufacture Association (CMA), the cement production has shown 9.74 percent growth in 2007-08 as compared to previous year. During the year under review, the exports of cement registered a 34.63 percent, over the previous year from 5.14 million tons to 6.92 million tones. The domestic consumption also registered a healthy growth of 8.68 percent, from 99.01millions tones to 107.6 million tones. (In Million Tons) Estimated Demand 180.50 8.0 Cement Export Production Capacity 165.56 202.64 Needed

Poor prices and rising fuel costs eroded the profitability of Indian cement companies in the year 2003-2004. Cement prices have shot up 10%-15% after lying in the freezer for better part of the fiscal. In major markets across the country, including Mumbai, Delhi, Jaipur, Ahmadabad, Hyderabad and Nagpur, prices are now touching their highest level for the fiscal.

This has come as a major reprieve for cement-makers troubled by a poor demand growth during 2002-03 so far. Cement consumption during April-January period has grown by just 5% compared to over 8% growth witnessed during the same fiscal last year. In North, prices are up by 10-12%.In Delhi it has shot up to Rs 250 a bag against Rs 235 during the month of December2009. Whats more, for the first time prices are uniform across the region. Cement is now selling between Rs 260-265 a bag in the North including Rajasthan, Haryana, Punjab and Himachal Pradesh. In normal times, Rajasthan and parts of Himachal and Punjab are at least Rs 15-20 cheaper than the rest of region.

PROSPECTIVE SCENARIO OF THE INDUSTRY: There is consensus among industry watcher that the selling price of cement in India will remain low for some time. Over the last five years, cement price index has declined by 1.1 % while price index of Iron & steel, building bricks, ceramic tiles, paints, etc. has posted a rise of around 20%. There is not so much hope in the export front also. The export growth rate has already fallen to 11% and is expected to fall further. According to industry sources, with the initiative taken by the government on the infrastructure, particularly the North-South corridor, popularly known as Golden Quadrilateral, the longterm outlook for the cement industry is encouraging. The Working Group on Cement Industry constituted by Planning Commission for the Xth Five Year Plan has estimated the demand for cement to reach 165.56 million tons by 2006-2007.The real gross Domestic Product (GDP) of the country is estimated to grow 8.7% in 2003-04 as against 4.00% in 2002-03. The spurt in GDP growth can be mainly attributed to agriculture and allied activities by as much 12.6% as compared to decline of 5.2% in the previous year. The annual rate of inflation, measured by increase in Wholesale Price Index (WPI) on average basis, was at 5.4% during 2003-04 as against 3.4% in 2002-03. It means the prices of cement is fluctuating, although from March 2002 the index are in increasing trend which is a good sign for the industry

Research Methodology

Research objective1) To market share of the company. 2) To prospects of the company. 3) To invest fever which company .

Hypothesis: -

The demand of cement product is increasing day by day.

Research Design: - Descriptive research Population: Number of people using cement. . CHAPTER PLAN  Chapter one:  Chapter Two: Introduction of the Industry Present Scenario of the Industry