ntroduction

India's cement industry is a vital part of its economy, providing employment to more than a million
people, directly or indirectly. Ever since it was deregulated in 1982, the Indian cement industry has
attracted huge investments, from both Indian and foreign investors, making it the second largest in
the world. The industry is currently in a turnaround phase, trying to achieve global standards in
production, safety, and energy-efficiency.
India has a lot of potential for development in the infrastructure and construction sector and the
cement sector is expected to largely benefit from it. Some of the recent major government initiatives
such as development of 100 smart cities are expected to provide a major boost to the sector.
Expecting such developments in the country and aided by suitable government foreign policies,
several foreign players such as Lafarge, Holcim and Vicat have invested in the country in the recent
past. A significant factor which aids the growth of this sector is the ready availability of the raw
materials for making cement, such as limestone and coal.
Market Size
The cement market in India is expected to grow at a compound annual growth rate (CAGR) of 8.96
percent during the period 2014-2019.
In India, the housing sector is the biggest demand driver of cement, accounting for about 67 per
cent of the total consumption. The other major consumers of cement include infrastructure at 13 per
cent, commercial construction at 11 per cent and industrial construction at nine per cent.
To meet the rise in demand, cement companies are expected to add 56 million tonnes (MT) capacity
over the next three years. The cement capacity in India may register a growth of eight per cent by
next year end to 395 MT from the current level of 366 MT. It may increase further to 421 MT by the
end of 2017. The country's per capita consumption stands at around 190 kg.
A total of 188 large cement plants together account for 97 per cent of the total installed capacity in
the country, while 365 small plants account for the rest. Of these large cement plants, 77 are located
in the states of Andhra Pradesh, Rajasthan and Tamil Nadu. The Indian cement industry is
dominated by a few companies. The top 20 cement companies account for almost 70 per cent of the
total cement production of the country.
Investments
On the back of growing demands, due to increased construction and infrastructural activities, the
cement sector in India has seen many investments and developments in recent times.
According to data released by the Department of Industrial Policy and Promotion (DIPP), cement
and gypsum products attracted foreign direct investment (FDI) worth US$ 3,084.89 million between
April 2000 and December 2014.
Some of the major investments in Indian cement industry are as follows:
Dalmia Cement (Bharat) Ltd has invested around Rs 2,000 crore (US$ 321.12 million) in
expanding its business in North East over the past two years. The company currently has
three manufacturing plants in the region one in Meghalaya and two in Assam.
JSW Group plans to expand its cement production capacity to 30 million tonnes per annum
(MTPA) from 5 MTPA now by setting up grinding units closer to its steel plants.
UltraTech Cement Ltd has charted out its next phase of greenfield expansion after a period
of aggressive acquisitions over the last two years. Following its takeover of two cement
plants owned by the Jaypee group, UltraTech has plans to set up two greenfield grinding
units in Bihar and West Bengal, according to Mr O P Puranmalka, MD, UltraTech.

 UltraTech Cement Ltd has agreed to buy two cement plants and related power assets of
Jaiprakash Associates Ltd in Madhya Pradesh for Rs 5,400 crore (US$ 867.28 million).
JSW Cement Ltd has planned to set up a 3 MTPA clinkerisation plant at Chittapur in
Karnataka at an estimated cost of Rs 2,500 crore (US$ 401.55 million).
Andhra Cements Ltd has commenced the commercial production in the company's cement
plants Durga Cement Works at Dachepalli, Guntur and Visakha Cement Works at
Visakhapatnam.
Government Initiatives
In the 12th FiveYear Plan, the government plans to increase investment in infrastructure to the tune
of US$ 1 trillion and increase the industry's capacity to 150 MT.
The Cement Corporation of India (CCI) was incorporated by the Government of India in 1965 to
achieve self-sufficiency in cement production in the country. Currently, CCI has 10 units spread
over eight states in India.
In order to help the private sector companies thrive in the industry, the government has been
approving their investment schemes. Some such initiatives by the government in the recent past are
as follows:
The Government of Tamil Nadu has launched low priced cement branded 'Amma' Cement.
The sale of the cement started in Tiruchi at Rs 190 (US$ 3.05) a bag through the Tamil Nadu
Civil Supplies Corporation (TNCSC). Sales commenced in five godowns of the TNCSC and
will be rolled out in stages with the low priced cement available across the state from 470
outlets.
The Government of Kerala has accorded sanction to Malabar Cements Ltd to set up a bulk
cement handling unit at Kochi Port at an investment of Rs 160 crore (US$ 25.68 million).
The Andhra Pradesh State Investment Promotion Board (SIPB) has approved proposals
worth Rs 9,200 crore (US$ 1.47 billion) including three cement plants and concessions to
Hero MotoCorp project. The total capacity of these three cement plants is likely to be about
12 MTPA and the plants are expected to generate employment for nearly 4,000 people
directly and a few thousands more indirectly.
India has joined hands with Switzerland to reduce energy consumption and develop newer
methods in the country for more efficient cement production, which will help India meet its
rising demand for cement in the infrastructure sector.
The Government of India has decided to adopt cement instead of bitumen for the
construction of all new road projects on the grounds that cement is more durable and
cheaper to maintain than bitumen in the long run.
Road Ahead
The eastern states of India along with the border states will be the newer and virgin markets for
cement companies and will contribute to their bottom line in future. In the next 10 years, India will
become the main exporter of clinker and gray cement to the Middle East, Africa, and other
developing nations of the world. Cement plants near the ports, for instance the plants in Gujarat and
Visakhapatnam, will have an added advantage for exports and will logistically be well armed to face
stiff competition from cement plants in the interior of the country.
A large number of foreign players are also expected to enter the cement sector in the next 10 years,
owing to the profit margins, constant demand, and right valuation. Cement companies will go for
global listings either through the FCCB route or the GDR route.
With help from the government in terms of friendlier laws, lower taxation, and more infrastructure
spending, the sector will grow and will take Indias economy forward along with it.

he Indian cement industry is the 2nd largest market

after China accounting for about 8% of the total
global production. It had a total capacity of over 360
m tonnes (MT) as of financial year ended 2013-14.
Cement is a cyclical commodity with a high
correlation with GDP. The housing sector is the
biggest demand driver of cement, accounting for
about 67% of the total consumption. The other major
consumers of cement include infrastructure (13%),
commercial construction (11%) and industrial
construction (9%).

The Indian cement industry grew at a commendable

rate in the previous decade, registering a compounded
growth of about 8%. However, the growth slowed down
in the period 2011 to 2013 when cement consumption
grew at an average rate of 4%. Moreover, the per capita
consumption of cement in India still remains
substantially low at about 192 kg when compared with
the world average which stands at about 365 kg
(excluding China). This underlines the tremendous
scope for growth in the Indian cement industry in the
long term.
Cement, being a bulk commodity, is a freight intensive
industry and transporting it over long distances can
prove to be uneconomical. This has resulted in cement
being largely a regional play with the industry divided
into five main regions viz. north, south, west, east and
the central region. The Southern region of India has the
highest installed capacity, accounting for about onethird of the country's total installed cement capacity.

Key Points
Supply
Demand

The demand-supply situation is highly skewed with the latter being significantly higher.
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 Licensing of coal and limestone reserves, supply of power from the state grid etc are all
of suppliers
controlled by a single entity, which is the government. However, nowadays producers
are relying more on captive power, but the shortage of coal and volatile fuel prices
remain a concern.
Bargaining power Cement is a commodity business and sales volumes mostly depend upon the
of customers
distribution reach of the company. However, things are changing and few brands have
started commanding a premium on account of better quality perception.
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.
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Financial Year '14

During the financial year 2013-14 (FY14), India's cement industry grew by 3-4% year-on-year
(YoY). The subdued growth was mainly attributable to slowdown in construction activities,
regulatory delays in infrastructural projects, high interest rates, prolonged monsoons and natural

disasters such as floods and cyclone in some parts of the country.

The industry witnessed high operating costs, including all major cost heads such as raw materials,
energy and freight. The steep depreciation of the rupee and hike in rail freight and diesel prices
further aggravated the concerns.
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Prospects

Cement demand is closely linked to the overall economic growth, particularly the housing and
infrastructure sector. Given the Modi governments thrust on housing and infrastructure
development, cement demand is expected to pick up in the coming times. The weakness in the
international crude oil prices and other commodities should help bring costs under control and
improve profitability of the sector. If inflation comes under control, a likely lowering of interest rates
would be a big positive for the cement sector.
While temporary challenges remain in the form of excess capacity, the long term drivers for
cement demand remain intact. Higher government spending on infrastructure, robust growth in
rural housing and rising per capita incomes are likely to augur well for the cement industry.

Ambuja Cements Ltd, a part of a global conglomerate Holcim, is one of Indias leading cement
manufacturers and has completed over 25 years of operations.
The cement industry is literally the building block of a nation. In that context Ambuja plays a key
role in Indias development and its blueprint for the future. It has always stayed on the fast track to
growth and has gone on to become a major player in the countrys cement sector.
The company, initially called Gujarat Ambuja Cements Ltd, was founded by Narotam Sekhsaria in
1983 in partnership with Suresh Neotia. Global cement major Holcim acquired management control
of Ambuja in 2006. The Company has also made strategic investments in ACC Limited.
Ambuja Cement is an established brand in India for Ordinary Portland Cement (OPC) and
Pozzolana Portland Cement (PPC), with significant footprints across western, eastern and northern
markets of India. Our customers range from individuals house builders (IHB) to governments to
global construction firms.
Ambuja has grown dynamically over the past decade. Its current cement capacity is 27.25 million
tons. The Company has five integrated cement manufacturing plants and eight cement grinding
units across the country. It is the first Indian cement manufacturer to build a captive port with four
terminals along the countrys western coastline to facilitate timely, cost effective and
environmentally cleaner shipments of bulk cement to its customers. The Company has its own fleet
of ships.
Today, the Company has established itself as one of the most efficient cement manufacturers in the

world. Its environment protection measures are on par with the finest in the country. It is one of the
most profitable and innovative cement companies in India. The Company has also pioneered the
development of multiple bio-mass co-fired technologies for generating greener power in its captive
plants.
The Companys most distinctive attribute is its approach to business. Ambuja follows a unique
home grown philosophy called I CAN, that gives people the authority to set their own targets and
the freedom to achieve their goals. Its focus has been consistent on two major building blocks that
are resonated through its daily operations Quality (of the product) and Safety (of the human
resources involved in the creation of the product).

About Holcim
Founded in Switzerland in 1912, Holcim is one of the worlds leading suppliers of cement and
aggregates employing some 80,000 people, with production sites in around 70 countries. Holcims
core businesses include the manufacture and distribution of cement, and the production, processing
and distribution of aggregates (crushed stone, gravel and sand), ready-mix concrete and asphalt. The
Company also offers consulting, research, trading, engineering and other services. With a market
presence on every continent, Holcim is more globally spread than any other building materials
group, allowing it to create a strong foothold in each individual market, and providing stable
earnings for the Group.

Sets up its first cement manufacturing plant at Ambujanagar, Gujarat with a capacity of 0.7
million tons.

Installs a new generation high-efficiency air separator which close-circuits the operation of
the cement mill. With this the Company achieved significant energy efficiency in its kilns
bringing down power costs and also reducing stabilising time from upto 18 months to a
mere three months, a critical time line for a cement plant.
Undertakes the Van-Vihar project to convert a mined area into an environmentally restored
and scenic location.
Introduces an innovative concept of bulk transportation in the country. Sets up a port and
orders and commissions three ships specially designed for the purpose. Adopts Kodinar
Taluka in Junagadh district, Gujarat for all-round development at a time when Corporate
Social Responsibility (CSR) was not common currency. It marks the unveiling of the
human face of Ambuja.

 Sets up a new unit of 9.4 lakh ton, Gajambuja Cement, at the existing premises of
Ambujanagar, Gujarat. Sets up a one-million ton cement plant at Suli, Himachal Pradesh.
Commissions clinkerisation facility in Suli (Himachal Pradesh) and Ropar (Punjab). Sets up
the third one-million tonne plant at Ambujanagar.
Achieves highest-ever export by an Indian cement company: 5.33 lakh tons of cement and
clinker are exported.
Increases power generation capacity to the extent of 40 MW at Ambujanagars power plant.
Sets up a new 12MW power plant at Himachal Pradesh. Undertakes environment protection
measures at Kashlog mines in Himachal Pradesh as a part of its commitment to being a
responsible corporate citizen.
Amalgamates wholly-owned subsidiary Maratha Cements Ltd with itself.
Makes a foray outside India by setting up a cement terminal in Sri Lanka.
Commences work on a 2 million ton capacity plant at Maratha Cement Works, Chandrapur,
Maharashtra. Carries out rehabilitation work at Gujarat as part its CSR activity after an
earthquake devastates many areas of the state. The rehabilitation campaign becomes a model
for relevance and community involvement.
Achieves 100% capacity utilization in Maratha Cement Works Chandrapur plant in the very
first year of production.
The erstwhile Ambuja Cements Eastern Limited is amalgamated with the Company. Holcim
enters into a strategic alliance with Gujarat Ambuja Cements to participate in the growth
market of India, making a public purchase offer to the shareholders of The Associated
Cement Companies (ACC) and Ambuja Cement Eastern. In the same year, Ambuja Cement
Eastern Ltd is amalgamated with the Company.
Adopts a new sustainable rural marketing model providing technical support in building
rural infrastructure and imparting training skills to villagers. Government of India confers
Padma Bhushan award to company Chairman, Suresh K Neotia for his contribution to
Indian business and industry.
Adopts a goal of Zero Harm working environment. Allocates resources to strengthen the
OH&S Management system.
Launches Ambujas knowledge initiative program Ambuja Knowledge Center to enable
industry professionals to get a first-hand feel of the world of cement and concrete. During
the year, three centers became operational in the cities of Jaipur, Ahmedabad and Kolkata.
Commissions two grinding units of 1.5 million tonnes Dadri (Uttar Pradesh) and Nalagarh
(Himachal Pradesh). Dadri Grinding Unit in its very first year of operation receives the
Integrated Management System (IMS) Certification, including ISO 9001:2008, ISO

14001:2004, and OHSAS 18001:2007 by BSI (U.K.).

Completes 25 years of operation. Acquires stake in Dirk India Private Ltd, Counto
Microfine Products Ltd and Nepal-based Dang Cement. Achieves water-positive status, as
certified by an independent foundation, Det Norske Veritas. Commissions two cement mills
one each at Bhatapara (Chattisgarh) and Maratha Cement Works (Maharashtra), increasing
the total grinding capacity of the Company to 27.35 million tons. Commissions five wind
turbine generators with a total capacity of 7.5 MW at Kutch, Gujarat.
Announces the expansion of capacity at grinding unit Sankrail, West Bengal, increasing the
capacity from 1.5 MTPA to 2.4 MTPA Wins CII Sustainability Award 2012 presented by
the President of India
Board approves a proposal to acquire Holderind Investments Ltd, Mauritius (Holcim),
followed by a merger of Holcim India into Ambuja. Commences work on the Marwar
Mundwa project, a cement grinding unit at Rajasthan.