One of the world’s largest and fastest growing cement industries, the Indian cement industry has been expanding significantly on back of rising infrastructure activities, increasing demand from housing sector, and construction recovery. The recent developments in the industry along with the strong support of government are attracting the global cement giants. It is estimated that the total cement installed capacity of India is to increase with a CAGR of around 7% during 2012-13 to 2014-15. Our country is the second major cement producing country following the China; we have 137 large and 365 mini cement plants. Leading players in the industry are Ultratech Cement, Gujarat Ambuja Cement Limited , JK Cements, ACC Cement, Madras Cements etc. Cement is an adhesive that holds the concrete together and is therefore vital for meeting economy’s needs of Housing & accommodation and necessary infrastructure such as roads & bridges, schools, hospitals etc. Hence, the cement is one of the fundamental elements for setting up strong and healthy infrastructure of the country and plays an important role in economic development and welfare of the nation.
Cement industry is being segmented regionally i.e. Northern, Central, Western, Southern and Eastern. Cement, being a bulk item transporting it over long distances can prove to be uneconomical as it attracts very high amount of freight. Thus, it has resulted in cement being largely a regional play with the industry divided into five main regions. As it is a freight intensive industry, the segment is completely domestic driven and exports account for very negligible percentage of the total cement off take.
HIGHLIGHTS OF INDIAN CEMENT INDUSTRY as in 2011
Statistics - Large Cement Plants
Companies (Members) (Nos.) 42
Cement Plants (Nos.) 139
Installed Capacity (Mn. t.) 234.3
Cement Production (Mn. t.) 2009-10 168.29
Plants with Capacity of Million tonnes and above (Nos.) 97
Manpower Employed (Nos.) Approx. 1,20,000
Statistics - Mini & White Cement Plants
Cement Plants (Nos.) Approx. 365
Installed Capacity (Mn. t.) 11.10 (P)
Cement Production (Mn. t.) 2010-11 6.00 (P)
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Source: CMA India
The Indian cement industry is highly fragmented with the top few accounting for more than 50% of the industry capacity. The rest is distributed among the large number of small players. The cement industry in India has come forward as the second largest in the world, showing a total capacity of around 230 MT (including mini plants). However, on account of low per capita consumption of cement in the country (156 kgs/year as compared to world average of 260 kgs) there is still a huge potential for growth of the industry.
In India there are around 365 small and 140 large cement plants, combined production capacity of which is approximately 234 Million Tonnes (MT). Keeping the tune with the global standard, the Indian cement industry has transited itself into more advanced one. At present, the Indian cement industry is positioned on the second rank. Due to the general economic slowdown, financial institutions tightened their credit norms. This led to a credit crunch and impacted upcoming real estate, infrastructure and other projects. With that, demand for cement moderated. However, stimulus packages and agricultural income, government spending on the infrastructure, rural demand will give a impetus to the demand for the commodity. The cement industry is likely to maintain its growth momentum and continue growing at around 8% to 9% in the medium to long term in line with the development of the economy (GDP). Government initiatives in the infrastructure sector and the housing sector are likely to be the main growth drivers. During FY2011, all-India demand grew by moderate 4.7% Y-o-Y, the lowest in the past several years. Demand in the southern region was worst affected, reporting a decline of 3.4% Y-o-Y. Demand scenario has worsened further in 1 HF Y2012 with all-India demand growth slumped to 3% Y-o-Y. In the western region, demand remained healthy and grew by 11.2% Y-o-Y. Demand grew by 7.2% and 5.2% in the northern and central regions, respectively, while it was flat in the eastern region. However, in the southern region, demand continued to slide down and declined by 4.1% Y-o-Y. The main drivers of cement demand are development of infrastructure like, Power Houses, Roads, Ports, Airports, and Mass Housing, both urban and rural.
Government Initiatives:With a goal of speed up and sustaining growth in the cement industry the government has taken a range of steps in the Union budget 2011-12. The infrastructure sector has received a momentum in the form of improved funds and tax related incentives offered to magnetize investors for tapping the infrastructure opportunities across the country. Introduction of tax free bonds, formation of infrastructure debt funds and formulating a comprehensive policy for developing public private partnership projects (PPPs) are some of the steps that will provide required stimulus for growth of the cement industry in India.