The term cement is used to designate many different kinds of substances that are used as binders. The term cements as used henceforth will be confined to inorganic hydraulic cements, principally Portland cement. The demand for the cement was stimulated by the growth of canal systems in the United States during 19th century. This led to process improvements in the calcinations of certain limestones for the manufacture of natural cements and to its gradual displacement by Portland cement. The latter was named by aspdin in a 1924 patent because of its resemblance to a natural limestone quarried on the island of Portland in England. Research conducted in many parts of the world since that time has provided a clear picture of the composition, properties and fields of stability of the principal systems found in Portland cement. These results led to the widely used Bogue calculation of composition based on oxide analysis. Recent research is reported in the International Symposia on the Chemistry of Cements, and the annual reviews, beginning in 1974, of the American Ceramic Society in Cements Research Progress. India is the second-largest producer of cement in the world after China. The cement industry is regional in nature due to the concentration of limestone reserves located in a few states. This has resulted in a surplus situation in some regions and a deficit in others. Demand for cement has grown at a CAGR of 9.1% in the last two years with supply growing at a CAGR of 8.2% in the same period. With a large amount of infrastructure activities being planned in commercial, real estate and housing sector along with huge development works in roads, railways, ports and hydel projects, we expect the cement demand growth momentum to stay intact. We expect this to have a positive impact on cement prices in different regions till new capacities come up by mid-FY09. Demand for cement is correlated to the GDP growth of the country, infrastructure and industrial capex as well as exports. Strong GDP growth expected in the coming years and huge planned investments should result in healthy growth in the cement demand. The Indian economy continues to be on a much stronger growth path driven by increased amount of infrastructure spending and capex. The economy is expected to grow by 8% for the next two to three years, which will drive an increased demand growth for the cement industry. The cement demand is expected to grow at a CAGR of 10% at least for the next three years. The cement industry witnessed serious M&A activity in the past few years, as a result of which the top four players now account for almost 52-55% of the installed cement capacity of India. The M & A activity have also had global participants. The growing presence of international players bring with them better technology and operational efficiencies which could significantly alter pricing patterns. The demand- supply deficit is expected to remain for short term due to strong industrial growth thus keeping the prices firm. Being a bulk commodity, it is unviable to transport cement beyond a certain distance and due to the requirements of proximity to raw materials, proximity to markets, export potential and high freight rates involved it becomes necessary to evaluate the sector on a regional basis. The industry is divided into five regions - north, south, east, west and central. Northern region is facing an acute supply crunch for the last four years due to region's demand-supply deficit and increased net exports to other regions. Cement demand in the region grew at a CAGR of 10% for the last five years and is expected to grow at the same pace for the next five years, backed by aggressive infrastructure development activities, significant hydel capacity addition in the region, surging housing demand, SEZs construction, etc. Cement demand in the Western region has grown at a CAGR of 5.8% for last five years, backed by consistent infrastructure spending, concentrated investment from region-specific industries like oil refineries in Vadodara and Jamnagar region of Gujarat and steady growth in housing activities. The demand will continue to grow at the same pace for next 3-5 years fuelled by enhanced infrastructure spending like construction of the Metro Railway in Mumbai, express highways joining Gujarat and Mumbai, etc., resurgence in industrial investments, strong growth in retail sector. The demand in the southern region has grown at CAGR of 10.2% for the last five years as compared to capacity addition growth of 6.5% for the same period, reflecting the low capacity addition in the region since FY02. The region's demand is expected to grow in the range of 8-9% for the next five years on account of strong capital expenditure in the IT and electronic hardware sector, enhanced spending on infrastructure development, special thrust on irrigation activities, etc. Demand in the Central region grew at CAGR of 5% as compared to All-India demand growth of 8.5% Capacity utilization in the region will continue to remain above 99% for next two years and the region carries the lowest risk among all the regions as the trend would continue even in FY09E. The region is witnessing frenzied investments to the tune of $140bn to be implemented in next 5-10 years. The Eastern region lacks infrastructure to aid this quantum of investment, hence it will fuel the emergence of aggressive infrastructure development. Prices are expected to remain strong on the back of diminishing surplus and tight consolidation present in the region, with 73% of the market being controlled by top five players (three on group-wise criteria, ACC+Gujarat Ambuja, Ultratech+ Grasim and Lafarge). Volatility in cement prices in the Eastern region has been least among all the regions.