Project Report on Study of Industry Sector Analysis

Name of the Industry – CEMENT

A Project report submitted in the partial fulfillment of the degree of

Masters of Business Administration

Under Guidance of Submitted by

Dr. Y.S. Thakur Ankit Mishra
HOD. Reg No.Y17282005

Department of Business Management

Dr. Harisingh Gour University (Sagar M.P.)
 DECLARATION BY THE CANDIDATE

Dated: _____________

I declare that the Project Report title “A Study on industry sector analysis” is my own work conducted
under the supervision of Dr. Y.S. Thakur Sir, HOD, Department of Business Management, Dr.
Harisingh Gour Central University, Sagar. The information and data given in the report is authentic to
the best of my knowledge and this project work is submitted in the partial fulfillment of the
requirements for the award of the degree of Master of Business Administration (MBA). The results
embodied in this thesis have not been submitted to any other University or Institute for the award of any
degree or diploma.

Ankit Mishra
MBA 1st Semester
(Registration No. - Y17282005)
 CERTIFICATE

This is to certified that Ankit Mishra, MBA 1st semester submitted the project report titled “Cement

Industry Analysis” conducted under the supervision guidance of Dr. Y. S. Thakur Sir, HOD,

Department of BusinessManagement, Dr. Harisingh Gour Central UniversitySagar (M.P.) for the

partial fulfillment of the degree of Master of Business Management Administration .Her work is

satisfactory .

Signature Signature Signature

Supervisor Head of Department Examiner

 ACKNOWLEDGEMENT

It is my proud privilege to release the feelings of my gratitude to several persons who helped me directly
or indirectly to conduct this project work. I express my heart full indebtness and owe a deep sense of
gratitude to my teacher and my faculty guide Dr. Y. S. Thakur, HOD, Dr. Harisingh Gour Central
University Sagar, (Madhya Pradesh.), to my project in charge Ms. P. Vakula Kumari Mam, Assistant
Professor, Dr. Harisingh Gour Central University Sagar, (Madhya Pradesh.), for their sincere guidance
and inspiration in completing this project.
I am also extremely thankful to all those persons who have positively helped me. I also thank all my
friends who have more or less contributed to the preparation of this project report. I will be always
indebted to them.
Thanking You

Ankit Mishra
MBA 1st Semester
(Registration No. Y17282005)
 PREFACE

One can deny for the importance of the practical exposure of the problem for its better understanding
and better grip of coming out with an industrially acceptable solution. Being the Management student
and performing small practical even is in itself an experience of responsibility on our head. The project
is certainly the best chance to work in the Management field and have practical understanding of
Management Strategic formulation and its implementation. This exposure has really added a supplement
and nourishment to our growing tree of management knowledge- just like the fertilizer does to the
plants. In view of above, this report has been completed as a part of syllabus prescribed for the master of
business administration. This had been made in order to know Cement industry overview and its
strategic tools and its planning. This will help us to understand How Made Strategic Tools for particular
industry, which factor affected to Cement industry. We also know the Strengths, Weakness,
Opportunities, and Threats. This will help to understand financial overview of Cement industry. We also
know the Political, Economical, Social, Technology factor which affected to the Cement Industry. It is
matters of proud to be students of such great university where in students are helped to extract hidden
potentials from their selves. We are highly Thankful to all the Faculties of the department who guided us
all the way long as how the entire MRP 1 report is to be conducted. The education institutions offering
management programs play a significant part in un calculating the much needed managerial skills in
their students, the aspiring managers. The real success of management lies in applying the professional
management techniques in all managerial activities. Practical study is eminent, and plays vital role for
the students of management, because classroom coaching and theoretical study alone are not enough. To
survive in this highly competitive world, practicality outweighs theoretic. Students are supposed to learn
the various principles of business administration conceptually but accuracy and efficiency in their
implementation is possible only through exposure to practical environment. We have tried our best and
have applied all our efforts, knowledge and sources available, in this project. Here we try our level best
for finding data.
The Indian cement industry is the second largest market after China. It had a total cement manufacturing
capacity of about 384 million tonnes (MT) as of financial year ended 2015-16. Cement is a cyclical
commodity with a high correlation with GDP. Cement is the single most important and profitable
product in the building material sector and with the consumption of cement in India to touch 600 million
tonnes by the year 2020.-this is truly the California Gold Rush of the new century. With an 8% GDP
growth rate, governmental infrastructure augmentation and population expansion, the Indian cement
industry is a market of opportunities waiting to be tapped. A direct implication of this sectoral growth is
the influx of multinationals like Holcim and Lafarge, which will drive Indian cement companies in the
building industry to adapt new business strategies to complement the higher demand and competition. A
cogent analytical research on governmental reports, industry data and cement MNC annual reports has
been performed. On analysis and scrutiny of the distinct variables involved in this market, this paper
investigates the current and future trends in the Indian cement industry and enumerates key business
strategies that cement conglomerates will have to adapt to compete in the Indian building materials
market.
 TABLE OF CONTENTS
S.No Topic Page No.

1 Introduction 8

1.1 Definition 8

1.2 Role and objective 9-10

1.3 Characteristics of the industry 10-11

1.4 Classification of the industry 11-15

1.5 Major Players 16-18

1.6 Core Business and its products 19-20

1.7 Present Status and Development 20-23

2 Research Methodology 24

2.1 Objectives of the Study 24

2.2 Need of the Study 24-25

2.3 Sources of data 25

2.5 Limitations 25

3 Data Analysis and Interpretation 26-27

3.1 Swot Analysis 28-30

3.2 PEST Analysis 30-31

3.3 Marketing Mix 32-33

3.3 Segmentation 34-51

3.4 Government Policies 52

4 Findings and Conclusion 52-53

Bibliography 53-56
India is the second largest producer of cement in the world. No wonder, 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, both
from Indian as well as foreign investors.
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 98 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, Heidelberg Cement, 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.
Indian Cement Industry is the second largest cement producer in the world after China with a total
capacity of 151.2 Million Tonnes (MT). Government of India has been giving immense boost to
various infrastructure projects, housing facilities and road networks, the cement industry in India is
currently growing at an enviable pace. In the coming years more growth in the Indian cement industry is
expected to come. It is predicted that the production in India would rise to 236.16 MT in FY16 &
expected to rise to 262.61 MT in FY17 in the Cement Industry. The Indian cement industry is
dominated by 20 companies, which account for almost 70% of the total cement production in India.The
companies all over India have produced 11 MT cement during April-September 2009. The Indian
Cement industry plays a major role in the growth of the nation for that case in any country. Industry
Cement Industry was under full control and supervision of the government. However, it got great relief
at a large extent after the economic reform which made its growth easier. Still government interference,
especially in the pricing, is evident in India.

In spite of it being second largest cement producer in the world, Indian Cement industry falls in
the list of lowest per capita consumption of cement with 125 kg. The reason for this is poor rural
people who mostly live in mud huts and cannot afford to have the commodity. The demand and
supply of cement in India has grown up over the years. In a fast developing economy as India there is
always large possibility of expansion of cement industry. The Indian cement industry is one of the vital
industries for economic development. The total utilization of cement in a year is used as an indicator of
economic growth. Cement contributes as a necessary constituent of infrastructure development and a
key raw material for the construction industry, especially in the government's infrastructure development
plans in the context of the nation's socio-economic development.

History and Evolution of cement industry in India:

Firstly in 1889 a Kolkata-based company started manufacturing cement from Argillaceous. Later the
industry started getting the organized shape in the early 1900's. India Cement Company Ltd was
established in 1914 in Porbandar with a capacity of 10,000 tons and production of 1000 tons installed.
The first initial thrust to the cement industry in India was during the World War 1 and then the industry
started growing at a fast rate in terms of production, manufacturing units, and installed capacity. This
particular stage in the history was referred to as the Nascent Stage of Indian Cement Industry. In 1927,
Concrete Association of India was established to create public awareness on the utility of cement as well
as to propagate cement consumption.
In the year 1956 the Indian Cement Industry saw the price and distribution control system, which was
established to ensure fair price model for consumers as well as manufacturers. Later, government
authorized new manufacturing units (as well as existing units going for capacity enhancement) to put a
higher price tag for their products in the year 1977. After some years, government introduced a three-tier
pricing system with different pricing on cement produced in high, medium and low cost plants. In 1982
Government of India introduced a quota system to give impetus to the cement industry.

A quota of 66.60% was imposed for sales to Government and small real estate developers. Lower quota
at 50% was effected for new units and sick units. The remaining 33.40% was allowed to be sold in the
open market. These changes had the desirable effects on the Indian Cement industry. Profitability of the
manufacturers increased substantially, but such rising input cost was a cause for concern. Complete
freedom to the cement industry was given in the year 1989, to gear it up to meet the challenges of free
market competition due to the impending policy of liberalization. In 1991 the industry was de- licensed
which resulted in an accelerated growth for the industry and availability of state of the art technology for
modernization. Major players invested heavily for capacity expansion and the industry laid greater
focus on exports to maximize the opportunity available in the form of global markets. The role of
the government has been extremely crucial in the growth of the industry.
Market Size of Indian Cement industry:

Cement prices in India recorded a 6.7 per cent month-on-month growth in April 2017, thereby indicating
the probability of growth in volume and profitability of cement companies in the quarter ending June
2017.The housing sector is the biggest demand driver of cement, accounting for about 67 per cent of the
total consumption in India. The other major consumers of cement include infrastructure at 13 per cent,
commercial construction at 11 per cent and industrial construction at 9 per cent.
The cement capacity in India is estimated to be at 420 MT as of March 2017 with production
growing at 5-6 per cent per year. The country's per capita consumption stands at around 225 kg.
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. A total of 188 large cement plants
together account for 97 per cent of the total installed capacity in the country, with 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.

Investments in Cement Industry:

On the back of growing demand, 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$ 5.24 billion between April 2000
and March 2017.

Some of the major investments in Indian cement industry are as follows:

 Emami Ltd, a fast-moving consumer goods (FMCG) company, plans to invest around Rs 8,500
crore (US$ 1.32 billion) to scale up its cement production capacity from 2.4 million tonnes (MT)
to 15-20 MT in the next three to five years.
  The Gujarat-based Nirma group, with presence in detergent, soap and chemicals sector, has
bought Lafarge India’s cement business, consisting of 11 MT production capacity, for US$ 1.4
billion.

 FLSmidth, a global engineering company based in Copenhagen, has signed a contract with
India’s Larsen & Toubro Limited for engineering, procurement and supply of equipment for a
complete cement production line with a capacity of 3,000 tonne in Tamil Nadu.

1.1 Definition:

Cement is the glue that holds the concrete together, and is therefore critical for meeting society's needs
of housing and basic infrastructure such as bridges, roads, water treatment facilities, schools and
hospitals. Concrete is the second1 most consumed material after water, with nearly three tonnes used
annually for each person on the planet. Being one of the basic elements for setting up strong and healthy
infrastructure, Cement plays a crucial role in economic development of any country. Having more than a
hundred and fifty years history, it has been used extensively in construction of anything, from a small
building to a mammoth multi purpose project.

The manufacturing process of cement consists of mixing, drying and grinding of limestone, clay and
silica into a composite mass. The mixture is then heated and burnt in a pre-heater and kiln to be cooled
in an air-cooling system to form clinker, which is the semi-finished form. This clinker is cooled by air
and subsequently ground with gypsum to form cement. There are three types of processes to form
cement - the wet, semi-dry and dry processes. In the wet/semi-dry process, raw material is produced by
mixing limestone and water (called slurry) and blending it with soft clay. In the dry process technology,
crushed limestone and raw materials are ground and mixed together without the addition of water.
Cements used in construction are usually inorganic, often lime or calcium silicate based, and can be
characterized as being either hydraulic or non-hydraulic, depending upon the ability of the cement to set
in the presence of water.
Non-hydraulic cement will not set in wet conditions or underwater; rather, it sets as it dries and reacts
with carbon dioxide in the air. It is resistant to attack by chemicals after setting.

Hydraulic cements (e.g., Portland cement) set and become adhesive due to a chemical reaction between
the dry ingredients and water. The chemical reaction results in mineral hydrates that are not very water-
soluble and so are quite durable in water and safe from chemical attack. This allows setting in wet
condition or underwater and further protects the hardened material from chemical attack. The chemical
process for hydraulic cement found by ancient Romans used volcanic ash (pozzolana) with added lime
(calcium oxide).

Green cement a new concept is a cementitious material that meets or exceeds the functional
performance capabilities of ordinary Portland cement by incorporating and optimizing recycled
materials, thereby reducing consumption of natural raw materials, water, and energy, resulting in a more
sustainable construction material.
New manufacturing processes for producing green cement are being researched with the goal to reduce,
or even eliminate, the production and release of damaging pollutants and greenhouse gasses, particularly
CO2.Growing environmental concerns and increasing cost of fuels of fossil origin have resulted in many
countries in sharp reduction of the resources needed to produce cement and effluents (dust and exhaust
gases).

1.2 Roles and Objectives:

The cement industry is the building block of the nation's construction industry. Few construction
projects can take place without utilizing cement somewhere in the design. The contribution of cement
industry in the economic development can be measured by the value addition of the cement industry to
Gross Domestic Product of the country, creation of employment opportunities, receipts from exports, tax
payments, and the entire revenue generated by the cement industry. The cement industry of India is one
of the major industries of India which have an enormous impact on the economic development of the
country. The contribution of cement industry is very effective not for only the manufacturing sector but
also for the entire economic development of India. The cement industry of India was once a very small
industry but it rapidly grew with the passage of time and finally it entered in the export market. The
cement industry contributes in the Gross Domestic Product (GDP), it creates employment opportunities
for thousands of people and it creates huge revenue for the government in the form of taxes. It directly
and indirectly contributes in the economic development of India. It also makes contribution in the
development of its allies industries especially the transportation sector is largely benefited by it. The
cement industry of India attracted not only domestic investors but also foreign investors.

Being one of the basic elements for setting up strong and healthy infrastructure, Cement plays a crucial
role in economic development of any country. Having more than a hundred and fifty years history, it has
been used extensively in construction of anything from a small building to a mammoth multipurpose
project.

 The infrastructure development of the country in the recent years is the demand driver for the
cement industry. The cement industry is one of the vital industries for economic development in
a country. The total utilization of cement in a year is used as an indicator of economic growth.
Cement is a necessary constituent of infrastructure development and a key raw material for the
construction industry, especially in the government’s infrastructure development plans in the
context of the nation’s socioeconomic development. The Cement industry being a core sector
industry, producing the basic construction material essential for any construction activity, be it
infrastructure, hospitals, housing, community development projects etc., plays a lead role in
country's economic development and hence deserves due support to the Governments for its
healthy growth.

 The cement industries are driven by the immense growth in the housing sector, the infrastructure
development and construction of transportation Estelar 112 systems. In comparison of other
manufacturing industries, cement industry contributes more to the nation due to the following
reasons.

(a) Lower capital investment per unit of production without sacrificing the quality of the
product.
 (b) Lower gestation period which helps in realizing quicker returns on capital invested.

(c) Bringing cement manufacture within the financial capacity of the smaller entrepreneur.

(d) Creating employment opportunities in rural areas.

(e) Setting up a cement industry in locations where movement of heavy machinery is difficult.

(f) Exploitation of small deposits of limestone as well as limited quantities of calcareous

industrial wastes.

(g) Reducing the average unit cost of transporting cement through the dispersal of cement-
production facilities.

Role of Cement Industry in Indian Economy:-

 The Indian cement industry is one of the booming sectors of the Indian economy.
 The infrastructure development of the country in the recent years is the demand driver for the
cement industry.
 The Indian Cement Industry is experiencing the entry of many foreign players in the Indian
market.
 The average monthly capacity utilization during the year 2016-17 was 94%.
 The cement dispatches in the year 2016-17 was 155 million tones.
 The growth of the cement sector pertaining to the total output was 10% in 2016-17.
 India ranks second in the production of cement in the world.
 The growth rate of the production of cement during the year 2016-17 was 9.1%
 The export of the cement in the year 2016-17 was 9.3 million tones.
 The cement industry in India constitutes of 365 small cement manufacturing units and 130 large
cement manufacturing units.
 The total installed capability of the cement manufacturing is 165 million tonnes per year.
  The large manufacturing units accounts for 94% of the total output of cement.

1.3 Characteristics of the industry:

Cement industry is one of the key industries in India. It plays a dominant role in the national economy.
Form the point of view of economic development of the country, 22 Cement industry ranks second very
next to the Iron and steel industry. Cement is indispensable in building and construction works. The
production and consumption of cement to a large extent, indicates a country's progress. In a developing
country like India the need for a well established cement industry is of paramount importance. The
Indian cement industry continues to suffer from excessive production capacity a time when demand
growth continues to be sluggish. The industry remains highly fragmented and profit have been impaired
by a series of debilitating price wars as well as from steadily rising costs. The recent arrival of Lafarge
may herald some much needed industry consolidation. Meanwhile cement capacity levels continue to be
swollen by a sizeable new building programmed.

The viability of the location plays the major role in the economics of cement manufacturing. It is
determined by the factors such as porosity to raw materials, limestone, and coal, distance of market
areas as well as availability of continuous power supply. Porosity to limestone deposit contributes
considerably to pushing down cots in transportation of heavy limestone. If units are located close
enough to limestone resources, trucks can be used to move limestone over the short distance instead of
relying on scarce railway capacity.

The proximity of coal deposits continues another important factor in cement manufacturing. Generally,
coal is transported by railway throughout the country. Coal distribution and coal prices are strictly
controlled by the Government. Although coal deposits are located all over the country constraints in
availability of wagons for railway transportation have led to major shortfalls in the amount of coal
received against the quota assigned to the cement industry.
At present the Indian cement industry produces 13 different varieties of cement employing three
different process types. Amongst varieties, Ordinary Portland cement (OPC), Portland pazzolona cement
(PPC) and Portland slag cement (PSC) constitute the major shares accounting for almost 99% in total
production. Ordinary Portland cement is most commonly used in India. It holds a share of about 70% in
total production PPC of only 11%. Generally, the two varieties, PSC and OPC, used for same purpose,
white PPC cannot used for prestressed and high strength concrete as used in bridge and airports.

During the financial year 2015-16 (FY16), India's cement demand stood at 284 MTPA as against the
supply of 384 MTPA during FY 2015-16. The poor growth in cement demand is attributable to slower
progress in infrastructure projects and low off-take from housing and industrial user segments. While
rural demand was affected by less-than-normal monsoon, the demand from real estate market in urban
areas was also poor because of frail market conditions. Cement demand from Industrial capital
expenditure was adversely affected due to existence of excess capacities across various industrial
sectors. The supply side on the other hand continued to reflect over-capacity leading to lower capacity
utilization levels by cement companies. Drop in commodity prices especially coal however helped
cement companies in rationalizing their cost of production.

Higher government spending on infrastructure and housing, and rising per capita incomes will be key
growth drivers for the cement industry. There have also been positive moves on the policy front, in areas
related to ease of doing business, promoting start-ups, rationalising the tax structure and administration,
and opening up more areas for foreign investment through the automatic route. The government is
substantially stepping up infrastructure spending.

Cement demand is closely linked to the overall economic growth, particularly the housing and
infrastructure sector.
The Economic characteristics of the cement Industry are enumerated as:-

 Supply : The demand-supply situation is highly skewed with the latter being significantly
higher.

 Demand: 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 of suppliers : Licensing of coal and limestone reserves, supply of

power from the state grid, etc. are all controlled by a single entity, which is the
government. However, many producers are relying more on captive power.

 Bargaining power of customers : Cement is a commodity business and sales volumes

mostly depend upon the distribution reach of the company. Cement is sold in two
segments - trade and non-trade. Trade cement is the one sold to the dealers. Non-trade
cement is sold directly to the consumers, mainly institutional buyers. Trade cement sells
higher compared to non-trade. As such, companies that have a strong distribution
network and retail presence tend to have better cement realizations.

 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.
1.4 Classification of the Industry:

There is hardly any other product that has so greatly contributed to the growth of modern human
civilization as Cement. The massive urban infrastructure that we see today across the world would have
been unthinkable without cement. Cement is the root substance that has given the essential element of
strength and durability to our houses, schools, offices and other buildings so that we can occupy them
with peace of mind.

1.5 MAJOR PLAYERS IN CEMENT INDUSTRY:

Top players in Indian road construction sector are:-

 UltraTech cement:

UltraTech Cement – 'The Engineer's Choice' is India's largest and amongst the World's
top manufacturers of cement. The company provides an array of products ranging from
grey cement to white cement, from building products to building solutions and an
assortment of ready mix concretes catering to varied needs and applications.A majority of
UltraTech’s state-of-the-art manufacturing units are accredited with the highest quality
standards and certifications such as ISO 9001 for quality systems, ISO 14001 for
environmental management systems and OHSAS 18001 for occupational hazard and
safety management systems.UltraTech and its subsidiaries have a presence in five
countries through 11 integrated plants, one white cement plant, one clinkerisation plant,
15 grinding units, two rail and three coastal terminals, and 101 ready mix concrete
(RMC) plants. The company is India's largest exporter of cement clinker spanning export
markets in countries across the Indian Ocean, Africa, Europe and the Middle East.

 Ambuja Cements Ltd:

Ambuja cements a part of a global conglomerate Holcim, is one of India’s leading

cement manufacturers. With over 25 years of operations, Ambuja plays a key role in
India’s development and its blueprint for the future. Today, it is one of the major
players in the country’s cement sector.Ambuja has grown dynamically over the past
decade. Its current cement capacity is 27.25 million tonnes. 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 three
terminals along the country’s western coastline to facilitate timely, cost-effective and
environmentally cleaner shipments of bulk cement to its customers. Ambuja also has
its own fleet of ships.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 among the most profitable and innovative cement
companies in India. Ambuja has also pioneered the development of multiple bio-mass
co-fired technologies for generating greener power in its captive plants.
 Binani Cement :-

Binani Cement is the flagship company of the Braj Binani Group. The company
manufactures and markets 'Ordinary Portland Cement' (OPC) and 'Pozzolana Portland
Cement' (PPC) under the Binani brand, which enjoys premium status amongst major
Indian cement brands with a significant market share in northern and western
India.Binani Cement is among India’s most reputed manufacturers of cement,
possessing a global manufacturing capacity of 11.25 million tonnes per annum
(MTPA) with an integrated plant in India and China, and grinding units in Dubai.The
Binani Cement Limited Plant was initially set up at Binanigram with a capacity of
1.65 MTPA; today, the cement capacity is 6.25 MTPA. After its success in the Indian
market, Binani Cement has taken giant strides into the international arena. Presently,
it has manufacturing facilities in China – Shandong Binani Rongan Cement Co Ltd
(SBRCCL) and Dubai – Binani Cement Factory LLC that are setting global
benchmarks. Binani Cement has a well-established sales network in India, UAE, UK,
Sudan, South Africa, Tanzania and Namibia.
 Jaypee Group :-

Jaypee group is the third largest cement producer in India. The Group’s cement
facilities are located in the Satna Cluster (MP), which has one of the highest cement
production growth rates in the country.The Group produces a special blend of
Portland Pozzolana Cement (PPC) under the brand name ‘Jaypee Cement’. Its cement
division currently operates modern,computerised process control cement plants and
had an aggregate capacity of (commissioned/under commissioned) 28.80 million
tonnes per annum (MTPA) in FY 17. The company is in the midst of capacity
expansion of its cement business in northern, southern, central, eastern and western
parts of the country and achieved 41.40 MTPA in total cement capacity
(commissioned/under commissioned) in FY 13 with Captive Thermal Power plants
totaling 672 megawatt (MW).All the 260 cement dumps are networked using
TDM/TDMA VSATs along with a dedicated hub to provide 24/7 connectivity
between the plants and the 120 points of cement distribution, in order to ensure
‘track-the-truck’ initiative and provide seamless integration. This initiative is the first
of its kind in the cement industry in India.

 JK Cement:
 J K Cement has over three decades of experience in cement manufacturing. It began
with commercial production at Nimbahera, Rajasthan in May 1975. The company has
an installed grey cement capacity of 7.5 million tonnes per annum (MTPA) which
makes it one of the leading manufacturers in the country.JK Cement is the second
largest manufacturer of white cement in India, with an annual capacity of 400,000
tonnes, and value-added building products, such as wall putty, with an annual
installed capacity of 300,000 tonnes.
JK Cement was the first company to install a captive power plant, in 1987 at
Bamania, Rajasthan. It is also the first cement company to install a waste heat
recovery power plant to take care of the need of green power. Today, at its different
locations, the company has captive power generation capacity of over 100 megawatts
(MW).

 ACC Limited:
 ACC Limited was established in 1936 by Mr FE Dinshaw when 10 existing cement
companies came together under one umbrella. Since inception, the company has been
a trendsetter and important benchmark for the cement industry in many areas of
cement and concrete technology. ACC has a unique track record of innovative
research, product development and specialised consultancy services. The company's
various manufacturing units are backed by a central technology support services
centre.ACC has rich experience in mining, being the largest user of limestone. As the
largest cement producer in India, it is one of the biggest customers of the domestic
coal industry, of Indian Railways, and a considerable user of the country's road
transport network services for inward and outward movement of materials and
products.ACC plants, mines and townships visibly demonstrate successful
endeavours in quarry rehabilitation, water management techniques and 'greening'
activities. Presently, it has about 16 cement works plants across the country.

 Madras Cements Ltd :

Madras Cements was established in 1961. Formerly known as Ramco Cements Ltd, it
is the flagship company of the Ramco Group, a well-known business group of South
India. It is headquartered at Chennai. The main product of the company is Portland
cement, manufactured in eight state-of-the art production facilities that include
integrated cement plants and grinding units with a current total production capacity of
 15.5 million tonnes per annum (MTPA).The company is the fifth largest cement
producer in the country and the most popular cement brand in South India. Madras
Cements also produces ready mix concrete and dry mortar products, and operates one
of the largest wind farms in India. In addition to its manufacturing facilities, it also
has two packaging terminals, one each in the states of Tamil Nadu and Andhra
Pradesh.

 OCL LTD. :-

The origin of OCL was seeded in the time that signaled India's independence. A
dream unleashed. A blue print of growth was drawn. Endeavors to reconstruct
economy set in. Indian industry woke up to the key challenge of self- reliance.
Agriculture took a turn to modernity with construction of dams across the country.
Against such a bubbling background Sjt. Jaidayalji Dalmia, an industrialist of
farsighted vision set up a cement plant at Rajgangpur during 1950 - 51 at the request
of government of Odisha to manufacture super grade cement for use in the
construction of Hirakud dam. The plant that went on steam as Orissa cement Ltd
during 1952 transformed itself into OCL India Ltd during 1996 to better reflect its
multifarious activities.
1.6 CORE BUSINESS AND ITS PRODUCTS:

Cement industry is one the most important industry that exits in an economy. This industry provides the
basic raw material (cement and related products) to infrastructure development industries.It also makes
important contribution to the economy of the country.The core business activity of any Cement
company includes the production and manufacturing of Cement followed by marketing and distribution
of various kind of Cements.Cement companies make use various kind of latest technology for the
production of Cement so as to increase production per unit of input. Major cement manufacturers in
India are also increasingly using alternate fuels, especially bioenergy, to fire their kilns. This is not only
helping to bring down production costs of cement companies, but is also proving effective in reducing
emissions.With the ever-increasing industrial activities, real estate, construction and infrastructure, in
addition to the onset of various Special Economic Zones (SEZs) being developed across the country,
there is remains a growing demand for cement.

Cement Manufacturing Process Phases:-

Production of cement completes after passing of raw materials from the following six phases. These are;

1. Raw material extraction/ Quarry

2. Grinding, Proportioning and Blending
3. Pre-heater Phase
4. Kiln Phase
5. Cooling and Final Grinding
6. Packing & Shipping

1: Raw Material Extraction :

Cement uses raw materials that cover calcium, silicon, iron and aluminum. Such raw materials are
limestone, clay and sand. Limestone is for calcium. It is combined with much smaller proportions of
sand and clay. Sand & clay fulfill the need of silicon, iron and aluminum. Generally cement plants are
fixed where the quarry of limestone is near bye. This saves the extra fuel cost and makes cement
somehow economical. Raw materials are extracted from the quarry and by means of conveyor belt
material is transported to the cement plant.There are also various other raw materials used for cement
manufacturing. For example shale, fly ash, mill scale and bauxite. These raw materials are directly
brought from other sources because of small requirements. Before transportation of raw materials to the
cement plant, large size rocks are crushed into smaller size rocks with the help of crusher at quarry.
Crusher reduces the size of large rocks to the size of gravels.

2: Proportioning, blending and Grinding:-

The raw materials from quarry are now routed in plant laboratory where, they are analyzed and proper
proportioning of limestone and clay are making possible before the beginning of grinding. Generally,
limestone is 80% and remaining 20% is the clay.Now cement plant grind the raw mix with the help of
heavy wheel type rollers and rotating table. Rotating table rotates continuously under the roller and
brought the raw mix in contact with the roller. Roller crushes the material to a fine powder and finishes
the job. Raw mix is stored in a pre-homogenization pile after grinding raw mix to fine powder.

3: Pre Heating of Raw Material:-

After final grinding, the material is ready to face the pre-heating chamber. Pre-heater chamber consists
of series of vertical cyclone from where the raw material passes before facing the kiln. Pre-heating
chamber utilizes the emitting hot gases from kiln. Pre-heating of the material saves the energy and make
plant environmental friendly.

4: KILN Process:-

Kiln is a huge rotating furnace also called as the heart of cement making process. Here, raw material is
heated up to 1450 ⁰C. This temperature begins a chemical reaction so called decarbonation. In this
reaction material (like limestone) releases the carbon dioxide. High temperature of kiln makes slurry of
the material.The series of chemical reactions between calcium and silicon dioxide compounds form the
primary constituents of cement i.e., calcium silicate. Kiln is heating up from the exit side by the use of
natural gas and coal. When material reaches the lower part of the kiln, it forms the shape of clinker.

5: Cooling and final grinding:-

After passing out from the kiln, clinkers are cooled by mean of forced air. Clinker released the absorb
heat and cool down to lower temperature. Released heat by clinker is reused by recirculating it back to
the kiln. This too saves energy.Final process of 5th phase is the final grinding. There is a horizontal filled
with steel balls. Clinker reach in this rotating drum after cooling. Here, steel balls tumble and crush the
clinker into a very fine powder. This fine powder is considered as cement. During grinding gypsum is
also added to the mix in small percentage that controls the setting of cement.

6: Packing and Shipping:-

Material is directly conveyed to the silos (silos are the large storage tanks of cement) from the grinding
mills. Further, it is packed to about 20-40 kg bags. Only a small percent of cement is packed in the bags
only for those customers whom need is very small. The remaining cement is shipped in bulk quantities
by mean of trucks, rails or ships.

Various Products of Cement Industry:-

1. Rapid Hardening Cement:

Rapid hardening cement is very similar to ordinary portland cement (OPC). It contains higher c3s
content and finer grinding. Therefore it gives greater strength development at an early stage than OPC.
The strength of this cement at the age of 3 days is almost same as the 7 days strength of OPC with the
same water-cement ratio.
The main advantage of using rapid hardening cement is that the formwork can be removed earlier and
reused in other areas which save the cost of formwork. This cement can be used in prefabricated
concrete construction, road works, etc.

2. Low Heat Cement:

Low heat cement is manufactured by increasing the proportion of C2S and by decreasing the C3S and
C3A content. This cement is less reactive and its initial setting time is greater than OPC. This cement is
mostly used in mass concrete construction.

3. Sulfate Resisting Cement:

Sulfate resisting cement is made by reducing C3A and C4AF content. Cement with such composition
has excellent resistance to sulfate attack. This type of cement is used in the construction of foundation in
soil where subsoil contains very high proportions of sulfate .

4. White Cement:

White cement is a type of ordinary Portland Cement which is pure white in color and has practically the
same composition and same strength as OPC. To obtain the white color the iron oxide content is
considerably reduced. The raw materials used in this cement are limestone and china clay.
This cement, due to its white color, is mainly used for interior and exterior decorative work like external
renderings of buildings, facing slabs, floorings, ornamental concrete products, paths of gardens,
swimming pools etc.

5. Portland Pozzolana Cement:

Portland pozzolana cement is produced either by grinding together, portland cement clinkers and
pozzolana with the addition of gypsum or calcium sulfate or by intimately and uniformly blending
portland cement and fine pozzolana.It produces lower heat of hydration and has greater resistance to
attack of chemical agencies than OPC. Concrete made with PPC is thus considered particularly suitable
for construction in sea water, hydraulic works and for mass concrete works.

6. Hydrophobic Cement:

Hydrophobic cement is manufactured by adding water repellant chemicals to ordinary portland cement
in the process of grinding. Hence the cement stored does not spoiled even during monsoon. This cement
is claimed to remain unaffected when transported during rains also. Hydrophobic cement is mainly used
for the construction of water structures such dams, water tanks, spillways, water retaining structures etc.

7. Colored Cement:

This Cement is produced by adding 5- 10% mineral pigments with portland cement during the time of
grinding. Due to the various color combinations this cement is mainly used for interior and exterior
decorative works.

8. Waterproof Portland Cement:

Waterproof cement is prepared by mixing with ordinary or rapid hardening cement, a small percentage
of some metal stearates (Ca, Al, etc) at the time of grinding. This cement is used for the construction of
water-retaining structure like tanks, reservoirs, retaining walls, swimming pools, dams, bridges, piers
etc.

9. Portland Blast Furnace Cement:

In this case, the normal cement clinkers are mixed with up to 65% of the blast furnace slag for the final
grinding. This type of cement can be used with advantage in mass concrete work such as dams,
foundations, and abutments of bridges, retaining walls , construction in sea water.
10. Air Entraining Cement:

It is produced by air entraining agents such as resins, glues, sodium salts of sulfate with ordinary
portland cement.

11. High Alumina Cement:

High alumina cement (HAC) is a special cement, manufactured by mixing of bauxite ( aluminum ore)
and lime at a certain temperature. This cement is also known as calcium aluminum cement (CAC). The
compressive strength of this cement is very high and more workable than ordinary portland cement.

12. Expansive Cement:

The cement which does not shrink during and after the time of hardening but expands slightly with time
is called expansive cement. This type of cement is mainly used for grouting anchor bolts and prestressed
concrete ducts.

1.7 PRESENT STATUS AND DEVELOPMENT:

The present status of Cement Industry in India can be enumerated as follows:-

1:Second largest cement market:-

 With cement production capacity of nearly 420 million tonnes, as of March 2017.
 India’s cement production capacity is expected to reach 550 million tonnes by 2025.
 India is the second largest cement producer in the world.
2:Dominated by private players:-

 Of the total capacity, 98 per cent lies with the private sector & the rest with public sector.
 The top 20 companies accounting for around 70 per cent of the total production.

3:Higher share of large plants:-

 210 large cement plants account for a cumulative installed capacity of over 350 million
tonnes, while over 350 mini cement plants have an estimated production capacity of nearly
11.10 million tonnes, as of 2016.

4: Large concentration in south and west:-

 Of the total 210 large cement plants in India, 77 are situated in the states of Andhra Pradesh,
Rajasthan & Tamil Nadu.

Key Demand Drivers of the Indian Cement Industry

The demand for cement is a derived demand, as it depends on industrial activity, real estate, and
construction activity.

1: Housing: -

 Forms the major portion of cement demand at around 67 per cent.

 Real estate market to increase at 11.6 per cent CAGR in 2011-20.
 Government initiatives like Housing for all to push demand in the sector.
2: Infrastructure:-

 Strong focus of government on the infrastructure development is increasing the demand for the
cement sector.
 100 smart cities planned by the government to be developed over the years which is going to increase
the demand for the cement industry overtime and manifold.
 Projects like Dedicated Freight Corridors and ports under development are proving beneficial to the
cement industries.
 Metro rail projects already underway in most major cities.

3: Urbanisation:-

 Development of 500 cities with population of more than 100,000 under new Urban Development
Mission. It is proving to be one of the major demand drivers for the Cement Sector in India.
Cement Market Overview:

 Indian cement industry sector is expected to grow at 5-6 percent CAGR between FY17-
FY20.
 Capacity addition of 109 million tonnes per annum (mtpa) between 2013-16.
 Domestic consumption may outpace supply in next three fiscals.

Continuous technological upgrading and assimilation of latest technology has been going on in the
cement industry. Presently 93 per cent of the total capacity in the industry is based on modern and
environment-friendly dry process technology and only 7 per cent of the capacity is based on old wet and
semi-dry process technology. There is tremendous scope for waste heat recovery in cement plants and
thereby reduction in emission level. One project for co-generation of power utilizing waste heat in an
Indian cement plant is being implemented with Japanese assistance under Green Aid Plan. The
induction of advanced technology has helped the industry immensely to conserve energy and fuel and to
save materials substantially.India is also producing different varieties of cement like Ordinary Portland
Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil
Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement
etc. Production of these varieties of cement conform to the BIS Specifications. Also, some cement plants
have set up dedicated jetties for promoting bulk transportation and export.

Recent Development in the Indian Cement Sector:

1: Increasing presence of Cement Players:-

 Presence of small & mid-size cement players across regions isincreasing, which helps to
diminish
market concentration of industry leaders.
 A large number of foreign players have also entered the market owing to the profit margins,
constant demand & right valuation.

2: Tie-up with overseas:-

 India has joined hands with Switzerland to reduce energy consumption & develop newer
methods in the country for more efficient cement production, which would help India meet
its rising demand for cement in the infrastructure sector.

3: Mergers and Acquisitions:-

 In January 2017, JSW Cement bought 35.6 per cent stake in Shiva Cement, for an estimate
amount of US$ 14.42 million.
 Lafarge India sold its business to Nirma for US$ 1.4 billion in 2016.
 UltraTech Cement acquired Jaypee Group’s cement business for US$ 2.38 billion.
 CHAPTER 2

RESEARCH METHODOLOGY
A research design is purely the framework or plan for a study that guides the collection and
analysis of data. A good research design has the characteristics problem definition, specific
method of data collection and analysis, time required for research project and expenses to be
incurred. Research design is important primarily because of the increased complexity in the
market as well as marketing approaches available to the researchers. In fact, it is the key to the
evolution of successful marketing strategies and programmers. It is an important tool to study
buyer’s behaviour, consumption pattern, and focus market changes. According to Ker linger,
“Research Design is a plan, conceptual structure, and strategy of investigation conceived as to
obtain answers to research questions and to control variance. Research design specifies methods
and procedures for study. In this study the company was interested to know the demand of
different consumer regarding their life insurance product, about competitors, and potential for
life insurance procedures to be used for the study among consumer and branches. It mainly
consists of the following main steps:

 Developing research design

 Determining the data collection method
 Developing a sampling plan
 Conducting field work

2.1 OBJECTIVES OF STUDY:

Today, the Indian cement industry is very large, second only to China in terms of installed capacity, and
has grown at a very fast pace in recent years. The rate of growth over the past 20 years has been
phenomenal. Since 1992 India's cement production has more than quadrupled from around 50Mt/yr to
279 Mt/yr in 2017.Indian Cement industry in itself plays a great role in economic and social
development of the country.
 To study about the Cement industry and its characteristics in details:-

Cement Industry is one of the major player in the economic development of the country and
contributes tremendously to the economic GDP of the country. It also supports other industry
like housing and infrastructure industries. The demand for cement is a derived demand and
arises out of level of developing activities going on in an economy.

 To study the growth and development of Cement industry:-

Cement industry has evolved over time. Being one of the basic elements for setting up strong
and healthy infrastructure, Cement plays a crucial role in economic development of any
country. Having more than a hundred and fifty years history, it has been used extensively in
construction of anything, from a small building to a mammoth multi purpose project. Firstly
in 1889 a Kolkata-based company started manufacturing cement from Argillaceous. Later the
industry started getting the organized shape in the early 1900's. India Cement Company Ltd
was established in 1914 in Porbandar with a capacity of 10,000 tons and production of 1000
tons installed. Today India is the largest produced of Cement ranking after China.

 To study the various product offered by various Cement industry:-

Cement industry manufactures many kind of cement which differs on the basis of their uses
and how they are actually manufactured. Various kinds of cement products include Rapid
hardening cement, low heat cement, Sulfate resisting cement, white cement, Colored cement,
waterproof Portland cement.

 To know about the changing paradigms of Cements markets in India:-

With changing global scenario cement industry in India is also adopting itself rapidly.It is
making use of new technology and new manufacturing process that is at par in quality and
quantity with Global players. Alternate fuels in cement industry in India are being used in
 production process which not only help the environment but also helping the industry in
reducing cost per unit of output. For instance Indian cement Ltd. Dalovi Plant is making use
of Low Sulphur heavy Stock sludge as an alternate fuel which is saving the plant USD 6500
anually.

 To study the factors responsible for growth on Indian Cement markets:-

Housing, Infrastructure and Urbanization are the major growth drivers for the Indian and
Global cement industry.

 To understand the role of Cement industry in economic development:-

Since independence Cement industry has played a major role in the economic development of the
country. Ever since it was deregulated in 1982, the Indian cement industry has attracted huge
investments, both from Indian as well as foreign investors. 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 98 smart
cities are expected to provide a major boost to the sector.

 To know the major players of Cement industry in our country:-

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. A total of 188
large cement plants together account for 97 per cent of the total installed capacity in the
 country, with 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.

 To know the various policies and rules of government related to Cement Industry in
India:-
Initiatives of the Indian Government plays an important role in development and growth of cement
industry. Any initiatives and project undertaken by the government for the growth of housing and
infrastructure sector directly or indirectly effect the Cement sector as demand for cement is derived
from housing and infra sector primarily. 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. In the
12th Five Year Plan, the Government of India plans to increase investment in infrastructure to the
tune of US$ 1 trillion and increase the industry's capacity to 150 MT.

2.2 NEED FOR THE STUDY:

This study is needed as a part of our academic curriculum and also to get knowledge about the Cement
industry, its major aspects and the overall role played in the economic growth of the country. Cement is
an important sector of an economy. Improving the Cement sector of an economy can directly result in
economic growth, because there will be more people able to conduct effective activities in the
workforce. It also increases the employment opportunities. Cement industry is one of the key industries
in India. It plays a dominant role in the national economy. From the point of view of economic
development of the country, 22 Cement industry ranks second very next to the Iron and steel industry.
Cement is indispensable in building and construction works. The production and consumption of cement
to a large extent, indicates a country's progress. In a developing country like India the need for a well
established cement industry is of paramount importance. The Indian cement industry continues to suffer
from excessive production capacity a time when demand growth continues to be sluggish. The industry
remains highly fragmented and profit have been impaired by a series of debilitating price wars as well as
from steadily rising costs. The recent arrival of Lafarge may herald some much needed industry
consolidation. Meanwhile cement capacity levels continue to be swollen by a sizeable new building
programmed.

2.3 SCOPE OF THE STUDY:

This report provides a comprehensive analysis of the Indian cement industry. It details the regulatory
framework for the Indian cement industry It covers an exhaustive summary on key trends, drivers and
issues affecting the Indian cement in industry, It details the competitive landscape in the Indian cement
industry It contains an analysis of market entry, growth and operational strategies of key players Make
strategic business decisions using historic and forecast market data related to the Indian cement industry,
Assess the growth opportunities and industry dynamics by viewing production.The study was carried out
purely for academic purpose, within the framework of time limit.The scope of this study is limited to
study of Indian Cement industry and sector. It covers the evolution of Indian Cement sector and various
steps and policies undertaken to evolve the sector overtime. The various factors that affect the Cement
sector is taken into account and studied. The study makes extensive use of secondary data obtained from
various sources regarding the Indian Cement sector. The study takes into account the economic
contribution of the Cement industry in Indian GDP overtime. It also enumerates major player in the
Cement sector, their share ,marketing mix and strategies undertaken by them to face global completion.
The study also tries to find the growth drivers for the cement industry. An analysis of the government
initiatives to promote cement industry in India is also made and how it is going to impact the future
growth prospect of the industry.

2.4 SOURCES OF DATA:

For this study purpose secondary data is used. The secondary data is collected from various online and
offline sources. The secondary data is collected for information regarding evolution of cement industry,
current status of the industry and the growth prospect of the industry. The secondary data have been
collected for every aspect of the study. The secondary data collected pertains to Cement sector and
companies in the economy. Information collected from Secondary data sources include Central
Statistical Organization (CSO) data of Indian Economy, RBI reports, Indian Economic survey reports,
investment reports and websites.

2.5 LIMITATION OF THE STUDY:

 The study is depends mainly on secondary data.

 The study is confined to the study of Indian Cement Sector.

 The secondary data obtained may be biased and therefore the interpretation drawn in the
study could be biased.

 The study makes use of various statistical tools for analysis so the limitations of these tools
and methods also apply.
 CHAPTER 3
DATA ANALYSIS AND INTERPRETATION
3.1 SWOT ANALYSIS:

SWOT analysis (or SWOT matrix) is an acronym for strengths, weaknesses, opportunities, and
threats and is a structured planning method that evaluates those four elements of an organization,
project or business venture. A SWOT analysis can be carried out for a company, product, place,
industry, or person. It involves specifying the objectives of the business venture or project and
identifying the internal and external factors that are favorable and unfavorable to achieve that
objective.

Strengths: The cement industry has many strengths to be considered. Cement is, literally, the building
block of the construction industry. Almost every building constructed relies on cement for its
foundation. The cement business is a $10 billion industry, measured by annual cement shipments. There
is also a strong reputation behind the cement industry. Cement is a solid material and consumers rarely
have complaints about the product. Regional distribution plants have also made cement widely available
to any type of buyer.

 High selling prices and profitability levels due to supply shortage.

 Relatively low energy costs.

 Tax-free environment.

 Taxes and restriction set on imported cement.

 Natural hedge from outside competition arising from high transportation cost.

 Capital intensive industry with long construction periods, creating natural barrier to new
entrants.
  Sustained growth in production.

 Easy availability of production resources in the country itself.

 Surplus production for local and export markets.

 Good local and Strong industry base.

Weaknesses: The cement industry is not without its drawbacks. The cement industry relies on
construction jobs to create a profit. But the cement industry heavily relies on weather. About two-thirds
of cement production takes place between May and October. Cement producers often use the winter
months to produce and stockpile cement, to meet demand. Another weakness is the cost of transport; the
cost of transporting cement is high and this keeps cement from being profitable over long distances. In
other words, shipping cement costs more than the profit from selling it.

 High oil prices significantly increasing production and transportation costs.

 Proximity to lower cost export markets in Indian subcontinent, Egypt and turkey increasing
completion in both local and export markets.

 Fragmented regional industry with no economies of scale.

 Non optimal capital structure driven by the relatively low debt levels maintained by most
companies in the region.

 Lack of Research and development in the country itself.

Opportunities:- The cement industries has opportunities as well. One such opportunity is the cement
industry's efficiency. The cement industry has recently streamlined its production efforts, using dry
manufacturing instead of wet, which is heavier and more time-consuming. The cement industry has also
invested about $6 billion in expansion efforts to meet unmet cement needs. Projections show that by
2018, the cement industry will have 30 percent more production capabilities.

 Construction boom in GCC countries that is expected to continue in the short to medium
term.

 A number of M&A transaction might take place in near future.

 Possible entry of multinational companies increasing efficiency and opening new export
routes.

Threats:- The nature of the economy have uncovered a number of threats to the cement industry. The
cement industry greatly relies on construction. The current economy has lessened the number of
construction jobs, which in turn hurts the cement industry. The cement industry controls the majority of
the United States market, but not all of it. About 11.5 metric tons of cement are imported annually to
support the unmet need. If other countries can produce and ship cement for a reduced price, the U.S.
cement industry is in danger. The U.S. government is also attempting to regulate the cement industry's
waste. The Environmental Protection Agency has introduced regulations for the cement industry to cut
down emissions.

 Several capacity upgrades are planned raising the possibility of oversupply situation.

 Increased completion in local markets post joining WTO and or opening up for foreign
investments.
  Further hikes in oil prices could negatively affect companies profitability if they cannot pass
increase in production cost onto customers.

3.2 PEST ANALYSIS:-

PEST analysis (political, economic, social and technological) describes a framework of macro-
environmental factors used in the environmental scanning component of strategic management. It is part
of an external analysis when conducting a strategic analysis or doing market research, and gives an
overview of the different macro-environmental factors to be taken into consideration. It is a strategic
tool for understanding market growth or decline, business position, potential and direction for
operations.

Political Factors:

The price of cement is primarily controlled by the coal rates, power tariffs, railway tariffs, freight,
royalty and cess on limestone. Interestingly, government controls all of these prices. Government is also
one of the biggest consumers of the cement in the country. Most state governments, in order to attract
investments in their respective states, offer fiscal incentives in the form of sales tax
exemptions/deferrals. States like Haryana offer a freeze on power tariff for 5 years, while Gujarat offers
exemption from electric duty.

Economic Factors:

The industry is on the boom, with a lot of government infrastructure and housing projects under
construction. The export segment of the industry is expected to grow again on account of various
infrastructure projects that are being taken up all over the world and numerous outstanding cement
plants coming up in near future in the country.

Social Factors:

The cement industry in India consists of both the organized sector and the unorganized sector.
Organized sector comprises of the well-known cement manufacturing companies while the main players
of the unorganized sector are the regional and local cement-producing units in various states across the
country. Indian consumers prefer buying branded cement like Ultratech, Jaypee Cement, Lafarge
Cement etc. A population of more than 100 billion people, it is expected that cement industry will create
another 25 lakhs jobs in the next 4-5 years.

Technology Factors:

The Government of India plans to study and possibly acquire new technologies from the cement
industry of world. The government is discussing technology transfer in the field of energy conservation
and environment protection to help improve efficiency of the Indian cement industry. Cement industry
has made tremendous strides in technological up-gradation and assimilation of latest technology. At
present 93% of the total capacity in the industry is based on modern and environment-friendly dry
process technology.

3.3 MARKETING MIX:-

The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or
product in the market. The 4Ps make up a typical marketing mix - Price, Product, Promotion and Place.
However, nowadays, the marketing mix increasingly includes several other Ps like Packaging,
Positioning, People and even Politics as vital mix elements.
Product:

Cement industry does not have a large product mix and same applies for various cement companies. The
product mix can be classified on the basis of the types of cement available.The various kinds of cement
available are:

 Rapid Hardening cement: Rapid hardening cement is very similar to ordinary portland cement
(OPC). It contains higher c3s content and finer grinding. This cement can be used in
prefabricated concrete construction, road works, etc.

 Low Heat Cement: This cement is mostly used in mass concrete construction.

 Sulfate Resisting Cement: This type of cement is used in the construction of foundation in soil
where subsoil contains very high proportions of sulfate.

 White Cement: This cement, due to its white color, is mainly used for interior and exterior
decorative work like external renderings of buildings, facing slabs, floorings, ornamental
concrete products, paths of gardens, swimming pools etc.

 Colored Cement: Due to the various color combinations, this cement is mainly used for interior
and exterior decorative works.

 High Alumina Cement: The compressive strength of this cement is very high and more
workable than ordinary portland cement.

 Expansive Cement: The cement which does not shrink during and after the time of hardening
but expands slightly with time is called expansive cement.
PRICE:

In Cement industry price is used only as a differentiator between the various Competitors brands. The
prices of different brands in the same segment remain more or less similar, with just a difference of 2-5
rupee per bag. Sometimes price also varies with the order placed by the customer i.e. order placed by
him is in trade or in non-trade. Pricing decisions in the cement industry largely depend on the price of
the inputs like clinker, other raw materials, excise duties and taxes and the general operating profits.
Generally increase or decrease of prices is affected across all brands in the market. Most of the Cement
companies offer a 5-10% margin to the dealer and particular amount of money against per Mt. of the
sales to the Sales Organizer for promoting the sales in his region. Due to internal competition the dealers
pass on this advantage to the customers by reducing their own margins to 2-3%. This is a cause of
concern for the cement companies because they have to keep a constant check on the prices offered in
the market. The dealers offer more of discounts and the companies are not able to firm up the prices.
Cement companies offer a lot of discounts like cash discounts, volume discounts, seasonal discounts,
foreign tours and allowances to dealers for promoting healthy sales. The dealers take advantage of these
discounts to gather more business This variation in prices can be observed all over India. The major
factors contributing towards the variation in prices are the regional transportation costs, the variations in
regional supply and demand, difference in the intensity of competition amongst local retailers and
distributors. Apart from this the prices keep on varying throughout the year depending upon the demand
and supply dynamics, the costs of raw material used and other factors.

PLACE:

Distribution Channels Involved: It is required a nationwide reach with strong foot prints in India. The
cement plants may also cover strategic locations in all the regions. A wide dealer and retainer net work
also required to nurture the empowered trade partnership even to reach even the tiniest village. The
concept of a two-tier distribution chain comprising of manufacturers and dealers function very well. It is
a perfect and simple set-up, in the sense that manufacturers sale cement to dealers. From thereon, the
onus is on the dealers who established contact with builders, government and institutional buyers, and
sold to retailers. Company invariably hires C&F agents or transport cements to own or government
warehouses either via roadway or railways. In case of exports, cement reaches the nearest port via
roadways or railways and is then transferred to the importing country. Domestically, from C&F agents
or warehouses the cement is transported to the dealers/distributors and in turn to sub-dealers who finally
sell it to the end users. There may or may not be physical ownership of goods. In the second case,
dealers and sub-dealer stake order from buyers and place it to the companies, coordinate and monitor the
timely dispatch of said orders, transportation of goods and final delivery. Distributor network in cement
industry is highly dominating and companies are compelled to hire as they do not really have that
rapport and touch with the end consumer of their product. Apart, from this, the distributors have storage
facilities as well which help control well in the entire supply chain as they are the ones who bring order
sand therefore are directly responsible for the business that a manufacturer would do. However, with the
mushrooming of large plants engaging in cut-throat competition to grab a bite of the market pie, Indian
cement companies are now beginning to adopt innovative strategies that have revolutionized the way
cement is sold in India. What was predominantly sold in bags is now being sold in bulk, albeit in
different quantities. Also, with a view to adding value to their products, manufacturers have now started
selling concrete instead of cement.

PROMOTION:

Role of Sales Personal in Promotion:

The major customer base which buys cement in India even today is the household owner. The end
customer’s purchase is influenced by opinion leaders’ viz. contractors, masons, architects etc. Thus to
attract them cements sales teams organize seminars for contractors and masons. They also interact with
retailers and distributors who are the channel members representing the company to the end customer.
They act as the connecting link. They also act as a channel between the company and contractors. The
retailers or distributors play an important part in influencing the end customer.

Use of Advertisements in Promotion:

Apart from this cements companies also come up with merchandises often where in the masons,
contractors are gifted with caps, key chains-shirts with the logo of Cement Companies to enhance the
brand recall.

Sales Promotion Schemes:

The sales promotion schemes are not directly implemented for the end user but channel members are the
one who benefit from sales promotions. The companies also felicitate the best performers. They provide
performance based incentives. Few players has worked out an equity-incentive scheme for its retailers,
Instead of giving cash incentives, retailers are given the option to own shares in the company. The
understanding is between the dealer and the retailer and the company is no way involved in the share
purchases, ―said a company official. Besides, they have other performance-linked incentive schemes
for their retailers which include gold coins and foreign trips. Also on offer are insurance covers for a
certain amount to say Rs 5 lakh for personal accidents and scholarships for their children etc. Few
Companies worked out a mechanism under which one particular scheme can be availed of in
combination with other available schemes as well. For enjoying abroad trips the stockiest will have to
meet their sales target.

3.4 SEGMENTATION:

Segmentation is categorization of buyers into suitable classes so that the strategic options are
customized and made appropriate to each specific class of buyers. From exploratory survey, on basis of
cement distribution, the customers are categorized as Trade customers and Non-Trade customers.
Trade customer:

Dealer/retailer/sub dealer/whole seller who sell cement to the retail customer and they are the direct
customer of cement company as they lift cement though authorized CFA of company. Trade customer
include retail customer can buy cement from a retail outlet (Hardware shop) from his area. People who
build their own houses or mason/ contractors/Engineer/Architect who build housing infrastructure and
opt to buy cement through distribution channel are the retail customers.

Individual home builders:

These are the trade customer or retail customer who purchases cement from cement retail store and build
private house for own accommodation.

Non trade (Industrial) customers:

A customer who has a registered company and buys large quantities of cement can buy cement directly
from sales points. Government is an industrial customer. Big builders and promoters fall into this
segment.

Generally 5 types of non trade customer segmentation is there :

 Builders and promoters: Are private companies specialized in developing housing or commercial
complexes to sell them on the market. E.g. PS Group, Fort group, Merlin Group, Riddhi Siddhi
Group.

 Big infrastructure contractors: are corporate companies that handle main civil construction
projects for the government or private customers: poIr plants, water waste, airports, major
bridges. E.g. Jusco, L&T ECC, Simplex Infrastructure, Ramky Infrastructur.

 Small projects contractors: are small public or private contractors which work essentially for
government infrastructure projects at smaller scale: roads, schools, irrigation etc. E.g. Block
Government Office.

 Manufacturers: are industrial manufacturers which use cement as a raw material for their
production: readymix, AC sheets, or concrete blocks manufacturers.
  Expanding companies: Are private companies which are building new industrial units to increase
their production. The consume cement for their own purpose. E.g. Tata metaliks, Ramsarup,
Utkarsh Galva.

3.5 GOVERNMENT POLICIES:

Cement was one of the government controlled industries earlier. Partial decontrol was introduced in
1982 and with 1991 policy reforms, all controls were withdrawn. Today, Government allows 100% FDI
in cement industry. However, due to environment concerns, the cement industry has to comply to
stringent environment rules. With the infrastructure sector enjoying top priority status under the
Narendra Modi-led government at the Centre, the cement industry is poised to witness robust growth in
the coming years. India is the second biggest producer and consumer of cement in the world and the
total cement production in the country touched 282.79 million tonnes in 2016. Domestic cement
consumption grew 15.7 per cent CAGR during FY11-17 beating the cement production in India, says a
recent note by IBEF.

Government Initiatives:-

1- Union Budget 2017-18:- The Union Budget has proposed to assign infrastructure status to
affordable housing projects and facilitate higher investments and better credit facilities, in line with
the government’s aim to provide housing for all by 2022 which will boost cement demand.This is
going to give a boost to demand of cement and ultimately cement sector.

2- Auction of Limestone block: The State Government of Chattisgarh has auctioned one block of
Limestone (Kesla II) in Raipur District having estimated reserves of 215 million tonnes valued at Rs
10,367crore (US$ 1.61 billion), and would earn a cumulative revenue of Rs 11,894 crore (US$ 1.85
billion) to State Government over the lease period.Limestone is one of the major ingredient used in
production of cement.
3- Pradhan Mantri Awas yojna-Gramin Scheme: The increased allocation to rural low-cost housing
under Pradhan Mantri Awaas Yojana- Gramin scheme to Rs 23,000 crore (US$ 3.45 billion) from
Rs 16,000 crore (US$ 2.4 billion) in FY17 is likely to drive a 2 per cent increase in cement demand,
Ambit Capital said in a report.

According to IBEF, the key drivers for the rise in demand for cement are the affordable housing sector,
infrastructure growth such as the dedicated freight corridors, airports and ports, commercial real estate
growth, smart cities, Swachh Bharat scheme, development of metro rail in key metropolitan cities in
Mumbai, Bengaluru and Hyderabad, and the rapid urbanisation of the present Indian cities. The housing
sector accounted for 67 per cent of the total cement demand due to growing urbanisation, higher
employment and easier access to credit for home buyers and banks’ willingness to focus on this
particular target group.The government also plans to increase the infrastructure investment to $1 trillion
in the 12th Five year plan (2012-17). Since more people are gravitating towards cities and urban areas in
search of jobs, the population in and around urban areas is set to increase and the government plans to
develop 500 cities with a population of more than one lakh. With the GST slated to be implemented in
July, the cement sector at 28 per cent slab is expected to see subdued growth. However, given the infra
push by the government, it remains one of the brightest sectors in the Indian economy.
 CHAPTER 4

FINDING AND CONCLUSION

Cement is one of the main industries that plays a pivotal role in the growth and expansion of a nation.
The cement industry is one of the main beneficiaries of the infrastructure boom in the country. The
Indian cement industry is huge, and it has great production capacity. Currently, the total capacity of
cement industry is about 165 million tonnes, which is the second largest in the world.

Cement is one of the vital constituents that is required for every construction purpose, such as industrial,
housing, and also for construction of infrastructures, such as roads, ports, bridges, power plants, and so
on. Thus, the cement industry is a significant contributor to the revenue collection of the government.

In India, the cement industry in the initial stages grew very slowly and the supply struggled to meet the
demands. However, the scenario changed drastically after the liberalization period. The cement industry
began to grow and since then the supply of cement has always managed to keep pace with its demand.
Today, the cement industry in India is one of the most advanced and pioneering sectors in the country,
and the cement industry has a huge potential for growth and attracting new investments. The cement
industry in India uses the most modern and world-class technology. Also, because India has a high
quantity and quality of limestone deposits through out the country, the cement industry promises huge
potential for growth.

The government of India has set ambitious plans to increase the production of cement in the country,
and to attain the target the government has made huge investments in the sector. The Department of
Industrial Policy and Promotion, which falls under the central Ministry of Commerce and Industry, is
the agency that is responsible for the development of the cement industry in the country. The agency is
actively involved in keeping track of the performance of cement companies in the country and provides
assistance and suitable incentives when required by the company. The department is also involved in
framing and administering the industrial policy for foreign direct investments in the sector. Apart from
formulating policies, the department also promotes the industry to attract new foreign investments in the
sector. The Indian Cement Industry with Modernization and technology up-gradation has become a
continuous process for industry. At present international standards and benchmarks in the quality of
cement and building materials produced are met in India and is able to compete international
markets.The cement industry has wide area for its growth and by this we would like to analyze more
about this industry and have a clear picture.
The Department of Industrial policy and promotion plays an active role in promoting foreign investment
in the cement industry by providing useful information to the investors about the investment climate and
opportunities in India. The department also provides advice to prospective investors on various policies
and investment procedures.

In order to promote investment in the sector, this department has greatly emphasized the development of
good transportation facilities to ensure smooth transportation of bulk cement. It also aims to support the
investors by providing them with R&D facilities and technological assistance.

The cement industry in India has been attracting several top-notch cement companies worldwide, which
reflects the fact that this industry holds huge potential for investment. Also, due to the boom in the
housing sector world-wide and the increased activity of the development of infrastructure, the demand
for cement is set to increase globally. Thus, the investors having nothing to lose and are all set to benefit
from investing in India’s cement industry.
 BIBLIOGRAPHY

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