1. COMPREHENSIVE STUDY OF INDIAN CEMENT SECTOR
Author : Madhavi Dhole & SudeepPanicker
Article : COMPREHENSIVE STUDY OF INDIAN CEMENT SECTOR
INTRODUCTION
Comprehensive study of a sector involves studying the basics of the sector like the product, its
features, history, manufacturing process, components of cost of production, overview of the
industry, history of the industry, challenges faced, government policies and initiatives for the
industrial growth, demand supply situation and the future prospects. With 153 cement plants
and a total installed capacity of around 209 million tonnes per annum (MTPA) both as of March
2009, the Indian cement industry is the second largest in the world, the largest being China,
which produces over 1 billion tonnes of cement annually. During 2008-09, total cement
consumption in India stood at 178 million tonnes while exports of cement and clinker amounted
to around 3 million tonnes. The industry occupies an important place in the national economy
because of its strong linkages to other sectors such as construction, transportation, coal and
power. Cement is a highly freight-sensitive product, given that it is a high-bulk, low-value
commodity, The Indian cement market therefore is largely a regional one, which also means
that the demand-supply dynamics may be different for the various regions and the country as a
whole.
OBJECTIVES OF THE STUDY
To study the performance of the Indian cement industry
To examine the factors influencing the demand for cement in India
To study the government rules and policies with regards to the Indian Cement Sector.
To get an idea of the challenges faced by the Indian cement sector and its future
outlook.
SCOPE OF THE STUDY
The scope of the study lies in getting familiar with the performance of the Indian cement
sector and its characteristics. The paper has been prepared within the boundaries of topics like
basics of cement, overview of the cement industry, the steps taken up the government for the
growth of the cement sector, the challenges faced by the industry and future outlook.
LIMITATIONS OF THE STUDY
The study is purely based on the secondary data. All the limitations suffered by the
secondary data are applicable to this paper.

2. METHODOLOGY OF THE STUDY
The secondary data was collected by
- Reading various articles on the cement industry
- Studying the annual reports of the cement manufacturing companies
- Visiting various websites for latest news on the cement sector
HYPOTHESIS
H1- The cement industry is highly cyclical in nature and its performance largely depends on
the health of the economy
H 0 - The nature of cement industry is not cyclical
There is a high degree of correlation between the GDP growth and the growth in cement
consumption. This can be gauged by the fact that after experiencing robust growth from 1994 to
1996, the sector was one of the worst affected due to economic slowdown during 1997 to 1999.
The industry registered an impressive growth of 15 per cent during the 1999-2000 which was
mainly due to demand from housing sector which accounts for 60 per cent of cement
consumption, the rest accounted equally between infrastructure and industry/others. In India,
cement consumption and sales follows a seasonal pattern with lean sales during the monsoon
season (July- September) and higher sales during October-March.
H1 - The cement industry is one of the most energy-intensive sectors within the Indian
economy.
H 0 - The cement industry is not the most energy-intensive sectors in the Indian economy.
The cement industry is one of the most energy-intensive sectors within the Indian economy.
Clinker production is the most energy intensive step, accounting for nearly 75 per cent of the
energy used in cement production. In India, an estimated 90-95 per cent of the thermal energy
requirement in cement manufacturing is met by coal. The remaining is met by fuel oil and high-
speed diesel oil. Generally, the cement industry in India on an average requires 90-105 units of
power in the wet process, and 100-110 units of power in the dry process to produce one tonne
of cement. The energy costs and cement freight costs are the two most important elements in
the cost structure of a cement company.

3. TYPES OF CEMENT AVAILABLE IN INDIAN MARKETS
Most common types of cement available in the market:Product Differentiation
Portland Cement
Portland Cement is a blend of finely pulverized clinkers, manufactured by burning materials
containing lime, alumina, iron and silica in pre-determined proportion at very high temperatures.
Normally, gypsum or its derivatives are added during the grinding stages for set control.
Types of Ordinary Portland Cements
a) OPC 43 Grade
b) OPC 53 Grade
43 Grade Cement (OPC 43 Grade)
Commonly used cement in all constructions including plain and reinforced cement concrete,
brick and stone masonry, floors and plastering. It is also used in the finishing of all types of
buildings, bridges, culverts, roads, water retaining structures, etc. What is more, it surpasses
BIS Specifications (IS 8112-1989 for 43 grade OPC) on compressive strength levels.
53 Grade Cement
This is an Ordinary Portland Cement which surpasses the requirements of IS: 12269-53 Grade.
It is produced from high quality clinker ground with high purity gypsum. 53 Grade OPC provides
high strength and durability to structures because of its optimum particle size distribution,
superior crystalline structure and balanced phase composition.
Ordinary Portland cement (OPC): The standard, grey cement used for most purposes.
Rapid Hardening Portland cement: Chemically very similar, but ground finer. Sets as slowly as
OPC, but its gains quick strength more so after it sets.
Sulphate Resisting Portland cement (SRPC): Cement used for underground work, particularly
with "aggressive" i.e. sulphate containing groundwater.
High Alumina Cement (HAC)
A special type of cement that develops rapid strength and possesses high chemical resistance.
It can also be utilised for refractory concretes, e.g. in steelworks, using the white version. A
phenomenon known as "inversion occurs in HAC when it gets hot and w Raw materials used in
the manufacturers of Portland cement. The two main raw materials employed during the
manufacturer of Portland cement are calcareous materials like limestone, chalk, shells or marl
and argillaceous materials like clay and shale (rich in silica).

4. Blended Cements
Fly-ash based Portland Pozzolana Cement
This is a special blended cement, produced by inter-grinding higher strength Ordinary Portland
Cement clinker with high quality processed fly ash - based on norms set by the company's R&D
division. This unique, value-added product has hydraulic binding properties not found in ordinary
cements.
Portland Slag Cement
This is slag-based blended cement that imparts strength and durability to all structures. It is
manufactured by blending and inter-grinding OPC clinker and granulated slag in suitable
proportions as per our norms of consistent quality. PSC has many superior performance
characteristics which give it certain extra advantages when compared to Ordinary Portland
Cement.
THE ROLE OF INDIAN CEMENT INDUSTRY IN THE INDIAN
ECONOMY
The Role of Cement Industry in India GDP is significant in the economic development of the
country. The cement industry in India is one of the oldest sectors in India. The industry is driven
by the immense growth in the housing sector, the infrastructure development, and construction
of transportation systems. An increased outflow in infrastructure sector, by the government as
well as private builders, has raised a significant demand of cement in India. It is the key raw
material in construction industry. Also, it has highly influenced those bigger companies to
participate in the growing sector. At least 125 plants set up by the big companies in India with
about 300 other small scale cement manufacturers, to fulfill the growing demand of cement.
Being one of the vital industries, the cement industry contributes to the nation’s
socioeconomic development. The sum total utilization of cement in a year indicates the
country’s economic growth.
The demand of cement in year 2009-2010 is expected to increase by 50 million tons despite of
the recession and decline in demand of housing sector. Against India’s GDP growth of 7%,
the experts have estimated the cement sector to grow by 9 to 10 % in the current financial year.
Major Indian cement manufacturers and exporters have all made huge investments in the last
few months to increase their production capability. This heralds an optimistic outlook for cement
industry. The housing sector in India accounts for 50 % of the cement’s demand. And the
demand is expected to continue. With the constant effort made by cement manufacturers and
exporters, India has become the second largest cement producer in the world. Madras Cement
Ltd., Associated Cement Company Ltd (ACC), Ambuja Cements Ltd, Grasim Industries Ltd, and
J.K Cement Ltd. are among few renowned names of the major Indian cement companies.

5. MEASURES TAKEN UP BY THE GOVERNMENT FOR THE
DEVELOPMENT OF CEMENT INDUSTRY
In India, the foundation of a stable Indian cement industry was laid in 1914 when the Indian
Cement Company Ltd. manufactured cement at Porbundar in Gujarat. In the initial stages,
particularly during the period before Independence, the growth of the sector had been very slow.
The indigenous production of cement was not sufficient to meet the entire domestic demand
and accordingly, the Government had to control its price and distribution statutorily. Also, the
large quantities of cement had to be imported for meeting the deficit in the economy. However,
with liberalisation and introduction of several policy reforms, the cement industry has been
decontrolled which gave impetus to its pace of growth. It has made rapid strides both in
capacity/ production and process technology terms. Today, it is one of the most advanced and
pioneering sectors in the country. Cement is a basic material input which facilitates the
promotional and developmental efforts, at a fast pace, in the areas of infrastructural set up and
other construction related works. Since it is a decontrolled commodity, its production and prices
are largely governed by economic factors, like, demand and supply, cost of raw materials and
other inputs, production as well as distribution costs.
The Indian cement industry is extremely energy intensive and is the third largest user of coal in
the country. It is modern and uses latest technology, which is among the best in the world. Only
a small segment of industry is using old technology based on wet and semi-dry process. Also,
the industry has tremendous potential for development as limestone of excellent quality is found
almost throughout the country. In other words, it is experiencing a boom on account of overall
growth of the Indian economy, cost control continuous technology upgradation, etc. This has
immensely helped it to conserve energy and fuel as well as to save materials substantially.
India is the second largest manufacturer of cement in the world. It is engaged in the production
of several varieties of cement such as 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. They are
produced strictly as per the Bureau of Indian Standards (BIS) specifications and their quality is
comparable with the best in the world. At present, the Indian cement industry comprises 134
large cement plants with an installed capacity of 173.08 million tonnes and more than 350
operating mini cement plants with an estimated capacity of 11.10 million tonnes per annum,
making a total installed capacity of 184.18 million tonnes
Growth in domestic cement demand is expected to remain strong, given the revival in the
housing markets, continued Government spending on the rural sector, and the gradual increase
in the number of infrastructure projects being executed by the private sector. Thus, the trend in
demand growth seen during the last five years is expected to continue over the medium term.
Also, with Government targeting an over 8% GDP growth rate, cement demand should grow at
8-10% over the next few years. The industry may be expected to add another 130-135 million
tonnes of cement capacity in phases over the next four years, that is, during the period 2009-10
to 2012-13.

6. BIBLIOGRAPHY
1) Industry outlook – Cement sector, ICRA rating feature 2010
2) Initiating coverage- Indian Cement Sector, Equity research
report by - Ravi Sodah, Vijay Goel; 2009
3) http://www.articlesbase.com/small-business-articles/cement-
industry-in-india-an-overview-1120678.html
4) http://timesofindia.indiatimes.com/biz/india-business/Cement-
demand-shows-upturn-in-economic-
recovery/articleshow/5600861.cms
5) http://business.gov.in/Industry_services/cement.php
6) http://business.mapsofindia.com/fdi-india/sectors/cement-
gypsum-products.html
7) http://www.indiainbusiness.nic.in/industry-
infrastructure/industrial-sectors/Cement.htm
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