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Fm cement assignment 1
1. India Vivek Narang
(91)9844001232
Sector Review – XXXX vivek14narang@gmail
l.com
18 May 2012
Sector Overview
The cement industry in India is experiencing a boom on account of overall growth
of the Indian economy. India is the second largest producer of cement on the globe
after china. In total, India manufactures 251.2 Million Tonnes of cement per year.
Market Segments
The cement industry in India is divided into four zones namely North, East, West
and Central- based on the differentiation in the consumer profile and supply-
demand scenario.
Major Players of Cement Industry
1) ACC Limited
2) Ambuja Cements Limited
3) Ultra Tech Cement Limited
4) India Cement Limited
5) Shree Cement Limited
6) Rain Cement Limited
7) Prism Cement Limited
8) Madras Cement Limited
9) Birla Cement Limited
10) JK Cement Limited
Cost analysis
The energy costs and cement freight costs are the two important elements in the
cost structure of a cement company. While, the share of energy costs has increased
marginally, freight costs has experienced a decline in its share of total operating
costs.
Foreign Investments
FDI Inflows to cement and gypsum Products industry in India has registered
significantly growth in the last few years due to the incentives that have been
provided by the government of India. This has helped in the growth and
development of the industry.
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2. India Sector Review 09 May 2011
Government Policies
Government policies have affected the growth of cement plants in India in various
stages.
Price and Distribution controls (1940-1981)
During the second world war, cement was declared as an essential commodity
under the defense of India Rules and was brought under price and distribution
controls which resulted in sluggish growth.
Partial Decontrol (1982-1988)
Under this scheme, levy cement quota was fixed for the units and the balance
could be sold in the open market.
Swot Analysis
a) Strength
Second largest in the world in terms of capacity: In India there are approximately
124 large and 300 mini plants with installed capacity of 200 million tonnes.
Low cost of production: Due to easy availability of raw materials and cheap labour.
b) Weakness
Effect of global recession on real estate: The real estate prices are stabilizing and
facing steady slowdown especially in metros.
Demand supply gap, overcapacity: the capacity additions distort the demand-
supply equilibrium in the industry thereby affecting profitability.
Increasing cost of production due to increase in coal prices
High interest rate on housing: the re-pricing of the interest rates in the last four
years from 7% to 12% has resulted in the slowdown in residential property market.
c) Opportunities
Strong growth of economy in the long run
Increase in infrastructure projects
Growing middle class
Technological change
d) Threats
Imports from Pakistan affecting markets in Northern India
Excess overcapacity can hurt margins, as well as prices.
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3. India Sector Review 09 May 2011
Future of the sector
The annual demand for cement in India is consistently growing at 8-10%. The
demand for cement in the country is expected t increase to 244.82 million tonnes
by 2012. The government has taken measures to increase the availability of
indigenous coal for cement manufacturers
Conclusion
The success of the firm in the Indian Cement industry is dependent on the degree
of integration between various functions of marketing- distribution, pricing,
segmentation, differentiation and integrated communication Program.
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