In India's Cement Industry the Real Estate Sector is a Key Driver and Accounted for...

Thu Jun 5, 2008 7:46am EDT

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In India's Cement Industry the Real Estate Sector is a Key Driver and Accounted for Almost 55% in FY 07

DUBLIN, Ireland--(Business Wire)--
Research and Markets
(http://www.researchandmarkets.com/reports/c93856) has announced the
addition of Indian Cement Industry 2008 to their offering.

   Indian Cement Industry on Growth Trajectory......

   The Cement industry has continued its growth trajectory over the
past seven years. Domestic cement demand growth has surpassed the
economic growth rate of the country for the past couple of years. The
growth rate of cement demand over the past five years at 8.37% was
higher than the rate of growth of supply at 4.84% as also the rate of
growth of capacity addition during the same period. Demand for cement
in the country is expected to continue its buoyant ride on the back of
robust economic growth and infrastructure development in the country.

   The key drivers for cement demand are real estate sector,
infrastructure projects and industrial expansion projects. Among
these, real estate sector is the key driver and accounted for almost
55% in FY 07.

   During the period FY 03 - 07, capacity additions in the country
(30.6 mn tonnes) were at a slower rate compared to demand growth
leading to higher average capacity utilization rates from 81.3% to
93.8% during the same period. This has exerted pressure on average
prices which have increased from Rs. 156 per bag in FY 03 to Rs. 216
per bag in FY 07. In December 2007, prices stood at Rs. 245 - Rs. 250
per bag.

   Low capacity addition coupled with higher utilization rate also
led to increase in proportion of production of blended cements in
product mix. Blended cement accounted for 68% of product mix in FY 07
as compared to 49% in FY 03.

   Cement is a bulky commodity and cannot be easily transported over
long distances making it a regional market place, with the nation
being divided into five regions. Each region is characterised by its
own demand-supply dynamics. The Southern region dominated the cement
consumption at 44.5 mn tonnes in FY 07, accounting for about 30% of
total domestic cement consumption. During FY 03-07, Southern region
has witnessed highest CAGR of cement demand growth at 10.4% followed
by Northern and Eastern regions at 8.9% and 9%, respectively.

   Over the past five years, cost of cement production has grown at a
CAGR of 8.4%. Also, the producers have been able to pass on the hike
in cost to consumers on the back of increased demand. Average
realizations have increased from Rs. 1,880 per tonne in FY 03 to Rs.
3,133 per tonne in FY 07, at a CAGR of 13.6%, which has been reflected
in higher profit margins of the industry.

   To reduce the cost of production, the industry has focused on
captive power generation. Proportion of cement production through
captive power route has increased over the years. Also, cement
movement by rail has increased over the years.

   Market share of top five players in the industry has increased
from 42% in FY 02 to 56% in FY 07. In FY 07, Holcim group captured a
leadership position with market share of 22.6% followed by Aditya
Vikram Birla group at 19.4%.

   Domestic Cement industry is highly insulated from global cement
markets. Exports have been constant at about 6% of total cement demand
for past few years. With GoI intervention, making cement duty free,
cement is being imported from neighbouring countries. However, due to
logistics issues and lack of port handling capabilities, imports of
cement will remain negligible and do not pose a threat to domestic
industry.

   Cement demand is expected to remain buoyant driven by boost in
construction sector in the country. As per estimates, investment of
USD 25 bn is required in urban housing, USD 450 bn will be required in
infrastructure related projects and industrial expansion projects
would witness investments of USD 88 over the next five years.

   We estimate domestic cement demand to grow at a CAGR of
approximately 10% for the next 5 years. The current tight demand -
supply situation is expected to extend up to end of calendar year 2008
owing to delays in capacity expansion programmes by various companies.
We expect prices to remain firm till the end of CY2008 due to tight
demand - supply situation and increase in input costs. Thereafter as
new capacities come in, we may witness a softening in prices in some
regions.

   The report elucidates facts on the Indian Cement industry,
supplemented by the latest Statistics. Emphasis is laid on the
following topics to accomplish the report:

   -Performance of the Cement industry over past five years with
evaluation of trends of capacity addition, production and capacity
utilisation.

   -Evaluation of Overall demand - supply scenario in the country
covering trend of domestic consumption and exports.

   -Regional dynamics of industry depicted by detailed analysis of
demand - supply situation in the five distinct regions in India.

   -Influence of various cement demand driving sectors like real
estate, infrastructure and industrial projects covering region-wide
demand drivers.

   -Changing scenario of product mix - override of blended cements on
OPC.

   -Cost analysis with emphasis on power & fuel cost, RM cost,
Freight cost and evaluation of average cost of production, average
realizations and margins of the industry.

   -Our perspective on region-wide future capacity addition, demand
estimation and identification of deficit/surplus regions in the
country.

   -Operating & financial performance of top players in the industry
along with future outlook.

   -Brief on peculiar characteristics of industry, types &
applications of cement variants and cement manufacturing process.

   -Comprehensive database of company-wide financial & operational
statistics and region-wide key operational statistics.

   Content Outline:

   Section I Topic No. Topics

   Executive Summary

   1 Introduction

   1.1 Overview

   1.2 Industry snapshot

   2 Demand - Supply Analysis

   2.1 Demand Supply scenario - Overall

   2.2 Demand Supply scenario - Regionwise

   2.3 Detailed Regional analysis

   2.4 Overall & Regionwise Capacity Utilisation Rate

   3 Demand Drivers

   3.1 Real Estate

   3.2 Infrastructure

   3.3 Industrial Expansion projects

   3.4 Demand Drivers - Regionwise

   4 Supply Dynamics

   4.1 Past supply Statistics

   4.2 Blending Dominate

   4.3 Projected Capacity additions - Regionwise

   5 Cement Import

   6 Cement Prices

   7 Cost Analysis

   7.1 Power & fuel cost

   7.2 Freight & Forwarding Expense

   7.3 Raw Material Cost

   8 Market Competition & consolidation

   8.1 Market Share of major players

   8.2 Industry Aggregates

   9 Outlook

   9.1 Overall projected Demand-Supply situation

   9.2 Regionwise projected Demand-Supply situation

   9.3 Concerns for the Industry

   10 SWOT Analysis

   11 Company Profiles

   11.1 Associated Cement Company Ltd. (ACC)

   11.2 Ambuja Cements Ltd.

   11.3 Grasim Industries Ltd.

   11.4 UltraTech Cement Ltd.

   11.5 The India Cements Ltd.

   Section II (Annexures)

   Topic No. Topics

   1 Cement Industry Basics

   1.1 Types of Cement

   1.2 Cement Manufacturing Process

   1.3 Industry Characteristics

   2 Key Statistics - Financial

   3 Key Statistics - Operational

   4 Capacity Expansion Projects by Major Companies

   5 Raw material costs & consumption

   6 Industry Developments

   Companies Mentioned:

   - Ambuja Cements Ltd.

   - Associated Cement Company Ltd. (ACC)

   - Grasim Industries Ltd.

   - The India Cements Ltd.

   - UltraTech Cement Ltd.

   For more information visit
http://www.researchandmarkets.com/reports/c93856

Research and Markets
Laura Wood
Senior Manager
press@researchandmarkets.com
Fax: +353 1 4100 980

Copyright Business Wire 2008
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