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Cement Sector
Cement Sector
Cement
Sector Update : June 2009
o Cement Production was 16.59 Mn.T, registering a growth of 13.01%.
o Cement Despatches were 16.70 Mn.T showing a growth of 12.84%
which is highest in last four years.
o Cement Export was 0.19 Mn.T. showing a growth of 35.71%.
o Clinker Export in June 09 was 0.26 Mn.T.
Stock Performance
Stock Return (%) as of 05/08/09
Company
1 Week 1 Month 3 Months 6 Months 1 Year
ACC 8.04 20.6 41.41 74.02 50.11
Guj. Ambuja Cement 12.3 22.19 38.77 58.27 26.95
Ultra Tech Cement 0.85 13.07 35.89 94.45 30.23
India Cements 12.81 10.64 30.16 47.7 ‐2.06
Shree Cement 8.31 43.39 111.66 235.06 172.42
Madras Cement 0.95 13.8 41.71 82.77 ‐12.41
Binani Cement 4 18.41 59.53 111.42 5.34
JK Cements 0.08 19.15 92.02 207.48 ‐7.42
JK Lakshmi ‐0.08 21.93 111.75 244.27 56.94
Guj. Sidhee Cement 0 33.08 89.15 140.37 ‐23.82
Outlook
The demand from the rural infrastructure and semi‐urban areas for the
cement sector will continue for some time in the back drop of increased
provisions for various social projects like Jawaharlal Nehru National Urban
Renewal Mission (JNNURM), Rajiv Awas Yojana (RAY), Bharat Nirman, etc.
The capacity of cement production in the country is expected to increase to
298 million metric tonnes by the end of the fiscal 2012. The industry, which
has grown by an average of 10% in the last three years, is expected to add
around 45 million tonnes of fresh capacity in FY2010, taking the overall
capacity to over 260 million tonnes per annum. Due to higher allocation of
infrastructure projects in the budget and demand from the real estate
industry the outlook remains bullish for cement sector.
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Capacity
o Capacity at the beginning of the year 2009‐2010 was 219.17 Mn.T.
o Capacity as on 30th June 2009 – 226.62 Mn.T.
Capacity Additions – 2009‐2010
Plant State Month of Capacity Capacity Added / Total
Commissioning Existing Derated
(a) New
India Cements ‐ Parli (G) MAH 09‐Apr ‐ 1.1 1.1
Dalmia‐Ariyalur T.N. 09‐Jun ‐ 2.5 2.5
Total – (a) 3.6
(b) Expansion
Shriram Cements Raj. 09‐Apr 0.2 0.2 0.4
OCL India ‐ Rajgangpur Orissa 09‐Apr 1.8 2.2 4
OCL India – Kapilas (G) Orissa 09‐Apr 0.9 0.45 1.35
Chettinad‐Karur T.N. 09‐Apr 0.6 0.4 1
Chettinad‐Karikalli T.N. 09‐Apr 1.2 0.6 1.8
Total – (a) 3.85
Total – (a)+(b) 7.45
Cement
Jun‐09 May‐09 Jun‐08 2009‐2010 2008‐2009
(Apr‐Jun)
Production 16.59 16.7 14.68 50.15 44.61
Despatches (Including
16.7 16.48 14.8 49.85 44.41
Export)
Export 0.19 0.19 0.14 0.68 0.34
Closing Stocks 1.25 1.42 1.19
Cap. Uti. (%) 90 91 87 91 89
Clinker
Jun‐09 May‐09 Jun‐08 2009‐2010 2008‐2009
(Apr‐Jun)
Production 12.27 12.74 11.17 37.31 33.85
Sale 0.34 0.38 0.33 1.22 1.08
Export 0.26 0.29 0.26 0.77 0.46
Transfer 1.65 1.87 1.35 5.49 4.61
Closing Stocks 5.33 5.38 5.65
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Budget Provisions
Some of the provisions in the budget that could have a direct and indirect
bearing on the cement sector are as follows‐
o In order to provide incremental lending to the infrastructure sector,
Indian Infrastructure Finance Company (IIFCL) will evolve a takeout
financing scheme in consultation with banks. IIFCL will refinance 60%
of commercial bank loans for PPP projects in critical sectors over the
next 15 to 18 months. IIFCL and Banks are now in a position to support
projects involving total investment of Rs 100,000 crore.
o Allocation under Jawaharlal Nehru National Urban Renewal Mission
(JNNURM) was stepped up by 87% to Rs 12,887 crore in B.E. 2009‐10
over B.E. 2008‐09.
o Allocation for housing and provision of basic amenities to urban poor
enhanced to Rs 3,973 crore in B.E. 2009‐10. This includes provision for
Rajiv Awas Yojana (RAY), a new scheme announced.
o Allocation for Bharat Nirman increased 45% in 2009‐10 over B.E. 2008‐
09. Allocations under Pradhan Mantri Gram Sadak Yojana (PMGSY)
increased 59% over B.E. 2008‐09 to Rs 12,000 crore in B.E. 2009‐10.
o Under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY),
allocation increased by 27% to Rs 7,000 crore.
o Allocation under Indira Awaas Yojana (IAY) increased 63% to Rs 8,800
crore in B.E. 2009‐10. Allocation of Rs 2,000 crore made for Rural
Housing Fund (RHF) in National Housing Bank (NHB) to boost the
resource base of NHB for refinance operations in rural housing sector.
o Unchanged corporate tax rate whereas Fringe Benefit Tax on the value
of certain fringe benefits provided by employers to their employees has
been completely abolished. Minimum Alternate Tax (MAT) has been
increased to 15% of book profits from 10%.
o Service provided in relation to transport of goods by rail will attract
service tax.
Region wise cement capacity, production & dispatches
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% Growth in Cement Production % Growth in Cement Consumption
(2009‐2010/2008‐2009) (Apr‐Jun) (2009‐2010/2008‐2009) (Apr‐May)
State Change (%) State Change (%)
Northern Region 21 Northern Region 15
Eastern Region 12 Eastern Region 9
Southern Region 8 Southern Region 6
Western Region 9 Western Region 9
Central Region 13 Central Region 22
All India 12 All India 11
Australian thermal coal Monthly Price
Latest Quarterly Results
Company Sales QoQ% PAT QoQ% EPS QoQ%
ACC 2081.26 15.1 485.62 84.7 25.87 78.8
Ambuja Cem. 1847.41 18.2 324.65 ‐3.6 2.13 ‐43.8
Binani Cement 524.3 60.8 106.7 100.2 5.25 100.4
Birla Corpn. 490.4 23.9 155.34 69.2 20.17 69.2
Guj. Sidhee Cem. 110.84 30.3 16.88 209.2 1.17 207.9
India Cements 953.48 10.1 130.42 ‐16.7 5.11 1.4
J K Cements 428.34 24.7 70.22 94.4 10.04 94.2
JK Lakshmi 350.81 30.2 78.49 102.9 12.83 103
Madras Cement 768.35 24.9 138.42 21.5 6 0
Shree Cement 922.45 50.5 294.47 153 83.57 162.6
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Industry News
o The 226‐million‐tonne Indian cement industry, the worldʹs second‐
largest after China, is all set to hit a double‐digit growth rate in July for
the fifth month in a row, owing to robust demand for the building
material. Estimates from industry analysts and cement makers suggest
that the industry may record an 11 per cent growth in despatches in the
current month.
o The Maharashtra government has signed three MoUs for the proposed
investment of Rs 6,300 crore for setting up of cement plants, steel unit
and ginning and pressing project.
o The robust performance of the 226‐million tonne domestic cement
industry, with a growth rate of over 11 per cent in the June quarter, has
made Foreign Institutional Investors (FIIs) increase their exposure in
the top sector firms.
o In one of the largest investments in Maharashtra, Reliance
Cementation, an Anil Dhirubhai Ambani Group (ADAG) company,
today announced setting up of 2 cement units in Maharashtra with a
total investment of Rs.2250 crore.
o ICL Financial Services Ltd, a subsidiary of India Cements Ltd, has
acquired a 53 per cent stake in Indo Zinc Ltd for about Rs 5.3 crore.
o Binani Cement Ltd, a flagship company of Braj Binani Group, on
Wednesday said that the company was targeting to increase its cement
making capacity to 15 mtpa over a period of 3‐4 years from the current
capacity of 6.5 mtpa.
o JSW Cement, part of the Rs 40,000‐crore OP Jindal Group, plans to set
up cement units near the group’s steel plants at Kurnool, Andhra
Pradesh, and Vijayanagar, Karnataka. The units will have a combined
capacity of 5.5 million tonnes per annum (mtpa). The project cost is Rs
1,900 crore.
o Uninterrupted construction activity due to less‐than‐expected rain has
led to increased cement dispatch. Leading cement companies have
reported an average 6‐15 per cent rise in dispatch for July 2009 against
July 2008.
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Mahesh Babaria
maheshb@ghallabhansali.com
Mittal Dharod
mittald@ghallabhansali.com
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