Cement industry

The cement industry is experiencing a boom on account of the overall growth of the Indian
economy. The demand for cement, being a derived demand, depends primarily on the industrial
activity, real estate business, construction activity, and investment in the infrastructure sector. India is
experiencing growth on all these fronts and hence the cement market is flourishing like never before.
Global rating agency, Fitch Ratings, has commented that cement demand in India is expected to grow
at 10% annually in the medium term buoyed by housing, infrastructure and corporate capital
expenditures.

Market share of cement companies

Ambuja cement:

Ambuja Cements Limited was set up in the late 80s. The cement industry presented an opportunity of
steady growth and ethical competition to the promoters.

However, a decade later, it became one of world’s most efficient cement companies producing the finest
cement in the world at the lowest cost. While adhering to the most stringent international pollution-
control norms.
Today, Ambuja is the 3 rd largest cement company in India, with an annual plant capacity of 16 million
tonnes including Ambuja Cement Eastern Ltd. and revenue in excess of Rs.3298 crores. The market
share of Ambuja cement is 9.83%.

Ambuja cements has its branch offices in Gujrath, Andhra Pradesh, Chattisgarh, Himachal Pradesh,
Maharashtra, Punjab, Rajasthan, Uttarkhand, Uttar Pradesh, Kolkata and west Bengal.

its plants are some of the most efficient in the world. With environment protection measures that are on
par with the finest in the developed world.

But the company’s most distinctive attribute is its approach to the business.

Ambuja believes its most valuable assets aren’t cement plants.

They are the people who run the plants.

Madras cements:

Madras Cements Ltd is the flag ship company of Ramco Group, a well known business group of South
India. It is based at Chennai.

The main product of the company is Portland cement manufactured through the five advanced
production facilities spread over South India. The cement capacity is 10.49 million tons per annum. 
Ramco Super grade is the most popular cement brand in South India. The market share of Madras
cement is 3.18%.

The company also produces Ready Mix Concrete and Dry Mortar products. In addition, the company also
operates one of the largest wind farms in the country.

Advantages of Merger:

 Overall market share:

The market leader in cement industry is ACC cement with a market share of 11.16%.
But if Madras cement and Ambuja cement merge with each other their market share
will be 13.01%. This will make them the market leader.

 Profitability
As the market share increases the profit earned by the company also increases. The
company can have a increased sales and hence improve its profitability.

 Global opportunities
Ambuja cement has a very good quality of cement. Its standard is international. By
merging with madras cement they cover almost whole of India and hence they can
plan for global business.
 Market rivalry
By merging with each other theycan give a cut throat competition for other leading
companies

 Pricing
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 Brand reputation
Ambuja cement is famous in whole of India and has a very good brand name.
Madras cement is famous in madras. So by merging their brand image will improve

 Sales and distribution effectiveness

The sales and distribution cost will reduce. And hence blah blah.....

 Economies of scale
Since the activity will be spread, the company can achieve economies of scale by
producing more.

 Wide spread activity

Ambuja cement has spread well in northern part of india and madras cement in
famous in south.
By merging with each other, the will spread in whole of india.

 Advertising and promotional effectiveness

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 Customer loyalty

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 Expand to new area like Kerala

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