Prajwal Dive

PGDM-4
2022-1905-0001-0009
Feasiblity Report on cement company
1 Cement Industry in India:
In India, a small group of approximately 20 companies dominate the cement industry,
responsible for approximately 70% of total cement production in the country. During the
current fiscal year, from April to September, these companies produced 11 million tons of
cement. As a result, total cement production in India for the current fiscal year reached 231
million tons.
The Indian cement industry has been able to successfully maintain levels of almost entire
capacity utilisation, which has led to a continued 10% growth rate. The overall shipment was
155 MT in 2006–07; it increased to 170 MT in 2007–08. Cement was shipped out in
quantities of 12.22 MT in October 2009, which was about 9% more than the 11.21 MT
shipped out overall in the same month the year before.
2 Market Analysis:
The demand for cement in India has seen steady growth in recent years, with an average
annual growth rate of around 7-8%. In 2020, the demand for cement saw a slight dip due to
the COVID-19 pandemic, but has since recovered and is expected to continue growing in the
coming years.
One major factor driving the demand for cement in India is the construction sector, which
accounts for around 70% of the total demand for cement. The country has seen a significant
increase in construction activity in recent years, particularly in the residential and
infrastructure sectors.
Another factor is the government's efforts to boost the construction sector through initiatives
such as the Pradhan Mantri Awas Yojana (PMAY) scheme, which aims to provide affordable
housing to the lower and middle income groups.
The southern and western regions of India have the highest demand for cement, with states
such as Tamil Nadu, Karnataka, and Gujarat leading the way. These regions have a strong
presence of industries and a growing population, leading to a higher demand for construction
materials.
Overall, the demand for cement in India is expected to continue growing in the coming years,
with increasing construction activity and government initiatives supporting the sector.
However, the market may face challenges such as rising production costs and the impact of
economic downturns.
Cement production increased at a CAGR of 6.87 percent to 270.32 million tones over FY
20072015 as shown in the figure 1.1. As per the 12th five year plan, production is expected
to reach 407 million tones over F.Y. 2017. Production of branded cement has increased due
to availability of flyash (from thermal power plants) and use of advance technology. The
environment friendly cement is more cost efficient to produce, as it requires lesser input of
clinker and energy.
2.1 Market Size:
The government's push for major infrastructure projects is likely to raise demand for cement
in India, resulting in a requirement for 45 million tonnes of cement over the next three to four
years. By the end of 2025, the demand for cement in India is predicted to reach 550–600
MTPA. Cement producers plan to add 56 million tonnes (MT) of capacity over the following
three years to accommodate the increase in demand. India's cement production capacity,
which is currently 366 MT, might increase by 8% to 395 MT by the following year. By the
end of 2017, it might rise to 421 MT. Several firms dominate this sector. According to the
data, the top 20 cement producers in the nation produce close to 70% of the nation's total
cement output. Together, 188 major cement plants make up 97% of the nation's installed
capacity, with 365 small units making up the remaining 3%. The states of Tamil Nadu,
Rajasthan, and Andhra Pradesh are home to 77 percent of the major plants.
3 Demographic Analysis:
According to data from the Ministry of Commerce and Industry, the cement industry in India
is dominated by a few large companies, with the top 10 players accounting for around 60% of
the total production. These companies have a strong presence in the southern and western
regions of the country, with states such as Tamil Nadu, Karnataka, and Gujarat leading in
production.
The cement industry in India is mostly concentrated in the northern, western, and southern
regions, with the eastern region having a relatively low share of production. The northern
region accounts for the largest share of production, followed by the western and southern
regions.
In terms of employment, the cement industry in India employs around 2.5 million people
directly and indirectly. The majority of these employees are skilled and semi-skilled workers,
with a smaller percentage being technical and managerial staff.
Overall, the cement industry in India is a significant contributor to the economy, with a large
presence in key regions and a significant number of employees. However, the industry may
face challenges such as rising production costs and the impact of economic downturns.
4 Pricing Factors:
There are several factors that influence the pricing of cement in India. These include:
1. Production costs: The cost of raw materials, labor, and energy are major factors that
influence the pricing of cement. If these costs increase, it can lead to higher prices for
cement.
2. Transportation costs: The cost of transporting cement from the production site to the
market can also impact the pricing. If transportation costs are high, it can lead to
higher prices for cement.
3. Demand and supply: The demand and supply of cement in the market can also affect
pricing. If there is a high demand for cement, prices may be higher. On the other
hand, if there is an excess supply of cement, prices may be lower.
 4. Competition: The level of competition in the cement market can also impact pricing.
If there are several companies competing for market share, prices may be lower to
attract customers.
5. Government policies: Government policies, such as taxes and duties, can also affect
the pricing of cement. If these policies are favourable, it can lead to lower prices for
cement.
Overall, the pricing of cement in India is influenced by a combination of factors,
including production costs, transportation costs, demand and supply, competition, and
government policies.
The profitability ratios may be regarded as true indicators of efficiency of a firm and
efficiency helps in a firm to attain effectiveness. The study has used this classification for
the purpose of study to choose strategic alternatives. The computed profitability ratios
(PBT/Sales). Table presents profitability ratios for responding firms, pursuing various
expansion strategies and earning profits for the whole period of study. It is evident from
the table 3 that major concentration of unrelated diversification firms (about 87%)
followed by related diversification firms (59%) is in lower of profitability ratios as
against only 56.7% of growth firms. The proportion of growth firms in each

5 Cost of production:
The total project cost for the proposed plant and captive power plant will be Rs.1200
crore.
6 Promotion activities:
 Wall Paintings
 Print Media like; Newspapers(Vijay Karnataka & Deccan Herald)
 Hoardings