Prestige Institute of Management

& Research, Indore

ETOP Profile
Cement Industry
Presented by Arun Kumbhakar
Neeti Dandotiya Ritesh Soni
Nupoor Garg Sunil Kaithwas
About the Industry…..
 Type of Industry – Cyclical Industry

 Industry Life Cycle- Rapid Growth stage

 Structure of Industry- Fragmented

 SWOT Analysis
 STRENGTHS
 Largest cement producing country in world (7% of world
production)
 Technology and Cost of production at par with world

 WEAKNESS
 Demand-Supply gap, Overcapacity
 Increasing Cost of Production
 High Interest rates
 Fail to maintain demand and Aggressive capacity expansion
 SWOT Analysis
 OPPORTUNITIES
 Strong growth of economy in the long run
 Increase in infrastructure projects
 Fragmented Industry & Transportation issue
 Per capita consumption 156 kg (worlds average 396 kg, China
1014 Kg, Japan 524 Kg)

 THREATS
 Imports from Pakistan affecting markets in Northern India
 Excess over capacity can hurt margins as well as prices
Factors Impact Importance Opportunities Threats

Political 05 07 35

Economic 07 07 49

Social 02 05 10

Technological 09 10 90

Environmental 05 08 40

Legal 06 04 24
ACC CEMENT
 SWOT of ACC Cement
STRENGTHS
1. It is having a good image and brand loyalty among consumers.
2. “Dhalai karne ke liye” people ask for ACC
3. Strong Liquidity
4. They have same price prevailing for wholesale at
dealers/stockiest retailers end.
5. Unique R&D facility
6. Nationwide presence –capacities in all five regions

WEAKNESS
1. The competitors are doing much promotional activity rather
than ACC Limited that’s why it facing more problems in
selling of product in the market.
2. Lack of awareness program for consumers.
 SWOT of ACC Cement
OPPORTUNITY
1. Capitalize on wide network and strong Geographic
Diversification
2. Rapid growth is taking place in Bihar and Madhya
Pradesh.
3. Government is spending heavily on infrastructure
projects.
4. FDI in infrastructure sector going to increase in coming
years, which will increase the demand of cement.
5. Roads are undergoing through the transformation
process through which the traditional method of road
building will be replaced by modern concrete roads.
 SWOT of ACC Cement
THREATS
1. Large number of players in cement industry makes it more
competitive for ACC to carefully price its product and at the
same time satisfy its dealers and customers.
2. Players such as Jaypee Cement, Prism Cement, and Birla
Samrat are eating up considerable market share.
3. Due to India’s exponential growth many new international
cement companies are expected in coming years which will
bring a tide of change and can start price war.
4. The emergence of small players in this market may increase
the competition and start the malpractices, and heavy
discounts to retailers or other Benefits.
Factors Impact Importance Opportunities Threats

Political 03 07 21

Economic 05 07 35

Social 04 05 20

Technological 07 09 63

Environmental 06 08 48

Legal 07 06 42
ULTRATECH CEMENT
 SWOT of UltraTech Cement
STRENGTHS:
1. The company exports over 2.5 million tons per annum,
which is about 30per cent of the country's total exports.
2. Consistent revenue growth.
3. Clean technologies and processes that combine economic
progress and sustainable environment have been adopted
at UltraTech.
4. Uniform cement quality to customer.
WEAKNESS:
1. High inventory handling cost
2. It affects human’s respiratory system adversely.
3. The cost of transporting cement is high and this keeps
cement from being profitable over long distances.

OPPORTUNITIES:
1. Institutional market like corporate and offices, school society
complexes are growing in large scale, which will increase the
requirement.
2. It can sign MOUs with government regarding supply of
cement for government work.
THREATS:
1. Cheep priced brand are grabbing rapidly a large chunk of
lower income customer base.
2. Now-a-days Timber is also being considered as one of the
substitutes of cement. In many countries like Japan,
Indonesia, Singapore etc are now using timber in
construction since those areas are high earthquake
affected. They now prefer timber which is cheap and long
lasting for years
Factors Impact Importance Opportunities Threats

Political 03 06 18

Economic 06 08 48

Social 05 05 25

Technological 06 09 54

Environmental 07 08 56

Legal 05 06 30
 ETOP Profile
SOCIO-ECONOMIC :
1. Cheap priced brand are grabbing rapidly a large chunk of lower
income customer base.
2. Roads are going through transformation ,through which traditional
method of road building will be replaced by modern concrete roads.

TECHNOLOGICAL:
1. Nowadays timber is also being considered as one of the substitutes
of cement. In many countries like Japan, Indonesia, Singapore, etc
are now using timber in construction since those areas are highly
earthquake affected. They now prefer timber which is cheap and
long lasting for years.
COMPETITORS:
Players such as Jaypee cement, ACC cement, Birla cement are
eating up considerable market share.
Emergence of small players in this market may increase
competition & start malpractices and heavy discounts to
retailers. They can also influence many retailers by giving
them better profit margins & other benefits.
Due to India’s exponential growth ,many new international
cement companies are expected in coming years.
CUSTOMERS:
Institutional market like corporate offices, school, society
complexes are growing in large scale ,which will increase
the requirement.

LEGAL:
Government is spending heavily on infrastructure projects.
It can sign MOUs with government regarding supply of
cement for government work.
Government intervention to adjust cement prices
AMBUJA CEMENT
 SWOT Analysis

STRENGTHS:
1. High productivity
2. Low Energy Consumption
3. Ability to sell total production
4. Competitive Advantage
5. Consumer Preferences
6. Consistency in Performance
7. High Quality
WEAKNESS:
1. No International presence
2. Not able to exploit the advantage of being nearer the sea
coast

OPPORTUNITIES:
1. There is increase in Demand in India
2. They can undertake some Projects in Future
3. They can go Global
THREATS:
1. Good number of Competitors
2. High Capital Cost
3. Raw Material ,Transportation and Power cost are
increasing so it will lead to low profitability
• The Indian cement industry has large number of cement
producers thus making it a low concentration market. The four
biggest cement players in the Indian cement industry are:
• 1. ACC Ltd
2. Grasim Cement
3. Ambuja Cement
4. Ultratech Cement
The market share of the above-mentioned four companies
accounts to 39.80% currently. It is believed that if these four
companies do not increase their market share in the coming years,
then their combined share could drop to 34%.
• The share of mid-large players (like Shree Cement, Madras
Cement, India Cement) will remain about 36%, small players
(like My Home Industries Ltd, Orient, Binani) will hold about
24%, and new players (like Reliance, Murli Agro, JSW
Cement) will account for 6% of the market.

• With focus on capacity addition, many small/medium players

have been able to capture more market share and consolidate
their position in the industry in the last two years. Market
share of top five individual companies taken together show a
decline to a level of 44.3% in FY09 from46.3% in FY08
 Suppliers Environment

• Licensing of coal and limestone reserves, supply of power from the state grid
etc are all controlled by a single entity, which is the government. However,
nowadays producers are relying more on captive power, but the shortage of
coal and volatile fuel prices remain a concern. 

• The basic raw materials used in the cement manufacturing process are
limestone, sand, shale, clay, and iron ore. The main material, limestone, is
usually mined on site while the other minor materials may or may not be mined
there. Since all the raw materials are natural resources, they are under the
Government’s control. Companies have to buy rights from the government to
set-up the cement plant. So there are no such suppliers in the cement industry.
 Technological Environment

• From mining to production the entire process depends on

technology. The Government of India plans to study and possibly
acquire new technologies from the cement industry of Japan.
• The government is discussing technology transfer in the field of
energy conservation and environment protection to help improve
efficiency of the Indian cement industry.
• Cement industry has made tremendous strides in technological up-
gradation and assimilation of latest technology.
• At present 93% of the total capacity in the industry is based on
modern and environment-friendly dry process technology.
 Economic Environment

• Currently, the industry is on the boom, with a lot of government

infrastructure and housing projects under construction.

• In spite of seeing a fall during 2008-09, the export segment of the

industry is expected to grow again on account of various
infrastructure projects that are being taken up all over the world and
numerous outstanding cement plants coming up in near future in the
country
 Regulatory Environment
• Stringent controls lifted in 1982
• Partial decontrol
• Partial control also lifted in March-1989
• In the Budget 2010, the government increased the excise duty from 8% to
10% on cement and clinker. However, the government has also increased
budgetary allocation for roads under NHDP.
• Further, with more incentives being spelled out for the infrastructure and
housing sector, cement manufacturers will continue to benefit.
• The budget measures such as increasing excise duties have proved to be
futile and in the future too the situation is expected to be same.
• Going forward, it is expected that the government's initiatives in the
infrastructure and housing sectors are likely to be the main drivers of growth
for the industry in the long run.
 Political Environment

• The price of cement is primarily controlled by the coal rates, power

tariffs, railway tariffs, freight, royalty and cess on limestone.
• Interestingly, government controls all of these prices. Government is
also one of the biggest consumers of the cement in the country.
• Most state governments, in order to attract investments in their
respective states, offer fiscal incentives in the form of sales tax
exemptions/deferrals.
• States like Haryana offer a freeze on power tariff for 5 years, while
Gujarat offers exemption from electric duty.
 Socio-cultural environment

• Usually, the cement industry in India consists of both the organized sector and the
unorganized sector.
• Organized sector comprises of the well-known cement manufacturing companies while the
main players of the unorganized sector are the regional and local cement-producing units in
various states across the state. 
• Indian consumers prefer buying branded cement like ULTRATECH, JAYPEE CEMENT,
LAFARGE CEMENT etc.
• It has been seen in the past, as well, that mini cement plants with low brand value and image
are not able to survive against the
cement giants.
• With a population of more than 100 billion people, it is expected that cement industry will
create another 25 lakhs jobs in the next 4-5 years. 
 International Environment

• India had competitively more deposits of lime stones.

• Cost of setting of plant is low, hence low cost of production.
• Developing countries of Asia and Africa would continue to be
large consumers of cement.
• Due to construction activities in Taiwan, South Korea, Hong
Kong, Thailand, Indonesia etc. there would be a shortage of
cement in the east and south east Asia. India was well situated
to meet such demands.
• Location near sea coast was an advantage for exports.
JK Lakshmi Cement
STRENGTHS:
1. Consistent revenue growth.
2. First cement producer of Northern India to be awarded an
ISO 9002 certificate.
3. Cement manufacturing facility has been rated amongst
Greenest Cement Plant  of India  by CSE  GRP  2005
4. Also won the Productivity Excellence Award 2007-08
5. Major Projects like IGNP, Sardar Sarovar Dam, Golden
Quadrilateral
6. Preferred choice of major corporations like L&T, Reliance,
NTPC, Essar and Airport Authority of India
 WEAKNESS:
1. Raw materials Not available in all the places.
2. Losses of raw material Products
3. High cost of  branded products.
4. Lack of availability in the market.
5. High Power/ Fuel costs.
6. High inventory handling cost.
7. Lack of awareness program for consumers due to low promotion mix
8. Lack of marketing mix.
9. Highly dusty environment  is hazardous for health.
 OPPORTUNITIES:
1. Institutional market like corporate and offices ,school society complexes
are growing in large scale, which will increase the requirement.
2. People are opting for more stable structures and intensive use of cement
is taking place
3. Government promoting infrastructure.
4. Roads  are  undergoing  through  the  transformation process through
 which  the traditional method of road building will be replaced by
modern concrete roads.
5. Foreign direct investment in infrastructure sector going to increase in
coming years, which will increase the demand of cement.
THREATS:
1. Cheep priced brand are grabbing rapidly a large chunk of
lower income customer base.

2. The emergence of small players in this market may increase

the competition

3. Now-a-days Timber is also being considered as one They

now prefer timber which is cheap and long lasting for years
ENVIRONMENTAL
 Major air polluting industries
 In Pollution Category, this is under the “Red" Category
which represents highly polluting industries.

Social
 Government Initiatives for infrastructure
 The cement industry is pushing for increased use of
cement in highway and road construction.
 Housing, infrastructure projects and the nascent trend
of concrete roads would continue to accelerate the
consumption of cement.
TECHNOLOGICAL ENVIRONMENT
 Continuous upgrading technology
 Presently 93 per cent of the total capacity in the
industry is based on modern and environment-
friendly dry process technology
 There is tremendous scope for waste heat recovery
in cement plants and thereby reduction in
emission level. (Utilizing waste heat in a cement
plant is being implemented with Japanese assistance
under Green Aid Plan).
 Use of advanced technology has helps in conserving
energy and fuel and to save materials substantially.
ECONOMIC ENVIRONMENT
 The cement industry accounts for approximately 1.3% of GDP
and employs over 0.14 million people.
 It is a significant contributor to the revenue collected by both the
central and state governments through excise and sales taxes.
 The Indian Cement Industry comprises of 125 large cement
plants with an installed capacity of 148.28 million tonnes and
more than 300 mini cement plants with an estimated capacity of
11.10 million tonnes per annum.

LEGAL ENVIRONMENT
 State governments, offer fiscal incentives in the form of sales
tax exemptions/deferrals but in recent govt has increased
excise and vat on cement and
 High tariff rate of power supply
 Royalty and cess on limestone and coal; and, duties on power
tariff. (account for around 30% of the sale price)
 Strength
• Double digit growth rate
• •Cement demand has grown in tandem with strong
economic growth;
• derived from:
-Growth in housing sector (over 30%) key demand
driver;
-Infrastructure projects like ports, airports, power
projects, dam & irrigation
• projects
-National Highway Development Programme
-Bharat Nirman Yojana for rural infrastructure
-Rise in industrial projects
-Export potential also demand driver
•Capacity utilization over 90%
 Weakness
• Low value commodity
•Cement Industry is highly fragmented
•Industry is also highly regionalized
•Low – value commodity makes transportation
over long distances uneconomical
 Opportunity
• Demand–supply gap
• Substantially lower per capita cement consumption as
compared to
developing countries (1/3 rd of world average) Per
capita cement
consumption in India is 82 kgs against a global average
of 255 kgs and
Asian average of 200 kgs.
 Government Controls

• The prices that primarily control the price of

cement are coal, power tariffs, railway,
freight, royalty and cess on limestone. All of these
prices are controlled by government.