Gujarat Ambuja Cement Ltd.

Rizwan Habib Sachin Rawt Desai Sandeep Sessiti Sarweshwar Shakti Dash Suraj Patil Vidwaita Sachan 174

Cement Industry An overview

Second largest producer in world after China with capacity of approximately 300 MT in 2011. Growing at approx CAGR of 9% 54 companies exist at present The cement industry accounts for approximately 1.8 % of GDP Cement industry employs over 1.4 million people. It is believed that in the coming years, more than 2.5 million people will be directly employed by cement companies. Highly fragmented (low entry barriers) Highly capital & energy intensive Heavily taxed sector High bulk (volume) low value product Heavy dependence on 4 sectors viz. coal,power and transport, Infrastructure

Key Points
Supply: The demand-supply situation is highly skewed with the latter being significantly higher. Demand: Housing sector acts as the principal growth driver for cement. However, recently industrial and infrastructure sectors have also emerged as demand drivers. Barriers to entry: High capital costs and long gestation periods. Access to limestone reserves (key input) also acts as a significant entry barrier. Bargaining power of suppliers: 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. Bargaining power of customers: Cement is a commodity business and sales volumes mostly depend upon the distribution reach of the company. However, things are changing and few brands have started commanding a premium on account of better quality perception. Competition: Intense competition with players expanding reach and achieving pan India presence.

Top 10 Cement companies in India

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. ACC Limited Ambuja Cements Limited UltraTech Cement Limited India Cement Limited Shree Cement Limited Rain Cement Limited Prism Cement Limited Madras Cement Limited Birla Cement Limited JK Cement Limited

Mergers and Acquisitions in Cement Industry in India

Holcim now holds 56% stake of Ambuja Cement. Previously it held 22% of stake. The company utilized various open market transactions to increase its stakes. It invested US$ 1.8 billion for that. UltraTech Cement is going to absorb its sister concern Samruddhi Cement to become biggest cement company in India. World's leading foreign funds like HSBC, ABN Amro, Fidelity, Emerging Market Fund and Asset Management Fund have together bought 7.5% of India Cements (ICL) at a cost of US$ 124.91 million.

Cimpor, a Cement company of Portugal, has bought 53.63% stake that Grasim Industries had in Shree Digvijay Cement.
French cement company Vicat SA bought 6.67% share of Sagar Cement at a cost of US$ 14.35 million.