Cement Sector Analysis Report
Cement Sector Analysis Report
[Key Points | Financial Year '13 | Prospects | Sector Do 's and Dont 's]
The Indian cement industry is the 2nd largest market after China accounting for about 8% of the total global production. It had a total capacity of about 347 m tonnes (MT) as of financial year ended 2012-13. Cement is a cyclical commodity with a high correlation with GDP. The housing sector is the biggest demand driver of cement, accounting for about 67% of the total consumption. The other major consumers of cement include infrastructure (13%), commercial construction (11%) and industrial construction (9%).
The Indian cement industry grew at a commendable rate in the last decade, registering a compounded growth of about 8%. However, the growth has slowed down in recent years owing to the sluggishness in the economy. Moreover, the per capita consumption of cement in India still remains substantially poor when compared with the world average. This underlines the tremendous scope for growth in the Indian cement industry in the long term.
Cement, being a bulk commodity, is a freight intensive industry and transporting it over long distances can prove to be uneconomical. This has resulted in cement being largely a regional play with the industry divided into five main regions viz. north, south, west, east and the central region. The Southern region of India has the highest installed capacity, accounting for about one-third of the country 's total installed cement capacity.
Given the high potential for growth, quite a few foreign transnational companies have ventured into the Indian markets. Already, while companies like Lafarge, Heidelberg and Italicementi have made a couple of acquisitions, Holcim has increased its stake in domestic companies Ambuja Cements and ACC to over 50% to gain controlling interest. Consolidation has taken place with the top two cement groups controlling nearly one-third of the total domestic capacity.
[Key Points | Financial Year '13 | Prospects | Sector Do 's and Dont 's]
The Indian cement industry is the 2nd largest market after China accounting for about 8% of the total global production. It had a total capacity of about 347 m tonnes (MT) as of financial year ended 2012-13. Cement is a cyclical commodity with a high correlation with GDP. The housing sector is the biggest demand driver of cement, accounting for about 67% of the total consumption. The other major consumers of cement include infrastructure (13%), commercial construction (11%) and industrial construction (9%).
The Indian cement industry grew at a commendable rate in the last decade, registering a compounded growth of about 8%. However, the growth has slowed down in recent years owing to the sluggishness in the economy. Moreover, the per capita consumption of cement in India still remains substantially poor when compared with the world average. This underlines the tremendous scope for growth in the Indian cement industry in the long term.
Cement, being a bulk commodity, is a freight intensive industry and transporting it over long distances can prove to be uneconomical. This has resulted in cement being largely a regional play with the industry divided into five main regions viz. north, south, west, east and the central region. The Southern region of India has the highest installed capacity, accounting for about one-third of the country 's total installed cement capacity.
Given the high potential for growth, quite a few foreign transnational companies have ventured into the Indian markets. Already, while companies like Lafarge, Heidelberg and Italicementi have made a couple of acquisitions, Holcim has increased its stake in domestic companies Ambuja Cements and ACC to over 50% to gain controlling interest. Consolidation has taken place with the top two cement groups controlling nearly one-third of the total domestic capacity.
References: Media Reports, India in Business, Cement Corporation of India, Department of Industrial Policy and Promotion (DIPP), Cement Manufacturers Association (CMA)