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Cement industry analysis

Cement industry analysis

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Cement industry analysis

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  1. Cement industry analysis

  2. An Overview • Cement is one of the core industries which plays a vital role in the growth and expansion of a nation. • The demand for cement, depends primarily on the pace of activities in the business, financial, real estate and infrastructure sectors of the economy.

  3. Product Variants

  4. Statistics - Mini & White Cement Plants • Cement Plants (Nos.) Approx.- 365 • Installed Capacity (Mn. t.) -219.2 • Cement Production (Mn. t.)-181.61

  5. Major Players in industry

  6. Rural housing demand ‐ key ingredient to cement demand

  7. Lower per capita cement consumption… chances of acceleration in cement demand

  8. Higher Infrastructure investment to fuel the cement demand……..

  9. Mergers and Acquisitions in Cement Industry in India • 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.

  10. French cement company Vicat SA bought 6.67% share of Sagar Cement at a cost of US$ 14.35 million. • 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.

  11. Recent Investments in the Indian Cement Industry • In a recent announcement, the second largest cement company in South India, Dalmia Cement declared that it's going to invest more than US$ 652.6 million in the next 2-3 years to add 10 MT capacity. • Anil Ambani-led Reliance Infrastructure is going to build up cement plants with a total capacity of yearly 20 MT in the next 5 years. For this, the company will invest US$ 2.1 billion. • India Cements is going to set up 2 thermal power plants in Andhra Pradesh and Tamil Nadu at a cost of US$ 104 billion.

  12. Anil Ambani-led Reliance Cementation is also going to set up a 5 MT integrated cement plant in Maharashtra. It will invest US$ 463.2 million for that. • JaiprakashAssociates Ltd has signed a MoU with Assam Mineral Development Corporation Limited to set up a 2 MT cement plant. The estimated project cost is US$ 221.36 million. • Rungta Mines (RML) is also planning to invest US$ 123 million for setting up a 1 MT cement plant in Orissa.

  13. Investments Total FDI in the cement sector between 2000 and October 2009 stood at US$ 1.69 billion.

  14. Impact Analysis: Union budget 2010-11 • The specific rates of duty applicable to Portland cement and cement clinker to be adjusted upwards proportionate to the across-the-board increase in the excise duty from 8% to 10%. • Levy of Rs 50 per ton cess on imported coal. • Consequent to enhancement in the standard rate of duty from 8% to 10%, the specific rates of duty on cement and cement clinker is also being revised

  15. Industry P/E Ratio : 13.37

  16. ”South India” story of 2009 is “nationwide” story of 2010 • New capacity back-ended, utilization could reach a 7-year low of 79% in FY11E • 100mn tonnes of new capacity will be commissioned from FY09-FY11E vs. Incremental demand of 45mn tonnes (11% FY10-FY12E CAGR growth) • Even before entering the phase of seasonally weak demand growth of June-September, the excess capacity in the system has started exerting downward pressure on prices nationwide

  17. All-India Capacity Utilization

  18. Demand And Supply

  19. Regional Analysis • South Region • West Region • East Region • West Region

  20. Southern Region

  21. Eastern Region

  22. Northern Region

  23. Regional wise cement capacity additions

  24. Margin squeeze from declining realizations and higher costs

  25. Raw Material

  26. Conclusion • Prices declined by rs.7/bag of 50 kg • Further dip of rs.10 is likely • Month-on-growth down by 7.74% • Due to low selling price and increased cost High profit margin time is over • Share prices are under-pressure