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Subject:- Indian Cement Industry Lecturer:- Akshat Mullick Course:- M.B.A(Industry Integrated) Name of Student:- Arvind Kumar Nitesh Kumar Rajesh Kumar Singh Shankar das Hargovind Singh
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 from 46.3% in FY08(Bharat Book Bureau 2004).
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there. Since all the raw materials are natural resources, they are under the Governments control. Companies have to buy rights from the government to setup the cement plant. So there are no such suppliers in the cement industry.
SWOT
Strengths
ANALYSIS
High selling prices and profitability levels due to supply Shortage Relatively low energy costs Tax-free environment
Taxes and restrictions set on imported cement Natural hedge from outside competition arising from high transportation costs Capital-intensive industry with long construction periods, creating natural barrier to new entrants
Weaknesses
High oil prices, significantly increasing production and transportation costs Proximity to lower cost export markets in Indian subcontinent, Egypt and Turkey, increasing competition in both local and export markets Fragmented regional industry with no economies of scale Non-optimal capital structure driven by the relatively low debt levels maintained by most companies in the region
Opportunities
Construction boom in all GCC countries that is expected to continue in the short to medium term Reconstruction in Iraq opens a window for dumping possible future excess capacities A number of M&A transactions might take place in the near Future
Possible entry of multinational companies, increasing efficiency and opening new export routes
Threats
Several capacity upgrades are planned, raising the possibility of oversupply situation. Increased competition in local markets post joining WTO and/or opening up for foreign investments Further hikes in oil prices could negatively affect companies profitability if they cannot pass increase in production costs onto customers