Impact of Global Recession on the Indian Cement Industry (With Special Reference to ACC Limited)

Sandeep Kumar Rai* and Shailesh K Dwivedi** Cement Industry in India is on a roll at the moment. Driven by a booming real estate sector, global demand and increased activity in infrastructure development such as state and national highways, the cement industry has witnessed tremendous growth. The realty sector boomed but could not sustain for long and it collapsed because of the loan defaults. This situation spread like wild fire and put the Indian economy in danger like the US economy. The US financial crises have affected many countries of the world and India is not an exception to it. Because of these financial crises, Indian economy has lost more than 2% of GDP growth. Almost all sectors of the Indian economy have been affected by this crisis. In this paper, an attempt has been made to find out the impacts of global financial crisis on the Indian Cement Industry particularly the ACC limited.

Introduction
The origins of Indian cement industry can be traced back to 1914 when the first unit was set-up at Porbandar with a capacity of 1,000 tons. Today cement industry comprises of 125 large cement plants and more than 300 mini-cement plants. The Cement Corporation of India, which is a Central Public Sector Undertaking (PSU), has 10 units. There are 10 large cement plants owned by various State Governments. Cement industry in India has also taken tremendous strides in technological upgradation and assimilation of latest technology. Presently, 93% of the total capacity in the industry is based on modern and environment-friendly dry process technology. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially. Indian cement industry has also acquired technical capability to produce
* Assistant Professor, Aacharya Sitaram Chaturvedi College for Women, Ramnagar, Varanasi 221005. E-mail: raisandeep2006@gmail.com ** Assistant Professor, Vindhya Institute of Management and Techonology, Allahabad. E-mail: dr.shaileshdwivedi@gmail.com 2011 IUP. All Recession on the Impact of GlobalRights Reserved. Indian Cement Industry (With Special Reference to ACC Limited) 35

different types of cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement, etc. Some of the major clusters of cement industry in India are: Satna (Madhya Pradesh), Chandrapur (Maharashtra), Gulbarga (Karnataka), Yerranguntla (Andhra Pradesh), Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria (Rajasthan). Cement industry in India is currently going through a consolidation phase. Some examples of consolidation in the Indian cement industry are: Gujarat Ambuja taking a stake of 14% in ACC, and taking over DLF Cements and Modi Cement; ACC taking over IDCOL; India Cement taking over Raasi Cement and Sri Vishnu Cement; and Grasims acquisition of the cement business of L&T, Indian Rayons cement division, and Sri Digvijay Cements. Foreign cement companies are also picking up stakes in large Indian cement companies. Swiss cement major Holcim has picked up 14.8% of the promoters stake in Gujarat Ambuja Cements (GACL). Holcims acquisition has led to the emergence of two major groups in the Indian cement industry, the Holcim-ACC-Gujarat Ambuja Cements combine and the Aditya Birla group through Grasim Industries and Ultratech Cement. Lafarge, the French cement major has acquired the cement plants of Raymond and Tisco. Italy-based Italcementi has acquired a stake in the K K Birla promoted Zuari Industries cement plant in Andhra Pradesh, and German cement company Heidelberg Cement has entered into an equal joint-venture agreement with S P Lohia Group controlled Indo-Rama Cement.

Growth of the Cement Industry

The growth of the Indian Cement Industry was very old. Prior to the end of the 19th century and beginning of the 20th century the cement industry started to grow in India. The growth of the Indian cement industry during different periods has been detailed below.

Prior to Independence
The first endeavor to manufacture cement dates back to 1889 when a Calcutta-based company endeavored to manufacture cement from Argillaceous (kankar). But the first endeavor to manufacture cement in an organized way commenced in Madras. South India Industries Limited began manufacture of Portland cement in 1904. But the effort did not succeed and the company had to halt production. Finally it was in 1914 that the first licensed cement manufacturing unit was set up by India Cement Company Ltd at Porbandar, Gujarat with an available capacity of 10,000 tons and production of 1,000 installed. The First World War gave the impetus to the cement industry still in its initial stages. The following decade saw tremendous progress in terms of manufacturing units, installed capacity and production. This phase is also referred to as the Nascent Stage of Indian Cement Industry. During the early years, production of cement exceeded the demand. Society had a biased opinion against the cement manufactured in India, which further led to reduction
36 The IUP Journal of Managerial Economics, Vol. IX, No. 1, 2011

in demand. The government intervened by giving protection to the Industry and by encouraging cooperation among the manufacturers. In 1927, the Concrete Association of India was formed with the twin goals of creating a positive awareness among the public of the utility of cement and propagate cement consumption.

After Independence
The growth rate of cement was slow around the period after independence due to various factors like low prices, slow growth in additional capacity and rising cost. The government intervened several times to boost the industry, by increasing prices and providing financial incentives. But it had little impact on the industry. In 1956, the price and distribution control system was set up to ensure fair prices for both the manufacturers and consumers across the country and to reduce regional imbalances and reach self sufficiency.

Period of Restriction (1969-1982)

The cement industry in India was severely restrained by the government during this period. The Government hold over the industry was through both direct and indirect means. Government intervened directly by exercising authority over production, capacity and distribution of cement and it intervened indirectly through price control. In 1977, the government authorized higher prices for cement manufactured by new units or through capacity increase in existing units. But still the growth rate was below par. In 1979, the government introduced a threetier price system. Prices were different for cement produced in low, medium and high cost plants. However, the price control did not have the desired effect. Rise in input cost, reduced profit margins meant the manufacturers could not allocate funds for increase in capacity.

Partial Control (1982-1989)

To give impetus to the cement industry, the Government of India introduced a quota system in 1982. A quota of 66.60% was imposed for sales to Government and small real estate developers. For new units and sick units, a lower quota at 50% was affected. The remaining 33.40% was allowed to be sold in the open market. These changes had the desired effect on the industry. Profitability of the manufacturers increased substantially, but the rising input cost was a cause for concern.

After Liberalization
In 1989, the cement industry was given complete freedom, to gear up to meet the challenges of free market competition due to the impending policy of liberalization. In 1991, the industry was delicenced.
Impact of Global Recession on the Indian Cement Industry (With Special Reference to ACC Limited) 37

This resulted in an accelerated growth for the industry and availability of state of the art technology for modernization. Most of the major players invested heavily for capacity expansion. To maximize the opportunity available in the form of global markets, the industry laid greater focus on exports. The role of the government has been extremely crucial in the growth of the industry. Cement Industry in India is on a roll at the moment. Production capacity has gone up and top cement companies of the world are vying to enter the Indian market, thereby sparking off a spate of mergers and acquisitions. Indian cement industry is currently ranked second in the world. The Indian cement industry with a total capacity of about 190 mn tons in FY 2008 is the second largest market after China, despite the fact that the Indian cement industry had clocked production of more than 100 mn tons for the last five years, registering an average growth of nearly 9%. This, more than anything underlines the tremendous scope for growth in the Indian cement industry in the long term. Although consolidation has taken place in the Indian cement industry with the top five players controlling almost 50% of the capacity, the balance capacity still remains pretty fragmented. Cement, being a bulk commodity, is a freight intensive industry and transporting cement over long distances can prove to be uneconomical. This has resulted in cement being largely a regional player with the industry divided into five main regions, viz., north, south, west, east and the central region. While the southern region always had excess capacity in the past owing to abundant availability of limestone, the western and northern regions are the most lucrative markets on account of higher income levels. However, with capacity addition taking place at a slower rate as compared to growth in demand, the demand supply parity has been restored to some extent in the Southern region for the medium term. Considering the pace at which infrastructural activity is taking place in different regions, the players have lined up expansion plans accordingly (Table 1). Despite the growth of the Indian cement industry, Indias per capita production of 115 kg per year lags behind the world average of over 250 kg and Chinas production of more than 450 kg per person. Clearly there remains Table 1: Region-Wise Growth room for tremendous growth in the industry in India. But if India is to reach its potential, the free hand of Region Growth (%) the market must be left unfettered. For this to happen, India 9.60 the Indian government must make sure that foreign South 16.30 companies that have a history of price fixing and West 9.80 market collusion receive appropriate regulation. If Central 14.30 market shares get fixed, India will be the loser and North 3.70 the gap between India and China will only grow in East 2.10 the race to become the next economic superpower.
38 The IUP Journal of Managerial Economics, Vol. IX, No. 1, 2011

The cement industry is one of the vital industries for economic development in a country. The total utilization of cement in a year is used as an indicator of economic growth. Cement is a necessary constituent of infrastructure development and a key raw material for the construction industry, especially in the governments infrastructure developmental plans in the context of the nations socio-economic development. The demand for cement in year 2010-2011 is expected to increase by 60 mn tons despite the recession and decline in demand of housing sector. Against Indias GDP growth of 7%, the experts have estimated the cement sector to grow by 9 to 10% in the current FY 2010-11. Major Indian cement manufacturers and exporters have all made huge investments in the last few months to increase their production capability. This heralds an optimistic outlook for the cement industry. The housing sector in India accounts for 50% of the cements demand. And the demand is expected to continue. With the constant effort made by cement manufacturers and exporters, India has become the second largest cement producer in the world. Madras Cement Ltd., Associated Cement Company Ltd. (ACC), Ambuja Cements Ltd., Grasim Industries Ltd., and J K Cement Ltd., are among the few renowned names of the major Indian cement companies.

Major Players of the Industry

The prominent players in the Indian cement industry are: Associated Cement Company Ltd. (ACC) Grasim Industries Ltd. Ambuja Cements Ltd. UltraTech Cement Ltd. J K Cement Limited Madras Cements Ltd. Jaypee Group. Binani Cement Limited Prism Cement Limited

Indian Cement Industry Forecast to 2012

India is fast emerging on the world map as a strong economy and a global power. The country is going through a phase of rapid development and growth. All the vital industries and sectors of the country are registering growth and thus, luring investors. And cement industry is one of them. The forecast model shown in Table 2 throws light on the Indian cement industry. The forecast model (Table 2) relates to the growth in the cement sector from 2009 to 2012. The contributing factors taken to consideration are:
Impact of Global Recession on the Indian Cement Industry (With Special Reference to ACC Limited) 39

Table 2: Forecast Cement Demand Supply Model

Forecast Model: Year 2009-2012 (mn tons) Year-end installed capacity Actual effective capacity () Mothballed capacity Effective installed capacity Domestic consumption Export (cement + clinker) Domestic consumption + export Surplus/(deficit) % surplus (wrt effective capacity) Actual utilization Average prices Change in average price Capacity growth Domestic demand growth 2009 224 207 4.9 202 178 6.1 184 18 9% 91% 239 3% 16% 8% 2010E 250 231 4.9 226 187 5 192 35 15% 85% 240 0% 12% 5% 2011E 287 257 4.9 252 205 8 213 38 15% 85% 240 0% 11% 10% 2012E 300 283 4.9 278 226 9 235 43 15% 85% 240 0% 10% 10%

Export Domestic Consumption Average Prices Capacity Growth and Domestic Demand Growth All the above mentioned factors are increasing at a considerable rate indicating a positive sign towards the growth of the sector.

SWOT Analysis
Strengths
Second largest in the world in terms of capacity. Low cost of production.

Weakness
Effect of global recession on Real Estate and Infrastructure. Demand-Supply gap, overcapacity. Increasing cost of production. High interest rates.
40 The IUP Journal of Managerial Economics, Vol. IX, No. 1, 2011

Opportunities
Strong growth of economy in the long run. Increase in infrastructure projects. Growing middle class. Technological change. Increase in government spending.

Threats
Imports from Pakistan affecting markets in Northern India. Excess over capacity can hurt margins as well as prices.

Challenges
Cement industry currently has one of the highest inventory levels in recent times. Growth rates have slowed. Capacity additions putting pressure on process. Due to the above mentioned facts, the cement companies are looking to cut production. From figure 1 we can see that: ACC contributed 11.8% to the sector L&T 11.3% Grasim 9.6%
Figure 1: Big Players: Cement Sector
Grasim, 9.60% L&T, 11.30% ACC, 11.80%

India Cement, 6.90% Madras, 3.30%

Others, 49.50%

Guj. Ambuja, 7.60%

Impact of Global Recession on the Indian Cement Industry (With Special Reference to ACC Limited)

41

 Gujarat Ambuja 7.6% India Cement 6.9% Madras 3.3% Others 49.5% to the sector. So, ACC being the sector leader contributed a major part of supplies.

ACC: The Market Leader

ACC Limited is Indias foremost manufacturer of cement with a countrywide network of factories and marketing offices. Established in 1936, ACC has been a pioneer and trendsetter in cement and concrete technology. ACCs brand name is synonymous with cement and enjoys a high level of equity in the Indian market. Among the first companies in India to include commitment to environment protection as a corporate objective, ACC has won several prizes and accolades for environment friendly measures taken at its plants and mines. The manufacturing cost per tonne of ACC Ltd, Indias largest cement manufacturer by capacity, is the highest in the Indian cement industry. ACCs manufacturing cost is 1,529 per ton against the industry average of 1,056 per ton. Birla Corp. Ltd., has the second highest manufacturing cost, 1,339 per ton, followed by Ultra Tech Cement Ltd., at 1,240 per ton. India, the second largest cement market in the world, has a total installed capacity of 170 mn tons per annum (mtpa), according to a report on the sector by domestic brokerage Karvy Stock Broking Ltd. Demand for cement in the country stood at 154.9 mtpa for the year ended March. ACC Limited is Indias foremost manufacturer of cement and concrete. ACCs operations are spread throughout the country with 14 modern cement factories, more than 30 Ready Mix Concrete (RMX) plants, 20 sales offices and several zonal offices. It has a workforce of about 9,600 persons and a countrywide distribution network of over 9,000 dealers.

Vision of the ACC Limited

To be one of the most respected companies in India; recognized for challenging conventions and delivering on our promises.

Subsidiaries
Bulk Cement Corporation (India) Ltd. (BCCI): The Company situated in Mumbai, caters to bulk cement requirements of the city of Mumbai and its environs. It has two cement storage silos with a capacity of 5,000 tons each. The plant receives cement in bulk from ACC plants at Wadi. The first of its kind in India, BCCI is equipped with all the facilities
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required by increasingly sophisticated construction sites in a bustling metropolis, including a laboratory, a fleet of specialized trucks and site silos for the convenience of customers and is capable of offering loose cement in bulk-tanker vehicles as well as packed cement in bags of varying sizes from 1 tonne down to 25 kg bags. ACC Concrete Ltd.: ACC set up Indias first commercial Ready Mix Concrete (RMX) plant in Mumbai in 1994. The RMX business of ACC was reorganized as a separate wholly owned subsidiary. Today this company is one of the largest manufacturers of RMX in India with a countrywide network of over 30 plants, with modern equipment and a large fleet of transit mixers. ACC Mineral Resource Ltd.: ACCs wholly-owned subsidiary, The Cement Marketing Company of India Limited, was renamed as ACC Mineral Resources Limited (AMRL) in May 2009. ACC Mineral Resources Limited has already entered into Joint Venture arrangements for prospecting, exploration and mining coal from the coal blocks in Madhya Pradesh and West Bengal. The company is also exploring other opportunities for securing additional coal and gypsum resources in India and abroad. Lucky Minmat: ACC acquired 100% of the equity of Lucky Minmat Private Limited. This company holds limestone mines in Sikar district of Rajasthan and helps supplement limestone supply to the Lakheri Plant.

Products and Services

Ordinary Portland Cement
OPC 43 Grade: It surpasses BIS Specifications (IS 8112-1989 for 43 grade OPC) on compressive strength levels. OPC 53 Grade: This is an Ordinary Portland Cement which surpasses the requirements of IS: 12269-53 Grade. It is produced from high quality clinker ground with high purity gypsum.

Blended Cement
Fly-Ash Based Portland Pozzolana Cement: This is special blended cement, produced by inter-grinding higher strength Ordinary Portland Cement clinker with high quality processed fly-ash based on norms set by the companys R&D division. Portland Slag Cement: This is slag-based blended cement that imparts strength and durability to all structures. It is manufactured by blending and inter-grinding OPC clinker and granulated slag in suitable proportions as per our norms of consistent quality.

ACC Bulk Cement

Ready Mix Concrete or RMX as it is popularly called, refers to concrete that is specifically manufactured for delivery to the customers construction site in a freshly mixed and plastic or unhardened state.
Impact of Global Recession on the Indian Cement Industry (With Special Reference to ACC Limited) 43

Consultancy Services
Engineering Skills and Services: ACC houses a wide range of engineering skills and services under one roof: Raw material evaluation and optimization. Feasibility studies. Engineering consultancy services for green field/brown field cement plants. Upgradation and capacity enhancement of existing cement plants. Management and operation of cement plants. Technical training and skills development. ACC Plants ACC has the oldest plants, says Sourav Mallik, Associate Director (investment banking) at Kotak Mahindra Capital Co. Ltd, the investment banking arm of Kotak Mahindra Bank Ltd. Some plants are inefficient and it is uneconomical to run them. Today each of its cement plants has state-of-the art pollution control equipment and devices. ACC has 13 plants at 12 locations nationwide, in which Jharkhand and Karnataka both have two plants in Chaibasa, Sindri and new Wadi plant respectively. The company has a manufacturing capacity of around Table 3: Plant Wise Capacity 23 mtpa and hopes to expand it to 27 mtpa Units Capacity(MTPA) by the end of 2009. The plants in different states and their capacities are given in Bargarh (Orissa) 0.96 Table 3. Chaibasa (Jharkhand) 0.87
Chanda (Maharashtra) Damodhar (West Bengal) Gagal (Himachal Pradesh) Jamul (Chhattisgarh) Kymore (Madhya Pradesh) Lakheri (Rajasthan) Madukkarai (Tamil Nadu) Sindri (Jharkhand) Wadi (Karnataka) New Wadi Plant (Karnataka) Tikaria (Uttar Pradesh) Total
44

1.00 0.53 4.40 1.58 2.20 1.50 1.18 0.91 2.59 3.20 2.31 23.23

Table 4 presents the financial highlights of ACC Limited from 2003-04 to 2008. Table 4 shows that in all respects, the company has done well. During this period, the company has shown a rising trend in every segment. Gross revenue of the company increased from 4,038 cr in 2003-04 to 8,548 cr in 2008 (Figure 2). Profit after tax of the company increased by six times during this sixyear period, i.e., 200 cr in 2003-04 to 1,212 cr in 2008 (Figure 3). Dividends paid by company have also increased by five times. In the year 2003-04, the company paid a total of 80 cr

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Table 4: Financial Highlights (in cr)

Items Gross Revenue Profit After Tax Dividend Net Worth Capital-Employed Borrowings Debt-equity Ratio Book Value per Share ( ) Earning per Share Dividend per Share Employees (Number) Shareholders (Number) 2008 8,548 1,212 439 4,927 5,745 482 0.10 262.56 64.63 20.00 9,557 155,813 2007 7,977 1,438 438 4,152 4,953 469 0.11 221.33 76.75 20.00 10,032 127,476 2006 6,586 1,231 322 3,142 4,378 916 0.29 167.77 66.02 15.00 9,231 110,455 2005(9M) 2004-05 3,815 544 168 2,130 3,607 1,176 0.55 115.00 30.02 8.00 9,170 97,219 4,640 378 143 1,577 3,382 1,509 0.96 88.00 21.23 7.00 8,995 105,165 2003-04 4,038 200 80 1,318 3,010 1,327 1.07 74.41 11.68 4.00 9,115 120,803

Note: (9M)-Data related to the year 2005 is only for nine months, i.e., April, 2005 to December, 2005.

as dividend which went upto 439 cr in 2008 (Figure 4). In respect of the net worth, the company improved during this six-year period. In the year 2003-04, the company had 1,318 cr as net worth which went upto 4,927 cr in 2008 (Figure 5). Book value per share has also tremendously increased during the period. In 2003-04, it was 74.41 and it reached 262.56 in 2008, an increase by four times (Figure 6). But the recession period 2007-2008 had a negative impact on some major financial instruments. The company had a decline in profit after tax, return on capital employed,
Figure 2: Gross Revenue of ACC Limited

Gross Revenue (in cr)

10,000 8,000 6,000 4,000 2,000 0 2003-04 2004-05 2005 (9M) Year 2006 2007 2008

Impact of Global Recession on the Indian Cement Industry (With Special Reference to ACC Limited)

45

Figure 3: Profit After Tax of ACC Limited

Profit After Tax 2008 2007 2006 2005 (9M) 2004-05 2003-04 0 200 400 600 800 1,000 1,200 1,400 1,600

Figure 4: Dividends Paid by ACC Limited

Dividends 500 450 400 350 300 250 200 150 100 50 0

2003-04 2004-05 2005 (9M) 2006 Year

2007

2008

Figure 5: Net Worth and Return on Net Worth of ACC Limited

6,000 5,000 4,000 3,000 2,000 1,000 0 2003-04 2004-05 2005 (9M) 2006 2007 2008 Net Worth Return on Net Worth 45 40 35 30 25 20 15 10 5

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earnings per share and the number of employees. The number of employees went down in 2008 as compared to 2007, i.e., from 10,032 to 9,557. Table 5 depicts the key ratios of ACC Limited during 2004-05 to 2008. Table 5 shows the liquidity, leverage and profitability ratio. Table shows that in this period, the company was affected by the global crisis. In the last two years, the company had less profitability ratios. In 2008, the company had low interest coverage ratio than that of the previous years. It shows that the company has more borrowings. Table 6 presents the major achievements by ACC Limited during 2006-09. ACC Limited won many awards during this period. In 2009, ACC Limited won the Greentech Safety Gold and Silver Awards 2009for outstanding performance in Safety management systems by Greentech Foundation.
Figure 6: Book Value per Share of ACC Limited
Book Value per Share 300 250 200 150 100 50 0 2003-04

2004-05

2005 (9M)

2006

2007

2008

Table 5: Key Ratios

Ratio Current Ratio Quick Ratio1.09 Debt-Equity Ratio Proprietary Ratio Interest Coverage Ratio 2008 1.00 1.06 0.10 85.75 41.23 2007 Liquidity Ratios 1.07 1.35 Leverage Ratios 0.11 83.82 70.72 0.29 71.76 26.86 0.55 59.13 5.35 0.96 46.96 4.04
47

2006 1.31 0.90

2005 (9M) 1.16 0.87

2004-05 1.19

Impact of Global Recession on the Indian Cement Industry (With Special Reference to ACC Limited)

Table 5 (Cont.)
Ratio 2008 2007 Profitability Ratios Return on Assets Return on Capital Employed Return on Equity EPS ( ) Dividend Payout Ratio 21.10 21.09 6.45 64.63 30.95 29.86 29.03 7.66 76.75 26.06 28.13 28.11 6.56 66.02 22.72 15.06 15.08 2.93 30.02 26.65 11.12 11.18 2.11 21.23 32.97 2006 2005 (9M) 2004-05

Note: (9M)-Data related to the year 2005 is only for nine months, i.e., April, 2005 to December, 2005.

Table 6: Achievements
2006 2006 2006 2006 2006 2006 2007 2007 2007 2008 2008 2008 2008 2009 Subsidiary companies Damodhar Cement and Slag Limited, Bargarh Cement Limited and Tarmac (India) Limited merged with ACC. ACC announces new Workplace policy for HIV/AIDS. Change of name to Associated Cement Companies Limited with effect from September 1, 2006 from ACC Limited. ACC receives Good Corporate Citizen Award 2005-06 from Bombay Chamber of Commerce and Industry. New corporate brand identity and logo adopted from October 15, 2006. ACC establishes Anti Retroviral Treatment Centre for HIV/AIDS patients at Wadi in Karnatakathe first ever such project by a private sector company in India. ACC partners with Christian Medical College for treatment of HIV/AIDS in Tamil Nadu. Sumant Moolgaokar Technical Institute completes 50 years and reopens with new curriculum. ACC commissions Wind energy farm in Tamil Nadu. Ready mixed concrete business hived off to a new subsidiary called ACC Concrete Limited. ACC Cement Technology Institute formally inaugurated at Jamul on July 7. First Sustainable Development Report released on June 5. ACC wins CNBC-TV18 India Business Leader Award in the category India Corporate Citizen of the year 2008. Received the Greentech Safety Gold and Silver Awards 2009for outstanding performance in safety management systems by Greentech Foundation.

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Conclusion
The cement industry is one of the vital industries for economic development in a country. The total utilization of cement in a year is used as an indicator of economic growth. The numbers have sparked some hope among analysts that demand for cement has picked up. The reasons for the higher demand include pre-poll spending and strong rural demand. A research report by broking firm Sharekhan.com says, With the revival of infrastructure and private house building activity, the cement industry has given an impressive performance in the last two consecutive months of 2008. But sustaining such growth is uncertain, as the real estate segment, which consumes about 55% of the total cement produced, has still not revived due to overall economic slowdown. However, we expect that the overall volume growth in FY 2010-11 will be certainly ahead of street expectations. Further, cement companies are also expected to benefit from softening coal and crude prices. ACC Limited contributed 11.8% to the sector, so it is the sector leader contributing a major part of supplies. ACC Limited is Indias foremost manufacturer of cement and concrete.

Key Findings
Domestic demand for cement has been increasing at a fast pace in India and it has surpassed the economic growth rate of the country. Cement consumption in India is forecasted to grow by over 24% in 2010-11 from 2007-08. Among the states, Maharashtra has the highest share in consumption at 12.18% in 2009-10, followed by Uttar Pradesh. In production terms, Andhra Pradesh is leading with 14.72% in 2009-10 of total production followed by Rajasthan. Housing sector is expected to remain the largest cement consumer in the coming years. Gagal, Himachal Pradesh has 4.40 mtpa capacities, highest in ACC Limited. Gross revenue, net worth, book value per share and dividends paid by ACC Limited increased during the recession period.

References
1. Business Standard, November 26, 2008. 2. Indian Concrete Journal, Cement Marketing Company of India, Vol. 68, 1994. 3. Kumar and Bar Das (1987), Cement Industry of India, APH Publishing. 4. Outlook Business, April 20-May 3, 2008, Vol. 3, No. 9.

Websites
1. www.acclimited.com 2. www.business.mapsofindia.com 3. www.researchandmarkets.com 4. www.scribed.com 5. www.tradechakra.com Reference # 21J-2011-02-03-01
Impact of Global Recession on the Indian Cement Industry (With Special Reference to ACC Limited) 49

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