INDUSTRY PROFILE

Cement is a key infrastructure industry. It has been decontrolled from price and distribution on 1 st March
1989 and delicensed on 25th July 1991. However, the performance of the industry and prices of cement
are monitored regularly. The constraints faced by the industry are reviewed in the infrastructure
coordination committee meetings held in the Cabinet secretariat under the Chairmanship of Secretary
(Coordination). The Cabinet Committee on infrastructure also reviews its performance.

CAPACITY AND PRODUCTION

The cement industry comprises of 125 large cement plants with an installed capacity of 148.28
million tones and more than 300 mini cement plants with and estimated capacity of 11.10 million tons per
annum. The Cement Corporation of India, which is a Central Public Sector undertaking, has 10 units.
There are 10 large cement plants owned by various State governments. The total installed capacity in the
country as a whole is 159.38 million tones. Actual cement production in 2003-04 was 116.35 million tones
as against a production of 106.90 million tons in 2002-03, registering a growth rate of 8.84%.

Keeping in view the trend of growth of the industry in previous years, a production target of 126
million tones has been fixed for the year 2004-05. During the period April-June 2004, a production
(provisional) was 31.30 tones.

The period of 2006-2007 the production is 41.35 tones. The industry has achieved a growth rate of 4.86%
during the year.

EXPORTS

Apart from meeting the entire domestic demand, the industry is also exporting cement and clinker.
The export cement during 2002-03 and 2004-05 was 5.41 million tones and in the year 2006-2007 were
6.92 million tons respectively. Export during April-May, 04 was 1.35 million tones. Major exporters were
Gujarat Ambuja cement Ltd. And L & T Ltd.
RECOMMENDATIONS ON CEMENT INDUSTRY

For the development of the cement industry ‘Working Group on cement industry’ was constituted by
the Planning Commission for the formulation of X Five Year Plan. The Working Group has projected
creation of additional capacity of 40-62 million tones mainly through expansion of existing plants. The
working group has identified following thrust areas for improving demand for cement.

1. Further push to housing development programs;

2. Promotion of concrete Highways and roads; and
3. Use of ready-mix concrete in large infrastructure projects.

Further, in order to improve global competitiveness of the Indian cement industry, the Dept. of
industrial Policy & Promotion commissioned a study on the global competitiveness of the Indian industry
through an organization of international repute, viz., KPMG Consultancy Pvt. Ltd.

The report submitted by the organization has made several recommendations for making the Indian
Cement Industry more competitive in the international market. The recommendations are under
consideration.

TECHNOLOGY CHANGE

Cement industry has made tremendous strides in technological up gradation and assimilation of
latest technology. At present ninety three percent of the total capacity in the industry is based in modern
and environment-friendly dry process technology. There is tremendous scope for waste heat recovery in
cement plants and there by reduction in emission level. One project for co-generation of power utilizing
waste heat in an Indian cement plant is being implemented with Japanese assistance under green Aid Plan.
The induction of advanced technology has helped the industry immensely to conserve energy and fuel and
to save materials substantially.

India is also production different varieties of cement like Ordinary Portland cement (OPC),
PotlandPozzolana cement (PPC), Portland Blast Furnance Slag cement (PBFS), Oil well Cement, Rapid
Hardening Portland Cement, Sulphate resisting Portland Cement, While Cement etc. Production of these
varieties of cement conforms to the BIS Specifications. It is worth mentioning that some cement plants
have set up dedicated jetties for promoting bulk transportation and export.

HISTORY OF CEMENTS

1. Invention of cement of JOSEPH ASPARIN. A Leeds builder in bricklayer.

2. 21st October, 1824 patented as Portland cement.
3. 1904- Irish and American standards of Portland cement.
4. 1912- Indian cement company limited established factory at Porbandar.
5. 1951- Indian standards.

CEMENT MANUFACTURING PROCESS

The cement manufacturing process beings when limestone, the basic raw material used to make
cement, is transported by rail to the plant from the limestone quarry.

The limestone is combined with clay, ground in a crusher and fed into the additive silos. Sand, iron
and bottom ash are then combined with the limestone and clay in a carefully controlled mixture which is
ground into a fine power in a 200hp roller mill.

1. Next, the fine powder is heated as its passes through the Pre-Header tower into a large kiln, which
is over half the length of a football field and 4.2 meters in diameter. In the kiln, the powder is
heated to 1500 degrees Celsius. This creates a new product, called clinker, which resembles pellets
about the size of marbles.
2. The clinker is combined with small amounts of gypsum and limestone and finely ground in a
finishing mill. The mill is large revolving cylinder containing 250 tons of steel balls that is driven
by a 4000 ph motor. The finished cement is ground so fine that it can pass through a sieve that will
hold water.
3. The cement manufacturing process consists of many simulations and continuous operations using
 some of the largest moving machinery in manufacturing. Over 5000 sensors and 50
4. Computers allow the entire operation to be controlled by a single operator from a central control
room.
5. DIFFERENT TYPES OF CEMENT

There are varieties of cement based on different compositions according to specific end uses
namely Ordinary Portland Cement, Portland Pozolona cement, Portland Blast furnace slag Cement, and
specialized Cement. The basic difference lies in the percentage of linker used.

ORDINARY PORTLAND CEMENT (OPC)

OPC, popularly known as grey Cement has 95% clinker and 5% of gypsum and other materials. It
accounts for 56% of the total consumption. White cement is a variation of OPC and is used for decorative
purposes like rendering of walls, flooring etc. Contains a very low proportion of oxide.

PORTLAND POZZOLANA CEMENT (OPC)

PPC has 80% clinker, 15% pozolona and 5% gypsum and accounts for 18% of the total cement
consumption. Pozzolona has siliceous and aluminous materials that do not possess cementing properties
but develop these properties in the presence of water. It is cheaply manufactured because it uses flyash /
burnt clay / coal waste as the ingredient. It has a lower heat of hydration, which helps in preventing cracks
where large volumes are being cast.

PORTLAND BLAST FURNACE SLAG CEMENT (PBSFC)

PBSFC consist of 45% clinker, 50% blast furnace slag and 5% gypsum and accounts for 10% of
the total cement consumed. It has a heat of hydration even lower than PPC and is generally used in
construction of dams and similar massive constructions.

SPECIALIZED CEMENT

Oil Well Cement:

Is made from clinker with special additives to prevent any porosity.

RAPID HARDENING PORTLAND CEMENT

It is similar to OPC, except, that it is ground much finer, so that casting, the compressible strength
increases rapidly.

WATER PROOF CEMENT

OPC, with small portion of calcium separate or non – specifiable of to impart waterproofing
properties.

CEMENT INDUSTRY IN INDIA

OVERVIEW

1. Indian cement industry date back to 1914 - first unit was set up at Proddatur with a capacity of 1000
tones.
2. Currently India is ranked second in the world with an installed capacity of 114.2 million tones.
3. Current per capita consumption – 85 kgs. Against world standard of 256 kgs.
4. Cement grade limestone in the country reported to be 89 bt. A large proportion however is
unexplainable.
5. 55 – 60% of the cost of production is government controlled.
6. Cement sales primarily through a distribution channel. Bulk sales account for < 1% of the total
cement produced.
7. Ready mix concrete a relatively nascent market it India.
CEMENT INDUSTRY: STRUCTURE

Installed capacity 114.2 mm tons per annum (mnta) Production around 87.8mm tons.

Major Cement Plants Mini Cement Plants

Companies : 59 Nearly 300 plants

Plant : 116 Located in Gujarat, Rajasthan, MP,AP

Typical installed capacity per plant : Typical capacity < 200 tpd installed capacity
Above 1.5 mnta around gmm. tones

Total installed capacity : 105 mntpa Production around : 6.2 mm tones

Production 98 – 99 : 81.6 mnta Excise : Rs 250 / tone

Excise : Rs. 408 tone Mini plans were meant to tap scattered limestone
reserves.

All India reach through multiple plants However most set up in A.P.

Export to Bangladesh, Nepal, Sri Lanka, Most use vertical Kiln technology
UAE and Mauritius

Strong marketing network, tie –ups with Production cost / tone – Rs. 1,000 to 1,400
customers, contractors

Wide spread distribution network Infrastructural facilities not to the best

Sales primarily through the dealer

channel

However, cement consumption per capita in our country at about 99 – kg / capita is one of the Lowest. The
world average is about 267 kg / capita. While that of China is 450 kg / capita. Similarly in Japan it s 631
kg / capita while in France it is 447 kg / capita.
PRODUCTION
1. Excess capacity exists, though some units are sick.
2. 1999 – 2000 production expended to reach 95 mm tones.
3. Exports around 2 mm tons.
4. Cement manufactured through the wet, semi – dry or process.
5. Dry process accounts for 90% of the installed capacity.
6. Wet process popular in the past – better control over mixing of raw material.
7. Dry process replacing the wet process as it is space saving energy efficient and economical.
PRICE

1. Price Fluctuations
2. Essentially determined by demand
3. Prices also vary with grades
AVERAGE MAXIMUM RETAIL PRICE

Delhi Calcutta Chennai Bangalore

Aug 2010 137 146 175 170

Sept 2011 137 139 175 161

Oct 2012 136 125 175 161

Nov 2013 136 125 172 140

Jan2014 158 170 160 156

Jan 2015 228 220 240 236

Jan 2016 280 282 300 290

Jan 2017 320 360 380 395

Jan 2018 350 395 420 435

 Over 370 companies in the organized sector

 However, industry dominated by 20 companies who account for ever 70% of the market.
Manufacturing Process

Cement is manufactured by using the wet, semi dry and processes. The wet process was popular
in the past as it provided better control over materials mixing process. However, the dry process has now
gained popularity globally because it is space saving, energy efficient and economical.

CAPACITY DISTRIBUTION AND CONSUMPTION NORMS

Process Capacity % of total Power Fuel Kcal/Kg

(TPD) Kwh/MT

Dry 282486 93 120-125 750-800

Semi-Dry 13910 5 115-120 900-1000

Wet 5260 2 110-115 1300-1600

Total 301656 100

Geographical Dispersion

Limestone is the most important material input into cement manufacture. The plant locations are
primarily determined based on the proximity of ‘cement-grade’ limestone deposits. These limestone
deposits have been classified as “cluster”, some of which overlap two states.
 Cluster Wise Installed Capacity (Large Plants)

Cluster State No of Plants Capacity (mm

tap)

Satna MP 8 12.18

Bilaspur MP 9 11.16

Gulabarga Karnataka/AP 7 7.82

Chandrapur Maharashtra/AP 7 7.49

Chanderia Rajasthan/MP 7 7.45

Nalgonda AP 8 5.85

Yerraguntla AP 4 5.40

Sub Total 50 57.37 (52.5%)

Non Cluster 63 52.75 (47.5%)

Total 120 110.10

Production Capacity

Cement plants with a capacity of up to 0.3 mm tap are classified as mini cement plants and are eligible for
confessional excise duty. Though the minimum economic size of a cement plant is 1mm tap, there are over
300 white and mini cement plants in India a collective capacity of only 9mn tap (8 per cent of the total
domestic installed capacity). Most of the new cement plants being set up have a capacity of 1 mm tap or
more. The average cost of setting up a mini cement plant is about Rs.1400 per ton, while for a large cement
plant it is about Rs. 3500 per ton.
Ready Mix Concrete: Industry

1. RMC-ready to use concrete, a blend of cement, sand and aggregate and water mixed in convenient
proportion.
2. Launched first in Mumbai a few years ago is gaining in other metros in India.
3. Typical cost of a plant – Rs. 7.8 crs (US $ 1.6 to 1.8 mm) to set up a 100 cubic meter (cum) plant
with 4-5 transit mixers. Gestation period is around 3-4 months.
4. Currently RMC is at a very nascent stage, accounts for 0.5% of the demand.
Company No. of plants Capacity (cu m/hr)

ACC 13 712

RMC Ready mix 4 440

L&T 5 330

Fletcher Challenge 3 320

HCC 2 240

Unitech 2 150

Jog Construction 1 120

Starmmac 1 120

Madras Cement 1 56

Birla Cement 1 30

Three units of ACC to be commissioned

Companies planning to enter this market.

 Priyadarshini Cements in Hyderabad.

 Saurashtra Cements in Navi Mumbai.
 Pioneer a world leader entering the market.
 Capacity additions expected in the next few years
 ACC plans to treble its capacities.
 Grasim is setting up four more plants.
 L & T plans to add another eight more

Concerns

1. Cement industry going through a consolidation phase in the last few years.

Transportation

1. Transportation costs high-freight accounts for 17% of the selling & distribution cost.

2. Road preferred mode for transportation for distances less than 250 kms. However, industry
is heavily dependent on roads are the railway infrastructure is not adequate shortage of
wagons,

Capacity additions

1. Acquisitions have been the mainstay of the business.

2. Regional imbalance resulting in cross regional movement-limestone availability in Pockets has led
to uneven capacity additions
3. Capacity additions have slowed down.
Industry inputs

1. Highly capital intensive industry.

2. Nearly 55-60% of the inputs controlled by the government.
3. Facing problems due to power shortage
4. Coal availability and quality affecting production.
5. Mini plants realization of the revenue lower large plants, survival difficult.
Future out look

Most economic forecasts for the Indian cement industry indicate a favorable outlook for the Indian

cement sector. With no significant addition expected, the supply-demand position is expected to be better

balanced. Retail housing segment is expected to show significant demand growth over the next two year.

With the industrial production showing an upward trend, housing construction showing a sign of revival

and the government gearing up to spend more on infrastructure, the sector looks favorably poised. The

overall demand growth is expected to about 7-8 per cent. Withdrawal of sales tax benefits for the new units

will give an added push to consolidation via acquisitions. Consolidation will be more regional, with

companies seeking to gain dominance in their chosen regions.

India’s per capital cement consumption is less than 100 kg compared to the world average of 250

kg. Currently, the total cement demand in India is lower than the total capacity. The Cement Manufacturers

Association of India projects a demand of 101 mm tap in 2000-01 as against 93 mm tap last year. Against

this, the total installed capacity is 109mn tap. However, seven million tons of Cement Corporation of India

and two million tons of UP Cement are lying ideal. An 8-10 per cent growth is projected in the coming

years, which will take the demand to 200 million tons in 10 years.

A focus on more value-added products like Ready Mix Concrete (RMC) is emerging. RMC is a

compound in which sand, gravel additives and water are added to cement and sold as readymade concrete.

Cement produces benefit from RMC production as it’s involves low capital expenditure. The cost of setting

up a 100 metric cube per hour plant is in the range of Rs. 70 to 90mn. While the central government has
declared a zero excise duty on RMC, the Maharashtra state government has made it mandatory to use RMC

in construction of all the flyovers. With these measures, the total RMC consumption is expected to touch

6 per cent of total cement capacity in next four year. To tap this exiting potential, leading cement

manufactures in the country like L & T and ACC have already announced their plans to expand their RMC

capacities in coming years.

Next cost cutting measure appears to be transporting bulk cement. This method of cement

transpiration is preferred by cement manufactures as it results in lower packaging costs, hence lower

demurrage costs. At present, cement is predominantly sold in 50 kg bags. But the pattern appears to be

changing as cement manufacturers have increasingly started selling cement in bulk, especially in cities

where the construction activity is at its peak. Most of the cement sold in bulk is currently used by the ready

mix concrete plants. Cement consumed in bulk could help save about Rs. 110 per ton (Rs. 5.50 per 50-kg

bag) compared to the use of conventional bags. Around the world, almost 80 per cent of the cement

transportation is carried out in bulk form. But in India, only about 1 per cent of total cement is transported

in this form. This is because of the attendant problems like inadequate infrastructure in the form of port

facilities and lack of timely availability of wagons from the railways. Cement packaging costs accounts for

nearly 4 per cent of total costs for a cement manufacturer.

The industry will see more action on the mergers and acquisitions front. So far, the market has

seen only two major international players. Large and Cements François, in action. But others, such as

Cement, Blue Circle and the big daddy, Holders Bank are waiting in the wings. These global players are

looking towards getting a foothold in the Indian market, offering a higher acquisition price than the

international standards. Within the next three to five years the industry is expected to be dominated by five

six big players and less than ten companies in all, both Indian and foreign.
DIrectorS Shri G. Maruthi Rao

Shri Gouri Shankar Rathi

Shri S.Y. Rajagopalan

Shri L. Madhusudhan Rao

Shri G. Bhaskara Rao

Shri L. Sridhar

Shri P.M. Suresh (Nominee of IDBI)

Shri V. Nagi Reddy, IAS (Nominee of APIDC)

ManaGInG DIrector Shri Mayank Kejriwal

Dy. Chief Operating Officer Shri Baskar Ramamurthy

Sr. GEneraL MANAGER – FINANCE Shri G.D. Saini

& COMPANY SEcretarY

AUDItorS M/s. K.R. Bapuji & Co.

Hyderabad

SOLIcitorS Khaitan & Co.

Awards & Recognition
Sustainability
 Lanco Foundation, the CSR arm of LITL bagged prestigious - the 5th Construction Industry  Pro
Development Council (CIDC) Vishwakarma Award 2013 in the category of “Social Development
& Impact”  His
 Lanco Foundation bags the Golden Peacock award for CSR
 Lanco Hills Technology Park Pvt Ltd won the Second Prize in the category of ' Gardens Maintained
by Private Industries in Gated Community' and Podium Garden by the Department of Horticulture,
Government of Andhra Pradesh
 Lanco Kondapalli Power Limited wins Energy Efficient Unit award from CII. For excellence in
energy management
 Lanco Babandh Power Limited receives Greentech Gold Award for its contribution in CSR
 Lanco Vidarbha Thermal Power Limited receives Greentech Gold Award for its contribution in
CSR
 Lanco Foundation bags the Blue Dart Global CSR Excellence & Leadership Award for “Best
Corporate Social Responsibility Practices”

Health, Safety & Environment

 Lanco Amarkantak Power Limited bagged the Silver Award for its Outstanding achievement in
Safety Management by Greentech Foundation
 Lanco Kondapalli Power Limited won the prestigious Golden Peacock Award for Environment
Management 2012
 Lanco Kondapalli Power Limited received the ‘Greentech Safety Award 2012’ for excellence in
safety management. ·
 Lanco Tanjore Power Company receives Safety Star award from NSC, Tamil Nadu Chapter, for
commitment and efforts in promoting HSE
 LITL EPC bagged Sarva Shreshta Suraksha Puraskar, for its outstanding safety performance while
executing construction works at Lanco Amarkantak Unit 3 & 4

Corporate Communications
 Lanco World, in-house magazine of Lanco wins the Prestigious ‘In-House Communication
Excellence (ICE)’ Award 2012 for the Best Cover Design (December - January ' 12 issue) amongst
675 National and International entries
 Designomics Awards for branded environment design, 2011

Industry Leadership
 Lanco Solar Energy Pvt Ltd receives the Most Innovative Product Award
2012 from IESA Technovation. The award was won for an innovative plug-
&-play solar PV product design to cater to the off-grid solar solutions in
urban and rural hinterlands
 Lanco Hills receives CNBC Awaaz Real estate Award in the Luxury
segment for the year 2012
 Construction World has adjudged LANCO as one of the Most Admired
(Construction and engineering) Companies in India 'Sep 2011
 EPC-World Awards 2010 for 'Outstanding Contribution in the Power and
Energy Sector (Generation)'