The Indian cement industry is the second largest market after China.
Indian cement production capacity is expected to rise to 349.6Mt in the current fiscal
year (FY13) from 336.1Mt reached in the last fiscal. It had a total capacity of about
300 million tonnes (MT) as of financial year ended 2010-11, The figure is expected to
double to reach almost 550 million tonnes by 2020, as per estimates by the Cement
Manufacturers Association (CMA).
Key Points
SUPPLY
The demand-supply situation is high skewed with the latter being
significantly higher.
DEMAND
Housing sector acts as the principal growth driver for cement.
However, recently industrial and infrastructure sectors have also
emerged as demand drivers.
BARRIERS TO ENTRY
High capital costs and long gestation periods.
Access to limestone reserves (key input) also acts as a
significant entry barrier.
BARGAINING POWER OF SUPPLIERS
Licensing of coal and limestone reserves, supply of power from
the state grid etc are all controlled by a single entity, which is the
government. However, nowadays producers are relying more on
captive power, but the shortage of coal and volatile fuel prices
remain a concern.
BARGAINING POWER OF CUSTOMERS
Cement is a commodity business and sales volumes mostly
depend upon the distribution reach of the company.
However, things are changing and few brands have started
commanding a premium on account of better quality perception.
COMPETITION
Intense competition with players expanding reach and achieving
pan India presence.
FOR GRAPHS AND EFFECT ON VARIOUS CEMENT INDUSTRIES HAVE A LOOK HERE
http://www.theequicom.com/reports_files/India%E2%80%99s%20Cement%20Industries-Outlook.pdf
