Global Country Study Report

On
Cement Industry of Indonesia
W. R.T
Business Opportunities For Gujarat And Orissa
Submitted To
778
Som-Lalit Institute Of Business Management Studies
Under The Guidance Of
Reshmi baneerji
(Designation)
In Partial Fulfillment Of The Requirement Of The Award Of The Degree
Of
Master Of Business Administration (Mba)
Offered By
Gujarat Technological University
Ahmedabad
Prepared By:
Jainam shah

157780592091

Jay rana

157780592082

Tapan srivastava

157780592110

Jay samani

157780592034

Ashutosh Patel

157780592005

Nitesh mishra

157780592059
Student Of

Mba (Semester Iii)2016

1 | Page

DECLARATION

We, Following Students, Hereby Declare That The Global Country Report
Titled cement Industry Of indonesia W. R.T Business Opportunities For
Gujarat And orissa Is A Result Of Our Own Work And Our Indebtedness To
Other Work Publications, References, If Any, Have Been Duly Acknowledged.
If We Are Found Guilty Of Copying Any Other Report Or Published Information
And Showing As Our Original Work, Or Plagiarism Limit, I Understand That We
Shall Be Liable And Punishable By GTU, Which May Include Fail In
Examination, Repeat Study & Re-Submission Of The Report Or Any Other
Punishment That GTU May Decide.

2 | Page

Preface
We are happy to bring out this report including our view on organization
study. Indonesia is a relatively open state-oriented and new industrialized
market economy. This introduced many new concepts of management.These
projects consist of brief discussion about the elements that help to make up
and grow the indonesuian cement industry. This is project report is the part
of our syllabus and the information include in this project report is taken from
the books, internet web site and guidelines of professional people. We
conform that this project report is true.

3 | Page

ACKNOWLEDGMENT
We have the pleasure to present here with the study work by way of A GLOBAL COUNTRY
STUDY REPORT. Working on this report has been a great learning experience. Numerous
individuals helped us a lot with all sort of queries that we had and without the help of them, we
would never be able to complete this global country study report. We would like to use this
opportunity to thank them.
We would like to acknowledge Vice chancellor of Gujarat Technological University Mr.
RajulGajjar for giving us an opportunity to get exposure and knowledge of International market
and global business through this Global Country Study Report. We are also heartily thankful to
GCSR Co-coordinator Prof. RESHMI BANEERJI for her support and giving seminar to
improve knowledge regarding GCSR.
We would like to acknowledge and extend our heartly gratitude to our respective faculty
Prof.LUCKY MISHRA for providing her valuable input and giving us the specific direction for
our study and she has stand like pillars for concrete global country study report.
In last, we are very thankful to all those people who directly or indirectly contributed to this
GCSR report.

4 | Page

5 | Page

a.) About selected country

Overview:Formal Name: Indonesia

Term for Citizens: Indonesian(s)
Capital of Indonesia: Jakarta
Date of Independence: Proclaimed August 17, 1945, from the Netherlands.
The Hague recognized Indonesian sovereignty on December27, 1949.
Fiscal Year: April 1st- March 31st.
Area: 7, 41,096 (in sq mi)
Population: 24, 82, 16,193
Population Growth Rate: 1.2%
Economic groups: There are 300 different ethnic groups have been identified in Indonesia.
Religions: According to 2011

Muslim: 87.2%
Christian: 2.9 %
Hindu: 1.7%
Buddhist: 0.7 %

6 | Page

Geography of Indonesia

Indonesia is the largest archipelago in the world. It consists of five major islands and about 30
smaller groups. There are total number of 17,508 islands of which about 6000 are inhabited. The
equator and the archipelago is on the crossroads between two oceans, the Pacific and the Indian
Ocean, and bridges two continents, Asia and Australia.
The territory Indonesia stretches from 608' N latitude to 1115' S latitude and from 9445' E to
14105' E longitude. Total Area of republic of Indonesia is 1,919,440 sq km (Land Area:
1,826,440 sq km; Water Area: 93,000 sq km).
The five main islands are: Sumatra (473,606 sq. km); the most fertile and densely populated
islands, Java/Madura (132,107 sq. km); Kalimantan, which comprises two-thirds of the island of
Borneo (539,460 sq km); Sulawesi (189,216 sq km); and Irian Jaya (421,981 sq km), which is
part of the world's second largest island, New Guinea. Indonesia's other islands are smaller in
size.
The republic of indonesia is predominantly mountainous with some 400 volcanoes, of which
about 100 are active. The highest mountain is the perpetually snow-capped Mandala Top (15,300
feet) in the Jaya Wijaya mountain range of Irian Jaya. Many rivers flow throughout the country.
They serve as useful transportation routes on certain islands, for example, the Musi, Batanghari,
Indragiri and Kampar rivers in Sumatra; the Kapuas, Barito, Mahakam and Rejang rivers in
Kalimantan; and the Memberamo and Digul rivers in Irian Jaya.

7 | Page

Languages of Indonesia

More than 700 living languages are spoken in Indonesia.Most belong to the Austronesian
language family, with a few Papuan languages also spoken. The official language
is Indonesian (locally known as Bahasa Indonesia), a variant of Malay,which was used in the
archipelago, borrowing heavily from local languages of Indonesia such as Javanese,
Sundanese and Minangkabau. The Indonesian language is primarily used in commerce,
administration, education and the media, but most Indonesians speak other languages, such
as Javanese, as their first language.Most books printed in Indonesia are written in the Indonesian
language.
The republic of Indonesia only recognises a single official language and the other languages are
not recognised either at the national level or regional level, thus making Javanese the most
extremely widely spoken language without official status, and Sundanese the second in the list
(excluding Chinese dialects).

Currency
The Indonesian Rupiah is the currency of Indonesia. The currency rankings show that the most popular
Indonesia Rupiah exchange rate is the IDR to AUD rate. The currency code for Rupiahs is IDR, and
the currency symbol is Rp.

Currency Facts
IDR Stats
Name: Indonesian Rupiah
Symbol: Rp
Minor Unit: 1/100 = Sen (obsolete)
Central Bank Rate: 0.00
Top IDR Conversion: IDR/AUD
8 | Page

Top IDR Chart: IDR/AUD Chart

Exchange Rates
For many years, Indonesia has had an exceedingly complex exchange system, with a large
number of buying and selling rates, a wide spread between rates, and various mixtures of free
market elements with fixed rates. Another aspects of complexity of the Indonesian exchange rate
structure has been the frequent changes-at least one in each year since 1955-and the practice
giving different names to basically the same exchange rate structure.
Indonesian Rupiah Rates table
Top 10 - Sep 15, 2016

Indonesian Rupiah
US Dollar
Euro
British Pound
Indian Rupee
Australian Dollar
Canadian Dollar
Singapore Dollar
Swiss Franc
Malaysian Ringgit
Japanese Yen

1.00 IDR
0.000076
0.000067
0.000057
0.005078
0.000101
0.000100
0.000104
0.000074
0.000314
0.007776

Inv. 1.00 IDR

13176.596066
14824.280599
17392.070198
196.944204
9859.535992
9984.279989
9654.855787
13549.424779
3185.054503
128.595277

Religion in Indonesia

Indonesia is a secular democratic country that has a Muslim-majority population. The Indonesian
constitution guarantees all people in Indonesia the freedom of worship, each according to his or
her own religion or belief. It also stipulates that the state shall be based upon the belief in "the
one and only God" (a condition which also forms the first principle of the Pancasila, the
Indonesian state philosophy introduced by Soekarno in 1945).

9 | Page

At first sight these two conditions seem to be somewhat contradictory but Soekarno, Indonesia's
first president, resolved this issue by hypothesizing that every religion (including 'soft
polytheistic' Hinduism) essentially has one highest Supreme Being to which one subjects
oneself.
Although Indonesia is not an Islamic state, Islamic principles do influence political decision
making. Moreover, certain hardcore Muslim groups have been able to influence political and
judicial decision making through (the threat of) violence.
One peculiarity of the Indonesian government's stance on (freedom of) religion is that it
recognizes six official religions only (namely Islam, Protestantism, Catholicism, Hinduism,
Buddhism and Confucianism). Every Indonesian is required to embrace one of these religions as
it is mandatory personal data that is mentioned in official documents such as passports and other
identification cards.
Atheism is not an option and constitutes a socially unacceptable ideology in Indonesia (however
there is no law that bans atheism). In recent years it has happened that Indonesians who
published atheist worldviews on social networks were threatened by their local community and
arrested by the police on charges of blasphemy; charges that can lead to imprisonment.

Composition of Indonesia's Six Official Religions

Religion

Total Population (in %)

Share Absolute (in Millions)

Muslim

87.2

207.2

Protestant

6.9

16.5

Catholic

2.9

6.9

Hindu

1.7

4.0

Buddhist

0.7

1.7

Confucian

0.05

0.1

Source: Statistics Indonesia (Badan Pusat Statistik), Population Census 2010

Indonesia National Flag

10 | P a g e

The Indonesian national flag is called "Sang SakaMerahPutih." As provided for in Article 35 of
the 1945 Constitution, the flag is made up of two colors, red on top of white. Its width is twothirds of its length, or two meters by three meters. It is hoisted in front of the presidential palace,
of government buildings and Indonesian missions abroad.
The first flag was courageously flown amidst Japanese occupation forces on the day Indonesia's
independence
was
proclaimed. Since then it
has been hoisted at
Independence Day commemorations in front of the presidential
palace in the capital city of
Jakarta. This historical flag, or
"benderapusaka,"
was
flown for the last time on
August 17, 1968. Since
then it has been preserved
and replaced by a replica
woven of pure Indonesian
silk.

INDONESIAN FLAG
NATIONAL ANTHEM

The national anthem is "Indonesia Raya," which means Great Indonesia. The song was
composed in 1928. The colonial policy of the day was "divide and rule." It was a policy that
deliberately aggravated language, ethnic, cultural and religious differences amongst the people.
The birth of Indonesia Raya marked the beginning of Indonesian nationalist movements. Its
composer, Wage Rudolf Supratman, at the second All Indonesian Youth Congress on October 28,
1928 in Batavia, now Jakarta, first introduced the song. It was the moment when Indonesian
youth of different ethnic, language, religious and cultural backgrounds resolutely pledged
allegiance to:
One native land, Indonesia;
One nation, the Indonesian nation;
One unifying language, the Indonesian language.
Soon the national song, which called for the unity of Indonesia, became popular. It was echoed at
Indonesian political rallies, where people stood in solemn observance. The song seriously
aroused national consciousness among the people throughout the archipelago. Archipelago is a
large number of scattered islands throughout Indonesia.

Politics of Indonesia
11 | P a g e

The Politics of Indonesia take place in a framework of a presidential representative

democratic republic, whereby the President of Indonesia is both head of state and head of
government, and of a multi-party system. Executive power is exercised by the government.
Legislative power is vested in both the government and the two People's Representative
Councils. The judiciary is independent of the executive and the legislature.
The 1945 constitution provided for a limited separation of executive, legislative and
judicial power. The governmental system has been described as "presidential with parliamentary
characteristics.Following the Indonesian riots of May 1998 and the resignation of President
Suharto, several political reforms were set in motion via amendments to the Constitution of
Indonesia, which resulted in changes to all branches of government
Legal aspect of Indonesia
The Indonesian legal system is based on Roman-Dutch law, modified by custom and Islamic law.
Sources of law are Islamic law, statutory legislation. Judiciary System: General courts include
District Courts of First Instance, High Courts of Appeal, and the Supreme Court
(MahkamahAgung).

Development in the country

Indonesia Economic Outlook
Indonesias economy picked up speed in the second quarter, expanding at the fastest pace since
Q4 2013. The result was driven by robust government spending, as President Joko Widodos
effort to kick the economy has lost some momentum: the manufacturing PMI fell into
contractionary territory and the trade surplus declined in July. In the political arena, Widodo
revamped his cabinet at the end of July and brought in Sri Mulyani Indrawati as finance minister.
Following the reshuffle, the government presented a draft budget for 2017 to Parliament on 16
August. The budget envisions a fiscal deficit of 2.41% of GDP after an expected of 2.50% of
GDP this year and higher spending on infrastructure project as the government continues to
support growth.
Indonesian Economy Details
DETAILS

2011

2012

2013

2014

2015

Population (million)

241

244

248

251

255

GDP per capita (USD)

3,708

3,764

3,685

3,541

3,379

GDP (USD bn)

894

920

914

890

862

12 | P a g e

Economic Growth (GDP, 6.2

annual variation in %)

6.0

5.6

5.0

4.8

Consumption
variation in %)

(annual

5.1

5.5

5.4

5.2

5.0

Investment
variation in %)

(annual

8.9

9.1

5.0

4.6

5.1

Manufacturing
variation in %)

(annual

6.3

5.6

4.4

4.6

4.2

Retail Sales
variation in %)

(annual

9.0

14.5

12.9

14.5

13.3

Unemployment Rate

7.5

6.1

6.2

5.9

6.2

Fiscal Balance (% of
GDP)

-1.1

-1.8

-2.2

-2.1

-1.9

Public Debt (% of GDP)

21.3

21.4

22.0

24.3

27.5

Money (annual variation

in %)

16.4

15.0

12.8

11.9

8.9

Inflation
Rate
(CPI,
annual variation in %,
eop)

3.8

3.7

8.1

8.4

3.4

Inflation
Rate
(CPI,
annual variation in %)

5.3

4.0

6.4

6.4

6.4

Inflation (WPI, annual

variation in %)

7.5

5.1

6.0

9.3

4.4

Policy Interest Rate (%)

6.00

5.75

7.50

7.75

7.50

Stock Market
variation in %)

3.2

12.9

-1.0

22.3

-12.1

Exchange Rate (vs USD)

9,068

9,638

12,17
0

12,38
5

13,788

Exchange Rate (vs USD,

aop)

8,763

9,362

10,44
9

11,86
6

13,392

Current Account (% of
GDP)

0.2

-2.7

-3.2

-3.1

-2.1

(annual

13 | P a g e

Current Account Balance

(USD bn)

1.7

-24.4

-29.1

-27.5

-17.8

Trade Balance
billion)

26.1

-1.7

-4.1

-2.2

7.6

Exports (USD billion)

203

190

183

176

150

Imports (USD billion)

177

192

187

178

143

Exports (annual variation

in %)

29.0

-6.6

-3.9

-3.6

-14.6

Imports (annual variation

in %)

30.8

8.0

-2.6

-4.5

-19.9

International
(USD)

110

113

99.4

112

106

25.2

27.4

29.1

33.0

36.0

External
GDP)

Debt

(USD

Reserves
(%

of

Overview of Industries, Trade & Commerce in Indonesia

LIST OF INDUSTRIES IN INDONESIA

Sr.No

Subsector

Output 2006 (Rp

trillion)

Increase since
2003 (%)

Agriculture, etc.
1
2
3
4
5

Food crops
Estate crops
Livestock, etc.
Forestry
Fisheries

1 Oil and gas

2 Non oil and gas
3 Quarrying

223
63
51
30
73
Mining
188
131
36

35
34
27
63
60
97
145
87

Manufacturing
Oil and gas manufacturing
14 | P a g e

1
2
3

Petroleum refining
Natural gas
Quarrying

120
54
213

139
94
35

Non oil and gas

1
2
3
4
5
6
7
8
9

Food,
tobacco,
beverages
Textiles, footwear, etc.
Wood, wood products
Paper, printing
Fertilisers, chemicals,
rubber
Cement, non-metallic
quarry
Iron, steel, basic metals
Transport equipment,
machinery
Other manufacturing

213

38

91
44
40

34
48
43

96

68

29

50

20

52

222

87

67

Electricity, gas, water

1 Electricity
2 Gas
3 Water supply

21
5
4

51
119
43

Construction
1 Construction, building

249

98

Trade, hotels, restaurants

Trade, wholesale and
387
retail
2 Hotels
17
3 Restaurants
92
1

48
52
45

Transport, communication
Transport
1
2
3
4
5

Road
Sea
Rivers, ferries
Air transport
Other

1 Communications

81
16
5
15
2
Communication
88

106
43
54
96
49
123

15 | P a g e

Finance, real estate, business

1
2
3
4
5

Banking
Non-bank finance
Associated services
Real estate
Business services

98
27
2
98
47

31
87
82
72
71

Other services
Public sector'
1 Government, defence

104

63

Private sector
Social
services,
60
community services
2 Amusement, recreation 10
Personal,
household
3
100
services

92

46
69

Source: Indonesian Statistics Bureau (Biro PusatStatistik), annual production data.

Indonesia Gross Domestic Product (GDP) Statistics:

Year

Average

Annual

1998-1999

Growth (%)
-6.65

2000-2004

4.60

2005-2009

5.62

2010-2014

5.80

GDP

Contribution of Different Sectors in Indonesia GDPs

Agriculture

1965

1980

1996

2010

2015

51

24

16

15

14.2
16 | P a g e

Industry

13

42

43

47

45.5

Services

36

34

41

38

40.3

EXPORT-IMPORT STATISTICS OF INDONESIA

Export and Import of Malaysia: (in US Million)
Year
2010
2011
2012
2013
2014

Export

Import

157,779
203,497

135,663
177,436

190,032
182,552
176,036

191,691
186,629
178,179

Top Indonesia exports from the world:Indonesia is the 25th largest export economy in the world and the 79th most complex economy
according to the Economic Complexity Index (ECI). In 2014, Indonesia exported $197B and
imported $178B, resulting in a positive trade balance of $19.4B. In 2014 the GDP of Indonesia
was $888B and its GDP per capita was $10.5k.
The top exports of Indonesia are Coal Briquettes ($20B), Palm Oil($17.5B), Petroleum
Gas ($17B), Crude Petroleum ($9.7B) and Rubber($5.42B), using the 1992 revision of the HS
(Harmonized System) classification. Its top imports are Refined Petroleum ($26B), Crude
Petroleum ($12.1B), Petroleum Gas ($4.04B), Vehicle Parts ($3.01B) and Broadcasting
Equipment ($2.78B).
The top export destinations of Indonesia are Japan ($24.9B), China($20.8B), the United
States ($18.8B), Singapore ($18.7B)
and India($13.6B).
The
top
import
origins
are China ($32.5B), Singapore ($25.6B),Japan ($15.4B), South
Korea ($11.6B)
and Malaysia ($10.6B).
Indonesia borders Malaysia, Timor-Leste and Papua New Guinea by land and Christmas
Island, India, the Philippines, Singapore, Thailand, Vietnam, Australia and Palau by sea.

17 | P a g e

Top Indonesia imports from the world:1.)

2.)
3.)
4.)
5.)
6.)
7.)
8.)
9.)

Oil: US$ billion (17.6% of total imports)

Machinery: $22.4 billion (15.7)
Electronic equipment: $15.5 billion (10.9)
Plastics: $6.8 billion (4.8)
Iron and steel: $6.3 billion (4.4%)
Organic chemicals: $5.5 billion (4%)
Vehicles: $5.3 billion (3.7%)
Iron and steel products: $3.3 billion (2.6%)
Cearls: $3.2 billion (2.2%)

MAJOR PLAYERS OF EACH INDUSTRY WITH THEIR

MARKET SHARE
Cement Industry:

Semen Gresik
Indocement Tunggal Prakarsa
Holcim Indonesia

Indonesia's Oil Production:

Bumi Resources
PT LapindoBrantas
MedcoEnergi
Pertamina
Perusahaan Gas Negara
Thiess Contractors Indonesia

Steel company:

Essar Steel
GunawanDianjaya Steel
Gunawan Steel Group
Krakatau Steel
Krakatau Wajatama

18 | P a g e

Consumer goods

Djarum, tobacco
Dragon Computer & Communication, computer hardware
GudangGaram, tobacco
Megatech, automotive
Sampoerna, tobacco
Unilever Indonesia, food, personal care products

Plastic Manufacturing company:

PT. Randugarut Plastic Indonesia

Duta Plastic Industry

PT. Bio Sentra Indonesia

XinBao Machinery Indonesia

PT KayuAsri Indonesia

SUMBER PLASTIK PD

Indonesia Pasifik

Financials

Bank Central Asia, bank

Bank Danamon, bank
Bank Mandiri, bank
Bank Negara Indonesia, bank
Bank Rakyat Indonesia, bank
PaninSekuritas, financial services
Pegadaian, state-owned financial services
Phillip Securities Indonesia, PT, financial services

Health care

Kimia Farma, state-owned pharma

Telecommunications
19 | P a g e

Indosat, telecommunications network

Telekomunikasi Indonesia, telecommunication services
Telkomsel, telecommunication services

List of Industries of India

Agriculture

Agriculture, Forestry and Fishing

Crops
Livestock
Industrial sector

Mining and quarrying

Manufacturing
Food products, Beverages and Tobacco
Textiles, Apparel and leather products
Metal products
IT industry
Machinery and equipment
Other manufacturing goods
20 | P a g e

 Electricity, Gas, Water supply & other utility services

Construction

Service Sector

Trade & repairs

Hotels & restaurants
Transport, storage, communication & services related to broadcasting
Railways
Road transport
Water transport
Air transport
Financial real estate & professional services
Public administration & defense

21 | P a g e

CONTRIBUTION OF DIFFERENT SECTOR IN GDP OF INDIA

(Rupees in Crore)
Sector
Agriculture

2010-11
& 18.21

allied services
Agriculture
15.78
Industry
27.16
Mining
& 2.83

2011-12
17.86

2012-13
17.52

2013-14
18.20

15.50
27.22
2.65

15.10
26.21
2.37

15.79
24.77
2.13

Quarrying
Manufacturing
14.80
14.73
14.07
12.89
Services
54.64
54.91
56.27
57.03
. Contribution of Agriculture, Industry and service sector in Indian GDP
(Source: statisticstimes.com/economy/sectorwise-gdp-contribution-of-india.php)

. IMPORT-EXPORT STATISTICS OF INDIA

Export and Import of India: (in US $ Million)
Year
2013
2014

Export
300400.57
314405.29

Import
490736.64
450197.63
22 | P a g e

2015
2016

310338.47
262290.11
. Export and Import of India during year 2013-2016

447964.38
381006.34

LIST OF MAJOR PLAYERS IN EACH INDUSTRY IN

INDIA
Agriculture

Agriculture is the most integral part of Indian economy, and at present the country is among the
top farm producers in the world. Agriculture is a source of employment for over 50 percent of
the population. The sector contributes around 13.9 percent to the GDP. The overall production
has seen a steep rise in the past six decades. According to official estimate, the total production
during 2014-15 crop year is 251.12 million tonnes. The major agricultural products cultivated in
India are wheat, rice, potatoes, cotton, oil seeds, jute, sugarcane and tea.
List of Top 10 Agricultural Companies
1. DuPont India
2. Rallies India Limited
3. Nuziveedu Seeds Limited
4. Lemken India Agro Equipments Private Limited
5. Advanta Limited
6. Monsanto India
7. Poabs Organic Estates
8. National Agro Industry
9. Godrej Agrovet Limited
10. Rasi Seeds

23 | P a g e

Manufacturing

Top 10 Manufacturing companies are:

1. Aditya Birla GroupCorporate
2. Larsen &ToubroCorporate
3. Bombay Dyeing
4. Hindustan Lever NetworkCorporate
5. Haldia Petrochemicals Ltd.Corporate Office
6. Apollo TyresCorporate
7. Jindal SteelCorporate
8. Videocon GroupCorporate Office
9. RanbaxyCorporate
10. Asian PaintsCorporate

FMCG

The top ten India FMCG brands are:

1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestl India
4. GCMMF (Amul)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries

Textile

The top ten India textile brands are:

24 | P a g e

The textile and apparel industry can be broadly divided into two segments - yarn and fibre, and
processed fabrics and apparel. India accounts for ~14 per cent of the world's production of textile
fibres and yarns (largest producer of jute, second largest producer of silk and cotton, and third
largest in cellulosic fibre). India has the highest loom capacity (including hand looms) with 63
per cent of the world's market share.

The Victoria Mills Ltd

Digjam
Richa Industries Ltd (RIL)
Alps Industries
Mandhana
Sutlej Textiles and Industries Ltd
Bombay Rayon Fashions Ltd (BRFL)
Bombay Dyeing
Alok Industries Ltd
Vardhman

IT Sector
India is the world's largest sourcing destination, accounting for approximately 55 per cent of the
US$ 146 billion market. The country's cost competitiveness in providing Information
Technology (IT) services, which is approximately 3-4 times cheaper than the US, continues to be
its Unique Selling Proposition (USP) in the global sourcing market.

Infotech
Rolta
Mindtree
Mphasis
NIIT Technologies
Hero Mindmine
IGATE
CMC Ltd
Wipro Ltd
25 | P a g e

Tech Mahindra

Construction

Thermax Group
The Jaypee Group
GMR Group.
LancoInfratech Ltd
NCC Limited
Punj Lloyd
L&T Ltd
Mahindra Construction Equipment
Hyundai Construction Equipment India Pvt Ltd (HCEIPL)
Action Construction Equipment Ltd (ACE)

INDIAN CEMENT INDUSTRY

The cement industry in India dates back to 1914, with the setting up of its first unit in Porbunder.
It is considered as one of the core infrastructure industries. It is the second largest producer of
cement in the world just behind China, with industry capacity of over 200 million tonnes. It is
consider to be a core sector accounting for approximately 1.3% of GDP and employing over
0.14 million people. Also the industry is a significant contributor to the revenue collected by
both the central and state governments through excise and sales taxes. The Indian cement
industry is extremely energy intensive and is the third largest user of coal in the country. It is
modern and uses latest technology, which is among the best in the world. Only a small segment
of industry is using old technology based on wet and semi-dry process.
Cement is an essential component of infrastructure development and most important input of
construction industry, particularly in the governments infrastructure and housing programs,
26 | P a g e

which are necessary for the countrys socioeconomic growth and development. Cement ranks
second in volume among the industrial products manufactured in the world. And it is the most
widely used man-made product and second only to water as worlds most heavily consumed
substance.
Cement is poly-phased inorganic compound of complex nature formed by burning of calcareous
and argillaceous raw materials as a binding material.
Cement is used as a binding material in various types of civil constructions. Earlier, clay or lime
was used for binding materials together. Its properties include- Low cost, high performance,
Binder with almost any hard material, Building block, Gain strength progressively with ageing
substitutes with steel, polyester, epoxy-resin, plasticizers with
Advancement in manufacturing technology, today cement is a completely technical product.
Various types of grades of cement are being manufactured to satisfy different needs of the
construction industry. However, cement is still considered as a non-technical product and used in
a traditional and often unscientific manner. There are around 11 different types of cement that are
being produced in India. The production of all these cement varieties is according to the
specifications of the BIS (Bureau of Indian Standards). Some of the various types of cement
produced in India are:

Clinker Cement
Ordinary Portland cement (OPC)
Portland Blast Furnace Slag Cement (PSC)
Portland Pozzolana Cement (PPC)
Rapid Hardening Portland cement
Oil Well Cement
White Cement
Sulphate Resisting Portland cement

LARGE CEMENT PLANTS

Companies (Members) (Nos.)
Cement Plants (Nos.) 139
Installed Capacity (Mn. tn.)
Cement Production (Mn. tn.) 2009-10
Plants with Capacity of Million tonnes and above
(Nos.)

42
139
234.30
168.29
97

27 | P a g e

Manpower Employed (Nos.) Approx

1,20,000

Turnover in 2014-15 (Mn. US$)Approx

$18,000

Statistics - Mini & White Cement Plants

Cement Plants (Nos.) Approx.

365

Installed Capacity (Mn. tn.)

11.10

Cement Production (Mn. tn.) 2010-11

6.00

CEMENT MAP OF GUJARAT

All India Ranking 5
(As on 31st March, 2011)

(Cement Production in Million Tonnes)

Year

Capacity

2010-11
2009-10
2008-09
2007-08
2006-07

18.72(7.99)
16.82(7.56)
19.62(8.86)
19.07(9.63)
17.47(10.41)

Cement
Production
12.19(7.24)
11.49(7.15)
15.40(9.15)
15.40(9.15)
15.22(9.78)

Cement
Consumption
13.08
11.54
11.68
11.68
10.08

Cement & Clicker

Export
2.53
3.23
5.06
5.11
7.83

Details of Cement Plants and Grinding Units in Gujarat

Sr.no
1

Name of cement Location

Company
Shree
Digvijay Sikka
Cement Company
Ltd.

Annual
installed
Capacity (MT)
1.07

Saurashtra
Ltd.

1.50

Cement Ranava

28 | P a g e

UltraTech
Cement
Ltd.
Gujarat
Sidhee
Cement Ltd.
UltraTech
Cement
Ltd.
UltraTech
Cement
Ltd.
Sanghi Indus. Ltd.
JK Lakshmi Cement
Ltd.(G)
Jaiprakash Associates
Ltd-Kutch
Jaiprakash Associates
Ltd. (G)-Wanakbori

4
5
6
7
8
9
10

Pipava

5.80

Veraval

1.20

Jafrabad

0.50

Magdalla

0.70

Abdasa , Taluka
Kalol

2.60
0.55

Sewagram

2.40

Sonipur

1.40

TOTAL

18.72

(G):Grinding Unit

INDONESIAN CEMENT INDUSTRY

In Indonesia, nine cement companies operate 15 cement plants with a total installed production
capacity of 46.1 million metric tons (MMT). PT Semen Gresik, PT Semen Padang, and PT Semen
Tonasa are part of the Semen Gresik Group, which is 51% owned the Government and holds the
largest market share of 45.3%. PT IndocementTungga Prakarsa, a subsidiary of Heidelberg of
Germany, is the second-largest player with a market share of 29.6%, and PT Holcim Indonesia, a
subsidiary of Holcim of Switzerland, is the thirdlargest with a market share of 15.2%.
The top three companies have a 90% share of the market. PT Semen Gresik, PT Indocement Tunggal
Prakarsa, and, to a lesser extent, PT HolcimIndonesia each operate several large plants across the
country. However, 73% of their capacity is in Java, which accounts for over two thirds of their sales.
The other four companies (PT Semen Andalas Indonesia [SAI], PT Semen Bosowa, PT Semen
Baturaja, and PT Semen Kupang) each operate a single plant or a few small plants in Sumatra or in
other islands.
The cement design capacity and location of the cement plants of these companies are given in the
table.

Company

Location
of Capacity
Cement Plant (TONES)

PT Semen

Indonesia

1,124,580

Domestic
Sales
(TONES)
-

Market Share Major

(%)
Shareholder
3.6

Lafarge
29 | P a g e

Andalas

Aceh

PT Semen
Padang

West
Sumatra

5,440,000

3,876,732

12.3

PT Semen
Gresik

PT Semen
Baturaja

South
Sumatra
and
Lampung

1,250,000

895,235

2.8

Government
of Indonesia

PT Indocement
Tunggal
Prakarsa

West Java
and South
Kalimantan

15,650,000

9,335,415

29.7

Heidelberg

PT
HolcimIndonesi
a

West Java
and Central
Java

9,700,000

4,793,114

15.2

Holcim

PT Semen
Gresik
PT Semen
Tonasa

East Java

8,200,000

7,903,635

25.1

South
Sulawesi

3,480,000

2,496,165

7.9

Government
of Indonesia
PT Semen
Gresik

PT Semen
BosowaMaros

South
Sulawesi

1,800,000

922,363

2.9

BosowaGroup

PT Semen
Kupang

East Nusa
Tenggara

570,000

68,942

0.2

Government of
Indonesia

The domestic producers are expected to respond to the rising demand byincreasing their capacity
through new or better-performing plants. As foreign investors are not restricted from entering the
Indonesian cement industry, the entry of new players could generate additional capacity. These
projects are, however, not expected to pose a major threat to existing cement players, given the
large capital investment requirement and the need for well-developed distribution network and
brand recognition.
In response to rising demand and higher domestic prices compared with export prices, these
companies have progressively shifted their sales toward the domestic market. Further capacity
expansions could come with the entry of new players. However, they are not expected to pose a
major threat to existing cement players, given the large capital requirements for new plants and
the need to develop a distribution network and brand loyalty.
Java is the largest-consuming region with the highest share of 62% of the national demand. The
top three cement producers, which competed aggressively for market share in this region, appear
to have switched to a for profit rather than a for market share strategy to maximize
30 | P a g e

shareholder value and improve financial health. In other regions, smaller producers are ranked
among the top three companies in market share, given the limited radius of competition in the
cement industry. For example, SAI is ranked second in Sumatra, while PT BosowaMaros is
ranked second in Sulawesi and eastern Indonesia.
GOVERMENT
INDUSTRY

REGULATIONS

IMPACTING

ON

INDONESIAN

CEMENT

Manufacture and Exchange, Ministry of Communications and the Asiatic Cement Remembering
(ASI) has observed the quota supported on factories activity, production volume, and the premise
of the cement market in the location. The purport of this organization of system and quota was to
swan filler give and stem in every domain at a relatively lasting price.
Furthermore, in visit to have the unchangingness of filler terms in the land, the regime has
ingrained Pegged Pricing Scheme with Peak Retail Soprano HET) method, the soprano is
monitored at all nowadays to insure that the soprano of cement on the mart is within just
capability.
The authorities originally set the toll of Rp.1.650/bag on 17 Feb 1974. And by Ministry of Line
Decree No. 31 9/KP/IV/1979 afterwards the HET scheme is varied into Localised Cost
Criterional (Harga Patokan Setempat-HPS) system. The topical filler prices in the servant
markets are upto Rs 4100 per bag (equal to Rs.41/Kg) in 2010, or some 35% higher than the
2008 state.

QUALITY STANDARDS
The Government has set standards for the quality of cement products as given in SNI 15-20492004, which is the standard for Portland cement of the I, II, II,IV, and V types. Standards for
other types of cement have also been set by the government.

GOVERMENT
INDIA

POLICY

TOWARDS

CEMENT

INDUSTRY

IN

Government Policies in India have affected the growth of cement units at various stages. First
and Foremost, there was total control on cement industry for a long period of time, and then
partial decontrol and thereafter the total decontrol has contributed much to the gradual opening
of the market for cement producers. Following were the stages of the growth of Cement industry
in India brief:
a. Price and Distribution Controls (1940-1981)
31 | P a g e

b. Partial Decontrol (1982-1988)

c. Total Decontrol (1989)
In India, the Department of Industrial Policy and Promotion (DIPP), under the
Ministry of Commerce and Industry, is the nodal agency for the development of cement
industries, that is, it is involved in monitoring their performance at regular intervals and
suggesting suitable policy incentives, as per the requirement. Some of the rules and orders,
administered by DIPP, relating to the cement industry are:

Cement Control Order, 1967

Cement Cess Rule, 1993

Cement (Quality Control) Order,1995

Cement (Quality Control) Order, 2003

GOVERNMENT CONTROLS
The control of cement prices can be controlled through the prices of coal, power tariffs, railway,
freight, royalty and cess on limestone. Interestingly, all of these prices are controlled by
government.

ADVANTAGE TO INDIA FOR EXPORTS

India is the second largest country in the world after china in terms of cement production,
with an installed capacity of about 236 million tonnes (MT) in 20092010.

Between 20052006 and 2009-2010, sales and realization of cement has been estimated
to have grown at a CAGR of 10.6 per cent and 18.4 per cent, respectively.

The industry has witnessed continuous modernization and adoption of new technologies.
Almost 93 per cent of the total capacity is based on eco friendly dry process technology.

The sector is expected to add an additional capacity of 92.3 MT by 2013. As a result, the
industry will have a total installed capacity of above 350 MT by March 2013. The cement
industry employed 140,000 people in 2009.

32 | P a g e

POTENTIAL FOR EXPORT

India is the second-largest producer and consumer of cement in the world, hence there is
a significant potential to use & capitalize its per capita consumption of cement in the
country, which is very low in comparison to Indonesia.

The per capita consumption of cement in India is 143 kg, as compared with Indonesia of
172 kg. Thus, there is a good opportunity for India to Export Cement to Indonesia.

Justification for selecting Cement industry

There are many benefits of choosing this cement industry as a study which are as follows :
The glue that holds the infrastructure sector is cement and the growth of cement industry is
directly linked to the growth of infrastructure sector.
India today is the second fastest growing economy in the world with the cement and construction
sector being the prime movers. The Indian cement industry with a total installed capacity of 219
million tonnes is the second largest producer in the world and has been growing at a rate of 9 to
10 percent per annum. With a large percentage of Indian population being below the age of 25,
the construction activity is expected to make a significant contribution in the context of growing
housing needs, development of roads and other infrastructure, urbanization, etc.
It is the construction sector which shares the blame of global economic slowdown leading to
slackening of demand for housing; but withstanding that hard time, our cement sector is still
growing at a 10 percent when compared to the global average of 5 percent. Indian industry is
33 | P a g e

fortunate in having an active support and services of the National Council for cement & Building
Materials with an excellent R&D Infrastructure and invaluable intellectual capital.
The Indian cement industry has achieved an installed capacity of 242 million tonnes and is
targetted to reach 300 million tonnes by 2011-12 and 600 million by 2020. India has 97 percent
of the installed capacity through dry process; the Indian cement industry has been adopting latest
technologies for energy conservation and pollution control as well as on-line process of quality
control based on expert systems and laboratory automation.
Despite having high demand in India, our per capita cement consumption is very low, where the
world average is 396 kg, in India the per capita consumption is only 156 kg. India being the
country of young population has a huge potential and its ushering social and economic base will
improve the domestic consumption.
Indian cement industry is in search of competitive advantage, therefore, it is continuously
improving on the innovation and optimization front. While embracing its commitment to grow
and compete globally, it is however not neglecting the ecological and environmental needs.
Cement sector is adopting sustainable development practices and conservation measures while
harnessing energy for its use. The industry if fully committed and partner global efforts to reduce
Green House Gases impact and mitigating the evil of climate change.

Scope of cement industry in Indonesia

The year 2015 was a sluggish year for Indonesia's cement industry amid the
country's slowing economic growth. Total cement sales only rose 1.8 percent
year-on-year (y/y) to 61 million tons, the slowest growth pace since 2009. In
the first month of 2016, however, a positive sign was detected. Widodo
Santoso, Chairman of the Indonesian Cement Association (ASI), said
Indonesian cement sales rose 4.4 percent (y/y) to 5.14 million tons in January
2016 (from the same month one year earlier) on the back of government-led
infrastructure development.
Indonesia's cement sales are expected to rise around 6.6 percent to 65
million tons in 2016 supported by the government's commitment to enhance
infrastructure development across the archipelago. Meanwhile, with the
34 | P a g e

nation's economic growth expected to accelerate (after six years of

slowdown) to 5.3 percent (y/y) in 2016, purchasing power will strengthen and
this should give rise to property development (particularly if Bank Indonesia
will cut its still relatively high interest rate regime).
Although Java (the most populous island of Indonesia) will continue to be the
largest consumer of cement, the island of Sumatra is expected to see a jump
in cement consumption in 2016 due to construction of (parts of) the TransSumatra toll road and the Besitang-Binjai railway.
However, Indonesia's traditional top three cement producers - Semen
Indonesia, Indocement Tunggal Prakarsa and Holcim Indonesia (together
controlling about 85 percent of the market in Indonesia) - have to face rising
competition as the promising perspectives of Indonesia's cement industry in
recent years attracted the arrival of new (foreign) players or made existing
players decide to expand production capacity. ASI Chairman Santoso said
four new cement plants will become operational this year, adding 9.1 million
tons to the nation's total cement production capacity. As such, the country's
cement production capacity (estimated at 92 million tons), by far, exceeds
domestic cement demand (estimated at 65 million tons) in 2016. This
implies fierce competition, something that should erode the profit margins of
cement producers.

INTER RELATIONS OF INDIA-INDONESIA

India and Indonesia are close geographical neighbors who share a maritime
boundary. We have shared close cultural and commercial contacts over the
last two
millennia. During our respective struggles for independence, the national
leaderships
of the two countries collaborated closely in supporting the cause of Asian
and African
35 | P a g e

independence. India took a big step in that direction with its Look East
Policy.
India and Indonesia: Emerging Economies in Asia
The economies of both India and Indonesia have undergone massive reforms
in the
past two decades. Among other things, this has facilitated trade, investment
liberalization, fiscal and monetary policy reforms, and infrastructural up
gradation.
Cooperation in the Energy Sector
Anil Dhirubhai Ambani Groups Reliance Power also acquired three coal
mines in
Indonesia and plans to invest over Rs. 3,000 crore in that country. In June
2010, it
announced that it plans to buy two Indonesian coal companies through its
unit. In the
past two years, almost all power giants - NTPC, Essar Power, Adani Power,
JSW
Energy, Indiabulls Power and Lanco Infratech - have been exploring options
to own
coal mines in Indonesia, to fuel some of their proposed projects.
Trade and Investment relations
Indonesia is our third largest trading partner in the ASEAN bloc. Bilateral
trade
registered in 2010-11 stood at USD 14.8 billion. Major Indian companies
operating in
Indonesia include the Aditya Birla Group which has a viscose fiber plant and
downstream units; Essar, which has a cold-rolled steel mill near Jakarta; and
Jindal
Stainless Steel in Surabaya. There are two Indian motorcycle manufacturers Bajaj
and TVS - in Indonesia. The State Bank of India and the Bank of India have
branches in a number of Indonesian cities. Tatas own 30% of the two largest
coal
mines in Indonesia.

36 | P a g e