Balance Sheet of Sagar Cements ------------------- in Rs. Cr.

-------------------
Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Sources Of Funds
Total Share Capital 11.15 11.15 12.70 13.34 15.00
Equity Share Capital 11.15 11.15 12.70 13.34 15.00
Share Application Money 0.00 0.00 1.07 0.55 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 12.14 13.70 59.89 91.43 177.22
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 23.29 24.85 73.66 105.32 192.22
Secured Loans 19.42 11.20 22.95 198.50 240.26
Unsecured Loans 11.75 8.74 1.40 19.52 12.90
Total Debt 31.17 19.94 24.35 218.02 253.16
Total Liabilities 54.46 44.79 98.01 323.34 445.38
Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Application Of Funds
Gross Block 71.89 76.14 84.16 142.07 434.31
Less: Accum. Depreciation 34.43 37.38 40.64 44.13 62.85
Net Block 37.46 38.76 43.52 97.94 371.46
Capital Work in Progress 3.06 1.80 34.13 205.90 7.77
Investments 2.80 2.80 2.80 2.80 17.80
Inventories 8.05 6.65 6.64 7.50 42.53
Sundry Debtors 9.79 9.15 8.25 5.39 24.93
Cash and Bank Balance 0.32 0.58 0.94 2.03 5.90
Total Current Assets 18.16 16.38 15.83 14.92 73.36
Loans and Advances 14.03 7.26 23.29 46.32 47.42
Fixed Deposits 0.33 0.63 15.01 4.84 5.32
Total CA, Loans & Advances 32.52 24.27 54.13 66.08 126.10
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 19.79 21.22 25.84 33.07 70.36
Provisions 1.58 1.62 10.73 16.32 7.39
Total CL & Provisions 21.37 22.84 36.57 49.39 77.75
Net Current Assets 11.15 1.43 17.56 16.69 48.35
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 54.47 44.79 98.01 323.33 445.38

Contingent Liabilities 2.70 1.33 168.76 47.81 38.90

Book Value (Rs) 20.89 22.29 57.15 78.55 128.13

Profit & Loss account of Sagar

------------------- in Rs. Cr. -------------------
Cements
Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

12
12 mths 12 mths 12 mths 12 mths
mths

Income

Sales Turnover 112.04 153.77 247.14 274.62 334.27

Excise Duty 26.78 20.43 21.87 20.86 27.73

Net Sales 85.26 133.34 225.27 253.76 306.54

Other Income -0.66 0.66 0.88 0.48 0.79

Stock Adjustments -1.78 -1.22 -0.51 0.16 5.22

Total Income 82.82 132.78 225.64 254.40 312.55

Expenditure
Raw Materials 39.53 55.84 89.13 92.95 93.16
Power & Fuel Cost 26.79 29.77 32.54 37.80 74.77

Employee Cost 4.34 4.21 7.54 10.88 13.01

Other Manufacturing Expenses 0.58 0.49 0.67 1.28 3.17

Selling and Admin Expenses 10.51 33.55 51.09 52.12 66.73

Miscellaneous Expenses 0.52 0.45 0.80 1.35 1.85

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenses 82.27 124.31 181.77 196.38 252.69

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

12
12 mths 12 mths 12 mths 12 mths
mths

Operating Profit 1.21 7.81 42.99 57.54 59.07

PBDIT 0.55 8.47 43.87 58.02 59.86

Interest 4.65 2.61 1.60 3.40 15.90

PBDT -4.10 5.86 42.27 54.62 43.96

Depreciation 3.22 3.02 3.41 4.13 18.72

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax -7.32 2.84 38.86 50.49 25.24

Extra-ordinary items 10.34 0.00 0.00 0.00 0.40

PBT (Post Extra-ord Items) 3.02 2.84 38.86 50.49 25.64

Tax 1.30 0.02 11.18 19.50 9.19

Reported Net Profit 1.72 2.83 27.67 30.96 16.46

Total Value Addition 42.75 68.47 92.64 103.45 159.53

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1.27 1.27 3.02 3.40 3.85

Corporate Dividend Tax 0.00 0.00 0.42 0.58 0.61

Per share data (annualised)
Shares in issue (lakhs) 111.52 111.52 127.02 133.37 150.02

Earning Per Share (Rs) 1.55 2.54 21.78 23.21 10.97

Equity Dividend (%) 10.00 10.00 25.00 25.00 25.00

Book Value (Rs) 20.89 22.29 57.15 78.55 128.13

Yearly Results of Sagar Cements ------------------- in Rs. Cr. -------------------

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'10

Sales Turnover 75.89 112.50 223.14 306.55 479.57

Other Income 0.66 0.88 1.00 0.80 6.79
Total Income 76.56 113.38 224.14 307.35 486.36
Total Expenses 68.08 69.55 166.55 247.49 399.90
Operating Profit 7.81 42.95 56.59 59.06 79.67
Profit On Sale Of Assets -- -- -- -- --
Profit On Sale Of Investments -- -- -- -- --
Gain/Loss On Foreign Exchange -- -- -- -- --
VRS Adjustment -- -- -- -- --
Other Extraordinary Income/Expenses -- -- -- -- --
Total Extraordinary Income/Expenses -- -- -- -- --
Tax On Extraordinary Items -- -- -- -- --
Net Extra Ordinary Income/Expenses -- -- -- -- --
Gross Profit 8.47 43.83 57.59 59.86 86.46
Interest 2.61 1.60 3.40 15.90 28.95
PBDT 5.87 42.23 54.20 43.96 57.51
Depreciation 3.02 3.41 4.14 18.72 27.69
Depreciation On Revaluation Of
-- -- -- -- --
Assets
PBT 2.85 38.82 50.06 25.24 29.82
Tax 0.02 11.15 19.10 8.78 10.70
Net Profit 2.83 27.67 30.96 16.46 19.12
Prior Years Income/Expenses -- -- -- -- --
Depreciation for Previous Years
-- -- -- -- --
Written Back/ Provided
Dividend -- -- -- -- --
Dividend Tax -- -- -- -- --
Dividend (%) -- -- -- -- --
Earnings Per Share 2.54 21.78 23.21 10.97 12.75
Book Value -- -- -- -- --
Equity 11.15 12.70 13.34 15.00 15.00
Reserves 14.98 59.89 91.43 177.22 192.10
Face Value 10.00 10.00 10.00 10.00 10.00
Profile

 
Sagar Cements Limited (SCL) is a Company of 25 Years standing,
engaged in manufacture of Cement at its Plant in Mattampally, Nalgonda
District, Andhra Pradesh.

The Company is managed by a Board, whose members are highly

competent and well known. The Senior Management team consists of
highly qualified Professionals with rich experience in the area of their
Specialization.

The Company employs modern technology in each of its process of

manufacture at its Plant and has adopted progressive manufacturing
practices, whether it relates to maintaining high standards of quality of its
products or development of its highly valued human resources or the need
to keep the pollution to the barest minimum.

The Company manufactures various varieties of cement like Ordinary

Portland Cement (OPC) of 53 grade, 43 grade, Portland Pozzalona Cement
(PPC) and Sulphate Resistant Cement (SRC) to suit different needs of
customers and all these products are being sold under the Brand Name
“Sagar” which has already become popular in Andhra Pradesh, has now
found its acceptance among the customers in the neighboring States as
well.

The Company has a strong committed marketing network comprising

various layers like Distributors, Dealers, C&F Agents, all of whom are
served by dedicated marketing personnel. The Company has a well-
designed Organizational Structure and the roles and responsibilities of each
of its personnel have been well defined. The Company believes in the
importance of development of Human Resources as a valuable asset and is
endeavoring to enhance its value by organizing various need based in-
house training programmes and encouraging their participation in the
external programmes sponsored by various institutions of repute.

Sagar Cements has a consistent Profit track record and, except for a few
years when it was either executing its expansion plans or the industry as a
whole was undergoing a difficult period, it has been declaring dividend at
reasonable percentages.

The company’s Shares are listed on Hyderabad and Bombay Stock

Exchanges, where they are actively traded.

The Company which started its operation with a Cement capacity of 66000
TPA, has gradually increased it to the level of 2.35 MTPA, while its
Clinker capacity has also witnessed a significant increase from 66000 TPA
in 1982 to present level of 2.10 MTPA.
Vision

To provide foundations for society 's future

Mission

To be the India's most respected and attractive company in our industry - creating value for all
our stakeholders. 
Group

 
Sagar is well diversified group serving various sectors of the economy.
The group constitutes of

Sagar Cements Limited

- Production of Cement & Clinker

Amareswari Cements Limited

- Production of Cement & Clinker

Sagar Power Limited

- Production of Hydel Power

Panchavati Polyfibers
- Production of PP Fabric / Woven Sacks for Cement Industries

RV Consulting
- Consulting for setting Cement Plants

Sagarsoft (India) limited -www.sagarsoft.in

- Software Services for global Clients
Corporate Governance

 
Sagar Cements has set itself high standards of corporate governance,
ensuring responsible and transparent company management to enable its
long-term success.

Code of Conduct

CODE OF CONDUCT AND ETHICS FOR DIRECTORS AND

SENIOR MANAGEMENT TEAM

Sagar Cements being committed to be a good corporate citizen conducts its

business as per the applicable laws, rules, regulations and statutory
guidelines as are in force and with highest standards of business ethics.

It is expected of the Directors and Senior Management Team of the

Company to comply with applicable laws, rules, regulations and guidelines
while discharging their respective roles and to promote honesty in the
process apart from abiding themselves by the policies and procedures laid
down for the conduct of the business. The accounts of the Company will
be maintained in a fare and accurate manner in accordance with the
relevant accounting and financial reporting standards.

CONFLICTS OF INTEREST

A conflict situation is deemed to arise directly or indirectly when:

• It is difficult to exercise an independent judgment of the company's

interest;

• A Director or a member of the Senior Management Team accepts any

personal benefits or gifts or entertainment beyond the customary level
either by himself or through his family as a result of his position in the
company from any person / company with which the company may have
business dealings;

• A Director or a member of the Senior Management Team engages in any

other business activity that detracts his ability to devote appropriate time
and attention to his responsibilities to the company;

• There exists a significant ownership interest with any supplier, customer

or competitor of the company
• There is any employment relationship between a Director or a member of
the Senior Management Team with any supplier, customer, business
associate or competitor of the company.

While it is expected of a member of the Board and the Senior Management

Team to avoid generally the situations where the 'conflicts of interest' can
be deemed to exit, in case of unavoidable conflict of interest, he should
disclose all facts and circumstances thereof to the Board of Directors or
any officer nominated for this purpose by the Board and a prior written
approval should be obtained.

FINANCIAL REPORTING AND RECORDS

As the professional and ethical conduct in the matter of financial affairs is

essential for the proper functioning of the company, the officers and
employees engaged in the finance functions should act with honesty and
integrity. The persons in-charge of finance and accounting function should
prepare and maintain company’s accounts fairly and accurately in
accordance with generally accepted guidelines, principles, standards, laws
and regulations applicable to the company. Internal accounting and audit
procedures shall fairly and accurately reflect all of the company's business
transactions and disposition of assets. There shall be no willful omissions
of the company transactions from the books and records. Any willful
material misrepresentation or misinformation on the financial accounts and
reports shall be regarded as a violation of this code.

PROTECTING COMPANY ASSETS

The assets of the company should not be misused but employed only for
the purpose of conducting the business for which they are authorised. All
Directors and members of the Senior Management Team should strive to
protect company's assets and property and ensure efficient use of them.

PROMOTING INTEREST OF THE COMPANY

Directors and Senior Management Team owe a duty to the company to

promote its legitimate interests when the opportunity to do so arises. They
should not use company's property, information or position for personal
gains. All Directors and Senior Management Team of the company must
strive to perform their best at all times.

INTEGRITY AND HONESTY

The Directors and Senior Management Team shall act in accordance with
the highest standards of personal and professional integrity, honesty and
ethical conduct. They shall act and conduct free from fraud and deception.
Their conduct shall conform to the professional standards of conduct.

FAIR DEAL

Each Director and the member of Senior Management Team should deal
fairly with customers, suppliers and competitors. He should not take unfair
advantage of anyone through manipulation, concealment, abuse of
confidential, proprietary or trade secret, information, misrepresentation of
material facts, or any other unfair practices.

HEALTH, SAFETY, ENVIRONMENT AND SOCIAL

RESPONSIBILITY

Sagarsoft shall strive to provide a safe and healthy working environment

and comply with all regulations regarding the preservation of the
environment in and around its manufacturing facilities and other points of
operations. The companies is committed to efficient use of natural
resources and minimize any hazardous impact of the development,
production, use and disposal of any of its products and services on the
ecological environment.

CONFIDENTIALITY

The Directors and the Senior Management Team shall maintain utmost
confidentiality of information or that of any customer, supplier or business
associates of the company to which company has a duty to maintain
confidentiality except when disclosure is authorized. The use of
confidential information for his own advantage or profit is also prohibited.

COMPLIANCES

The Directors and the Senior Management Team shall comply with all
applicable laws, rules and regulations. Transactions relating to sale or
purchase of company's equity shares should not be undertaken without
complying with the formalities contained in the company's code of internal
procedures and conduct for prevention of insider trading. If any Director or
Member of the Senior Management Team who knows of or suspects of any
violation of applicable laws, rules or regulations or this Code of Conduct,
he must immediately report the same to the Board of Directors or any
designated person thereof. Such person should as far as possible provide
the details of suspected violations with all known particulars relating to the
issue. The company recognizes that resolving such problems or concerns
will advance the overall interests of the company that will help to
safeguard the company’s assets, financial integrity and reputation.

All Directors and Senior Management Team should adhere to the Code of
Conduct and Ethics of the company. Violations of this Code of Ethics will
result in disciplinary action, which may even include termination of
services of the employee. The Board of Directors or any person designated
by the Board for this purpose shall determine appropriate action in
response to violations of this Code.

Products

Cement

 
Cement is the basic and the most widely used building material. Twice as
much Cement/Concrete is used worldwide than all other Building
Materials.

A Mixture of Limestone and Clay is ground and burnt at a very high

temperature to form Clinker. The Clinker is ground to a fine powder with
addition of Gypsum ( up to 5 %) to form Cement. The essential
components of Cement are Lime, Silica, Alumina and Iron Oxide.

There are different types of Cement , which differ based on their chemical
composition. However, the manufacturing process remains the same.

Cement - Varieties

There are different varieties of cement based on different compositions

according to specific end uses, namely, Ordinary Portland Cement,
Portland Puzzolona Cement, White Cement, Portland Blast Furnace Slag
Cement and Specialized Cement.
The basic difference lies in the percentage of clinker used.

Ordinary Portland cement (OPC)

OPC, popularly known as grey cement, has 95 per cent clinker and 5 per
cent gypsum and other materials. It accounts for 70 per cent of the total
consumption.

Portland Puzzolona Cement (PPC)

PPC has 80 per cent clinker, 15 per cent Pozzalona and 5 per cent gypsum
and accounts for 18 per cent of the total cement consumption. It is
manufactured because it uses fly ash/burnt clay/coal waste as the main
ingredient.

White Cement

White cement is basically OPC - clinker using fuel oil (instead of coal)
with iron oxide content below 0.4 per cent to ensure whiteness. A special
cooling technique is used in its production. It is used to enhance aesthetic
value in tiles and flooring. White cement is much more expensive than
grey cement.

Portland Blast Furnace Slag Cement (PBFSC)

PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5
per cent gypsum and accounts for 10 per cent 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

Rapid Hardening Portland Cement is similar to OPC, except that it is
ground much finer, so that on casting, the compressible strength increases
rapidly.

Water Proof Cement

Water Proof Cement is similar to OPC, with small portion of calcium
stearate or non- saponifibale oil to impart waterproofing properties.

53 Grade OPC

53 Grade OPC is a higher strength cement to meet the needs of the consumer for
higher strength concrete. As per BIS requirements the minimum 28 days
compressive strength of 53 Grade OPC should not be less than 53 MPa. For certain
specialized works, such as pre-stressed concrete and certain items of precast
concrete requiring  consistently high strength concrete, 53 grade OPC is found very
useful. 53 grades OPC produce higher-grade concrete at very economical cement
content. In concrete mix design, for concrete M-20 and above grades a saving of 8
to 10 % of cement may be achieved with the use of 53 grade OPC.
The range of applications, the Physical / Chemical requirements as per Bureau
of Indian Standards (BIS) and strength of OPC are discussed in the following
sections.

Portland Pozzolana Cement (PPC)

Portland Pozzolana Cement is a kind of Blended Cement which is produced by

either intergrinding of OPC clinker along with gypsum and pozzolanic materials
in certain proportions or grinding the OPC clinker, gypsum and Pozzolanic
materials separately and thoroughly blending them in certain proportions.

Pozzolana is a natural or artificial material containing silica in a reactive form.

It may be further discussed as siliceous or siliceous and aluminous material
which in itself possesses little, or no cementitious properties but will in finely
divided form and in the presence of moisture, chemically react with calcium
hydroxide at ordinary temperature to form compounds possessing cement
properties. It is essential that Pozzolana be in a finely divided state as it is only
then that silica can combine with calcium hydroxide (liberated by the hydrating
Portland Cement) in the presence of water to form stable calcium silicates
which have cement properties

43 Grade OPC

The 43 grade OPC is the most popular general-purpose cement in the country today.
The production of 43 grade OPC is nearly 50% of the total production of cement in
the country.

43 Grade OPC can be used for the following applications.

+  General Civil Engineering construction work.

+  RCC works(preferably where grade of concrete is up to M-30).

+  Precast items such as blocks, tiles, pipes etc.

+  Asbestos products such as sheets and pipes.

+  Non-structural works such as plastering, flooring etc

 Cement Industry in India

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. 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 origins of Indian cement industry can be traced back to 1914 when the first unit was set-up at Porbandar with a
capacity of 1000 tonnes. 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, has 10 units. There
are 10 large cement plants owned by various State Governments. Cement industry in India has also made
tremendous strides in technological upgradation and assimilation of latest technology. Presently, 93 per cent 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 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 per cent 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
Grasim's acquisition of the cement business of L&T, Indian Rayon's 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 per cent of the promoters' stake in Gujarat Ambuja Cements (GACL). Holcim's 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. 

Issues concerning Cement Industry

 High Transportation Cost is affecting the competitiveness of the cement industry. Freight accounts for 17%
of the production cost. Road is the preferred mode for transportation for distances less than 250km.
However, industry is heavily dependant on roads for longer distances too as the railway infrastructure is not
adequate.
 Cement industry is highly capital intensive industry and nearly 55-60% of the inputs are controlled by the
government.

 There is regional imbalance in the distribution of cement industry. Limestone availability in pockets has led
to uneven capacity additions.

 Coal availability and quality is also affecting the production.

Outlook
Outlook for the cement industry looks quite bright. Given the sustained growth in the real estate sector, the
government's emphasis on infrastructure and increased global demand, it looks as if the juggernaut of cement
industry would continue to roll on the path of growth

1. INTRODUCTION

The cement industry is one of the main beneficiaries of the infrastructure boom. With robust demand
and adequate supply, the industry has bright future. The Indian Cement Industry with total capacity of
165 million tones is the second largest after China. Cement industry is dominated by 20 companies who
account for over 70% of the market. Individually no company accounts for over 12% of the market. The
major players like L&T and ACC have been quiet successful in narrowing the gap between demand and
supply. Private housing sector is the major consumer of cement (53%) followed by the government
infrastructure sector. Similarly northern and southern region consume around 20%-30% cement while
the central and western region are consuming only 18%-16%.

India is the 2nd largest cement producer in world after china .Right from laying concrete bricks of
economy to waving fly over’s cement industry has shown and shows a great future. The overall outlook
for the industry shows significant growth on the back of robust demand from housing construction,
Phase-II of NHDP (National Highway Development Project) and other infrastructure development
projects. Domestic demand for cement has been increasing at a fast pace in India. Cement consumption
in India is forecasted to grow by over 22% by 2009-10 from 2007-08.Among the states, Maharashtra has
the highest share in consumption at 12.18%,followed by Uttar Pradesh, In production terms, Andhra
Pradesh is leading with 14.72% of total production followed by Rajasthan. Cement production grew at
the rate of 9.1 per cent during 2006-07 over the previous fiscal's total production of 147.8 mt (million
tons). Due to rising demand of cement the sales volume of cement companies are also increasing &
companies reporting higher production, higher sales and higher profits. The net profit growth rate of
cement firms was 85%. Cement industry has contributed around 8% to the economic development of
India. Outsiders (foreign players) eyeing India as a major market to invest in the form of either merger or
FDI (Foreign Direct Investment). Cement industry has a long way to go as Indian economy is poised to
grow because of being on verge of development.

The company continues to emphasize on reduction of costs through enhanced productivity, reduction in
energy costs and logistics expenses. The cement sector is expected to witness growth in line with the
economic growth because of the strong co-relation with GDP. Future drivers of cement demand growth
in India would be the road and housing projects. As per the Working Group report on Cement Industry
for the formulation of the 11th Plan, the cement demand is likely to grow at 11.5 per cent per annum
during the 11th Plan and cement production and capacity by the end of the 11th Plan are estimated to
be 269 million tones and 298 million tones, respectively, with capacity utilization of 90 per cent.
Despite the growth of Indian cement industry India lags behind the per capita production. Supply for
cement is expected to remain tight which, in turn, will push up prices of cement by more than 50%. The
most important factor for better prices is consolidation of the industry. It has just begun and we will see
more consolidation in the coming years. Other budget measures such as cut in import duty from 12.5
per cent to nil etc. are all intended to cut costs and boost availability of cement.

Sadly the adverse effects of global slowdown have not speared this industry too. Demand is sluggish, the
government is keeping an eagle eye on prizes, domestic coal and pet coke, prizes have increased sharply
and utilizations rates are down. The numbers coming out are a reflection of grim times. ACC the
country’s largest cement company that’s controlled by Swiss giant HOLCIM, registered 2% fall in august
sales. It is the biggest fall since Feb 2007. Production fell by 5%.

To stand against the problematic situation, government as well as cement industry has taken some
steps. Companies are focusing on cost of transportation. One of the strategy is to decrease dependence
on road & opt for sea logistics as that can cut transportation cost by 30- 50 %. Some plants are adopting
futuristic plan such as setting up captive power plant, moving closer to the customers by creating clicker,
crushing, and capacity in key markets, to be more customer centric to generate better revenue. India
should push for stricter regulations of market place as to control the prices of big companies and
prevent them from forming cartels and exchanging information. To fight with the high inflation,
government wants to import more cement from Pakistan .However cement prizes are not very much
high as other items but still they are increasing. And the reason of high prize is surging cost of raw
material and transportation cost. Apart from this government also discussed with cement industry not
to have increase in prizes and keep consumer interest in mind.

Now the question arise in front of the government is whether the demand by the government is
possible to increase through expenditure on infrastructure or not according to the current state of
economy when so many crises are going on or how the government allocation of US$ 3.23 billion for the
National Highway Development, Project will keep the demand for cement alive? And to what extent the
prizes of cement should be increase so that consumer can’t affect.

Cement industry in India has also made tremendous strides in technological up gradation and
assimilation of latest technology. Presently, 93 per cent 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 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).
 2. CURRENT SCENARIO

The Indian cement industry is the second largest producer of quality cement, which meets global
standards. The cement industry comprises 130 large cement plants and more than 300 mini cement
plants. The industry's capacity at the end of the year reached 188.97 million tons which was 166.73
million tons at the end of the year 2006-07. Cement production during April to March 2007-08 was
168.31 million tons as compared to 155.66 million tons during the same period for the year 2006-
07.Despatches were 167.67 million tons during April to March 2007- 08 whereas 155.26 during the same
period. During April-March 2007-08, cement export was 3.65 million tons as compared to 5.89 during
the same period.
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 per cent 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 Grasim's acquisition of the cement business of L&T, Indian Rayon's
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 per cent of the promoters'
stake in Gujarat Ambuja Cements (GACL). Holcim's 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.
 3. PROCESS TECHNOLOGY

While adding fresh capacities, the cement manufacturers are very conscious of the technology used. In
cement production, raw materials preparation involves primary and secondary crushing of the quarried
material, drying the material (for use in the dry process) or undertaking a further raw grinding through
either wet or dry processes, and blending the materials. Clinker production is the most energy-intensive
step, accounting for about 80% of the energy used in cement Production. Produced by burning a mixture
of materials, mainly limestone, silicon oxides, aluminum, and iron oxides, clinker is made by one of two
production processes: wet or dry; these terms refer to the grinding processes although other
configurations and mixed forms (semi-wet, semi-dry) exist for both types. In the dry process, the raw
materials are ground, mixed, and fed into the kiln in their dry state. In the wet process, the crushed and
proportioned materials are ground with water, mixed, and fed into the kiln in the form of slurry.

Different types of cement that are produced in India are:

• Ordinary Portland cement (OPC):
OPC, popularly known as grey cement, has 95 per cent clinker and 5 per cent gypsum and other
materials. It accounts for 70 per cent of the total consumption.

• Portland Pozzolana Cement (PPC):

PPC has 80 per cent clinker, 15 per cent pozzolana and 5 per cent gypsum and accounts for 18 per cent
of the total cement consumption. It is manufactured because it uses fly ash/burnt clay/coal waste as the
main ingredient.

• White Cement:
White cement is basically OPC - clinker using fuel oil (instead of coal) with iron oxide content below 0.4
per cent to ensure whiteness. A special cooling technique is used in its production. It is used to enhance
aesthetic value in tiles and flooring. White cement is much more expensive than grey cement.

• Portland Blast Furnace Slag Cement (PBFSC):

PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5 per cent gypsum and accounts
for 10 per cent of the total cement consumed. It has a heat of hydration even lower than PPC and is
generally used in the 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:

Rapid Hardening Portland Cement is similar to OPC, except that it is ground much finer, so that on
casting, the compressible strength increases rapidly.

• Water Proof Cement:

Water Proof Cement is similar to OPC, with a small portion of calcium stearate or non- saponifibale oil to
impart waterproofing properties.
 4. PROCEDURE

The main raw materials used in the cement manufacturing process are limestone, sand, shale, clay, and
iron ore. The main material, limestone, is usually mined on site while the other minor materials may be
mined either on site or in nearby quarries. Another source of raw materials is industrial by-products. The
use of by-product materials to replace natural raw materials is a key element in achieving sustainable
development.

Raw Material Preparation

Mining of limestone requires the use of drilling and blasting techniques. The blasting techniques use the
latest technology to insure vibration, dust, and noise emissions are kept at a minimum. Blasting
produces materials in a wide range of sizes from approximately 1.5 meters in diameter to small particles
less than a few millimeters in diameter.

Material is loaded at the blasting face into trucks for transportation to the crushing plant. Through a
series of crushers and screens, the limestone is reduced to a size less than 100 mm and stored until
required.

Depending on size, the minor materials (sand, shale, clay, and iron ore) may or may not be crushed
before being stored in separate areas until required.

Raw Grinding

In the wet process, each raw material is proportioned to meet a desired chemical composition and fed
to a rotating ball mill with water. The raw materials are ground to a size where the majority of the
materials are less than 75 microns. Materials exiting the mill are called "slurry" and have flowability
characteristics. This slurry is pumped to blending tanks and homogenized to insure the chemical
composition of the slurry is correct. Following the homogenization process, the slurry is stored in tanks
until required.

In the dry process, each raw material is proportioned to meet a desired chemical composition and fed to
either a rotating ball mill or vertical roller mill. The raw materials are dried with waste process gases and
ground to a size where the majority of the materials are less than 75 microns. The dry materials exiting
either type of mill are called "kiln feed". The kiln feed is pneumatically blended to insure the chemical
composition of the kiln feed is well homogenized and then stored in silos until required.

Pyroprocessing

Whether the process is wet or dry, the same chemical reactions take place. Basic chemical reactions are:
evaporating all moisture, calcining the limestone to produce free calcium oxide, and reacting the calcium
oxide with the minor materials (sand, shale, clay, and iron). This results in a final black, nodular product
known as "clinker" which has the desired hydraulic properties.
In the wet process, the slurry is fed to a rotary kiln, which can be from 3.0 m to 5.0 m in diameter and
from 120.0 m to 165.0 m in length. The rotary kiln is made of steel and lined with special refractory
materials to protect it from the high process temperatures. Process temperatures can reach as high as
1450oC during the clinker making process.

In the dry process, kiln feed is fed to a preheater tower, which can be as high as 150.0 meters. Material
from the preheater tower is discharged to a rotary kiln with can have the same diameter as a wet
process kiln but the length is much shorter at approximately 45.0 m. The preheater tower and rotary kiln
are made of steel and lined with special refractory materials to protect it from the high process
temperatures.

Regardless of the process, the rotary kiln is fired with an intense flame, produced by burning coal, coke,
oil, gas or waste fuels. Preheater towers can be equipped with firing as well.
The rotary kiln discharges the red-hot clinker under the intense flame into a clinker cooler. The clinker
cooler recovers heat from the clinker and returns the heat to the pyroprocessing system thus reducing
fuel consumption and improving energy efficiency. Clinker leaving the clinker cooler is at a temperature
conducive to being handled on standard conveying equipment.

Finish Grinding and Distribution

The black, nodular clinker is stored on site in silos or clinker domes until needed for cement production.
Clinker, gypsum, and other process additions are ground together in ball mills to form the final cement
products. Fineness of the final products, amount of gypsum added, and the amount of process additions
added are all varied to develop a desired performance in each of the final cement products.
Each cement product is stored in an individual bulk silo until needed by the customer. Bulk cement can
be distributed in bulk by truck, rail, or water depending on the customer's needs. Cement can also be
packaged with or without color addition and distributed by truck or rail.

5. DEMAND & SUPPLY

The demand drivers for the cement sector continue to be housing, infrastructure and commercial
construction, etc. We expect the proportion of infrastructure in total demand to improve further in
future, as the thrust on infrastructure development is on the rise. During April-November 2007, cement
demand grew by 10 per cent year-on-year (y-o-y) propelled by the growth witnessed in end user
segments such as housing, infrastructure etc. CRISIL Research expects demand to remain strong and
grow by over 12 per cent in the next 2 years. Cement demand is expected to outstrip supply for the next
year and a half as no major capacities are coming on-stream, thus providing enough flexibility to cement
manufacturers to further hike the prices.
Today, cement from Andhra is going all over India, including Assam, Meghalaya, Jharkhand, Orissa, West
Bengal, Chattisgarh, Gujarat and Maharashtra. More cement is likely to flow into Tamil Nadu from the
state in view of cut in sales tax. Any further increase in demand in the South India will benefit the
cement industry here. Cement movement from Gujarat to Mumbai is also coming down due to exports
while cement movement from Orissa into Andhra has stopped and, in fact, cement is flowing into Orissa
as well.

Earlier in 2006-07, the housing sector alone consumed 65 per cent of the total domestic consumption.
With the launch of several infrastructure projects, the housing consumption may come down to 55 per
cent as the infrastructure and other sectors are expected to move up to 45 per cent from the present 35
per cent. Still, the main sector of consumption continues to be housing, including commercial space,
occupying more than 60 per cent. The current demand in the state for 2005-06 is expected to cross 15
million tons (11.5 million tons). We expect the demand here to go past the 17.5-million mark in 2006-07
in view of irrigation and infrastructure projects being taken up in the state. Weaker sections’ housing,
construction of public toilets, schools in rural areas apart from several private and public infrastructure
projects will also give tremendous boost to the cement consumption in the state. Most importantly,
irrigation projects, worth nearly Rs 1 lakh crore, will trigger unprecedented demand for the next 5-7
years.
Cement consumptions are as follows:
 6. DEMAND DRIVERS
Indian cement demand skewed towards housing
The demand from the housing sector is ~53% of the total Indian cement demand.

There are fears of a slowdown in the demand from the housing sector due to a drop in real estate prices
in the country. The worry is that builders may postpone construction of new buildings if the property
prices were to correct.

Infrastructure to give demand a big boost

Our analysis shows that Infrastructure should be the biggest growth driver for cement demand in the
country. If we were to look only at order books of the top eight construction and manufacturing
equipment companies in India, we find that their combined order book has virtually doubled over the
last two years from INR1,000bn (USD25bn) to INR1,950bn (USD48.75bn) for completion over the next
24-30 months.
 7. COST

Over the past five years, cost of cement production has grown at a CAGR of 8.4%. Also, the producers
have been able to pass on the hike in cost to consumers on the back of increased demand. Average
realizations have increased from Rs. 1,880 per tonne in FY 03 to Rs. 3,133 per tons in FY 07, at a CAGR of
13.6%, which has been reflected in higher profit margins of the industry.

To reduce the cost of production, the industry has focused on captive power generation. Proportion of
cement production through captive power route has increased over the years. Also, cement movement
by rail has increased over the years. Freight and energy costs are also increasing; however, in the current
market scenario, manufacturers have the flexibility to pass on the increase in costs to end-consumers.
Let us have a look at the cost factors affecting the cement industry

Capacity Utilization: Since the industry operates on fixed cost, higher the capacity sold, the wider the
cost distributed on the same base. But one should also keep in mind, that there have been instances
wherein despite a healthy capacity utilization, margins have fallen due to lower realizations.

Power: The cement industry is energy intensive in nature and thus power costs form the most critical
cost component in cement manufacturing (about 30% to total expenses). Most of the companies resort
to captive power plants in order to reduce power costs, as this source is cheaper and results in
uninterrupted supply of power. Therefore, higher the captive power consumption of the company, the
better it is for the company.

Freight: Since cement is a bulk commodity, transporting is a costly affair (over 15%). Companies, which
have plants located closer to the markets as well as to the source of raw materials have an advantage
over their peers, as this leads to lower freight costs. Also, plants located in coastal belts find it much
cheaper to transport cement by the sea route in order to cater to the coastal markets such as Mumbai
and the states of Gujarat and Tamil Nadu.
On account of sufficient reserves of raw materials such as limestone and gypsum, the raw material costs
are generally lower than freight and power costs in the cement industry. Excise duties imposed by the
government and labor wages are among the other important cost components involved in the
manufacturing of cement.

Operating margins: The company should have a consistent record of outperforming its peers on the
operational performance front i.e. it should have higher operating margins than its competitors in the
industry. Factors such as captive power plants, effective capacity utilization results in higher operating
margins and therefore these factors should be looked into. Since cement is a regional play on account of
its high freight costs, the company should not have all its plants concentrated in one region. It should
have a geographical spread so that adverse market conditions in one region can be mitigated by high
growth in the other region
 8. Government Policies

Government policies have affected the growth of cement plants in India in various stages. The control on
cement for a long time and then partial decontrol and then total decontrol has contributed to the
gradual opening up of the market for cement producers. The stages of growth of the cement industry
can be best described in the following stages:

Price and Distribution Controls (1940-1981)

During the Second World War, cement was declared as an essential commodity under the Defense of
India Rules and was brought under price and distribution controls which resulted in sluggish growth. The
installed capacity reached only 27.9 MT by the year 1980-81.

Partial Decontrol (1982-1988)

In February 1982, partial decontrol was announced. Under this scheme, levy cement quota was fixed for
the units and the balance could be sold in the open market. This resulted in extensive modernization
and expansion drive, which can be seen from the increase in the installed capacity to 59MT in 1988-89 in
comparison with the figure of a mere 27.9MT in 1980-81, an increase of almost 111%.

Total Decontrol (1989)

In the year 1989, total decontrol of the cement industry was announced. By decontrolling the cement
industry, the government relaxed the forces of demand and supply. In the next two years, the industry
enjoyed a boom in sales and profits. By 1992, the pace of overall economic liberalization had peaked;
ironically, however, the economy slipped into recession taking the cement industry down with it. For
1992-93, the industry remained stagnant with no addition to existing capacity.

Government Controls
The prices that primarily control the price of cement are coal, power tariffs, railway, freight, royalty and
cess on limestone. Interestingly, all of these prices are controlled by government
 9. REQUIREMENTS

Coal
The consumption of coal in a typically dry process system ranges from 20-25% of clinker production. This
means for per ton clinker produced 0.20-0.25 ton of coal is consumed. This contributes 35-40% of the
production cost. The cement industry consumes about 10mn tons of coal annually. Since coalfields like
BCCL supply a poor quality of coal, NCL and CCL the industry has to blend high-grade coal with it. The
Indian coal has a low calorific value (3,500-4,000 kcal/kg) with ash content as high as 25-30% compared
to imported coal of high calorific value (7,000-8,000 kcal/kg) with low ash content 6-7%. Lignite is also
used as a fuel by blending it with coal. However this process is not very common.

Electricity
Cement industry consumes about 5.5bn units of electricity annually while one ton of cement
approximately requires 120-130 units of electricity. Power tariffs vary according to the location of the
plant and on the production process. The state governments supply this input and hence plants in
different states shall have different power tariffs. Another major hindrance to the industry is severe
power cuts. Most of the cement producing states like AP, MP experience power cuts to the tune of 25-
30% every year causing substantial production loss.

Infrastructure
To reduce uncertainty relating to power, most of the leading companies like ACC, Indian Rayon, and
Grasim rely on captive power plants. A few companies are also considering power-generating windmills.

Limestone
This constitutes the largest bulk in terms of input to cement. For producing one ton of cement,
approximately 1.6 ton of limestone is required. Therefore, the cement plant location is determined by
the location of limestone mines. The major cash outflow takes place in way of royalty payment to the
central government and cess on royalties levied by the state government. The total limestone deposit in
the country is estimated to be 90 billion tons. AP has the largest share -- 34%, Karnataka 13%, Gujarat
13%, M.P 8%, and Rajasthan 6.5%. The plants near the limestone deposit pay less transportation cost
than others.

Transportation
Cement is mostly packed in paper bags now. It is then transported either by rail or road. Road
transportation beyond 200 kms is not economical therefore about 55% cement is being moved by the
railways. There is also the problem of inadequate availability of wagons especially on western railways
and southeastern railways. Under this scenario, manufacturers are looking for sea routes, this being not
only cheap but also reducing the losses in transit. Today, 70% of the cement movement worldwide is by
sea compared to 1% in India. However, the scenario is changing with most of the big players like L&T,
ACC and Grasim having set up their bulk terminals.
Infrastructure for Future
The consumption of cement is determined by factors influencing the level of housing and industrial
construction, irrigation projects, and roads and laying of water supply and drainage pipes etc. The level
and growth of GDP and its sectoral composition, capital formation, development expenditure, growth in
population, level of urbanization, etc, in turn, determine these factors. But the domestic demand for
cement is mainly from the housing activities and infrastructure development. The government paved
the way for the entry of the private sector in road projects. It has amended the National Highway Act to
allow private toll collection and identified projects, bridges, expressways and big passes for private
construction. The budget gave substantial incentives to private sector construction companies. Ongoing
liberalization will lead to an increase in industrial activities and infrastructure development. So it is
hoped that Indian cement industry shall boom again in near future.

Incentives in States
Most state governments, in order to attract investments in their respective states, offer fiscal incentives
in the form of sales tax exemptions/deferrals. In some states, this applies only to intrastate sales, like
Madhya Pradesh and Rajasthan. States like Haryana offer a freeze on power tariff for 5 years, while
Gujarat offers exemption from electric duty.

Installed Capacity
India is the world’s second largest cement producing country after China. The industry is characterized
by a high degree of fragmentation that has created intense competitive pressure on price realizations.
Spread across the length and breadth of the country, there are 120 large plants belonging to 56
companies with an installed capacity of around 135mn tons as on March 2002.
 10. OPPORTUNITIES, THREATS, RISKS AND CONCERNS

The cement industry is going through its boom period with full capacity utilization. Powered by the GDP
growth of 8-9%, the annual demand for cement in the country continues to grow at 8- 10%. As per
NCAER study, under high growth scenario, the demand for cement (including exports) is expected to
increase to 244.82 million tonnes by 2010-11. As per the study, the demand is expected to be much
higher at 311.37 million tonnes, if the optimistic projections of the road and the housing sectors are
met. The industry has responded to this with substantial new capacity announcements. The
materialization of these capacities, however, is likely to be delayed due to a number of factors including
timely delivery of equipment and construction of the plant due to the heavy order book position of the
suppliers. It is expected that demand growth will outstrip supply till the materialization of such new
capacities. However, the current high level of international crude prices and its impact on the domestic
prices of petroleum products is likely to make a dent in the profitability but its impact will have to be
seen depending upon the ability of the economy to pass on such cost increase to the consumer.

While the freight cost could be optimized on the imported coal through usage of company’s own ships
for part of the quantity, the international prices of imported coal and its volatility together with the
strengthening of the dollar against rupee could derail this. This could impact the delivery prices of
imported coal and also the cost of production. The Government has taken steps to increase the
availability of indigenous coal for its expanded capacity across various plants which can mitigate the
impact of such high cost of imported coal for the plants located near the coal fields in India.
The Government’s continuing efforts to rein in cement prices by freeing imports and banning exports
could artificially disable the normal market price mechanisms for determining the price.

The rise in the price of cement is because of the gap of demand & supply in the market. The demand for
cement is much higher than its actual supply. But with the production maximization, which can be
encountered in next few year, this gap may narrow down, that may ensure the market to be in
equilibrium.

Decreasing per capita consumption doesn’t affect the total consumption for the cement. It means the
infrastructure; contacted housing is using the bulk of the production. In spite of High price of the
product, the hick of demand because of the increasing rate of infrastructural development.

Domestic price of cement is rising as well as the imported cement price is lowering. So altogether the
supply of the cement, which is affordable, will increase. This may in decrease the gap between supply
and demand.

Major Demand was from the housing sector, which may shift to infrastructure as lots of infrastructural
development processes has already being taken up & due to the increased price, housing segment
started showing a slowdown.
 11. Main Companies In India

Associated Cement Companies Ltd (ACCL)

Associated Cement Companies Ltd manufactures ordinary Portland cement, composite cement and
special cement and has begun offering its marketing expertise and distribution facilities to other
producers in cement and related areas. It has twelve manufacturing plants located throughout the
country with exports to SAARC nations. The company plans capital expenditure through expansion of
existing units and/or through acquisitions. Non-core assets are to be divested to release locked up
capital. It is also expected to actively pursue overseas project engineering and consultancy services.

Birla Corporation Ltd.

Birla Corp's product portfolio includes acetylene gas, auto trim parts, casting, cement, jute goods, yarn,
calcium carbide etc. The cement division has an installed capacity of 4.78 million metric tonnes and produced
4.77 million metric tonnes of cement in 2003-04. The company has two plants in Madhya Pradesh and
Rajasthan and one each in West Bengal and Uttar Pradesh and holds a market share of 4.1 per cent. It
manufactures Ordinary Portland cement (OPC), Portland pozzolana cement, fly ash-based PPC, Low-alkali
Portland cement, Portland slag cement, low heat cement and sulphate resistant cement. Large quantities of
its cement are exported to Nepal and Bangladesh. Going forward, the company is setting up its captive power
plant to remain cost competitive.
Century Textiles and Industries Ltd (CTIL)

The product portfolio of CTIL includes textiles, rayon, cement, pulp & paper, shipping, property & land
development, builders and floriculture. Cement is the largest division of CTIL and contributes to over 40 per
cent of the company's revenues. The company has an installed capacity of 4.7 million tonnes with a total
cement production of 5.43 million tonnes in 2003-04. CTIL has four plants that manufacture cement, one in
Chhattisgarh, two in Madhya Pradesh and one in Maharashtra. Going forward, the company has scripted a
three-pronged strategy closing down its shipping business, continuing with its chemicals and adhesive
division, and focusing on cement, rayon and paper as its long-term business plan.

Grasim-UltraTech Cemco

Grasim's product profile includes viscose staple fibre (VSF), grey cement, white cement, sponge iron,
chemicals and textiles. With the acquisition of UltraTech, L&T's cement division in early 2004,
Grasim has now become the world's seventh largest cement producer with a combined capacity of 31 million
tonnes. Grasim (with UltraTech) held a market share of around 21 per cent in
2003-04. It has plants in Madhya Pradesh, Chhattisgarh, Punjab, Rajasthan, Tamil Nadu and Gujarat among
others. The company plans to invest over US$ 9 million in the next two years to augment capacity of its
cement and fibre business. It’s also plans to focus on its international ventures, ramping up the capacity of
Alexandra Carbon Black in Egypt to 1,70,000 tonne per annum
(from 1, 20,000 tpa) and raising the capacity of the carbon black plant in China from 12,000 tpa to 60,000 tpa.

Gujarat Ambuja Cements Ltd (GACL)

Gujarat Ambuja Cements Ltd was set up in 1986 with the commencement of commercial production at its 2
million tonne plant in Chandrapur, Maharashtra. The group has clinker manufacturing facilities at Himachal
Pradesh, Gujarat, Maharashtra, Chhattisgarh, Punjab and Rajasthan. The company has a market share of
around 10 per cent, with a strong foothold in the northern and western markets. Its total sales aggregated
US$ 526 million with a capacity of 12.6 million tonnes in 2003-04. Gujarat Ambuja is India's largest cement
exporter and one of the most cost efficient firms. GACL has a 14.45 per cent stake in ACC, making it the
second largest cement group in the country, after Grasim-UltraTech Cemco. The company has free cash flows
that it is likely to use to grow inorganically. The company is scouting for a capacity of around two million
tonne in the northern and western markets. It has also earmarked around US$ 195-220 million for
acquisitions
India Cements

India Cements is the largest cement producer in southern India with a total capacity of 8.81 million tonnes
and plants in Andhra Pradesh and Tamil Nadu. The company has a market share of 5.4 per cent with a total
cement production of 6.36 million tonnes in 2003-04. Its product portfolio includes ordinary Portland cement
and blended cement. The company has limited its business activity to cement, though it has a marginal
exposure to the shipping business. The company plans to reduce its manpower significantly and exit non-core
businesses to turnaround its fortune. It also expects the export market to open up, with the Gulf emerging as
a major importer.

Jaiprakash Associates Limited

Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the Jaypee group with
businesses in civil engineering, hospitality, cement, hydropower, design consultancy and IT. It has an annual
capacity of 4.6 million tonnes with plants located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar
Pradesh). The company has a market share of 3.8 per cent with the cement division contributing US$ 172
million to revenue in 2003-04. The company is upgrading its capacity to 6.5 million tonnes through the
modernizing of the existing units and the commissioning of a new grinding unit at Tanda (Uttar Pradesh) with
an investment of US$ 163 million. Jaiprakash Associates has decided to concentrate on its core business of
construction and engineering and leave its cement plant to its subsidiary Jaypee Rewa Cement Ltd. The
company manufactures a wide range of world class cement of OPC grades 33, 43, 53, IRST-40 and special
blends of pozzolana cement.

JK Synthetics

JK Synthetics, a Singhania Group company, started manufacturing nylon at Kota in 1962. Subsequently, it
diversified into PSY/PFY, nylon tyre-cord, cement (in 1975), acrylic and white cement (in 1984). The company
has a market share of 2.7 per cent. JK Synthetics Limited is restructuring its business divisions into two
separate entities- JK Cements and JK Synthetics. After the restructuring, it will be left with a cement plant at
Nimbahera in Rajasthan, with a capacity of 3.26 million metric tonnes and manufacturing white cement.

Madras Cements

Madras Cements Ltd is one of the oldest cement companies in the southern region and is a part of the Ramco
group. The company is engaged in cement, clinker, dolomite, dry mortar mix, limestone,
ready mix cement (RMC) and units generated from windmills. The company has three plants in Tamil Nadu,
one in Andhra Pradesh and a mini cement plant in Karnataka. It has a total capacity of 5.47 million tonnes
annually and holds a market share of 3.1 per cent. Madras Cements plans to expand by putting up RMC
plants. As Karnataka is a promising market, the company is further expanding its capacity from the present
1.5 million tonnes to 3.4 million tonnes through an investment of US$ 9 million.
Holcim

Holcim, earlier known as Holderbank, has a cement production capacity of 141.9 million tonnes. It is a key
player in aggregates, concrete and construction related services. It has a strong market presence in over 70
countries and is a market leader in South America and in a number of European and overseas markets.
Holcim entered India by means of a long-term strategic alliance with Gujarat Ambuja Cements Ltd (GACL).
The alliance aims to strengthen their clinker and cement trading activities in South Asia, the Middle East and
the region adjoining the Indian Ocean. Holcim also intends to use India as an additional base for its IT
operations, R&D projects as well as a procurement sourcing hub to generate additional synergies and value
for the group.

Italcementi Group

The Italecementi group is one of the largest producers and distributors of cement with 60 cement plants, 547
concrete batching units and 155 quarries spread across 19 countries in Europe, Asia, Africa and North
America. Italcementi is present in the Indian markets through a 50:50 joint venture company with Zuari
Cements. All initiatives in southern India are routed through the joint venture company, while Italcementi is
free to buy deals in its individual capacity in northern India. The joint venture company has a capacity of 3.4
million tonnes and a market share of 2.1 per cent.

Lafarge India

Lafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement capacity of 5 million tonnes and a
clinker capacity of 3 million tonnes in the country. Lafarge commenced operations in 1999 and currently has
a market share of 3.4 per cent. It exports clinker and cement to Bangladesh and Nepal. It produces Portland
slag cement, ordinary Portland cement and Portland pozzolana cement. The Indian cement plants are located
in Chhattisgarh and Rajasthan. Lafarge Cement has become the largest cement selling firm in the Indian
markets of West Bengal, Bihar, Jharkhand and Chhattisgarh.