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Cement Industry Structure

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Cement Industry Structure

The Indian cement industry is weakly oligopolistic in nature on a national level with top 11 to 12 firms among more than 100 firms capturing 70% of the cement market. This nature has been consistent through the years MARCH 2011

The major players are ACC Ltd., Ambuja Cements Ltd., Ultratech Cement Ltd., India Cements Ltd., Century Textiles & Inds. Ltd., Jaiprakash Associates Ltd., Birla Corporation Ltd., Lafarge India Pvt.Ltd., Madras Cements Ltd., Shree Cement Ltd., Binani Cement Ltd., and Kesoram Industries Ltd. The shares, in terms of all India cement production, of these top companies have fluctuated by small amounts in the last six years (since ACC Ltd. and Ambuja Cements Ltd. were taken over by Holcim Group).
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Overall trend among companies

The period of 2005 to 2011 has seen increasing cement production numbers from all of the players in the Indian cement industry. On an all India level the capacity utilization levels in this period for a large numbers of top 13 firms have been on the higher side with capacity utilization crossing 100 for most part of the given period for companies like Ambuja Cement Ltd., Grasim Industries Ltd., Century Textiles & Inds. Ltd., Lafarge India Pvt. Ltd., Birla Corporation Ltd, and Kesoram Industries Ltd.

The Mar 2011capacity utilization for Kesoram Industries Ltd. is 75% which is far below its average over the preceding five years. Cement production numbers for Kesoram Industries Ltd are almost same for Mar-10 and Mar-11 indicating that they have added capacity but not used it which has been reflected in a negative PAT index for Mar-11 and an operating profit margin of just 4% for
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 Ultratech Cement Ltd.’s capacity utilization has never been above 90% with the March-11 figure at 78% even after almost doubling their cement production in 2010-11 from 2009-10. This indicates a huge capacity build up by Ultratech Cement Ltd., and their increasing PAT index does not correspond to decreasing operating profit margin and capacity utilization levels.

 As for India Cements Ltd., their capacity utilization levels have declined to 75% and 69% in Mar-10 and Mar-11 respectively, from being at 103% in Mar-08. This on the top of their highest production levels in the period of 2007-2010.

 Capacity utilization for Shree Cement Ltd. seems to fall abruptly with a decrease in prices in 2009 and late 2010 (Mar-11 period), being at 77% in Mar-11 from 103% in Mar-10, on the back of almost same production level. Such a sharp fall indicates (happened previously also: from 97% in Mar-08 to 85% in Mar-09) a supply constraint being deliberately exercised in order to decrease cement supply in the market

 The case for Madras Cements Ltd. is even worse with the capacity utilization falling continuously from 2008 onwards to 56% in Mar-11. The cement production also fell from an index of 213 in Mar-10 to 195 in Mar-11 The case for Madras Cements Ltd. is even worse with the capacity utilization falling continuously from 2008 onwards to 56% in Mar-11. The cement production also fell from an index of 213 in Mar-10 to 195 in

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