ANALYSIS OF THE INDIAN CEMENT INDUSTRY Project Report Submitted to Alliance Business School in Partial Fulfillment of the Requirements

of the Post Graduate Program in Business Management course. Submitted by GROUP 4 Under the Guidance of Dr. GERVASIO S. F. L. MENDES and Dr. R. VENKATAMUNI REDDY FEBRUARY 2009

DECLARATION We hereby declare that the dissertation work titled ANALYSIS OF THE INDIAN CEMENT INDUSTRY, is a record of independent study carried out by us under the guidance of Dr. Gervasio Mendes and Dr. R. Venkatamuni Reddy, Faculty, Alliance Business School, Bangalore. This dissertation has not formed the basis for the award previously of any Degree/ Diploma or any other similar titles of any university. Date: 23.02.2009 BANGALORE MEMBERS GROUP 4 PGP I ALLIANCE BUSINESS SCHOOL 2

ACKNOWLEDGEMENT We would like to express our profound gratitude and grateful thanks to Prof. Gervasio Mendes and Prof. R. Venkatamuni Reddy for giving us the opportunity to study this course and undertake this research. We thank them for showing interest in our research and giving us their valuable advice. GROUP 4 Anjana Ashok, Divya Mohan, Jitesh Nangia, Priya Bhutada, Priyanshu Mishra, Swati Khurana 3

CONTENTS Chapter Chapter Name No. I Introduction Evolution of the Indian Cement Industry Global Cement Industry Indian Cement Industry Page No. 9 15 16 II Research Design Scope of the Study Objectives of the Study Statement of Problem Limitations of the Study 21Tools and Techniques for Data Collection 21 21 21 22 III Industry Analysis Status of the Indian Cement Structure of the Indian Cement Industry Porters Five Forces model SWOT Analysis Industry over the periods Indian Cement IndustryReasons for the growth of the Cement Industry Demand Drivers 2008 30 26 28 28 24 25 IV Analysis of Data Analysis of Financial Ratios of Major Companies 36 Major Companies 41 4 Key issues Analysis of Key Financial Ratios of Minor Companies

relating to the Cement Industry 48 55 V Summary of Findings Effects of The cement industry performance for the year 2008-09 Future prospects of the CementRecession on the Indian Cement Industry Bibliography 66 68 62 59Industry 5

LIST OF TABLES Table No. 1.1 1.2 1.3 TITLE Status of the Indian Cement Industry Home Loan Rates and disbursement of loans Projects under the NHDP Major Companies Page No 25 32 34 1.4 1.5 1.6 1.7 1.8 1.9 1.10 Industry Standards (Ratios) North Region Industry Standards (Ratios) South Region Analysis for the Year ended 2007-2008 Analysis for the Year ended 2006-2007 Analysis for the year ended 2005-2006 Analysis for the Year ended 2004-2005 Analysis for the Year ended 2003-2004 Minor Companies 41 41 42 43 44 46 47 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 Industry Standards (Ratios) North Region Industry Standards (Ratios) South Region Analysis for the Year ended 2007-2008 Analysis for the Year ended 2006-2007 Analysis for the Year ended 2005-2006 Analysis for the Year ended 2004-2005 Analysis for the Year ended 2003-2004 Region-wise production of cement Region-wise cement consumption 48 49 49 50 51 53 54 60 61 6

LIST OF GRAPHS AND CHARTS Sl No. 2.1 2.2 2.3 2.4 2.5 2.6 2.7 TITLE Diagrams showing: Gigatons/yr of cement produced/used Percentage of yearly worldwide cement produced/used Percentage change in cement production/usage Trends in the Cement Industry during Five-Year Plans Indian Cement Industry Demand Drivers - 2008 Loan Rates and disbursement of loans Region-wise production increase for December 2008 Region-wise consumption and YoY growth percentage Cement prices Page No. 11 12 13 25 30 33 60 2.8 2.9 61 65 7

CHAPTER I INTRODUCTION 8

GLOBAL CEMENT INDUSTRY Cement is a cyclical industry in which long periods of growth are interspersed by shorter periods of decline. Over recent decades, different geographical markets have experienced different cycles, meaning that it is comparatively rare for their periods of decline to coincide. This also means that as a rule the number of markets in growth at any one time will exceed those in decline. This is a significant factor for the long-term outlook of the cement sector, meaning that growth prospects for the industry are encouraging, despite the 2007 downturn in the US. The key growth drivers for cement consumption are population growth (increasing demand for housing, commercial building and infrastructure) and economic growth (driving up the consumption of cement per capita). Rapid urbanization and the booming infrastructure have lead to an increase in construction and development across India, attracting even the global players. Cement is a global industry made up of local markets. When a product is both heavy and cheap, transportation costs become a key factor in determining its profitability, so cement plants need to be close to customers. This is why global cement industry leaders are seeking to be present in as many local markets as they can, resulting in the growing dominance of the industry by its largest businesses According to the leading manufacturer of cement production equipment in the world, FLSmidth, world cement consumption is set to rise on average between 3.6% and 4.8% per year in the coming years. At the same time, the Portland Cement Association (the US cement sectors trade body) is expecting world cement consumption to average more than 6% annually in the next two years, reaching 2.9 billion metric tons by 2008 (estimation Oct 2007). While much of this growth is set to come from emerging growth markets in Central and Eastern Europe and Asia, growth in mature markets also looks healthy. The recent years have witnessed a surge of foreign direct investment in the cement sector. International players like France's Lafarge, Holcim from Switzerland, Italy's Italcementi and Germanys Heidelberg Cements together hold more than a quarter of the total capacity. Holcim, one of the world's leading suppliers of cement, has 24 plants in the country and enjoys a market share of about 2325 per cent. It will further invest about US$ 2.49 billion in the next five years to set up plants and raise capacity by 25 MT in the country. Holcim 9

has a global sale worth about US$ 20 billion, where India contributes US$ 2 billion2.5 billion. Italcementi Group, which acquired full stake in the K K Birla promoted Zuari Industries' cement, for US$ 126.62 million in 2006 plans to invest US$ 174 million over the next two years in various greenfield and acquisition projects. The French cement major, Lafarge which acquired the cement plants of Raymond and Tisco with an installed capacity of 6 MTPA a few years back plans to double its capacity to 12 MT over the next five years by adopting the greenfield expansion route. Global demand to rise 4.7% annually through 2010 Global demand for cement is forecast to grow 4.7 percent annually to 2.8 billion metric tons in 2010. China, which is already by far the largest market for cement in the world, will register the biggest gains in terms of the total amount of cement sold. Other developing parts of the Asia/Pacific region and Eastern Europe, as well as a number of nations in the Africa/Mideast and Latin America regions, will also record aboveaverage cement market gains, fueled by a robust construction outlook. Vietnam, Thailand, the Ukraine, Turkey and Indonesia will record some of the strongest increases in percentage terms. Market advances will be less robust in the developed areas of the US, Japan and Western Europe, with maintenance and repair construction accounting for much of the growth in cement demand through 2010. However, a pickup a construction spending in Germany and Japan following an extended period of decline will help bolster overall developed world market growth. Sales of straight portland cement, which currently accounts for more than three-quarters of all cement demand worldwide, will be less robust but still healthy, benefitting from continued growth in construction spending worldwide and further advances in manufacturing technology. 10

Fig. 2.1: Gigatons/yr of cement produced/used Source: Industry data 11

Fig. 2.2: Percentage of yearly worldwide cement produced/used Source: Industry data Ready-mix concrete to be fastest growing end use the ready-mix concrete market is expected to be the fastest growing end-use segment. Ready-mix concrete companies account for a comparatively small but increasing share of total cement demand in a number of fast-growing developing countries, and suppliers will benefit from an extremely favorable market outlook in China, where large-scale construction projects will require significant amounts of ready-mix concrete through 2010. Consumer demand for cement will also climb at an above-average pace, stimulated by rising personal income levels in developing parts of the world, where consumer sales can account for half 12

or more of total cement demand, and by new product introductions in mature developed world markets. . Fig. 2.3: Percentage change in cement production/usage Source: Industry data 13

Mergers and Acquisitions (M&As) A growing and robust economy was noteworthy in terms of the total number of mergers and acquisitions (M&A) in India 2007, with the cement sector contributing to 7 per cent to the total deal value. Increased activity in infrastructure and a booming real estate market have seen foreign firms vying to acquire a share of the pie. Holcim strengthened its position in India by increasing its holding in Ambuja Cement from 22 per cent to 56 per cent through various open market transactions with an open offer for a total investment of US$ 1.8 billion. Moreover, it also increased its stake in ACC Cement with US$ 486 million, being the single largest acquirer in the cement sector. Leading foreign funds like Fidelity, ABN Amro, HSBC, Nomura Asset Management Fund and Emerging Market Fund have together bought around 7.5 per cent in Indias thirdlargest cement firm, India Cements (ICL), for US$ 124.91 million. Cimpor, the Portugese cement maker, paid US$ 68.10 million for Grasim Industries 53.63 per cent stake in Shree Digvijay Cement. German major Heidelberg Cement has merged Mysore Cement, in which it owns around 54 per cent stake, Indorama, (where it acquired 100 per cent stake in 2008) and its 100 per cent Indian subsidiary, Heidelberg Cement India 14

INDIAN CEMENT INDUSTRY Cement is a binder which sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term "opus caementicium" to describe masonry which resembled concrete and was made from crushed rock with burnt lime as binder. Cement is an essential component of infrastructure development and most important input of construction industry, particularly in the governments infrastructure and housing programs, which are necessary for the countrys socioeconomic growth and development. 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 consented 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 cement industry has continued its growth trajectory over the past seven years. Domestic cement demand growth has surpassed the economic growth rate of the country for the past couple of years. The growth rate of cement demand over the past five years at 8.37 % was higher than the rate of growth of supply at 4.84% as also the rate of growth of capacity addition during the same period. Demand for cement in the country is expected to continue its buoyant ride on the back of robust economic growth and infrastructure development in the country. 15

EVOLUTION OF THE INDIAN CEMENT INDUSTRY Until 1982, the government controlled the price and distribution of the cement since the production wasnt sufficient to meet the entire demand. The industry was partially decontrolled in 1982 and this gave impetus In 1889, Calcutta firm attempted to its pace of growth. HIGHLIGHTS to produce cement from Argillaceous (kankar). The first organized effort on mass scale to manufacture Portland cement commenced in Madras in It was in 1914,1904 by South India Industries Limited, but it failed. that the first commissioned cement-manufacturing unit in India was set up by India Cement Company Limited at Porbandar, Gujarat with an Theinstalled capacity of 10,000 tonnes and production of 1000 tonnes. problem of supply outstripping demand was significant in early period of the industry. This led to a price war between the producers forcing many to sell below its production cost and also many into liquidation. Then the government of India intervened into the market and referred the cement industry to the Tariff Board. The board recommended protection by government and cooperation among existing cement units. These events resulted in formation of Indian Cement Manufacturers In 1927, ConcreteAssociation in 1925 (the price regulator). Association of India was formed whose two main objectives were to educate public about the use of cement and to play an active role in popularizing Indian cement. 16

This was followed by the formation of Cement Marketing Company of India Limited in 1930 to promote and control the sale and distribution of cement at regulated prices. After all these initiatives, the sales increased along with the increase in the number of plants. In 1936, eleven companies, except Sone Valley Portland Cement Company Limited, merged to form Associated Cement Company Limited (ACC). In 1937, Dalmiya Jain Group set up five factories with installed capacity of 575000 tonnes and ACC added four more plants. The price and distribution control system on cement, implemented in 1956, aimed at ensuring fair prices to producers and consumers all over the country. Although due to slow growth in capacity expansion and rising cost in the industry, the government had to increase the fixed price several times. Growth was low due to inadequate retention price and lack of adequate financial resources to the existing companies. Direct control by government over CONTROL PERIOD (1969-1982) production, capacity and distribution of cement. Indirect intervention took the form of price control. Due to maintained slow development, the uniform price imposed by the government was substituted by a three-tier price system in 1979. Different prices were assigned to cement produced in low, medium and high cost plants. 17

Thus, controlled price did not reflect the true economic cost and profit margins reduced increasingly, preventing essential investments in capacity and production expansion. However, the system resulted in artificial shortages, extensive black marketing and corruption in the civil supply departments of the government. The system of price control was accompanied by a policy of freight pooling. The price control fixed a uniform price according to estimated production costs at which cement was required to be sold all over the country. This price contained a freight component that was averaged over the country as a whole. It implied that producers had no incentive in locating production, such that transportation costs of cement would be minimized. As a result of non-optimal location of industries, average costs of production as well as demand for scarce railway capacity for transportation increased. The government of India introduced a PARTIAL DECONTROL (1982-1989) system of partial decontrol in 1982. A levy quota of 66.60 % for sales to government and small house builders was imposed on existing units while for new and sick units a lower quota at 50% was established. The balance of 33.40% could be sold in the free open market to general A ceiling price was set for sales in the open market. consumers. Freight pooling no longer covered non-levy cement. 18

To sustain an accelerating course, the government in 1988 subsequently introduced the levy quota as low as 30% for units established before 1982 and the retention price had increased substantially. In 1987, the Cement Manufacturers Association and the government decided that there was no further necessity for a maximum price ceiling. In 1989, all price and distribution TOTAL DECONTROL (1989 onwards) controls on sale of cement were withdrawn. Freight pooling was abandoned and a subsidy scheme to ensure availability of cement at reasonable prices in remote and hilly regions of the country was worked out. De-licensing under the policy of economic liberalization was done in 1991. Growth was seen from 91 plants and 43 million tonnes of production in 1989-90 boosting to 132 plants and 161.66 million tonnes production Total capacity utilization for the industry hasin 2006-07 (CMA 2007). also increased from 78% to 91% during the same period. 19

CHAPTER II RESEARCH DESIGN 20

STATEMENT OF THE PROBLEM During the last few years, liberalization of economic policies in India has resulted in a business climate that has favoured rapid growth in almost all segments of Indian industry and commerce. During the past decades, the Indian financial market has witnessed considerable maturity. The primary reason for this is the (LPG) process in1991. The entire process has brought in a lot of changes in various aspects of financial market. During the last few years savings of country was around 23%, which was one of the highest in world. All this has played its part in the growth and development of the To analyze the evolution cement industry. OBJECTIVES OF THE STUDY of the cement industry. To compare the financial ratios of the leading and the lagging companies in the industry. To find the reasons for the growth of the industry. METHODOLOGY OF STUDY The whole study can be termed as a desk research. Hence there is no field work and collection of primary data for this research except for secondary information obtained by the medium of internet, journals and magazines. The top 5 and the bottom 3 performers of the industry have been chosen on the basis of their sales in the previous year. SOURCES OF DATA Only secondary data was collected from the internet, company websites, magazines and various articles. Capitaline databases have been the main source of information for The study is limited to company analysis. LIMITATIONS OF THE STUDY: selection of top 5 and bottom 3 cement companies in India. The number of years used for comparing the performance of these companies is 5. 21

CHAPTER III INDUSTRY ANALYSIS 22

STRUCTURE OF THE INDIAN CEMENT INDUSTRY It is a fragmented industry. There are 56 cement companies in India, operating 124 large and 300 mini plants, where majority of the One ofproduction of cement (94%) in the country is by large plants. the other defining features of the Indian cement industry is that the location of limestone reserves in select states has resulted in its Since cement is a high bulk and lowevolving in the form of clusters. value commodity, competition is also localized because the cost of transportation of cement to distant markets often results in the product Another distinguishingbeing uncompetitive in those markets. characteristic comes from it being cyclical in nature as the market and consumption is closely linked to the economic and climatic cycles. In India, cement production is normally at its peak in the month of March while it is at its lowest in the month of August and September. The cyclical nature of this industry has meant that only large players are able to withstand the downturn in demand due to their economies of scale, operational efficiencies, centrally controlled distribution systems and geographical diversification. 23

Status of the Indian Cement Industry over the periods Table 1.1 - Status of the Indian Cement Industry over the periods Fig. 2.4 - Trends in the Cement Industry during Five-Year Plans 24

SWOT ANALYSIS Second largest in the world in terms of capacity: In a) Strengths: India there are approximately 124 large and 300 mini plants with installed capacity of 200 million tonnes. Low cost of production: due to the easy availability of raw materials and cheap labour. Effect of global recession on real estate: The realb) Weakness: estate prices are stabilizing and facing steady slowdown especially in metros. There are approximately one hundred thousand completed flats without occupancy in Bangalore. There has been drastic reduction in property prices due to reduced demand and increased supply. Demand-Supply gap, overcapacity: The capacity additions distort the demand-supply equilibrium in the industry thereby affecting profitability. Increasing cost of production due to increase in coal prices. High Interest rates on housing: The re-pricing of the interest rates in the last four years from 7% to 12% has resulted in the slowdown Strong growth ofin residential property market. c) Opportunities: economy in the long run: Indian economy has been one of the stars of global economics in the recent years, growing 9.2% in 2007 and 9.6% in Increase2006. However, India is facing tough economic times in 2008. in infrastructure projects: Infrastructure accounts for 35% of cement consumption in India. And with increase in government focus on infrastructure spending, such as roads, highways and airports, the Growing middle class: Therecement demand is likely to grow in future. has been increase in the purchasing power of emerging middle-class with rise in salaries and wages, which results in rising demand for better quality of life that further necessitates infrastructure development and hence increases the demand for cement. 25

Technological changes: The Cement industry has made tremendous strides in technological up gradation and assimilation of latest technology. At present ninety three per cent of the total capacity in the industry is based on modern and environment-friendly dry process technology and only seven per cent of the capacity is based on old wet and semi-dry process technology. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially and hence reduce the cost of production. Imports from Pakistan affecting markets in Northern India:d) Threats: In 2007, 130000 tonnes in 2008, 173000 Metric tones of cement was exported to India. This was done to keep the price of cement under Excess overcapacity can hurt margins, as well as prices.check. 26

PORTERS FIVE FORCES REASONS FOR THE GROWTH OF CEMENT INDUSTRY The domestic cement industry is highly insulated from global cement markets. Exports have been constant at about 6% of total cement demand for past few years. With the Government of India intervention, making cement duty free, cement is being imported from neighbouring countries. However, due to logistics issues and lack of port handling capabilities imports of cement will remain negligible and do not pose a threat to domestic industry. Earlier government sector used to consume over 50% of the total cement sold in India but in the last decade, its share has come down to 35%. Demand for cement is linked to the economic activity in any country. Broadly, it can be categorized into demand for housing construction (homes, offices etc.) and infrastructure creation (ports, roads, power plants etc). The real driver of cement demand is infrastructure development; hence cement demand in emerging economies is much higher than developed countries where the demand has reached a 27

plateau. In India too, the demand for cement will be affected by spending on infrastructure (including housing.) Cement is a bulky commodity and cannot be easily transported over long distances making it a regional market place, with the nation being divided into four regions. Each region is characterized by its own demand-supply dynamics. The Southern region dominated the cement consumption at 44.5 mn tonnes in FY 07, accounting for about 30% of total domestic cement consumption. During FY 03-07, Southern region has witnessed highest CAGR of cement demand at 10.4% followed by Northern and Eastern regions at 8.9% and 9%, respectively. Apart from meeting the entire domestic demand, the industry is also exporting cement and clinker. The export of cement during 2001-02 and 2003-04 was 5.14 million tonnes and 6.92 million tonnes respectively. Export during April-May, 2003 was 1.35 million tonnes. The Planning Commission for the formulation of X Five Year Plan constituted a 'Working Group on Cement Industry' for the development of cement industry. The Working Group has identified following thrust areas for improving demand for cement; i. ii. iii. Further push to housing development programmes; Promotion of concrete highways and roads; and Use of ready-mix concrete in large infrastructure projects. Further, in order to improve global competitiveness of the Indian Cement Industry, the Department of Industrial Policy & Promotion commissioned a study on the global competitiveness of the Indian Industry through an organization of international repute, viz. KPMG Consultancy Pvt. Ltd. The report submitted by the organization has made several recommendations for making the Indian Cement Industry more competitive in the international market. 28

Indian Cement Industry Demand Drivers - 2008 Graph 2.5 - Indian Cement Industry Demand Drivers - 2008 (Source CMA) Housing and infrastructure sectors constitute a major part of the total demand for cement in India. These two sectors have been further analysed. HOUSING Housing, besides being a very basic requirement for the urban settlers, also holds the key to accelerate the pace of development. Investments in housing, like any other industry, have a multiplier effect on income and employment. Construction sector employment is growing at the rate of 7% per annum. Housing provides opportunities for home-based economic activities. The Indian Housing sector has grown by leaps and bounds in the last few years. The total home loan disbursements to this sector has risen from Rs 19,723 crore in the year ended 2000 to a massive Rs 2,52,932 crore in the year 2008.This robust growth has been triggered by a number of factors. Some of which are: Tax rebates on housing loans Continued growth in population Decrease in number of people per household (average size of household) Rise in disposable income levels Lower interest rates and easy availability of housing finance. 29

Also the Housing Finance Companies and banks have introduced various schemes to attract the young generation borrower. Free home insurance, lower rates for purchase of consumer durables, household goods, and refinance options are some of the noteworthy schemes that the institutes have come up with to attract the borrowers. The Indian housing industry is highly fragmented, with the unorganized sector, comprising small builders and contractors, accounting for over 70% of the housing units constructed and the organized sector accounting for the rest. The organized sector comprises large builders and government or government affiliated entities. The housing market witnessed a frenzied boom in the early nineties on the back of a booming stock market and a liberalization process that was kicked off in 1991. The stock market and real estate markets crashed in quick succession - 1994 and 1995 respectively, followed by a prolonged period of about 8 years of little or no appreciation in real estate. The crash, accentuated by high inflation and high interest rates, not only kept speculative inflows out but also kept genuine home seekers at bay. However, reversal in that trend is being witnessed in the past 3-4 years because of several reasons. One of the most important reasons is that the rural people are moving from thatched mud units to pucca (brick and mortar) structures. With increasing rural affluence, demand for cement for construction of houses in villages has gone up significantly overt the last few years. The cement industry is expecting around 50 per cent of the overall demand to come from the rural housing sector during the current year and beyond. Rural people, especially in the most underdeveloped sates, are increasingly replacing thatched mud hutments and switching over to pucca structures. While a marked increase in demand is being seen in the rural parts of predominantly underdeveloped states such as Bihar, Chhattisgarh and Uttar Pradesh, the hill states of Uttarakhand, Himachal Pradesh and the north-east are also seeing a spurt in demand. The Centre's latest estimates peg the estimated shortage of houses in rural areas at around 15 million as against an overall shortage of 22 million dwelling units in the rural and urban areas put together. The Centre, under its Bharat Nirman programme, expects over six million houses to be built in rural areas over the next four years. Rural housing projects undertaken by about 15 states through their own capital subsidy or credit-cumsubsidy schemes have also resulted in rural housing coverage going up during the last few years. These states, including Tamil Nadu, Andhra Pradesh, 30

Karnataka, Gujarat, Uttarakhand, Jharkhand, Sikkim, Meghalaya and Punjab, have together constructed about 27 lakh houses from 2001 to 2005, according to Planning Commission estimates. The cement industry recorded another year of double digit demand growth (10 per cent for 2006-07). The demand buoyancy is witnessed across sectors with increased focus on infrastructure development, rising industrial activity, and strong real estate demand from commercial and residential sectors. Another reason is the fall in interest rates, which have also greatly contributed to the growth of the housing sector thus fuelling the demand for cement and in turn its production. The following graph gives a clear indication of the rise in the quantum of loans lent as against the rate of interest prevailing over a period of time. Table 1.2 Home Loan Rates and disbursement of loans Interest Rate (in %) 2000 13.00 2001 12.15 2002 11.35 2003 09.85 2004 07.65 2005 07.50 2006 08.50 2007 11.00 2008 9.00 Source: RBI Trend and Progress Reports Year Quantum of Loan lent in Rs Crore 19,723.38 22,425.09 29,359.29 51,672.70 89,449.00 1,34,276.00 1,79,060.00 2,24,481.00 2,52,932.00 31

Fig. 2.6 - Home Loan Rates and disbursement of loans INFRASTRUCTURE Infrastructure projects along with commercial constructions accounts for about 35% of the total cement consumption in India. With the government increasing its focus on infrastructure spending, particularly on roads, ports and airports, the cement demand is likely to go up in the near future. Since India began opening up in 1991, until recently, the progress of infrastructure has been very poor and has been a zigzag process. But if one considers the following developments, it would be visible that India is turning the corner on the infrastructure question and in turn spurring the demand for cement. Firstly, there are over a hundred Special Economic Zones (SEZs) in India either in operation or under construction. Many international companies, like Nokia and automotive makers like Volvo, are actually producing in the SEZs. Construction has been taking place land clearance has been done to relocate squatters or farmers away from their land and this has already happened in the last five years or so. 32

The other thing to look at is the organized retail sector in India. There are well over 500 retail malls either already operating in India or in various stages of construction and this is also new in the last three to five years. The various road projects under the National Highway Development Program (NHDP Phase I and II) initiated by the previous government are being successfully implemented by the present government. Further, government has also announced new projects namely NHDP Phase, III, IV, V and VI, which include having four lanes on high density highways, upgradation of existing highways, sixlaning of roads under NHDP Phase I and also 1,000kms of new expressways. The total cost of these new projects is about Rs. 1,075 billion and is expected to be completed by FY2012. A total demand of close to 50 million tonnes of cement is expected from the above projects. Table 1.3 Projects under the NHDP Moreover, the government has set aside over USD100 billion for infrastructure spending in between 2007 and 2012. New airports have come up and the efforts are on to modernize the existing ones. Thus, infrastructure is getting its share of attention and in turn spurring demand for cement. 33

CHAPTER IV ANALYSIS OF DATA 34

The Indian Cement Sector is divided on the basis of regional INDIA operations. Companies fall within the categories of: MAJOR NORTH INDIA MAJOR SOUTH INDIA MINOR NORTH INDIA MINOR SOUTH MAJOR COMPANIES The top 5 cement companies have been selected based upon their performance in the last financial year. The net sales turnover has been used to judge performance. The 5 major companies are Northern Region - ACC, Ultra Tech Cement, Ambuja Cement, Shree Cement Southern Region India Cement ACC LIMITED Established in 1936, ACC has been a pioneer and trend-setter in cement and concrete technology. A prominent overseas presence and figuring on the elite list of consumer super brands of India but most importantly ACC has been amongst the first Indian companies to make environmental protection, it is a cornerstone of its corporate objectives. The historic merger of ten existing cement companies led to the establishment of ACC - melding into a cohesive organization in the year 1936 at Maharashtra. Its a big company in cement manufacturing and offers the services of Ready mixed concrete and Consultancy service. This company is listed by Bombay Stock Exchange, National Stock Exchange and in London. The company received an award as 'Good Corporate Citizen' for the year 20052006. During the year 2007 company acquired 100 % of the equity stake of Lucky Minmat Private Limited for Rs 35 crores and also acquired 14.3 % equity stake in Shiva Cement Limited. Meanwhile the 35

company divested its entire equity shares in Almatis ACC Ltd to the Almatis group. The overseas contract with YANBU Cement Company in the kingdom of Saudi Arabia is successfully ongoing relationship from last 28 years and has been renewed up to February 28, 2011. The company has developed comprehensive expansion plans to meet the requirements of its agenda for growth with a view to attain leadership position in the cement industry, for that company made a project for augmentation of clinkering and cement grinding. As a result with this the capacity of Gogal works stands increased to 4.4 Metric Tonnes Per Annum. ACC planed to expand the unit of Bargarh works capacity to 2.14 MTPA together with 30MW captive power plant is underway. The implementation of the projects for augmenting grinding capacity at Madukkarai by 0.22 MTPA and New Wadi by 0.60 MTPA. Ready mix concrete business has been identified as an area of strategic priority. ACC commissioned a Wind Energy Farm in Tamil Nadu to promote clean and green technology. The company foresees substantial scope for growth of this business in India and has accordingly finalized plans to expand Ready Mix business in major cities including Tier1 and Tier 2 cities. ACC realizes the growth potential of Ready Mix, the company has 26 plants for the same and enhance to 46 in 2008. The company has major capital expenditure projects in hand, as a result of these projects the total cement capacity of the company will increase to about 30.4 MTPA by end of 2010 with total outlay of Rs 4,000 crores. ULTRATECH CEMENT LTD. UltraTech Cement Limited was incorporated as a public limited company on 24th August 2000, as L&T Cement Limited a 100% Subsidiary of Larsen & Toubro Limited. The name of the Company was changed to UltraTech CemCo Limited with effect from 19th November 2003. The name of the company was again changed to UltraTech Cement Limited with effect from 11th October 2004. UltraTech Cement Limited has an annual capacity of 18.2 million tonnes. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana Cement. It also manufactures ready mix concrete (RMC). UltraTech Cement Limited has five integrated plants, six grinding units and three terminals two in India and one in Sri Lanka. 36

UltraTech Cement is the countrys largest exporter of cement clinker. The export markets span countries around the Indian Ocean, Africa, Europe and the Middle East. INDIA CEMENTS India Cements was set up in 1946 and the company's first plant was established in 1949 at Sankarnagar, Tamil Nadu. Since the India Cements Ltd. has been established, it has risen in stature to become the biggest cement producer in south India. India Cements has 7 plants spread across Andhra Pradesh and Tamil Nadu. The total production capacity of the plants is around 9 million tons per year. In south India, India Cements Company has a 28% market share and it plans to achieve a market share of around 35% in the near future. Around 90% of India Cements Company's produce is sold in the Tamil Nadu and Kerala markets. India Cements Company has a distribution network which is very strong - it has over 10,000 stockists out of which around 25% is devoted to the company. The India Cements Ltd. owns famous brands such as Rassi Super Power, Sankar Super Power, and Coromondal Super Power (In the year of 1990, ICL acquired Coromandel Cement plant at Cuddapah,consequently installed capacity rose to 2.6 million tonnes per annum). The India Cements Company has subsidiary companies which include ICL Financial Services, Industrial Chemicals & Monomers, ICL International, and ICL Securities. In 1997 India cements acquired Aruna Sugars Finance Ltd which was later renamed as India Cements Capital & Finance Ltd. It also acquired Cement Plant of Visaka Cement Industry, at Tandur, Ranga Reddy district of Andhra Pradesh with Installed capacity 9,00,000 Tonnes.The cement division of Raasi Cement (RCL) was vested with the company from April.1998 under a scheme of arrangement India Cements has established itself as a leading cement manufacturing company and as it plans to expand its production capacity, the company's position in the market is sure to rise in the near future. AMBUJA CEMENT The company's cement plant was commissioned in 1985. It was set up in technical collaboration with Krupp Polysius, Germany, Bakau Wolf and Fuller KCP. The company got necessary approvals for setting up another cement plant with 1 million tonne capacity per annum at Himachal Pradesh in the year 1991. The Company undertook bulk cement transportation, by sea, to the major markets of Mumbai, Surat and other deficit zones on the West Coast. Transportation was to be 37

carried out by three specially designed ships during the year 1992. During the year 1994, the company's Muller location 1.5 million tonne cement project with clinkeriation facility at site in H.P and grinding facility both at Suli & Ropar in Punjab was bespoken. In 1997, Kodinar plant of the company was originated its commercial production with an enhanced capacity. In the last decade the company has grown tenfold. It was the first company in India to introduce the concept of bulk cement movement by the sea transport. The company's most distinctive attribute, however, is its approach to the business. Ambuja follows a unique homegrown philosophy for successful survival. Ambuja is the most profitable cement company in India, and one of the lowest cost producers of cement in the world. The company was awarded for its credit, the National Award for commitment to quality by the Prime Minister of India, National Award for outstanding pollution control by the Prime Minister of India, Best Award for highest exports by CAPEXIL and Economic Times - Harvard Business School Association Award for corporate excellence in different years. The company was adjudged as the top Indian company in the cement sector for the Dun and Bradstreet - American Express Corporate Awards 2007. The company developed a unique homespun channel management model called Channel Excellence Programme (CEP) for marketing their product. Over 7000 dealerships and 20,000 retailers across India are covered under this model. The company name was changed from Gujarat Ambuja Cements Limited to Ambuja Cements Limited on April, 2007, the word Gujarat was dropped to reflect the true geographical presence of the company SHREE CEMENT LTD. Shree Cement Ltd., belonging to the Calcutta-based industrialists P D Bangur and B G Bangur is one of the largest cement producer in Rajasthan was incorporated in the year 1979. Shree has two plants in Beawar, Rajasthan with 2.6 million tonne installed capacity. Shree's is the largest single location manufacturer with production in Northern India. The company markets its products under two brands- Shree Ultra Ordinary Portland Cement (OPC) and Shree Ultra Red Oxide Cement. The company has undertaken new activities in the field of leasing and hire purchase during 199495. The company has tied up with Christian Pfeiffer & Company, Germany, for installing a horizontal impact crusher to pre-crush clinker before using it in the cement mill to upgrade cement output and save energy. It has also tied up with IKN, Germany, to incorporate their KIDS system in the clinker cooler to improve efficiency of the clinker cooler and save heat. The company has been awarded by KPMG 38

Quality Registrar, USA certificate of ISO 9002 during the year. In Oct.'97, the Raj Cement was commenced production. The company has successfully commissioned its new cement plant of 1.24 million tonne capacity and has already attained 100% capacity utilization. The company's modernization and expansion plan to increase its installed capacity from 20 to 26 lakhs TPA was implemented in December 10,2001,. During 2001-02 the company exerise to commission a captive 36 MW thermal power project at a cost of Rs.120 crores. An EPC contract was signed with Thermax Ltd in September, 2001 and the civil work commenced in October 2001 and the project is expected to be commissioned by December, 2002. During 2004-05 the company was in the process of setting up a new plant with a capacity of 1.2 MTPA which is scheduled to start functioning by the third quarter of this year at Village Ras, about 32 kms away from the existing location. This plant is designed to produce a premium grade of cement 'Bangur Cement'. The estimated project cost was Rs.304 crores. During August 2005 the company has commissioned a 6 MW Captive Thermal Power Plant at its cement manufacturing facility Rajasthan. The total capacity of its Captive Thermal Power Plant has gone up from 36 MW to 42 MW. The additional capacity would enable Company to meet requirement of power for its upcoming 'Bangur Cement Project'. 39

INDUSTRY STANDARDS North Region: Table 1.4 Industry Standards (Ratios) North Region YRC Debt-Equity Ratio Current Ratio Turnover Ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBIDTM (%) ROCE (%) RONW (%) Source: Capitaline South Region: 1.06 10.94 29.57 6.29 23.45 23.17 31.28 1.07 11.27 30.9 9.59 24.16 27.03 36.27 0.9 10.41 24.61 3.21 15.63 10.87 14.37 0.89 10.54 24.02 1.49 14.61 7.82 4.23 Latest 1.6 0.85 2006 0.98 0.95 2005 1.81 0.79 2004 3.53 0.72 Table 1.5 - Industry Standards (Ratios) South Region YRC Debt-Equity Ratio Current Ratio Turnover Ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) Source: Capitaline 0.85 7.59 14.1 2.1 11.12 9.72 9.13 0.82 7.18 13.65 2.25 11.84 10.36 10.92 0.73 7.08 13.31 1.24 7.56 5.78 1.5 0.73 7.08 13.31 1.24 7.56 N/A N/A 0.71 7.64 13.38 0.73 6.27 N/A N/A Latest 1.88 1.07 2006 2.06 1.07 2005 2.61 1.08 2004 2.88 1.08 2003 3.14 1.14 40

Table 1.6 - Analysis for the Year ended 2007-2008 YRC Debt-Equity Ratio Current Ratio Turnover Ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBIDTM (%) ROCE (%) RONW (%) 1.53 11.58 31.19 24.28 26.74 41.34 35.12 1.29 12.05 31.42 20.91 28.95 40.69 45.18 1.01 11.87 12.44 8.69 30.45 24.36 32.01 1.32 13.06 54.91 26.14 34.3 42.49 29.02 1.29 14.67 64.51 8.08 36.84 24.8 46.19 ACC December 0.19 0.97 Ultra Tech March 0.74 0.65 India Cements March 0.96 1.88 Ambuja Cement December 0.15 1.05 Shree Cement March 2.01 2.02 Ambuja cement maintained the least debt to equitySource: Capitaline ratio in this period which was also below that of the industry standard. Thus we can say that the company was more dependent on its equity. Considering the scenario it can be said that a lower debt would be favourable for the company as it would be relieved of the interest burden. However Shree cement has the highest ratio. This is because the company has increased its secured and unsecured loans by 42% and used the amount to purchase fixed assets and has increased its investments When compared to all the companies, Shree Cement hassignificantly. the best current ratio of 2.02. Thus the company has had an efficient working capital position . However the working capital position of ACC The debtor turnover ratio ofand Ultra Tech has not been encouraging. Shree Cement and Ambuja Cement has been very impressive. This clearly indicates that they are able to generate cash quickly and are able to use this to meet their current liabilities quickly thus maintaining a The interest coverage ratio has been the besthealthy current ratio. for Ambuja .But Shree Cement and India Cement have scored the lowest on this parameter. This measure is an important one for the long term creditors. For Shree Cement as the interest on the loans taken was high resulted in a lower interest coverage ratio. 41

Table 1.7 - Analysis for the Year ended 2006-2007 YRC Debt-Equity Ratio Current Ratio Turnover Ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBIDTM (%) ROCE (%) RONW (%) 1.37 10.53 31.24 20.22 27.5 41.3 41.57 1.17 13.49 30.8 14.43 26.97 42.96 55.84 1 11.29 10.43 4.28 28.51 21.1 36.59 1.13 12.89 68.9 17.26 32.51 34.1 35.36 1.13 11.99 72.45 14.83 37.92 17.39 43.86 ACC December 0.4 0.97 Ultra Tech March 1.08 0.7 India Cements March 1.55 2.2 Ambuja Cement December 0.35 0.91 Shree Cement March 1.74 1.56 We note that all the companies with the exceptionSource: Capitaline of Shree Cement have a high debt equity ratio in the fiscal 2006-07 when compared to 2007-08. Ambuja Cement has the lowest debt to equity ratio in this fiscal too. India cement had the best current ratio which was well above the industry standard of 1.07, followed by Shree Cement. The fixed assets and inventory turnover ratio have been satisfactory for all the companies and have been well over their industry standards. The debtor turnover ratio of Shree Cement has been significantly high in comparison to the other players. This depicts that the company is able to generate cash very quickly. Thus owing to a good debtor turnover ratio the company was able to maintain a cash and bank balance of Rs.608 crores when compared to Rs.483 crores in the year ended March 08. The interest cover ratio has been healthy for all the companies except for India Cement. While the other players have maintained a ratio much above the industry standard of 6.29, India Cement was able to maintain its ratio just above the industry standard of 2.1. The main reason being that during this period it had a high interest payable, as is evident form the high debt equity ratio maintained by the company in this fiscal. 42

Table 1.8 - Analysis for the Year ended 2004-2005 India Cements March 1.08 0.7 1.17 13.49 30.8 4.19 26.97 42.96 55.84 Ambuja Cement December 2.81 1.8 0.87 8.81 8.63 1.27 14.67 7.19 4.1 YRC Debt-Equity Ratio Current Ratio Turnover ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) ACC December 0.72 0.91 1.14 8.67 25.44 20.22 23.56 19.08 22.08 Ultra Tech March 0.57 0.63 0.82 10.59 68.34 17.26 27.86 18.55 22.3 Shree Cement March 1.14 0.94 0.76 8.88 39.06 2.92 24.9 6.57 6.28 The debt equity ratio of the Ambuja cement is leastSource: Capitaline as compared with the other prominent players which is also below the industrial standard of 0.98 which depicts that the major funds is generated out of the shareholders equity by increasing it from Rs.2178.42 crores in 30.06.2005 to Rs.3491.72 crores as on 31.12.2006*. India cements debt equity ratio is the highest among the top performers which also shows that they have more funds generated from the loans and debts than from the shareholders equity. It also shows that there is also a vital role of short term debts in raising funds (as comparing it with the long term debt equity ratio of the others). Thus , this may result in the volatile earnings as the result of the additional interest In the long term debt equity ratio of the India cementexpenses. stood to be the highest among all the other top performers. i.e. 2.22 which is even much higher than the industrial standard of 0.89. However the debt equity ratio of the same has got reduced from the previous of 4.20. still it sounds more riskier because of higher interest rates, they might have to pay the additional interest out of the debts. Also Ambuja stood to be the lowest in the long term debt-equity ratio because of more increase in the raising of funds from shareholders equity than of the long term loans. 43

As per the comparison of the top cement players the India cement stood to be the highest in maintaining the current ratio of 1.8 (near to the ideal ratio of 2.0) which shows the higher liquidity of the company than its peers which is followed by the Shree cement and the acc ltd. (however they are far behind the India cement). The least one is of the Ambuja cement i.e. of 0.63 which is not very attractive . The comparison of the fixed asset turnover ratio of the top performers shows that the acc ltd. And the Ultratech have been efficiently utilizing their fixed assets for the generation of the sales as compared to the others and also succeed their industrial standard of 1.07. however the fixed asset efficiency of the others are the moderate. The debtors turnover ratio of the Ambuja cement is very impressive as compared to the others which depicts its ability to collect the amount from the debtors and also the efficient management of the debtors and helps the firm to generate enough cash to meet the current liabilities and thus maintain healthy liquid ratio. However the debtors collection of the Indian cement is to be questioned as it holds the lowest of the debtors turnover ratio within the top performers and even fall below the industrial standard of 13.65. The interest coverage ratio observation of the top performers reveals that the coverage ratio of the acc ltd is the highest of all which sounds good from the lenders point of view since its profit before interest and tax is 20.22 times of its interest expenses i.e. the company has enough earnings to clear its interest obligations and thus shows the investment of the lenders are relying in the safe hands. Also it depicts a good short term financial health of the business. also the coverage ratio of Ambuja cement sounds impressive .however the coverage ratio of Ultratech cement and Shree cement is not attractive for the investor as it falls below the industrial standard of 9.89 and the interest coverage ratio of the Indian cement sounds questionable as it is the lowest of all and also is below its industrial standard of 2.25. 44

Table 1.9 - Analysis for the Year ended 2004-2005 YRC Debt-Equity Ratio Current Ratio Turnover Ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) 1.15 9.86 24.35 5.61 11.91 18.46 25.65 0.71 12.07 17.5 0.69 2.4 2.77 0.27 0.68 7.89 9.14 0.18 2.34 2.79 -12.55 0.82 10.59 68.34 6.65 20.17 18.55 22.3 0.79 11.01 26.94 2.46 7.25 8.84 10.75 ACC March* 1 0.9 Ultra Tech March 1.48 0.66 India Cements March 4.76 1.47 Ambuja Cement December 0.57 0.63 Shree Cement March 1.2 0.98 Source: Capitaline * In the year 2004-05, ACC cements has prepared its books of accounts in the month of March 2005. It changed their financial year to December by preparing their Annual Report for a period of 9 months in Decmember 2005. Thereafter, it prepared its books of accounts Ambuja cement and ACC Cement have the lowest debt-equityin December. ratios. India cement has the highest debtequity ratio of 4.76. This is The currentbecause the fall in equity is more than the fall in debt. ratio is the least for Ambuja Cement and Ultratech Cement, which show a poor working capital, which has to be strengthened. The working capital The fixed asset ratio of ACCof India Cement shows a good position. cement is high because the revenues increased by 16.7% that year whereas the fixed assets increased by less than 6%. The ratio for India Cement is lowest because the company has not spent its revenue, which increased by Rs.152.49 crores, on fixed assets, which reduced by Rs.33.22 crores. Ultratech Cement has the highest inventory turnover ratio among the Northern major players whereas the lowest is that of ACC cement because the average inventory increased by roughly 43.5% that year. 45

The debtors Turnover ratio for India Cement is lower than the industry standard of 13.31 which shows that the company is not able to effectively generate cash from its debtors. Ambuja Cement shows a good turnover rate, which is well above the industry standard. The interest coverage ratio is very low for India Cement Table 1.10 - Analysis for the Year ended 2003-2004 Ultra Tech March 1.52 0.61 1.26 24.14 30.33 1.43 6.1 12.17 7.2 India Cements March 4.76 1.47 0.68 7.89 9.14 0.18 2.34 N/A N/A Ambuja Cement December 0.83 0.76 0.7 9.62 51.92 4.36 21.63 14.99 18.51 ACC March Debt-Equity Ratio Current Ratio Turnover Ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) 1.05 10.75 21.34 3.26 9.41 13.86 16.48 1.21 0.78 Shree Cement March 1.51 0.95 0.74 10.03 19.43 1.55 10.09 10.32 5.5 Source: Capitaline Ambuja Cement has the least debt-equity ratio, which is also well below the industry standard of 3.53. The company has reduced its secured and unsecured loans by 31.6% in 2003-2004 when compared to the previous year. As a result of this, the equity is much more than its debt. India cement has the highest debt-equity ratio of 4.76 which is much higher than the industry standard of 2.88. The company is highly dependant on its debt. The loans of the company have increased by 17.7% in 2004 when compared with 2003. Most of this amount has been invested in fixed assets. Ultratech cement has the lowest current ratio and is also the only company among the top 5 to be below the industry standard. The highest current ratio is that of Shree cement and India cements. They have a good working capital position when compared to the remaining companies. The Debtors turnover ratio is highest for Ambuja cement which shows that it can generate cash from their debtors quickly. ACC cement and Shree Cement should work on improving their debtors turnover ratio.

46

India cement has an interest coverage ratio which is below the industry standard of 0.73. In the North, Ultratech cement has the lowest interest coverage ratio. This is because the companys interest was very high at around Rs.106.88 crores. Ambuja Cement has the highest interest coverage ratio. Its interest was relatively lower than that of the previous years. The average inventory of Ultratech cement was quite low during the year, causing it to have the highest Inventory Turnover ratio among the other players. The reason for Ambuja Cement to have the least Inventory Turnover ratio among the major companies of the North is because of its high average inventory. The Asset turnover ratio is high for ACC cement because the revenue has increased considerably, whereas the value of fixed assets has not increased much. MINOR PLAYERS RATIO ANALYSIS The bottom 3 cement companies have been selected based upon their performance in the last financial year. The net sales turnover has been used to judge performance. The 3 minor companies are: Northern Region Sainik Finance Southern Region Shri Keshav Cements, Bheema Cements Table 1.11 Industry Standards (Ratios) North Region YRC Debt-Equity Ratio Current Ratio Turnover ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) Latest 1.82 1.26 0.87 9.7 10.23 1.54 10.87 8.84 5.91 2006 1.89 1.39 0.96 8.5 11.81 3.38 14.99 13.22 22.4 2005 2.02 1.22 0.86 7.36 8.74 1.59 8.83 7.44 5.55 2004 2.1 1.11 0.83 6.91 7.18 1.54 12.13 10.63 7.13 2003 1.63 1.12 0.56 5.52 5.31 1.36 13.16 7.52 4.35 Source: Capitaline 47

Table 1.12 Industry Standards (Ratios) South Region YRC Debt-Equity Ratio Current Ratio Turnover ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) Latest 2.03 0.97 1.05 9.23 9.42 1.13 6.56 8.25 0.36 2006 1.55 0.83 1.09 9.77 11.35 2.21 9.07 14.42 19.1 2005 1.94 0.81 0.98 7.53 11.95 1.13 5.87 8.17 -0.61 2004 2.24 0.85 0.65 4.5 6.7 0.92 6.33 0 0 2003 2.32 0.8 0.89 6.28 8.83 0.95 6.92 0 0 Source: Capitaline Table 1.13 -Analysis for the Year ended 2007-2008 YRC Debt-Equity Ratio Current Ratio Turnover Ratios: Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) 1.25 2.23 2.71 5.77 17.76 8.06 4.6 0.93 4.31 630.4 3.49 12.63 8.9 15.45 0.72 6.66 10.22 4.62 27.2 18.08 7.38 Sainik Finance March 0.19 2.03 Shri Keshav March 2.71 0.93 Bheema Cements March 0.46 1.16 Source: Capitaline The debt to equity ratio was the highest for Shri keshav. The main reason being that for the year ended March 2008, their total debt stood at Rs 28.73 crores which is much higher when compared to their last fiscal year which stood at a mere Rs 3.93 crores. The excess loan was utilised to purchase fixed assets. Perhaps the company intends to increase their production capacity. 48

Sainik Finance and Bheema Cement maintained a healthy current ratio well above the industry which stands at 0.97. The low industry standard depicts that the minor players in the South pay less attention to liquidity in comparison to their counterparts in the North where the industry standard stands at 1.26. The industry standard for fixed asset turnover ratio is 1.05. However only Sainik Finance was able to meet the standard. The main reason being that it has very low assets which are worth Rs 6.66 crores .Where as Bheema and Shree Keshav have assets of 117 crores and 17 crore respectively and have generated net sales of Rs37 crores and Rs 17 crores respectively. The companies had a low inventory turnover ratio, even below that of the industry standard of 9.23 times. Sainik Finance had the lowest ratio. This is mainly because it had Rs 5.39 crores tied up in inventories. Shree Keshav maintained a very impressive debtor turnover ratio for the year ended 2008.This implies that the company has been very efficient in collecting dues from its debtors where as Sainik Finance had the lowest ratio even below that of the industry standard of 10.23. The interest coverage ratio for all the companies lies well above their industry standard. 49

Table 1.14 - Analysis for the Year ended 2006-2007 YRC Sainik Finance March Shri Keshav March Bheema Cements September Debt-Equity Ratio Current Ratio Turnover Ratios: 0.54 0.85 0.77 5.35 112.67 4.24 12.63 8.9 15.45 1.46 1.15 1.67 6.93 6.32 4.81 21.77 31.21 51.29 0.29 2.16 1.26 1.86 2.87 4.54 23.72 9.5 5.54 Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) Source: Capitaline The debt-equity ratio was the highest for Bheema Cement in this year but in the year ended 2008 it was 0.46. The main reason was that the company had a share holders equity of only Rs. 22.88 crores as on September 2007 but the same swelled to Rs.152.82 crores in the year ended 2008. More over Sainik Finance had the lowest debt equity ratio. The current ratio of Sainik Finance was very impressive when compared to its industry standard of 1.26 times. However Shree Keshav failed to even meet the industry standard of South India of 0.86 and also lagged behind in the fixed asset turn over ratio. The companies in this year too, companies have had low inventory turnover ratios indicating that they have not been able to convert their inventory into sales efficiently. The three companies lie much below the industry standards of 9.3 times. very The debtor turnover ratio maintained by Shri Keshav has been very efficient. Thus they have been able to covert their debts to cash very quickly. This can help the company to maintain liquidity. However the other players have not been able to maintain the same and have in fact performed below the industry standard of 9 times. The companies have had interest coverage position better than the industry standard. However it ought to be more from the point of view of the long term lenders.

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Table 1.15 - Analysis for the Year ended 2005-2006 YRC Sainik Finance March Shri Keshav March Bheema Cements March Debt-Equity Ratio Current Ratio Turnover Ratios: 0.36 2.4 1.03 1.11 2.96 3.85 21.98 7.25 0.32 0.89 0.71 6.76 12.93 2.21 4.13 3.7 1.45 1.08 1.46 5.3 5.72 1.73 8.01 14.12 Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) Source: Capitaline The observation of the debt-equity ratio reveals that the ratio of Bheema cements Ltd. stood the highest among the remaining lowest minor performers as its major funds got raised from debts which raised from Rs.9.49 crores to Rs.12.2 crores, however it remained lower than its industrial standard of 1.55. The debt-equity ratio of Sainik finance and industries got down from 0.58 in mar 2005 to 0.36 in mar 2006 primarily because of decrease in debts from Rs. 8.49 crores in 2005 to Rs. 6.10 in 2006. The debtequity ratio of Shri Keshav cement and infra ltd. Stood to be the lowest at 0.32 although there is increase in its ratio comparing to its previous years. Also while observing its long term debt-equity ratio it reveals that much of the funding of the companies has been raised from the short term loans and in fact in company such as Sainik finance and industries there has actually being repayment of long term debt. The current ratio of Sainik finance and industries seems to be most impressive i.e. 2.40 followed by Bheema cements which is at 1.45, both much higher than their industrial standards of 1.39 and 0.83 respectively. This shows that they have greater ability to pay their short-term liabilities (from which they have raised their vital funding requirements.) thus, this might have provided confidence to the investor to invest in the industry. Although the current ratio of Shree Keshav is the lowest of all, it sounds good as comparing to its industrial standards. The fixed assets turnover ratio of Bheema cements ltd. Is the highest among the minor performers which depicts that it has been efficiently utilizing its fixed assets for generating 51

sales as compared to others. The fixed assets turnover ratio of Sainik also sounds good as comparing its previous years performance. However Thethe same turnover ratio of Shree Keshav is not very encouraging. analysis of the debtor turnover ratio shows that the ratio of Shree Keshav cements and infra stands the highest and is far above the ratio of the others .This depicts that the ability to extend credit and to collect debts is higher in Shree Keshav cement as compared to the others. The debtors turnover ratio of the other to minor players is not impressive as they fall much below the industrial standards of 11.85 The observation of interest cover ratioand 11.35 respectively. reveals that the ratio of the Sainik finance and industries holds the highest of all followed by Shree Keshav cement & infra Ltd. and Bheema cements Ltd. This shows that the ability to pay interest on outstanding debts is 3.85 times of its earnings before interest and tax (in case of Sainik finance) which says that the confidence of the creditors would be higher in it. However all of the three minor players have their interest cover ratio higher or equal to their industrial standards. 52

Table 1.16 -Analysis for the Year ended 2004-2005 YRC Sainik Finance March Shri Keshav March Bheema Cements March Debt-Equity Ratio Current Ratio Turnover Ratios: 0.58 2.05 0.83 0.49 4.38 1.85 23.98 6.63 0.22 0.94 0.8 6.42 8.13 1.94 4.08 4.11 1.53 1.1 1.47 5.91 6.26 1.77 6.73 12.21 Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) Source: Capitaline The analysis of the debtors equity ratio reveals that Bheema cements has the highest ratio as compared to the others though it has got decreased from its previous years ratio. It is even having ratio lower than its industrial standard of 1.94. Others such as Sainik and Shree Keshav cements debt-equity ratio is not encouraging. Also comparing the debt equity ratio with the long term debt equity ratio reveals that there is presence of short term debts as compared to the long term ones. The current ratio of Sainik finance and industries sounds very impressive as compared to the others thus shows its greater ability to pay its short term liabilities. The current ratio of Bheema cements also sounds good as it is higher than its industrial standards of 0.81. The fixed assets turnover ratio observation reveals that the turnover ratio of Bheema cements is the highest amongst all the three minor players and it is also higher than the industrial standard of 0.98. This shows that the company is able to efficiently utilize its fixed assets to generate sales. The fixed assets turnover ratio of Sainik and Shree Keshav is not very encouraging.

 The debtors turnover ratio observation reveals that the ability to extend credit and to collect debt is highest in Shree Keshav as compared to the others, however it is not sound as compared to the industrial standard of 11.95. The turnover ratio of the other two player is also not very encouraging. 53

The interest cover ratio of each of the minor player sounds good as comparing their ratios with the industrial standard with Shree Keshav cement holding the highest of ability to cover its interest obligations with the earnings before interest and tax and thus having greater investors confidence followed by Sainik finance and then by Bheema cements Table 1.17 - Analysis for the Year ended 2003-2004 YRC Sainik Finance March Shri Keshav March Bheema Cements March Debt-Equity Ratio Current Ratio Turnover Ratios: 1.86 1.12 1.4 7.37 5.87 1.02 2.06 7.71 0.36 0.3 1.04 0.63 4.88 3.99 1.6 6.97 3.84 1.85 0.83 1.61 0.87 0.39 9.11 1.67 11.74 9.74 3.68 Fixed Assets Inventory Debtors Interest Cover Ratio PBITM (%) ROCE (%) RONW (%) Source: Capitaline For this period Sainik cements portrayed the lowest debt equity ratio of 0.3, whereas Bheema cement was 1.86. Bheema cements have reduced the external borrowings. Even though compared to the other minor players Bheema has a higher debt equity ratio, when compared to the industry standards of 2.24, it is very less. Sainik cements has the highest current ratio of 1.61, followed by Bheema cements 1.12 and Shri Keshav with1.04. Sainik cements is in a good position as the industry standard is 1.1. Sri Keshav , even though it has the lowest in comparison to others is in a good position as the industry standard for minor south is 0.85.they are in a position to meet their short term obligations. The debtors turnover ratio the highest for sainik cements. They are able to generate cash quickly. Bheema cements should improve their position and Shri Keshav in this regards has not been up to the mark. The interest coverage ratio has been the best for sainik cements followed by Shri Keshav and Bheema.

Even though the two minor south players are less in comparison to Sainik 54

cements, when compared to their standard of 0.92, their position is good. This measure is an important one for the long term creditors. It used to determine how easily a company can pay interest on outstanding debt. THE KEY ISSUES RELATING TO THE CEMENT INDUSTRY: Carbon Dioxide emissions: The cement industry is responsible for 8% of global carbon emissions. It is the key ingredient in concrete, and one that is rapidly emerging as a major obstacle on the world's path to a lowcarbon economy. The manufacturing process involves burning vast amounts of cheap coal to heat kilns to more than 1,500C. It also relies on the decomposition of limestone, a chemical change which frees carbon dioxide as a byproduct. So as demand for cement grows for schools, hospitals, luxury hotels and car parks, so will greenhouse gas emission. Dimitri Papalexopoulos, managing director of Titan Cement, Athens said "No matter what you do, cement production will always release carbon dioxide. You can't change the chemistry, so we can't achieve spectacular cuts in emissions. Cement is needed to satisfy basic human needs, and there is no obvious substitute, so there is a trade-off between development and sustainability." Already, some cement companies have taken steps to reduce their environmental impact. Some burn waste products alongside coal, while others have reworked their recipes and tried to make their plants more energy-efficient, with modest success. Transportation costs: Cement being a high bulk and low value commodity, outward freight accounts for close to one fifth of the total manufacturing cost. In addition, for every tonne of cement produced, close to 1.7 tonnes of raw material (including coal) is transported. In this scenario, the location of the cement plant becomes crucial. While deciding on the plant location, there is a trade-off between proximity to raw material sources and proximity to markets. 55

The plant has to address issues of logistics (evacuation of cement by rail, road or waterways), power availability in the region, and the first strategy is to locate manufacturing facilities near the consuming centers. In this case, outward freight is minimized and marketing flexibility enhanced at the cost of higher raw material assembly costs. The second strategy is to locate the plant close to the mineral deposits, so as to minimize raw material assembly costs. Given that 1.4-1.5 tonnes of limestone are required per tonne of clinker, locating the plant along the limestone deposits is the logical corollary. Thus, there can be two broad locational strategies, which is not merely to minimize unitmanufacturing cost, but to minimize unit delivered cost as well. The freight cost becomes a significant factor in determining the landed cost of cement. This has resulted in very low volumes of international trade in cement. World cement trade has averaged just around 6-7% of the total production. Most of the cement plants in India are located in and around the limestone clusters. These clusters are distant from the markets for cement. Thus, cement companies have to rely on extensive transportation for moving coal from the coal pitheads to the cement plants and for dispatching cement from the plant to the markets. As both coal and cement are of low value and are bulky in nature, freight costs are considerably higher for cement plants. Cement companies use both road and rail to transport cement and to receive coal. Rail despatches amount for about 33% while roads carry the balance 66%. The balance 1% is accounted by sea transportation. The share of road over rail has only gone up over the years. For coal transportation, the dependence on rail network is still very high and accounts for around 70% of coal movement Although rail transportation is more economical for distances beyond 250-300 km, cement companies have started preferring road transportation even for longer distances because of several reasons. Rising railway traffic coupled with insufficient investments by the railways for increased wagon supplies and the fact that the cement industry is not an important customer of the Railways (cement cargo accounts for just 7-8% of the total railway freight) have resulted in a shortage of wagon supply to the cement industry. 56

Coal prices: Cement is made from a mixture of calcium carbonate (generally in the form of limestone), silica, iron oxide and alumina. A high-temperature kiln, often fuelled by coal, heats the raw materials to a partial melt at 1450C, transforming them chemically and physically into a substance known as clinker. This grey pebble-like material is comprised of special compounds that give cement its binding properties. Clinker is mixed with gypsum and ground to a fine powder to make cement. Coal is used as an energy source in cement production. Large amounts of energy are required to produce cement. Kilns usually burn coal in the form of powder and consume around 450g of coal for about 900g of cement produced. Coal, accounting for almost 35-40 per cent of cost of production of cement, is in short supply. This has forced cement firms to buy local coal from the open market at a 30-60 per cent premium. According to a report in economic times in 2007, the supply situation would continue to remain tight for the rest of the financial years. As a result, it is expected that there would be upswing in cement prices as tightness continues. Other Environmental Impacts: The cement industry does not fulfil the requirements of environmentally sustainable industry It uses non-renewable raw because of the following reasons: materials and energy, such as coal. It sources its raw material by mining, which destroys the local ecology. It produces products that are not recyclable such as mercury, cadmium, arsenic and cobalt. In India, approximately 70% of cement plants have communities residing near their mines within 1 km radius. And 90% of the limestone, a major raw material for cement production is extracted via blasting. As a Blastingresult, the local communities face the following problems: There arehas high environmental impact- noise, vibration and dust. also complaints related to building damage and dust problems due to Mining also results inblasting, mining and material transportation. depletion of groundwater levels. 57

CHAPTER V SUMMARY OF FINDINGS 58

THE CEMENT INDUSTRY PERFORMANCE FOR THE YEAR 2008-09 India's cement dispatches growth has been improving from 5.9% in the quarter ended June 2008 to 6.3% in the quarter ended September 2008, which has further accelerated to 8.3% in the quarter ended December 2008 while the industry has shown a 11% YoY growth. The cement sector recorded 11% growth in dispatches in November to 15.81 million, after similar 11% increase to 14.25 million tonne in December 2008. In fact, the pace of growth in production accelerated from 6% in October 2008 to 8% in November 2008, which has further leaped to 11% increase to 15.62 million tonne in December 2008. In the process, after seven months of single digit growth in the dispatches in the current fiscal, the sector has recorded double digit growth for two months in succession. Throughout the financial year 20072008 and the beginning of the current year the cement producers were constrained with their inability to raise price due to excessive government intervention. The period then witnessed sky rocketing commodity prices, which squeezed the operating margins of the cement manufacturers. However the fall in input prices like the prices of coal and other raw materials from their peaks during the recent past would help the industry in maintaining their margins at least till the end of the next financial year when the supply is expected to exceed demand. PRODUCTION & DISPATCHES (REGION-WISE): During the month of December 2008 the cement industry posted excellent growth in production mainly from the northern and the eastern region of the country. The demand continued to be strong as can be evident from the capacity utilization levels in all the major regions. Increase in installed capacities by some players also contributed to improved The central region of the country achieved the production growth. highest capacity utilization rate of 98% The northern region and the eastern region had a capacity utilization rate of 93% respectively. The western region and the southern region had a capacity utilization level of 95% and 86% respectively. 59

The overall cement production and dispatches increased by 11% to 15.82 million metric tonnes and 15.81 million metric tonnes respectively during the month of December 2008 as compared to the same period last year. Excess dispatch implies that there is strong demand as inventories are being disposed off quickly. The production and dispatches were higher by 10% and 11% respectively as compared to the previous month. The following graph gives a clear indication of the increase in production (Region wise) in December in comparison to the previous month. Table 1.18: Region-wise production of cement Region Central Northern Southern Western Eastern Fig. 2.7 Increase % 13 22 9 2 9 Production in million tonnes 2.31 3.74 4.94 2.51 2.32 Source: Capitaline 60

CONSUMPTION: Southern region continued its trend of higher consumption with the total consumption reaching a level of 4.58 million tonnes thus registering a YoY growth rate of 9.3%. Andhra Pradesh and Tamil Nadu were the dominant consumers in the southern region accounting for 1.59 and 1.3 million tonnes respectively. Following South is the Western region with a consumption of 3.02 million tonnes. The following graph gives a clear indication of the region wise consumption and their YoY growth percentage. Table 1.19: Region-wise cement consumption Region Central Northern Southern Eastern Western Fig. 2.7 Consumption YoY growth % 2.38 3.21 4.58 2.46 3.02 25 11.7 9.3 14.1 8.3 Source: PL Research 61

INPUT COSTS CONTINUE TO FALL: Following the global financial turmoil commodity prices had crashed from their peak level. Major input cost for the cement sector like the international coal also fell significant from their peak of the current year. The South African export price of coal during the month of November 2008 was US$ 89.38 / metric tonnes, which were 18%, lower compared to the previous month. The price was even lower compared to the same period last year. The current price is around USD 76 per metric tonnes. During the month of December 2008, the government has reduced the prices of petrol & diesel by Rs 5 and Rs 2 per litre respectively and in the coming weeks the government is planning to reduce the prices further due to falling crude oil prices. A cut of 5-6% in diesel prices will translate into a 1.5-2% decline in the freight rates for the cement companies, depending on their road and rail transport mix. In line with the falling commodity prices and the benefits arising from the recent cut in excise duty, the prices of cement has also fallen in most of the major consuming markets. The WPI of cement thus also has fallen. Cement, which has a weight of 1.73% in the WPI index, has fallen by 1% to 222.48 during the month of December 2008 as compared to the previous month. However it remained at higher levels when compared to the same period last year. EFFECTS OF RECESSION ON THE INDIAN CEMENT INDUSTRY India's cement industry is the world's second largest after China with an installed capacity of more than 200 million tonnes. It has 132 large plants and 365 small plants with a cumulative installed capacity of 204mt at the end of August 2008. After growing by over 10 per cent in the last two years, cement demand has slowed down to 9 per cent now. This decline A sharp slowdown in real estate Lack of capital stems from investment in infrastructure sectors and A broad economic downturn across the world. 62

REAL ESTATE SECTOR: The real estate sector is the key driver of the Indian Cement Industry. It accounted for almost 55% share in FY 07. The unending euphoria of real estate sector in India witnessed during the last few years is finally starting showing signs of ebbing. This slowdown is likely to hurt the cement sector the most. The slowdown is The fall in stock markets, as wealth creation does aided by not happen and there is lack of capital among investors to invest in real estate projects. Also, to adjust their share market losses, many investors are forced to sell off their real estate properties. Other factor that has led to the slowdown is the increase in interest rates leading to higher costs. (for real estate developers) Income levels have not risen in proportion to the increase in property prices thus forcing many potential buyers out of the market. Due to rising input costs of steel, iron and other building material, it has become unviable for builders to construct properties at agreed prices. As a result, there may be a delay in project completion leading to financial constraints. The IT industry is experiencing a slowdown. This has imposed constraints on residential as well as commercial demand since IT/ITES segment accounts for 70% of the total commercial demand. INVESTMENT IN The completion INFRASTRUCTURE: The Union Budget 2007-08 provides for of the North-South, East-West corridor project, by 2009. 538 projects with a total cost of Rs. 23,950 crore have been sanctioned in sectors such as water supply, sanitation, transport, road and housing in many cities spread over several states, under the Jawaharlal Nehru National Public private partnership (PPP) model -Urban Renewal Mission (JNNURM) The budget announced the launch of the US$5 billion infrastructure financing initiative by partnering with Citigroup, Blackstone, IDFC and IIFCL. Government also proposes to promote the flow of investment to the infrastructure sector by Real Estate Mutual Fund (REMF). 63

India requires approximately US$320 billion for infrastructure during the eleventh Five Year Plan. Such initiatives will create the necessary finance pool for speedy implementation of critical infrastructure projects in the country. However, India's core infrastructure sector, which accounts for 26.68 percent of India's industrial output (IIP), declined to 4.3 percent in July 2008 from 7.2 percent a year ago. During the April-July 2008 period, the core infrastructure sector grew by 3.7 percent, lower than 6.6 percent growth posted in the corresponding year ago period. As the cement industry is demand driven, this decline as an immediate impact on its performance. *The core infrastructure sector comprises of crude oil, petroleum refinery products, coal, electricity, cement and finished (carbon) steel. OVERALL SLOWDOWN (Economic Downturn): Job cuts and pay cuts are a common phenomenon after the global meltdown and the cost of living has gone up due to inflation. In such a scenario, a borrower faces a serious financial crisis as home loan repayments become difficult. This in turn The industry'saffects the housing sector. CAPACITY UTILISATION: capacity utilization for second quarter ended September 2008 declined to 82%, a four-year low, largely because 31mt of capacity was added in the past year. The production capacity exceeded the demand, thus lowering the total capacity utilization. In the next 2 to 3 years, 120mt of capacity is to be added, in addition to several companies modernizing Experts predict capacity utilization for the year their plans. ending March 2009 will be at around 87% down from an optimum level of around 95% in the year-ago quarter ended March. They also estimate capacity utilization to fall sharply to 74% in 2009-10. The surplus of cement in the industry is predicted to be as high as 20.7 million tonne in 2008-09 and 47.4 million tonne in 2009-10. 64

UltraTech Cement, while announcing September quarter results on 18 October, said, "The likely commissioning of around 90mt capacity in a phased manner over the next three years could lead to a surplus scenario by 2009 resulting in pressure on earnings, sales realization and margins. All these pose a challenge to the cement industry. Graph 2.8: Cement prices PRODUCTION COSTS: Cement companies reported 10 per cent growth in their revenues, while their net profit declined by 21 per cent on compression of margins, last year. Almost all cement companies faced margin pressures on account of an increase in their overall production costs. Coal, which accounts for almost 35-40 per cent of the cost of production of cement, is in short supply. Coal prices increased by over 100 per cent in the last one year. This has lead to an overall increase in the cement prices, thus affecting the demand for it. EXPORTS: Domestic Cement industry is highly insulated from global cement markets. Exports have been constant at about 6% of total cement demand for past few years. In 2008, Cement exports declined from 10 million tonnes in FY05 to 2.1 mt between April-December 2008 on account of additional capacity addition and real estate slump in the Middle East region, which is the main export market of Indian cement producers. Demand for cement can be gauged from the countrys economic performance, with demand typically averaging 1.2 times the GDP growth. Assuming that Indias GDP will grow at 6.5 per cent and 6 per cent in FY09 and FY10 respectively, analysts expect demand for cement to grow at 7.8 per cent and 7.2 per cent in the mentioned two years, respectively 65

FUTURE PROSPECTS OF THE CEMENT INDUSTRY High spending on infrastructure projects and growing demand for housing units will fuel the Indian cement industry. Despite the gloomy outlook for the world economy, cement dispatches have witnessed impressive growth of 11.2% and 12.1% in November and December 2008 respectively. INFRASTRUCTURE: The Indian government has considered spending more than US$ 500 billion on infrastructure in the 11th Five Year Plan. This plan includes building road infrastructure, which will require 75 million metric tons of cement and power infrastructure that demands around 45 million metric tons of cement. Apart from this, railways, urban infrastructure, ports, airports, IT & ITES sector, organized retailing, shopping malls and multiplexes will be the main sectors driving the demand of cement in the country, says the report. Besides this, the housing sector is also one of the key drivers for the cement industry and accounts for more than 40% of total cement demand. To further boost the housing demand in the country, many nationalized banks have reduced their interest rates on housing loans. As a result, the number of houses constructed is expected to increase from 3.6 million in 2007 to 6 million units by 2011. This concrete growth in the housing sector will lead to huge cement demand in the country. COMMONWEATH GAMES: Industry experts forecast that the growth pattern in cement is expected to continue further due to the increased level of construction activities taking place across India. One of the reasons for this is that Delhi, the capital of India, is home to the 2010 Commonwealth Games. ESTIMATED PRODUCTION: The current cement industry is expected to grow to produce 223.0 million tonnes in 2009 from 198.30 million tonnes of the 2008. 66

ESTIMATED EXPORTS: The target for export has been estimated to be 9.9 million tonnes and 10 million respectively for 2009 and 2010. SEZS DEVELOPMENT: Also upcoming SEZs in areas such as Bangalore, Bhubaneshwar, Indore, Nasik and Pune would further boost the demand for cement. INCREASE IN POPULATION: Indian population growing at the rate of 1.5% would also act as a benefit for the cement industry as it would boost the overall demand for housing and in turn cement. 67

BIBLIOGRAPHY 68

Sources of On-line Journals and Write ups: 1. www.articlenext.com 2. www.capitaline.com 3. www.economywatch.com 4. www.globusz.com 5. www.ibef.org 6. www.mospi.nic.in 7. www.rbi.org.in 8. www.researchandmarkets.com The following reports were referred to L. G. Burange and Shruti Yamini (2008), Performance of Indian cement industry: The competitive landscape, University of Mumbai, Department of Economics. Anupam Rastogi (2007) ,The Infrastructure Sector In India. Economic Advisory Council, Review of the Economy 2008/09 National Housing Bank Report 2005 Reserve Bank of India Trends and Progress Reports 69

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