Amit Cement

8/9/2019 Amit Cement

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Indian Economy Overview-2009-2010:

Indias GDP growth for 2009-10 was at 7.2 per cent, up from 6.7 per cent recorded in 2008-09. Inthe latest estimates for third quarter of 2009-10, countrys GDP stood at 6 percent corresponding tothe growth of 6.2 percent during same period of 2008-09. With an assumption of a normal

monsoon and sustainable good performance of the industry and services sectors, the latest RBIprojection placed the real GDP growth at 8.0 per cent for the year 2010-11.

According to the latest IMF projection, India will grow at 8.8 percent during the year 2010. Indian industry recovered substantially in the latter half of 2009-10. The IIP figures available for

the entire fiscal shows industrial production register growth of 10.4 percent as against 2.8 percentduring the same period of 2008-09.

At the disaggregated level, all three sectors, i.e. mining, electricity and manufacturing witnessed aperceptible growth during the year 2009-10. The manufacturing sector, in particular, contributedsignificantly to this overall strong performance with a comprehensive growth of 10.9 percentduring the period. As per used based classification, capital goods industry led the frontier attaininggrowth of 19.2 percent during 2009-10. The consumer goods sector secured a robust growth of 7.4

percent on account of consumer durables segment. In 2009-10, fourteen (14) out of seventeen industries achieved higher growth than in the previous

year 2008-09. Only three sectors namely the food products, beverages, tobacco & related productsand jute textiles have still continued to suffer from discernibly low growth in output.

Core sectors grew at a satisfactory rate of 5.5 percent in 2009-10 as compared to 3.3 percentgrowth in the previous fiscal. The growth was mainly on account of the cement industry sectorfollowed by coal and power sectors.

The rise in inflation continued even in March 2010; the overall inflation headed 9.9 percent duringthe month whereas the rate of inflation was only 1.3 percent in March 2009. The upward pressureon prices of food articles and fuel commodities pushed up the aggregate price level of theeconomy.

The Reserve Bank raised the repo and reverse repo rates by 25 basis points each on March 19,2010 to anchor inflation expectations. (M3) Broad money supply increased by 17 percent during the year 2009-10. This growth was

slightly lower than the growth of 18.4 percent posted during last year. Over the year 2009-10 the expansion of aggregate deposits was around 17 percent corresponding

to the expansion by 19.9 percent seen during the same period last year

The increase in bank credit was marginally lower at around 16.7 percent while it was 17.5 percentduring the same period of the preceding year. After a phase of deceleration, there has been a

restoration in the flow of bank credit observed since November 2009. As a consequence the

indicative target of 16.0 per cent credit growth as set by RBI for the year was exceeded up to mid-

March 2010. In response to the large capital flight in portfolio investments throughout the year, Indian stock

market portrayed an optimistic picture in the financial year 2009-10. As a result the BSE sensex

rose from 9 k points in April 2009 to 16 k points in March 2010. Nevertheless, during the third and

fourth quarter of 2009-10 the BSE sensex remained between 16 k to 17 k points.

Fiscal deficit has been found to be reticent with a modest increase of 24 percent during the periodfrom April to February 2010 while the growth was 33 percent during the same period of 2008-

09.During this period of 2009-10, the level of fiscal deficit stepped up from Rs 307133 crores in

2008-09 to Rs 380901 crores in 2009-10.Growth in the gross tax revenue decelerated in February


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2009-10. The slide in overall tax collection was mainly on account of the weak collections in

indirect taxes.

Indian merchandise trade managed to recover from the severe impact of global turmoil. Indiasexport seems to gather momentum as it saw a tremendous growth of 54.1 percent during March

2010 compared to negative growth of (-)33.1 percent in March 2009. However, taking the entire

year 2009-10, Indian exports contracted by (-) 4.7 percent while the growth figure was positive 3.4

percent during 2008-09. Capital flows continued to remain buoyant throughout the year 2009-10. During the year 2009-10

total foreign investment amounted to be USD 66.5 billion as against USD 21.3 billion recorded

during the same period last year. This confirms more than a three- fold increase in capital flows

over the preceding year 2008-09.

Indias foreign exchange reserves increased by US$ 27.1 billion during 2009-10 to reach US$279.1 billion at the end of March 2010. This is mainly ascribed to higher capital inflows in the

form of portfolio investments during the year 2009-10.

CURRENT ECONOMIC PROFILE OF INDIA:

Gross Domestic Product (GDP) {current prices} in the year 2009-10: US$ 1,264.40 billion (Rs.58,68,331 crore) (Est.)

Gross Domestic Product (GDP) {current prices} in Q4 of 2009-10: US$ 349.43 billion (Rs. 16,21,812crore) (Est.)

Gross Domestic Product (GDP) {constant (2004-05) prices} in the year 2009-10: US$ 961.89 billion(Rs. 44,64,081 crore) (Est.)

Gross Domestic Product (GDP) {constant (2004-05) prices}in Q4 of 2009-10:US$ 259.69 billion (Rs.12,05,119 crore) (Est.)

Per capita income (at 2004-05 prices) during 2009-10: US$ 720.23 (Rs. 33,588) (Est.)

Per capita income (current prices) during 2009-10: US$ 950.87 (Rs. 44,345) (Est.)

GDP composition by sector during 2008-09: Services 57.0%, Agriculture 17.1%, and Industry 25.9%

Forex Reserves: US$ 273.36 billion (for the week ended May 21,2010)

Exports: US$ 16.89 billion (Rs. 75147 crore) (April 2010)

Imports: US$ 27.31 billion (Rs. 121517 crore) (April 2010)

Amount of FDI inflows during 2009-10: US$ 25.89 billion (Rs 1,23,378 crore) (April 2009-March2010)

Cumulative amount of FDI Inflows: US$ 132.43 billion (Rs 5,77,108 crore) (August 1991 to March2010)


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Sectors Attracting highest FDI inflows: Services Sector, Computer Software & Hardware,Telecommunications, Housing & Real Estate, Construction Activities, Power, Automobile Industry,Metallurgical Industries, Petroleum & Natural Gas and Chemicals.

Top Investing Countries: Mauritius, Singapore, U.S.A., U.K., Netherlands, Cyprus, Japan, Germany,U.A.E and France.


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PORTERS 5 FORCES IN

THREAT OF NEW ENTRAN

capital investment, requirement of broa

entrants. Access to limestone reserves

BARGANING POWER OF SUlicensing of coal and limestone reserve

for transport are all controlled by a sin

BARGANING POWER OF BU

of retail purchase, declining share of bu

power of the customers.

THREAT OF SUBSTITUTES:

engineering plastics in building offer

popular in India.

INTER FIRM RIVALRY: The i

in the industry and very little brand d

resorting to expanding reach and achie

The high bargaining power of govern

in a consolidation phase. Smaller co

have mining leases for coal and lim

result they either try to merge with lar

I

S

BARGANING

POWER OF

SUPPLIERS-

VERY HIGH

EMENT INDUSTRY:

: The threat of a new entrant in cement industry

d distribution network and over supplied marke

lso act as a significant entry barrier.

PLIER: The bargaining power of suppliers isupply of power from the state grid and availa

le entity, which is the government.

YERS: The bargaining power of buyers is lim

lk purchase by the government has taken away

The threat of substitution is low. Only bit

some element of competition otherwise no c

nter firm competition isvery high. Due to larg

ifferentiation to speak of, the competition is i

ing pan India presence.

ment and intense competition has resulted in

panies which do not have access to captive p

stone mines find it difficult to maintain thei

er players or liquidate their business.

TER FIRM

RIVALRY-

HIGH

HREAT OF

NEW

NTRANT-

LIMITED

BARGANING

POWER OF

BUYERS-

LIMITED

HREAT OFBSTITUTES

LOW

is limited. High

t deter new

s very high. The

ility of railways

ited. Rising share

the bargaining

umen in roads and

lose substitutes are

number of players

ntense with players

the industry going

wer plant or dont

bottom line. As a


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CEMENT MANUFACTURIN

There are two general processes forprocess. In general, the dry process issomewhat more energy efficient thanimportant role in Indian cement produc

Over the last decade, increased prefereas to obtain a cost advantage in a coprocess, many manufactures have switcsuitable modifications in their plants.expected to be completely phased out iused wet process kilns. These kilns hathe kilns are dry process, 3% are wet,larger, with capacities in India rangingcapacities in semi-dry kilns range frorange from 200-750 tpd (average 425 t

DRY PROCESS:

In dry process production, limestocrushed to a uniform and usableblended with certain additives (such aore and bauxite) and discharged onvertical roller mill where the raw matare ground to fine powder. An electroprecipitator dedusts the raw mill gasecollects the raw meal for a series of fstages of blending. The homogenizedmeal thus extracted is pumped to the ta pre heater by air lift pumps. In th

heaters the material is heated to 7Subsequently, the raw meal undergprocess of calcinations in a pre calci(in which the carbonates presentreduced fed to the kiln. The remacalcination and clinkerization reactions1,500C. The clinker formed is cooletransported to the cement mills for prand for producing PPC, clinker, gypsu

WET PROCESS:The wet process differs mainly in theproduce slurry. The chemical composievaporation of moisture, preheating, cand transported, as in the case of othewet process is more energy intensive,high.

The cement companies that still usoperating cost significantly by opting

PROCESS:

roducing clinker and cement in India: a dryuch more energy efficient than the wet proce

the semi-dry process. The semi-dry process htion and accounts for less than 0.2% of total pro

ce is being given to the energy efficient dry prmpetitive market. Moreover, since the initiatihed over from the wet technology to the dry teDue to new, even more efficient technologies,

the near future. In 1960, around 94% of the cee been phased out over the past 46 years andand only 1% are semidry process. Dry procesfrom 300- 8,000 tonnes per day (tpd) (average

600-1,200 tpd (average 521tpd), capacities id).

e issize,ironto arials

staticand

rtherraw

op ofpre

0C.es anator

areiningare completed in the kiln where the temperaturand conveyed to the clinker silo from wher

ducing cement. For producing OPC, clinker aand fly ash are used.

preparation of raw meal where water is addedtion is corrected and the slurry is then pumpelcinations and sintering reaction takes place. Tplants, with suitable conveyors to cement miland thus becomes expensive when power an

e wet process can increase their efficiencior dry process.

Dry Process

95.3%

Wet Process

3.5%

PROCESS WISE C

PRODUCTIO

process and a wets, and the semi-wetas never played anduction.

ocess technology soon of the decontrolhnology by makingthe wet process is

ment plants in Indiat present, 96.3% of

s kilns are typicallyf 2,880 tpd). While

n wet process kilns

e is raised to 1,450-it is extracted andd gypsum are used

to raw materials tod to the kiln wherehe clinker is cooledls for grinding. Thed energy prices are

s and lower their

Semi-Dry

Process

0.2%

MENT

N


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GLOBAL CEMENT OVERVIEW:

source: U.S. Geological Survey, Mineral Commodity Summaries, January 2010

The Global Cement market is largely dominated by China. China accounts for nearly 50% of world

cement production. India comes second with a share of 6% and then USA with a share of 3%

Global demand for cement is forecast to grow 4.7 percent annually through 2010 to 2800 MMT, valued at

over $200 billion. China, which is already by far the largest market for cement in the world, will register

the biggest increases. Product demand in China is projected to expand more than the total amount of

cement currently used annually in the next two largest markets -- India and the US -- combined.

Other developing parts of Asia and Eastern Europe, as well as a number of nations in the Africa/Mideast

and Latin America regions, will also record above average cement market gains, fueled by a robust

construction outlook. Product demand in India, for example, will climb at a healthy 6.4 percent annual rate

on account of increased infrastructure spending by the Government. Vietnam, Thailand, Turkey and

Indonesia will register 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 in

construction activity in Germany and Japan following an extended period of decline will help bolster

overall developed world market gains.


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Demand for straight Portland cement, which currently accounts for more than three-quarters of all cement

sales worldwide, will be healthy, spurred by increases in global construction spending and further

advances in manufacturing technology. Sales of blended cements will climb at a somewhat faster pace

through 2010, driven by their superior performance in selected applications. Demand for non-blended

pozzolanic cements, masonry cement and other types will record the strongest gains.

Ready-mix concrete is expected to be the fastest growing market through 2010, surpassing consumer sales

to become the largest single cement market. Ready-mix concrete companies account for a comparatively

small but rising share of total cement demand in a number of fast-growing developing countries, and

suppliers will benefit from an extremely favorable outlook in China, where large-scale construction

projects will require significant amounts of ready-mix concrete. Consumer demand for cement will also

expand at an above-average rate, stimulated by higher personal income levels in developing areas, where

consumer sales can account for half or more of all cement demand, and by new product introductions in

mature developed world markets.

WORLD CEMENT DEMAND(million metric tons)

% Growth over 5 years

Item 2000 2005 2010 2000-2005 2005-2010

Cement Demand 1630.0 2250.0 2830.0 36 25

North America 149.6 170.0 196.0 12 13

Western Europe 197.7 208.5 233.0 5 11

Asia/Pacific 954.5 1470.0 1895.0 54 20

Other Regions 328.2 401.5 506.0 22 26

The world cement demand will be led by emerging markets like Brazil, India, China, Russia. China and

India are the top two countries producing cement. Traditionally the demand of cement is linked to the

GDP growth, higher the GDP growth, higher is the demand for cement. Also the demand is driven by

the infrastructure spending by the government.

The volume of cement entering world trade has traditionally been low relative to overall production and

consumption - typically accounting for approximately 6-7% in aggregate terms. This is linked to the low

unit value of cement, the widespread availability of raw materials, and the link between economic growth

and cement consumption - all these factors favoring domestic production rather than import dependence.

The development of future cement trade volumes will continue to be dominated by essentially short-term

import requirements, set against an underlying background of clinker import dependency and other long-

term supply patterns. Trade volumes will remain highly susceptible to cost and availability factors, with

any major shift in shipping costs being of potential primary significance in this regard.


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INDIAN CEMENT INDUS

The cement industry in India dates baconsidered as one of the core infrastruthe world just behind China, with indu2009-10. It is consented to be a coreover 0.14 million people. Also the inducentral and state governments throughThe growth rate of cement was on anthe Indian Cement industry has been grfor growth in the long term because tworld average of over 263 kgs. Demanback of robust economic growth and inCement, being a bulk commodity, isdistances can prove to be uneconomicaindustry divided into five main regio

14%

15%

22%

36%

13%

REGION WICAPACITY(200

16%

20%

18%

31%

15%

REGION WISE CE

CONSUMPTION(20

RY:

ck to 1914, with the setting up of its first unitcture industries. India is the second largest prstry capacity of over 245 Million Metric Tonneector accounting for approximately 1-3% ofstry is a significant contributor to the revenue cxcise and sales taxes.average 9% to 10% during the period from 20owing at 9% to 10% for the last five years, it hhe per capita consumption is around 134 kgsd for cement in India is expected to continue itsrastructure development in the country.a freight intensive industry and transporting

l. This has resulted in cement being largely a res viz. north, south, west, east and the centra

southern region alwaysin the past owing to abulimestone, the western aare the most lucrative mahigher income levels. Hoaddition taking place atcompared to growth in ddemand supply parity hato some extent in theConsidering the pace atactivity is taking place ithe players have linedaccordingly.

The region wise distri

indicates a higher capacsouthern region. This is

reserves of limestone w

raw material in cement such huge capacity in t

the prices of cement are

rest of India.

The western region whitwo states Maharashtra a

20% of the total cement on account of rapid ecoof these regions.

E-09)

EAST

WEST

NORTH

SOUTH

CENTRAL

ENT

8-09)

EAST

WEST

NORTH

SOUTH

CENTRAL

in Porbunder. It isducer of cement in

s(MMT) in the yearDP and employing

ollected by both the

6-10. Even thoughs tremendous scopeas compared to thebuoyant ride on the

cement over longgional play with thel region. While thead excess capacitydant availability ofd northern regionsrkets on account ofever, with capacitya slower rate as

mand, recently thealso been restoredSouthern region.

hich infrastructuraln different regions,p expansion plans

ution of capacity

ity build up in theue to the available

ich is a principle

roduction. Due toe southern region

lower than that of

h constitutes onlyd Gujrat consume

roduction. This is omic development


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Out of the total states in India only 2

installed capacity of more than 1 MM

cement only after 2006-07. In most oflike Maharashtra, Uttar Pradesh, Wes

demand is more than the supply. These

companies who have pan India presenc

0

5

10

15

20

25

30

35

40

Rajasthan

AndhraPradesh

MadhyaPradesh

TamilNadu

Gujarat

Maharashtra

Karnataka

Chhattisgrah

UttarPradesh

10.98

17.96

8.38

15.88

12.09

21.88

11.65

4.16

17

MILLIONMETRICTONNES

CEMENT P

1 states have cement plants. Out of these onl

. The states like Uttarkhand and Haryana ha

the states the supply is more than the demand.t Bengal, Haryana, Kerala, Bihar, Jammu&

are very lucrative markets for the cement com

e will only be able to tap these diverse markets

HimachalPradesh

Orissa

Jharkhand

Punjab

WestBengal

Meghalaya

Haryana

Uttarkhand

Kerala

Bihar

Jammu&Kashmir

Assam

.86

1.93

5.47

3.11

6.257.65

0

7.27

2.43

7.89

5.1

1.081.68

RODUCING STATES

Ce

Ca

Ce

17 states have an

e started producing

However, in statesashmir, Assam the

anies. However the

profitably.

ent Production

acity

ent Consumption


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CEMENT-INPUTS:

Limestone

It is the main raw material req

production of cement. About 1.5

limestone is used in the manufacture

of cement. Cement grade limestone

only in certain areas in the country l

establishment of cement plants in

Limestone is available in large qu

Rajasthan, Madhya Pradesh, Gujarat

Pradesh, Karnataka, Tamil Nadu, and

Bihar.This has created pockets o

production called

The skewed distribution of capacitie

with transportation bottlenecks ha

pockets of surplus and deficit in thThis has led to pricing differentials acr

fluctuation in prices of limestone wou

cement companies have their own lim

Grasim Industries Ltd., The Associate

Shree Cement Ltd., Birla Corporation

Coal

Around 25 tonnes of coal are used to

tonnes of cement. Coal forms about 20

total operating cost. The industry us5% of coal produced in the country.

ownership of coal mines was not per

India and all purchases had to be m

government-owned coal mines.

government and Cement Manu

Association (CMA) make allocation

The quantities were fixed after

assessments of likely production and al

on past performance of the unit co

Units at a greater distance used t

because of high transport costs and (i

some units) delays in receiving coal be

additional transshipment time (loss in t

However, the scenario has changed so

larger cement companies have taken ad

from fluctuations in coal prices and unc

The union budget 2010-11 has levied cl

50 per tonne. This cess will also apply

coal demand from cement (excluding c

Gujarat

11%

Tamil

Nadu

8%

Chhattisgarh

8%

Karnataka8%

Other

States

12%

LIMESTONE PR

STATE

uired for

onnes of

f 1 tonne

is located

eading to

clusters.

ntities in

, Andhra

a part of

cement

clusters.

s coupled

created

country.ss markets. Since limestone is required in such

ld affect the bottom line of companies. Henc

stone mines. Some of the companies having l

d Cement Cos. Ltd., Ultra Tech Cement Ltd.,

td., Madras Cement Ltd. and Binani.

ake 100

% of the

s about. Private

itted in

de from

The

facturers

of coal.

making

so based

ncerned.

o suffer

case of

cause of

ansferring coal from broad gauge to meter gau

ewhat. The government has allowed captive co

vantage of this and got mining licenses. This ha

ertainty in allocation of coal.

ean energy cess on coal produced in India at a

n imported coal. The XIth plan project (2011-1

oal requirement of captive power plants) to be 3

0

20

40

60

80

100

120

A

pr

M

ay

Jun

Jul

A

ug

Sep

O

ct

N

ov

USD$

MONTHLY PRIC

INTERNATION

OF CO

Andhra

Pradesh

22%

Rajasthan

18%

Madhya

Pradesh

13%

ODUCING

high quantities any

most of the major

imestone mines are

India Cement Ltd.,

e wagons).

al mining. The

s protected them

ominal rate of Rs

2) had estimated

1.9 million tonne.

D

ec

J

an

Feb

M

ar

S 2009-10

L PRICES

L

Price


11/13

So, the Rs 50 per tonne levy of clean e

sector. The actual impact could be high

thermal power plants, which also requi

The prices of international coal are e

coal depend on the availability of ship

up. The index to watch out for is the B

coal as well as the clean energy cess icoming under pressure.

Power

Cement industry is very power intensiv

produce one tonne of cement. The cons

units. Availability of stable and continu

Factories, particularly those in the Sout

are high in India and growing at 10% a

setting up captive thermal power plants

arrangement.Most of the cement companies have in

plants creates a win-win situation for

continuous and uninterrupted power s

electricity boards. The thermal

power plants generate fly ash

which is used in manufacturing

of cement.

TransportationCement is highly freight intensive

in nature. Every tonne of cement

manufactured involves the

transportation of 1.6 tonnes of

limestone, 0.25 tonnes of coal,

0.05 tonnes of gypsum and 1

tonne of the finished product. The

industry faces serious

transportation constraints in terms

of timely availability of railwagons. This has forced

manufacturers to move

progressively larger quantities by road.

this has been slashed by more than 40

gauge conversion - thus limiting carryi

To overcome its resource crunch, the R

lease transfer' (BOLT) schemes. It is cl

the same to the railways will be given

have already invested in the OYW sche

ergy cess means additional cost of Rs 159.50 c

er considering the fact that most of the cement

e use of coal.

pected to continue their upward journey. Also

ing recourses, non availability of ships can p

altic Dry Index. As a result of increase in pric

posed the cement companies would be seeing

e and about 120 kwh(kilo watt hour) of power i

umption is lower at around 90-100 kwh in new

ous power supply is of critical importance to th

h, have been experiencing erratic power supply.

nually. The industry is trying to insulate itself

while diesel generator sets are being used as a

vested heavily in setting up captive power plan

he companies. The companies not only are as

upply but also are insulated from the price hik

In spite of serious shortage of wagons, the plan

under resource constraints. The outlay has als

g capacity and turnaround time of wagons.

ailways is relying on 'Own your Wagon' (OYW

ar that the companies that have procured own

riority in allotment of wagons. Companies like

me.

0

50

100

150

200

250

300

350

Jan Mar May Jul Sep Nov Jan Mar

WholesalepriceIndex(W

PI)

Months from Jan 09-May 10

WPI of cement v/s WP

ore for the coal

lants have captive

since the prices of

sh the coal prices

of international

their margins

s required to

and more efficient

cement industry.

Also power costs

gainst this by

tandby

ts. Setting these

ured of

e by the state

ned expenditure on

been reduced on

) and 'build operate

agons and leased

Grasim and ACC

May

of inputs

Cement

Coaking Coal

Lime Stone

Gypsum


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Gujarat Ambuja pioneered the concept of transportation by sea. It has taken the advantage of its coast

location and has constructed its own jetties at Kodinar, Surat and New Bombay and has insulated itself

from otherwise poor port facilities. It uses these facilities and its own ships to move cement to markets in

Gujarat and Mumbai. It enjoys a significant cost advantage by using this route.

Thus it can be seen that the cement companies which are able to create their own infrastructure are able to

insulate themselves from the uncertainties of the supplies from the government. Thus the company would

gain competitive advantage over others thereby enjoying higher profit margins.


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IMPACT OF UNION BUDGET 2010-11 ON CEMENT INDUSTRY:

Clean energy cess on coal produced in India at a nominal rate of Rs 50 per tonne to be levied.This cess will also apply on imported coal. The XIth plan project (2011-12) had estimated coaldemand from cement (excluding coal requirement of captive power plants) to be 31.9 million

tonne. So, the Rs 50 per tonne levy of clean energy cess means additional cost of Rs 159.50crore for the coal sector. The actual impact could be higher considering the fact that most ofthe cement plants have captive thermal power plants, which also require use of coal.

Rs. 66100 crore provided for Rural Development. An amount of Rs 48,000 crore allocated for rural infrastructure programmes under Bharat

Nirman. Unit cost under Indira Awas Yojana increased to Rs 45,000 in the plain areas and to Rs 48,500

in the hilly areas. Allocation for this scheme increased to Rs 10000 crore. Allocation for urban development increased by more than 75% from Rs.3,060 crore to

Rs.5,400 crore in 2010-11. Allocation for Housing and Urban Poverty Alleviation rose from Rs 850 crore to Rs 1000 crore

in 2010-11. Scheme of one per cent interest subvention on housing loan upto Rs10 lakh, where the cost of

the house does not exceed Rs 20 lakh announced in the last Budget extended up toMarch 31, 2011.

Rs 1270 crore allocated forRajiv Awas Yojana as compared to Rs 150 crore last year. Standard excise rate up from 8% to 10%

The clean energy cess of Rs.50/tonne of coal would mean the energy cost would go up. The cementcompanies not only require coal for firing up their Kilns but also they require it in their captive power

plants for generating electricity. This would surely increase their cost.

E.g for producing 100 tonnes of cement we require 25 tonnes of coal. Now, for a 1 MMT plant the coalrequired would be 40000 tonnes which would cost additional 250000*50=12500000 i.e 12.5million

rupees.

The increase in allocation for infrastructure programmes would increase the demand for cement.Moreover the increased spending for rural development will help the cement companies tap in the rural

markets.

Increase in excise duty would result in cement companies trying to pass the cost to the consumers.

Amit Cement

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