The Transport Of Cement

Published Date: 02 Nov 2017

CEMENT INDUSTRY

This is the comprehensive project which is prepared on cement industry. It was firstly established in washermanpet near Madras. There were different changes in the growth and evolution of the industry as the time passes.

Because of increase in Special Economic Zones there is an increase in the demand of cement. Indian population increases day by day so there is requirement for new construction it creates a major demand for cement.

There is a major rush in Maharashtra so it is the most demand created state among all the states of India. Different sectors also create the demand for it like infrastructure, real estate, etc.

The transport of cement is done by roads, railways and by sea. It is most preferable by road for a shorter distance and for a longer distance railway is preferred. Because of increasing special economic zones the demand for cement is also increased.

Ultratech is the leading producer of white cement in India. Ultratech Cement Ltd was set up in 1996 for confined usage to meet household as well as overseas demands. It was set up at West Coast of India and in Gujarat at a distance of 140 kms of SouthWest of Bhavnagar.

There is a major use of raw materials such as rock, sand and water, where the utilization of energy is high to extract the rock and sand and the carrying of raw materials is also high. It puts the damage on the earth.

There is an excess cement capacity which is decided by the government projections so it generates difference between demand and supply.

The development in cement industry is possible by the rapid development in infrastructure sectors such as roads, ports, airports, housing, irrigation projects, etc.

It is only possible through enhancing schemes for reasonable housing by providing tax release.

The cement industry will reach at peak in next coming years by its rapid growth.

The manufacturing of cement is to be predicted to rise by 400 million tones in the next 10 years.

The top market players concentrate on increase the present capacity of their plants.

INDEX

PART 1-INDUSTRY STUDY

GROWTH AND EVOLUTION OF CEMENT INDUSTRY IN INDIA

Cement is considered as an important thing for binding the material together and makes use of it independently. Cement is not to be known as concrete but it means a dry powder substance. And cement mixture is referred to as concrete. India is fourth largest country in manufacturing cement.

Nowadays whenever the word cement is come, it refers to Portland cement which was come from England.

The Portland Cement Industry was come back in1904 with tiny cement factory in Washermanpet near Madras. The ‘cement era’ was actually come in 1914 when there was new establishment of three cement factories. They were Indian Cement Company Limited (Porbandar), Katni (Madhyapradesh), Lakheri (Rajasthan). They were established by the managing agency which was in Bombay. The first world war made effect on it and by 1924 the new ten cement companies were set up with an installed capacity of 5,59,800 metric tons but there was manufacturing of half of the capacity.

There was a low prices offered by the Indian Cement Company which did not cover cost of production because of the oppose by its users. So the company’s liquidation was made effect on Government to take certain steps for it. The Government of India gave the responsibility of cement industry to tariff board. It required the support of all the units of it.

In 1925 the Indian Cement Manufacturer’s association (CMA) was established for control on prices. In 1936 the eleven companies were merged to establish associated cement company limited.

A new five cement plant were established by Dalmia-Jain Group with an installed capacity of 5,75,000 tons per year which made the prices lower down again at uneconomic level in 1937. During the second world war cement was considered as an important element so there was a price and distribution control on it by the direct state working.

There was mostly order for civil purposes in 1946 so the demand for cement increased. Because of recent trend in technology there was new technology upgrading in cement industry. 93% of the cement industry based on new environment friendly dry method and 7% based on traditional wet and semi dry method.

India is manufacturing different types of cement as Ordinary Portland cement, Portland Pozzolana Cement, Portland Blast Furnace Slag Cement, Oil Well Cement, Rapid Hardening Portland cement, Sulphate Resisting Portland cement, White Cement, etc. it is standardized under the BIS specifications.

Eventually, the development of the cement industry shows the change before India’s independence because of the problems created by the manufacturing over demand.

Mainly competitors in cement manufacturing are Ambuja cement, Aditya cement, L & T cement and JK cement.

Cement production was increased from 4.16 million tons to 76.22 million tons during the year 1951-56 to 1996-97. The industry which has been in Tirunelveli district play a vital role in the growth of not only economy of that particular district but also for country.

Easy availability of raw materials like limestone, gypsum and electricity in the district are considered as a useful factor for setting up of the Sankar works of the India Cement Limited near Tirunelveli. All the general public near this can get easily. It has also bad effects on it.

Cement industry is most important for the country’s socio economic growth and development.

PRODUCT PROFILE

By-Product:-

Two types of Cement normally used in building industry are as follows:

Hydraulic Cement

Nonhydraulic Cement

Cement:-

A powdery product made from limestone and small amounts of other raw materials, heated to form clinker, which is then ground to a powder with small amounts of gypsum and other additives.

Clinker:-

A hard substance produced in cement kilns which is ground with gypsum and other additives to make cement.

Concrete:-

A building material made from a mixture of sand and rocks bound together with cement.

Dioxins:-

Informal term for the family of polychlorinated dibenzo dioxins and related polychlorinated dibenzo furans.

Gypsum:-

A naturally occurring mineral hydrated calcium sulphate.

Limestone:-

A naturally occurring rock primarily composed of calcium carbonate, often containing trace amounts of other minerals.

NOx:-

Oxides of nitrogen: the sum of nitric oxide (NO) plus nitrogen dioxide (NO2). Although other oxides of nitrogen occur, such as nitrous oxide (N2O), they are normally excluded from the definition of NOx.

PAHs: - Polyaromatic hydrocarbons.

PCBs:- Polychlorinated biphenyls.

SOx:-

Oxides of sulphur: the sum of sulphur dioxide (SO2) and sulphur trioxide (SO3). The former substance predominates, and emissions of SOx are often reported as SO2 equivalent.

DEMAND DETERMINATION OF THE CEMENT INDUSTRY

There are broadly five regions in India which have mainly independent demand-supply factors and numbers, combined with different industry structure in each region.

Source: www.indiacement.com

Sector Overview:-

India is the second-largest cement producing country in the world after china. The country’s cement production was 300 million tonnes in 2010: the figure is expected to double to reach almost 550 million tonnes by 2020, as per estimates by the Cement Manufacturing Association (CMA). As of 2011, there were 137 large and 365 mini cement plants in India.

India cement demand emanates from four key segments-

Housing, accounting for 67%,

Infrastructure for 13%,

Commercial Construction for 11%,

Industrial sector for 9%.

India Cements Pricing

Expect May dispatches to get impacted led by heightened scarcity of sand among some states. Price movement to turn down with beginning of monsoon influencing construction activities.

April-May prices fluctuations to a great extent a remarkable representing that prices conducting surprises, and they could actually be pessimistic.

Cement prices are expected to rise in northern India, which geographically is too far from southern and eastern India to be supplied from those regions where surplus cement production capacity is available.

Penetration level:-

The demand for cement mainly depends on the level of growth and the rate of development of the economy of the country. There are no close substitutes for cement and hence the demand for cement is price is elastic as far as India is concerned. For the FY 2011 - 12 (Apr - Oct), MT 97.84 was consumed form the 98.91 MT produced.  During the first half of the year, there was marginally poor off take in cement demand due to passive construction activity, which led to excess supply, thus putting downward pressure on realizations. This has been coupled with rise in input costs, especially prices of coal and petroleum products. As a result, both the top line and bottom line have been affected. This demand supply mismatch scenario is expected to prevail for quite some time in the years to come. Good infrastructure development will support demand.

PLAYERS IN THE INDUSTRY

India is world’s second largest cement manufacturing after China. There are mainly projects for infrastructure, housing and road networks which are covered by the government. The cement industry is developed rapidly nowadays. The Indian Cement Industry is large in size and it sets up more of the companies in the market.

It does not keep eye on large development in recent trend but also leads to the growth of top ten cement companies. The top twenty companies contribute 70% of the total manufacturing of the cement in the country.

Its target is to produce 236.16 MT IN 2011 and 262.61 MT in 2012.

TOP TEN COMPANIES PROFILE

List of Top Players in the cement industry in India:

Table 1

Ultratech Cement Ltd.

Ambuja Cements Ltd.

ACC

India Cements Ltd.

Madras Cement Ltd.

Shree Cement Ltd.

Birla Corporation Cement Ltd.

J.K. Cement Ltd.

Prism Cement Ltd.

JK Lakshmi Cement Ltd.

DISTRIBUTION CHANNEL OF THE CEMENT INDUSTRY

India’s infrastructure estimates the investment of about USD 1 trillion as per 12th Five Year plan. The economic growth of India and cement utilization has a relation. Infrastructure requirement mainly for government projects, higher housing demand in rural and semi urban areas generates sales for cement. Increasing recognition and rising dispatches are measured to be advantageous for higher profits for the cement industry. Because of higher raw material prices required for cement like coal, gypsum and flyash the cement industry had a key confrontation. The Indian Cement Industry suffers from a loss whenever there is a uninspiring demand capacity utilisation in the Cement industry.

Distribution of Cement:-

Distribution of Cement to different regions from the Plants is a challenge. Railways, Sea and Road are mainly the modes of transportation for it. The mode of transportation is decided according to the distance and volume of cement. It involves different mediators for estimating the time occupied for the cement to carry out from the Plant to the customers.

Any one of the following strategies is followed:-

The Company may transport cement to their key dealers by road. Mainly dealers who are near to the producing facility usually take delivery of cement by road.

Some Companies select most important dealers / distributors who would sell a large volume of cement of a specific brand; who in turn would send to the customers in the region. So major companies have a preference for sending cement through great arrangement of small dealers. It shows that there is an accessibility of cement in all outlets by the network of small dealers.

The supply of cement which is provided to the consumers by large dealers provides an attractive discount scheme. This shows that the dealer do not give a great deal of consideration to the sales of other brands. Most dealers generally contract with several cement brands.

Cement Plants generally are located distantly from project locations and customer’s building. It generates hindrances for availability of cement and high inventory costs. For covering these the companies have situating the grinding units and Packing units close to the main markets. Major infrastructure projects would select having a close contact with the Company and therefore there is an easy availability of cement to them.

So it provides benefits for the project to acquire from a major dealer would be favourable credit terms and ease in the procurement of other building materials.

The company should makes the distribution network according to the objectives of the company. The distribution strategy determines segmentation, pricing, customer behaviour and customer communication decisions.

Market Segmentation:-

Segmentation is made according to the any to the following criteria:

Nature of Application of Cement:

Cement is used for Large infrastructure projects, Commercial housing project, Residential projects, precast or block making works, Ready Mix Concrete units or for minor repair works.

Category of Construction Professional:

A construction professional could be either a mason, Civil Engineer , Builder or Contractor, Consultant.

Rural, Semi-urban and Urban Markets:

Cement could be sold in villages, suburban areas of cities and within the city limits.

KEY ISSUES AND CURRENT TRENDS

Because of economical changes in India, there is most of changes in demand in this industry. India has got the second place after China with a total capacity of 224 MT manufactured by 125 big and 300 small cement plants.

Indian cement industry has an occurrence of passive demand development and reducing operating rates above the last two years.

In 2012-13 as well, operating rates are expected to stay on under force.

There is an increase in demand of cement because of growth of the Special Economic Zones. It will create the demand for 4-5 metric tons cement per year.

The Indian population increased day by day so it creates more construction and by this cement consumption is increased.

Because of the large extent in infrastructure and housing market it gives more scope for demand in cement industry. Among all the Indian states the demand is created more by Maharashtra.

The demand is generated from these sectors which are real estate, infrastructure, etc.

Because of increasing demand Indian companies increases their production capacity and also sustains growth in the competition with multinationals.

There is mostly the increasing demand by housing sector and it is considered as a big customer in coming year.

The current news of Indian Cement Industry is for making the business strategies the competitors are made for sustaining in an Indian Building material market.

PESTEL ANALYSIS

Political Factor: -

The rate of cement is generally managed by the coal rates , power tariffs, railway tariffs, freight, royalty and limestone so the government manages all of these rates.

Government as the largest customers of the cement in the country, mainly state government take corrective steps for making investment in their states.

Economic Factor:-

Presently the demand of cement is increasing because of the requirement by government infrastructure and real estate.

There will be an increase of cement plants in the coming years in the country because of development export of the industry.

Social Factor:-

The cement industry in India involves the organize sector and the unorganized sector. The organized sector involves recognized cement producing companies and the chief competitors of the unorganized sectors are the zonal and local cement manufacturing plants in different states among the states.

Mostly the Indian customers make preference on selecting the higher brand so there is a difficult for small cement units for sustaining in a highly competitive market.

It is estimated about generating 25 lacs jobs in the coming 4-5 years.

Technological Factor:-

The government of India makes strategies according to the newly advanced technology from the cement industry of Japan because all the process regarded to manufacturing of cement based on technology.

It makes strategies for enhancing the capability of Indian cement industry and take steps according to environment protection.

Because of increasing prices of coal the industry has been facing problems of scarcity of coal in the country.

Environment Factor:-

Cement is the crucial element in concrete, locking together the sand and gravel constituents in an inert matrix; it is the ‘glue’ which holds together much of modern society’s infrastructure. To produce a tonne of cement uses approximately 1.5 tonnes of raw materials, 0.3 tonnes of air and 6 gigajoules of fuel and releases 0.94 tonnes of carbon dioxide.

During the acquirement of the raw materials which may include blast furnace slag and fly ash according to the desired properties of the finished product.

Legal Factor:-

Corporate governance is as a set of systems, processes and principles, which shows that a company is governed in the benefits of all stakeholders.

While determining to get business goals, companies and operating management are expected to permit a good working board and board committees, allow sufficient clearness in operations, taking good business practices that are ethical.

There are mainly efforts made for improving quality of product and service..