INTRODUCTION

The Indian cement industry with a total capacity of about 190 m tonnes in financial year-2008 is the second largest market after China. Despite the fact that the Indian cement industry has clocked production of more than 100 m tonnes for the last five years, registering an average growth of nearly 9%, the per capita consumption of around 150 kgs compares poorly with the world average of over 260 kgs and more than 450 kgs in China. This, more than anything underlines the tremendous scope for growth in the Indian cement industry in the long term .Although consolidation has taken place in the Indian cement industry with the top five players controlling almost 50% of the capacity, the balance capacity still remains pretty fragmented. Cement, being a bulk commodity, is a freight intensive industry and transporting cement over long distances can prove to be uneconomical. This has resulted in cement being largely a regional play with the industry divided into five main regions viz. north, south, west, east and the central region. While the southern region always had excess capacity in the past owing to abundant availability of limestone, the western and northern region are the most lucrative markets on account of higher income levels. However, with capacity addition taking place at a slower rate as compared to
1

growth in demand, the demand supply parity has been restored to some extent in the Southern region for the medium term. Considering the pace at which infrastructural activity is taking place in different regions, the players have lined up expansion plans accordingly. Despite the growth of the Indian cement industry, Indias per capita production of 115 kilograms per year lags the world average of over 250 kgs and Chinas production of more than 450 kgs per person. Clearly there remains room for tremendous growth in the industry in India. But if India is to reach its potential, the free hand of the market must be left unfettered. For this to happen, the Indian government must make sure that foreign companies that have a history of price fixing and market collusion receive appropriate regulation. If market shares get fixed, India will be the loser and the gap between India and China will only grow in the race to become the next economic superpower.

Cement Industry in India

The Indian cement industry is one of the booming sectors of the Indian economy. The Indian cement industry is the 2nd largest market after China It had a total capacity of about 300 m tones (MT) as of financial year ended 2010-11. Cement industry in India comprises of 125 large cement plants and over 300 mini cement plants. The Indian cement industry is not only meeting the requirements arisen within the domestic territory but also fulfilling the demands of the international arena.

MAJOR PLAYERS OF THE INDUSTRY

This section provides the overview and financial information on prominent players in the Indian cement sector, like o Associated Cement Company Ltd. (ACC), o Grasim Industries Ltd., o Ambuja Cements Ltd., o Ultra Tech Cement Ltd., o J.K. Cement Limited, o Madras Cements Ltd., o Jaypee Group. o Binani Cement Limited o Prism Cement Limited

Ambuja Cements:-HSBC value Ambuja Cements at a target 2010e EV/EBITDA of 5.5x, which is at a discount to its historical trading range of 7-10x and in line with its industry peers. We value Ambuja Cements in line with ACC, which we believe is its closest comparable. Our target price is Rs 50 and we have an Underweight rating on the stock,

Madras Cements: HSBC value Madras Cements at 4x EV/EBITDA. HSBC is underweight on the stock with a target price of Rs 60.

India Cements:-With a worsening macro outlook and likely oversupply in 2009, HSBC value India Cements at 4.5x 2010e EV/EBITDA, which is at a discount to its historical trading range of 5.5x-8.5x. HSBC gave the target price of Rs 80, with an Underweight rating on the stock. Shree Cements:-The stock has traded in a narrow EV/EBITDA band of 4-6x in the last two years. A concentration of the companys operations in northern India could make it more vulnerable to potential oversupply in 2009; We therefore value it at the lower band of its EV/EBITDA range, i.e.3.5x.

BIG PLAYERS: CEMENT SECTOR

From the above chart we can see that

o ACC contributed 11.8% to the sector o L&T 11.3% o Grasim 9.6% o Gujarat Ambuja 7.6% o India Cement 6.9% o Madras 3.3% And others 49.5% to the sector . So, ACC being the sector leader contributing a major part of supplies.

FACTORS RESPONSIBLE FOR THE GROWTH OF THE SECTOR

Technological change

Continuous technological upgrading and assimilation of latest technology has been going on in the cement industry. Presently, 93 per cent of the total capacity in the industry is based on modern and environment-friendly dry process technology and only 7 per cent of the capacity is based on old wet and semi-dry process technology. There is tremendous scope for waste heat recovery in cement plants and thereby reduction in emission level. New Investments

Shree Cements will invest almost US$ 244.12 million this year, of which half will be invested towards setting up two grinding units at Rajasthan and Uttarakhand to augment its capacity. The other half will be towards the two power plants in Bangur.

ACC Ltd will spend US$ 575 million on capacity expansion in 2009 and 2010. ACC is expanding capacity by a third to 30 MT by 2010.

Binani Cement has signed a memorandum of understanding with the Gujarat government to set up a 2.5 MTPA greenfield cement plant in Gujarat at a cost of US$ 169.40 million. Binani Cement has also initiated talks with a few foreign institutional investors (FIIs) to raise US$ 307.99 million for its new projects.
7

Bheema Cements Ltd is planning to invest US$ 116.42 million in setting up a new manufacturing line of 1.5 MT capacity at its plant in Andhra Pradesh.

Mergers and Acquistions (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.

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 India's third-largest 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.

CRH Plc, the world's second biggest maker and distributor of building materials, acquired a 50 per cent stake in My Home Industries Ltd for almost US$ 372.64 million.
8

Vicat SA, a French cement maker acquired a 6.67 per cent stake in Hyderabadbased Sagar Cement for US$ 14.35 million. Government Initiatives

Government initiatives in the infrastructure sector, coupled with the housing sector boom and urban development, continue being the main drivers of growth for the Indian cement industry.

Increased infrastructure spending has been a key focus area over the last five years indicating good times ahead for cement manufacturers.

The government has increased budgetary allocation for roads under National Highways Development Project (NHDP).

Appointing a coal regulator is looked upon as a positive move as it will facilitate timely and proper allocation of coal (a key raw material) blocks to the core sectors, cement being one of them.

Keeping in mind the global meltdown which is impacting the cement companies in India, the government reimposed the counter-veiling duty (CVD) and special CVD on imported cement in January. This is likely to provide a level playing field to domestic companies.

ACC Limited(The Associated Cement Companies Limited)

ACC Limited is the one of the prominent manufacturers of cement and concrete in India . They have several zonal officer, 19 sales officer, 19 ready mix concrete plants and 14 modern cement factories in different parts of India. ACC is the most preferred cement brand name in India ACC is now part of the worldwide Holmic Group ACC has also extended its services overseas to the Middle East, Africa, and South America, where it has provided technical and managerial consultancy to a variety of consumers, and also helps in the operation and maintenance of cement plants abroad ACC has 14 plants at 12 locations nationwide Madukkarai in Tamil Nadu, Wadi (two) in Karnataka, Chamda in Maharashtra, Bargarh in Orissa, Damodhar in West Bengal, Sindri and Chaibasa in Jharkhand, Jamul in Chhattisgarh, Kymore in Madhya Pradesh, Tikaria in Uttar Pradesh, Lakheri in Rajasthan, and Gagal (two) in Himachal Pradesh.

10

The company has a manufacturing capacity of around 21mtpa and hopes to expand it to 27mtpa by 2009.

Performance of ACC Ltd. In terms of appreciation

Period One Two One Three Six One Week Week Month Month Month Year Period 1334 1170 1124 1219 999.6 975.3 Old Price Price 21.15 185.1 230.9 136.8 355.8 380.1 Gain Gain in 1.59 15.82 20.53 11.22 35.59 38.97 %

11

Gujarat Ambuja Cements Limited

Ambuja Cements was set up in 1986. Ambuja is the most profitable cement company in India, and one of the lowest cost producer of cement in the world. The total cement capacity of the company is 18.5 million tones. In 1993, Ambuja Cement set up a complete system of transporting bulk cement via the sea route. Making it the first company in India to introduce bulk cement movement by sea Today, Ambuja is the 3rd largest cement company in India, with an annual plant capacity of 16 million tonnes including Ambuja Cement Eastern Ltd. and revenue in excess of Rs.3298 crore. As per Relative Strength Indicator (RSI) , Ambuja Cements Ltd. was in over bought level. However, recent price moves on 10/02/2012 indicates trend reversal and stock may fall / correct in near future. This was done with jump in volume. Which is another indicator supporting the counter trend. Ambuja Cements Ltd. share price is down along with rise in volume on 10/02/2012 . This signal's downward trend. Traders may exit position Stock has jumped by more than 15% in last One Month.. Share has hit two week low on 10/02/2012 Ambuja Cements Ltd. has broken resistance, with good volume on 06/02/2012. This could mean a good up move is imminent. This stock is in short term up trend.

12

Performance of Ambuja Cement Ltd. In terms of appreciation

Period One Two One Three Six One Week Week Month Month Month Year Period 180.6 160.6 151.5 163.3 131.2 116.5 Old Price Price -10.65 9.35 18.4 6.6 38.7 53.45 Gain Gain in -5.9 5.82 12.15 4.04 29.5 45.9 %

13

Ultra Tech Cement Limited

Ultra tech cement a part of Aditya Birla group, is the countrys largest exporter of cement . The company has 12 integrated plants, one white cement plant, one clinkerisation plant in UAE, 15 grinding units 11 in India, 2 in UAE, one in Bahrain and Bangladesh each and five terminals, four in India and one in Sri Lanka. The Ultratech Cement has strong brand equity and premium pricingin its key markets. Ultratechs Gujarat plant offers it the flexibility to choose its market due to its coastal location.

Performance of Ultra Tech Cement Ltd. In terms of appreciation

Period One Week Period 1363.75 Old Price Price 32.75 Gain Gain in 2.4 %

Two Week 1190

One Three Six One Month Month Month Year 1164.5 1176.4 1020 915

206.5 17.35

232.05 19.93

220.1 18.71

376.6 36.92

482 52.7

14

India Cements
The India Cements Ltd was established in 1946 and the first plant was setup at Sankarnagar in Tamilnadu in 1949. Since then it has grown in stature to seven plants spread over Tamilnadu and Andhra Pradesh. The capacities as on March 2010 have reached 14.05 mtpa. The Company is the largest producer of cement in South India. The Company's plants are well spread with three in Tamilnadu and four in Andhra Pradesh which cater to all major markets in South India and Maharashtra. The Company is the market leader with a market share of 28% in the South. It aims to achieve a 35% market share in the near future. India Cements Ltd. also owns Indian Premier League's Chennai franchise, Chennai Super Kings.

Performance of India Cements Ltd. In terms of appreciation

Period One Two One Three Six One Week Week Month Month Month Year Period 94 93.85 72.2 67.65 68.1 93.3 Old Price Price 9.85 10 31.65 36.20 35.75 10.55 Gain Gain in 10.48 10.66 43.84 53.51 52.50 11.31 %

15

ACHEIVEMENTS
2006 Subsidiary companies Damodhar Cement & Slag Limited, Bargarh Cement Limited and Tarmac (India) Limited merged with ACC ACC announces new Workplace policy for HIV/AIDS Change of name to ACC Limited with effect from September 1, 2006 from The Associated Cement Companies Limited ACC receives Good Corporate Citizen Award 2005-06 from Bombay Chamber of Commerce and Industry New corporate brand identity and logo adopted from October 15, 2006 ACC establishes Anti Retroviral Treatment Centre for HIV/AIDS patients at Wadi in Karnataka the first ever such project by a private sector company in India. ACC partners with Christian Medical College for treatment of HIV/AIDS in Tamil Nadu Sumant Moolgaokar Technical Institute completes 50 years and reopens with new curriculum ACC commissions Wind energy farm in Tamil nadu Ready mixed concrete business hived off to a new subsidiary called ACC Concrete Limited ACC Cement Technology Institute formally inaugurated at Jamul on July 7 First Sustainable Development Report released on June 5. ACC wins CNBC-TV18 India Business Leader Award in the category India Corporate Citizen of the year 2008

2006 2006

2006 2006 2006

2007 2007 2007 2008 2008 2008 2008

16

We would choose Cement for the following reasons:

Declining Debt to Asset ratio, thereby decreasing the financial charges burden. Improved Earnings Regular Dividend payments Low P/E Ratio.

17

TECHNICAL ANALYSIS
Stock has jumped by more than 10% in last two weeks. Stock has jumped by more than 15% in last One Month. Share has hit 52 week high on 10/02/2012 ACC Ltd. has broken resistance, with good volume on 08/02/2012. This could mean a good up move is imminent. This stock is in short term up trend. ACC Ltd. share price and volume is rising for last five days observed on 08/02/2012 . This normally happens after some news affecting stock is out. Traders can use the momentum to gain some quick returns provided other indicator are supportive This stock is in short term up trend.

Name

One Week Old Price/Gain in %

Two Week Old Price/Gain in % 1173.8/ 18.36% 161.3/ 10.48% 81.35/ 18.01% 1239.7/ 12.98%

ACC Ltd. 1248.85/ 11.25% Ambuja 169.95/ Cements 4.85% Ltd. India 87.95/ Cements 9.15% Ltd. Ultra 1263.25/ Tech 10.88% Cement Ltd.

One Month Old Price/Gain in % 1099.65/ 26.34% 152.15/ 17.12% 69.5/ 38.13% 1151.75/ 12.98%

Three Month Old Price/Gain in % 1207.55/ 15.05% 160.95/ 10.72% 77.8/ 23.39% 1164/ 20.33%

Six Month Old Price/Gain in % 995.85/ 39.51% 127.95/ 39.27% 65.65/ 46.23 987.45/ 41.85%

One Year Old Price/Gai n in % 938.9/ 47.97% 119.1/ 49.62% 87.15/ 10.15% 897.25/ 56.10%

18

Future Ahead of Indian Cement Industry

The annual demand for cement in India is consistently growing at 8-10%. It is estimated after an extensive study that the demand for cement in the country is expected to increase to 244.82 million tonnes by 2012. The government has taken measures to increase the availability of indigenous coal for cement manufacturers to bring down production costs. It is estimated that the Government's assistance to several infrastructure projects, road networks and housing facilities will boost the growth in cement consumption in the near future. While concrete steps are being taken to bring down, costs, the cement industry is heading towards a very bright future in India

19

SWOT ANALYSIS
Strengths
Availability of raw material Export Market Cement Industries operating at max capacity Growing housing demand Rise in govt. developmental spending Low labor cost

Weaknesses
Highly leveraged sector High Transportation Cost High oil prices Lack of coal supply. Weather Conditions.

20

Opportunities
Availability of capacity Foreign direct investment in infrastructure sector going to increase in coming years, which will increase the demand of cement. Taping new geographical areas in foreign market Declining Interest Scenario.

Threats
Depriciation Of Rupee. Law & order situation Power availability Increase in production cost Low Domestic Demand Few small factories may shut their plants in the wake of severe losses.

21

Indian Cement Industry Forecast to 2012

India is fast emerging on the world map as a strong economy and a global power. The country is going through a phase of rapid development and growth. All the vital industries and sectors of the country are registering growth and thus, luring investors. And cement industry is one of them. To throw light on the Indian cement industry, RNCOS has launched its report 'Indian Cement Industry Forecast to 2012' that gives an extensive research and in-depth analysis of the cement industry in India. This report helps clients to analyze the competitive dynamics and emerging opportunities critical to the success of the cement industry in India. Based on this analysis, the report gives a future forecast of the market that is intended as a rough guide to the direction in which the market is likely to move

22

CONCLUSION
Cement production: too early to say worst is over

The shares of cement companies have been moving up again, on the back of a decent rise in January dispatches for some companies. Industry data show that cement production and despatches increased by 12.6% and 12.7% year-onyear (y-o-y) in December, after growing by 9.8% and 12% y-o-y in November. The governments numbers show that all-India growth in cement production was 8.7% in November and 11.6% in December. The momentum is likely to be kept up in Januarythe Aditya Birla group has said that cement production and despatches are up 9.76% and 7.35%, respectively, ACC Ltds production and despatches for January are up 12% and 12.5%, respectively. The numbers have sparked some hope among analysts that demand for cement has picked up. The reasons for the higher demand include pre-poll spending and strong rural demand. A research report by broking firm Sharekhan.com says, With the revival of infrastructure and private house building activity, the cement industry has given an impressive performance in the last two consecutive months. But sustaining such growth is uncertain, as the real estate segment, which consumes about 55% of the total cement produced, has still not revived due to
23

overall economic slowdown. However, we expect that the overall volume growth in FY2009 will be certainly ahead of street expectations. Further, cement companies are also expected to benefit from softening coal and crude prices. There is, however, also a base effect at work here. According to analysts at Morgan Stanley, the y-o-y growth in the three-month moving average of cement dispatches was at a low of 4.9% in January 2008, which is why they expect high growth of 11.4% in the three-month moving average of cement despatches for January 2009. In February 2008, however, the three-month moving average went up to 8%, which means that itll be difficult to show high growth in February 2009. But perhaps the biggest reason not to set too much store by the rebound in cement despatches is the opinion of the cement producers themselves. The Grasim management, for example, points out that although cement demand can be expected to grow in line with the gross domestic product growth, prices and margins will come under pressure in FY10 as more capacities come on stream.

24

Presented By :-

Sr. No 1 2 3 4 5

Name Jaymit Goyani Kunit Jain Mihir Shah Devang Shah Yash Shah

Roll No 12 15 46 47 49

25

Bibliography
www.topstockresearch.com www.scribd.com www.moneycontrol.com www.nseindia.com

26