Industry Overview :
India is second largest manufacturer of Cement with 139 cement plants, 365 mini plants & 40 players. India’s cement demand is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by 2025.
The Indian cement industry is dominated by a few companies. The top 20 cement companies account for almost 70 per cent of the total cement production of the country. A total of 188 large cement plants together account for 97 per cent of the total installed capacity in the country, with 365 small plants account for the rest. Of these large cement plants, 77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu.
India has a lot of potential for development in the infrastructure and construction sector and the cement sector is expected to largely benefit from it. Some of the recent major government initiatives such as development of 98 smart cities, large Infrastructure projects leading to 45 million tonnes of Cement needed in next three to four levels and expected to provide a major boost to the sector.
To meet the rise in demand, cement companies are expected to add 56 MT capacity over the next three years. The cement capacity in India may register a growth of eight per cent by next year end to 395 MT from the current level of 366 MT. It may increase further to 421 MT by the end of 2017. The country’s per capita consumption stands at around 190 kg.
Expecting such developments in the country and aided by suitable government foreign policies, several foreign players such as Lafarge-Holcim, Heidelberg Cement, and Vicat have invested in the country in the recent past. A significant factor which aids the growth of this sector is the ready availability of the raw materials for making cement, such as limestone and coal.
The housing sector is the biggest demand driver of cement, accounting for about 67 per cent of the total consumption in India. The other major consumers of cement include infrastructure at 13 per cent, commercial construction at 11 per cent and industrial construction at 9 per cent.
Share Holding pattern
Financials and Ratios.
|Net Profit Margin||13.71||9.34||9.81||9.95||5.01|
|Dividend per Share||28||30||30||34||17|
|Debt to Equity||0.07||0.01||0||0||0|
|Asset Turnover||80.57||95.23||92.35||92.63||91.8 6|
Future Prospects : Recent Deal in-between Holcim-laffarge is very important. Though Due to CCI decision, They need to sell Laffarge units to Nirma, but the Synergy is very important.
More important issue is the consortium of Cement manufacturer. Even if India is second largest manufacturer of Cement! expand but the ratios of Cement manufacturer are not looking good. This will not make monopoly but will make India as one of the important market for the parent.
Corporate governance was always issue with them when holcim decide to use the Cash of Ambuja for Their own. Though their are very big opportunities with the sector but corporate governance and the way management is working makes Cement manufacturer less attractive. That is the reason why many Investors Choose housing finance companies to get Profit from housing growth and not Cement manufacturer.
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