INTRODUCTION TO

CEMENT INDUSTRY
INTRODUCTION

Cement Industry in India is on a roll at the moment. Driven by a booming real

estate sector, global demand and increased activity in infrastructure development
such as state and national highways, the cement industry has witnessed tremendous
growth. Production capacity has gone up and top cement companies of the world
are vying to enter the Indian market, there by sparking off a spate of mergers and
acquisitions. Indian cement industry is currently ranked second in the world. The
origins of Indian cement industry can be traced back to 1914 when the first unit
was set-up at Porbandar with a capacity of 1000 tones. Today cement industry
comprises of 125 large cement plants and more than 300 mini cement plants. The
Cement Corporation of India, which is a Central Public Sector Undertaking, has 10
units. There are 10 large cement plants owned by various State Governments.
Cement industry in India has also made tremendous strides in technological up
gradation and assimilation of latest technology. Presently, 93 per cent of the total
capacity in the industry is based on modern and environment- friendly dry process
technology. The induction of advanced technology has helped the industry
immensely to conserve energy and fuel and to save materials substantially. Indian
cement industry has also acquired technical capability to produce different types of
cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC),
Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening
Portland Cement, Sulphate Resisting Portland Cement, White Cement etc. Some of
the major clusters of cement industry in India are: Satna (Madhya Pradesh),
Chandrapur (Maharashtra), Gulbarga (Karnataka), Yerranguntla (Andhra Pradesh),
Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria (Rajasthan).

Cement industry in India is currently going through a consolidation phase. Some

examples of consolidation in the Indian cement industry are: Gujarat Ambuja
taking a stake of 14 per cent in ACC, and taking over DLF Cements and Modi
Cement; ACC taking over IDCOL; India Cement taking over Raasi Cement and
Sri Vishnu Cement; and Grasim's acquisition of the cement business of
L&T, Indian Rayon's cement division, and Sri Digvijay Cements. Foreign cement
companies are also picking up stakes in large Indian cement companies. Swiss
cement major Holcim has picked up 14.8 per cent of the promoters' stake in
Gujarat Ambuja Cements (GACL). Holcim's acquisition has led to the emergence
of two major groups in the Indian cement industry, the Holcim-ACC-Gujarat
Ambuja Cements combine and the Aditya Birla group through Grasim Industries
and Ultratech Cement. Lafarge, the French cement major has acquired the cement
plants of Raymond and Tisco. Italy based Italcementi has acquired a stake in the
K.K. Birla promoted Zuari Industries' cement plant in Andhra Pradesh, and
German cement company Heidelberg Cement has entered into an equal joint-
venture agreement with S P Lohia Group controlled Indo-Rama Cement.

CURRENT SCENARIO
The Indian cement industry is the second largest producer of quality cement,
which meets global standards. The cement industry comprises 130 large cement
plants and more than 300 mini cement plants. The industry's capacity at the end of
the year reached 188.97 million tons which was 166.73 million tons at the end of
the year 2006-07. Cement production during April to March 2007-08 was 168.31
million tons as compared to 155.66 million tons during the same period for the
year 2006-07.Despatches were 167.67 million tons during April to March 2007- 08
whereas 155.26 during the same period. During April-March 2007-08, cement
export was 3.65 million tons as compared to 5.89 during the same period.
Cement industry in India is currently going through a consolidation phase. Some
examples of consolidation in the Indian cement industry are: Gujarat Ambuja
taking a stake of 14 per cent in ACC, and taking over DLF Cements and Modi
Cement; ACC taking over IDCOL; India Cement taking over Raasi Cement and
Sri Vishnu Cement; and Grasim's acquisition of the cement business of L&T,
Indian Rayon's cement division, and Sri Digvijay Cements. Foreign cement
companies are also picking up stakes in large Indian cement companies. Swiss
cement major Holcim has picked up 14.8 per cent of the promoters' stake in
Gujarat Ambuja Cements (GACL). Holcim's acquisition has led to the emergence
of two major groups in the Indian cement industry, the Holcim-ACC-Gujarat
Ambuja Cements combine and the Aditya Birla group through Grasim Industries
and Ultratech Cement. Lafarge, the French cement major has acquired the cement
plants of Raymond and Tisco. Italy based Italcementi has acquired a stake in the
K.K. Birla promoted Zuari Industries' cement plant in Andhra Pradesh, and
German cement company Heidelberg Cement has entered into an equal joint-
venture agreement with S P Lohia Group controlled Indo-Rama Cement.

Cement Production in India

Following China, Japan and the US, India is the fourth largest cement-producing
country in the world. In 1996, around 115 large cement plants within 57 cement
companies and about 300 small plants produced 76.2 million tonnes1 (Mt) cement
per year. Ownership is mostly private (85% of installed capacity) and centralized
for the large plants with four production houses controlling most units. This has
led to financial and administrative integration of different factories. (Datt and
Sundharam, 1998) Installed capacity increased considerably between 1970 and
1996, particularly in the last few years following complete deregulation of the
cement sector. While in the two decade period from 1970 to 1990 total installed
capacity rose by around 47 million tons from 17 million tons to 64 million tons,
within only 6 years between 1990 and 1996 it increased by another 41
million tons to 105 million tons of installed capacity.

Production, however, did not increase accordingly. Due to a high frequency of

power failures, shortage of coal, inadequate availability of wagons for rail
transportation, limited availability of furnace oil etc. capacity utilization decreased
steadily from as high as 90% in 1978 to a low point of 67% in 1980-81. Following
policy changes towards deregulation in the early and late 1980s capacity utilization
improved to 82% in 1991-92. Yet, since then it has again shown a decreasing trend
to 72% in 1996-97. (Datt and Sundharam, 1998; Karwa, 1998)

The viability of the location plays a major role in the economics of cement
manufacturing. It is determined by factors such as proximity to raw materials
(limestone, coal), distance to market areas as well as availability of continuous
power supply. Proximity to limestone deposits contributes considerably to pushing
down costs in transportation of heavy limestone. If units are located close enough
to limestone resources, trucks can be used to move limestone over the short
distance instead of relying on scarce railway capacity. The proximity of coal
deposits constitutes another important factor in cement manufacturing. Generally,
coal is transported by railway throughout the country. Coal distribution and coal
prices are strictly controlled by the government. Although coal deposits are located
all over the country constraints in availability of wagons for railway transportation
have led to major shortfalls in the amount of coal received against the quota
assigned to the cement industry. For the year 1973, Chakravarty (1989) computed
losses in cement production due to coal shortages of up to 37%. However, they
were considerably lower at 10% in 1981 and have since steadily decreased. In
1987, coal shortage accounted for only 0.4% of production losses. In order to
reduce transportation as well as capital costs, to increase regional development
and to make use of smaller limestone deposits many small and mini cement plants
with a capacity of up to 650 tons per day were set up in dispersed locations in
India. As seen construction of such plants began in the early 1980s and amounted
to 180 mini cement plants in 1992 together producing 3 Mt (about 6% of total
cement production) and 311 plants producing 5 Mt (7.3% of total cement) in 1996.
(World Energy Council, 1995; International Cement Review, 1998).
Despite the advantages, there were several drawbacks associated with the setting
up of units in dispersed areas, mainly due to increased distances to market areas
other than the local markets. Limits in transportation capacity, particular in rail
transport, constrained the delivery of cement from the production site to the
consumer. Consequently, due to lack of storage capacity (silos) at the production
site producers were often forced to cut back cement production. Only in recent
years the government finally allowed the cement industry to purchase and own rail
wagons to overcome these problems. Demand for cement has been growing at
rates of up to 10% p.a. in the past. While in 1987 demand was about 37 million
tons (Mt), it reached 53 Mt in 1993 and further increased to more than 65 Mt in
1995 (CMA, 1994 and Karwa, 1998). Providing a main input for construction,
cement consumption is highly dependent on activities in the construction sector
which are in turn dependent on governmental and private investment in
infrastructure and buildings. Appendix B provides gross value added in the
construction sector from 1977-95. During most of the past, demand could not be
met by national
Production. Therefore, imports had to fill the balance. Since 1987, however,
cement production has increased and India reached self-sufficiency. And, more
recently exports, particularly to neighboring countries, have been increasing. At
present the Indian cement industry produces 13 different varieties of cement
employing three different process types. Amongst the varieties, Ordinary Portland
Cement (OPC), Portland Pozzolana Cement (PPC) and Portland Slag Cement
(PSC) constitute the major shares accounting for almost 99% in total production.
Ordinary Portland Cement is most commonly used in India. It holds a share of
about 70% in total production. PPC production accounts for about 18% of total
cement production while PSC assumes a share of only 11%. (Karwa, 1998)
Generally, the two varieties, PSC and OPC, can be used for same purposes, while
PPC cannot be used for prestressed and high strength concrete, as used in bridges
and airports (Das and Kandpal, 1997) Cement is produced using the wet, the semi-
dry, and the dry processes. The share of the wet process in total installed capacity
has declined from over 90% in 1960 to only 12%today. The wet process has been
substituted by the significantly less energy using dry process over time. Following
the two oil price shocks the shift in technology mix has become substantial. The
dry process nowadays accounts for the majority (86%) of India’s cement
production. Due to new, even more efficient technologies, the wet process
is expected to be completely pushed out in the near future. The semi-dry process
never played an important role in Indian cement production. Its share in total
installed cement capacity has been small over time. It currently accounts for
2% of total production. Mini cement plants usually use vertical shaft kilns for
cement production.

CEMENT PROCESS
Cement acts as a bonding agent, holding particles of aggregate together to form
concrete. Cement production is highly energy intensive and involves the chemical
combination of calcium carbonate (limestone), silica, alumina, iron ore, and small
amounts of other materials. Cement is produced by burning limestone to make
clinker, and the clinker is blended with additives and then finely ground to produce
different cement types. Desired physical and chemical properties of cement can be
obtained by changing the percentages of the basic chemical components (CaO,
Al2O3, Fe2O3, MgO, SO3, etc.). Most cement produced is Portland cement: other
cement types include white, masonry, slag, aluminous, and regulated-set cement.
Cement production involves quarrying and preparing the raw materials, producing
clinker through pyro processing the materials in huge rotary kilns at high
temperatures, and grinding the resulting product into fine powder. The following
detailed description is borrowed from the World Energy Council (1995).

Raw Materials Preparation

Raw materials preparation involves primary and secondary crushing of the

quarried material, drying the material (for use in the dry process) or undertaking a
further raw grinding through either wet or dry processes, and blending the
materials. The energy consumption in raw materials preparation accounts for a
small fraction of overall primary energy consumption (less than 5%) although it
represents a large part of the electricity consumption.

Clinker Production

Clinker production is the most energy-intensive step, accounting for about 80% of
the energy used in cement production in the United States. Produced by burning a
mixture of materials, mainly limestone (CaCO3), silicon oxides (SiO2), aluminum,
and iron oxides, clinker is made by one of two production processes: wet or dry;
these terms refer to the grinding processes although other configurations and
mixed forms (semi-wet, semi-dry) exist for both types. In the wet process, the
crushed and proportioned materials are ground with water, mixed, and fed into the
kiln in the form of slurry. In the dry process, the raw materials are ground, mixed,
and fed into the kiln in their dry state. The choice among different processes is
dictated by the characteristics and availability of raw materials. For example, a wet
process may be necessary for raw materials with high moisture content (greater
than 15%) or for certain chalks and alloys that can best be processed as a slurry.
However, the
Dry process is the more modern and energy-efficient configuration. Once the
materials are ground, they are fed into a kiln for burning. In modern kilns, the
Raw material is preheated (in four to five stages) using the waste heat of the kiln,
or it is pre-claimed. During the burning or pyro processing, the water is first
evaporated after which the chemical composition is changed, and a partial melt is
produced. The solid material and the partial melt combine into small marble-sized
pellets called clinker.

Finish Grinding

Cooled clinker is ground in tube or roller mills and blended by simultaneous

grinding and mixing with additives (e.g., gypsum, anhydrite, Pozzolana, fly-ash or
blast furnace slags) to produce the cement. Drying of the additives may be needed
at this stage.

BIG PLAYERS: CEMENT INDUSTRY IN INDIA

From the above chart we can see that

➢ ACC contributed 11.8% to the sector

➢ L&T 11.3%
➢ Grasim 9.6%
➢ Gujarat Ambuja 7.6%
➢ India Cement 6.9%
➢ Madras 3.3%

Other’s -49.5% to the sector. So, ACC being the sector leader contributing a major
part of supplies.
GROWTH IN CEMENT PRODUCTION 2007-08/2006-07 (Apr-Mar

This Graphical represenation shows that overall growth in cement production in

inidia is 8% in 2007-08. but if we are distributing in different region then it
shows 14%,8%,8%,5%,4% to North,East,South,West,Centre respectively.In
North,higest growth is 14% and least growth in centre region which is only 4%.