Bank of America Merill Lynch - investment banking division

Abstract

The project involved updating the cement industry database that the organization maintains. This exercise included in detail study of the industry and the players. It involved estimating the demand scenario, capacity additions, supply for the next 4 years, interstate movement of cement, and regional market analysis. Cement industry is unique in terms of cement being a bulky but a low value commodity. Average price per kg comes to around Rs 5-6. Thus the economics are very local for the industry. The main raw material is limestone. Limestone reserves in India are found in only 9 states in India (Figure 1). Thus cement plant have to be located close to these mines, since limestone transportation is difficult and costly. Recently, there has emerged a concept of split grinding. In this, mined limestone is converted into clinker (an intermediate product) near the mines and is then transported to different areas close to the consuming market where a grinding unit (where the cement is produced and packaged) is located, and which ultimately services the consuming region.