[Original] India's Cement Industry in Rapid Development

India is one of the BRICS economies, and its economy is developing rapidly. In 2013, India's GDP was $1.49 trillion, with a growth rate of 3.2%. In 2014, GDP by purchasing power (PPP) was $7.28 trillion, making it the third largest economy in the world. In recent years, GDP growth has fluctuated greatly, with a maximum of 10.3% in 2010. In 2013, the per capita GDP was 4000 US dollars, and in 2011 and 2012, it was 3800 US dollars and 3900 US dollars respectively.

India's population grew by 1.25% in 2014, boosting its growing workforce and demand for housing. Agriculture, industry and services also contributed 17.4%, 25.8% and 56.9% to GDP, respectively. Industrial production grew by 0.9% in 2013. Of the 487 million labor force in 2013, the population of agriculture, industry and service industry accounted for 49%, 20% and 31% respectively. The unemployment rate rose from 8.5% in 2012 to 8.8% in 2013, while the inflation rate (GDP deflator index) fell from 7.2% in 2012 to 6.9% in 2013.

India is an important trade center in the world, with a large number of imports of goods every year, and the export volume is also growing. The export value of products in 2013 was about $313 billion, compared with $297 billion in 2012; the export value of products in 2013 dropped from $489 billion in 2012 to $468 billion. Imports and exports mainly include petroleum, crude oil, raw materials, machinery and chemicals.

India is the world's second largest cement producer and consumer after China. According to data from the US Geological Survey (USGS), India produced 280 million tons of cement in 2014 and has a cement clinker production capacity of 280 million tons since 2013. There are a large number of domestic and multinational cement companies in India, such as Holcim, Lafarge, Heidelberg and Vicat of France, which have cement production capacity in India. However, India's domestic cement companies, such as UltraTech, Chettinad, JK, Dalmia Group, India Cements, etc., are dominant.

According to the global cement inventory and research in 2015, India had 174 integrated cement plants in 2014, of which 155 were in operation, with a total production of more than 301 million tons per year. In addition, there are 91 grinding stations with a production capacity of more than 109 million tons per year. There are also some cement plants and grinding stations that cannot be counted. Integrated cement plants are located in the western and southern regions, with Andhra Pradesh, Rajasthan and Tamil Nadu each having a capacity of more than 30 million tonnes per annum. The 13 new integrated plants announced in 2014 are mainly in Andhra Pradesh and Karnataka. Meghalaye Cement plans to build a new plant at West Kameng in Arunachal Pradesh, which, if completed, will be the first integrated plant in the state.

As a BRICS economy, India's cement consumption growth is mainly due to strong infrastructure and housing development. Despite the large amount of investment, the shortage of fuel and energy has made cement enterprises face major challenges in the supply of raw materials and the development of regional markets in 2014-2015.

Table 1: Top 15 Cement Companies in India by Capacity in 2014

Source: World Cement Directory 2015

Holcim India: ACC and Ambuja Cement

Holcim currently has two subsidiaries in India, ACC Cement and Ambuja Cement. After the merger, the company has 15 cement plants with a total cement production capacity of 44.9 million tons per year, making Holcim the largest cement producer in India. Its factories have a national advantage, with one or two integrated factories in most States. Therefore, Holcim has strong market resistance in the regional market. In addition, Holcim has 15 grinding stations across India, with a cumulative annual capacity of 16 million tons.

In July 2013, Holcim announced the consolidation of its operations in India with the approval of its Cabinet Committee on Economic Affairs (CCEA), Foreign Investment Promotion Board (FIPB) and public shareholders. As a result, Holcim India has been merged into Ambuja and ACC Holcim India's 50% shareholding has been transferred to Ambuja, making it the holding company of ACC. Holcim currently owns 61.4% of Ambuja. While structural and staffing changes are ongoing, some senior management has changed in 2014, including the appointment of Bernard Trevor as head of Asia.

In August 2014, the Department of Revenue in Delhi ordered Holcim India to pay $36 million in stamp duty and $11 million in fines within 30 days for stamp duty evasion. Tax Collector (HQ) Lalit Mohan said Holcim had breached the payment of stamp duty in the Ambuja merger case. Mohan believes that "the stamp duty in the acquisition case should be paid at 3% of the total amount of $1.2 billion, which should be $36 million." In its submission to the IRD, Holcim held that there was no transfer of the movable and immovable property of the transferor, Ambuja, to the transferee, Holcim India, except that the shares held by Ambuja in other companies were transferred to Holcim. Therefore, Holcim does not believe that it needs to bear the responsibility of stamp duty.

In 2014-2015, ACC commissioned a milling and blending plant in Udupi, Karnataka. The plant uses fly ash from the thermal power plant of Udupi Power Company and can mix 30,000 tons of cement per month. Clinker comes from ACC's plant at Wadi and Gulbarga is used for cement production at the blending plant. ACC also invested $499 million to modernize its Jamul plant in Chhattisgarh. That is, to retire the existing plant and build a modern cement plant with an annual output of 4 million tons, which is expected to be completed in the second quarter of 2015. In the future, ACC plans to add a 1.5 million tonne per annum grinding line at its plant in Jharkhand.

In 2014-2015, Ambuja continued the construction of its three cement plants in Rajasthan, Madhya Pradesh and Uttar Pradesh with an annual capacity of 1.5 million tonnes each. Its additional 800,000-tonne-per-year clinker lines in West Bengal and Rajasthan are also continuing.

UltraTech cement

UltraTech, part of the Edia Bela Group, is the second largest cement producer in India in terms of combined production capacity. In 2014, it had 15 cement plants with an annual cement production capacity of 32.2 million tons, mainly in Gujarat, Madhya Pradesh and Rajasthan. The 560,000 tonnes per year of white cement at the Jodhur plant in Rajasthan is also included. UltraTech also has 11 grinding stations with a cumulative annual production capacity of 13.2 million tons, which are evenly distributed throughout the country.

In 2014, UltraTech completed some major investments, such as the acquisition of Jaiprakash's 4.8 million tonnes per year cement plant in Gujarat, which has a 57.5MW coal-fired power plant with 90 years of limestone reserves. And a terminal at Sewagram in Maharashtra, worth a total of $627 million. As part of the deal, UltraTech took on $614 million of Jaiprakash's debt and issued $252 million worth of shares to Jaiprakash. UltraTech also acquired Jaiprakash's two cement plants in Madhya Pradesh with a combined capacity of 5.2 million tonnes per year and a grinding station with a capacity of 560,000 tonnes per year. Electricity for all these plants is supplied by a 180MW power plant, with a total of $740 million in IOUs and $16 million in equity. UltraTech has assumed $128 million in net debt and working capital related to the transaction. This brings the total value of the deal to $628 million.

UltraTech is also reportedly in talks to buy Jaiprakash's cement assets in Solan, Himachal Pradesh, valued at $644 million. Its assets include a grinding and blending plant with an annual output of 2 million tons and an integrated cement plant with an annual output of 2 million tons. At present, there is no latest follow-up report.

In 2014, UltraTech's Middle East investment company acquired a 51% stake in Awam, a gypsum mining company in Oman. Awam has been licensed to mine gypsum deposits in southern Oman. Gypsum will be supplied to UltraTech's cement plant in India, addressing its gypsum shortage.

Chettinad cement

Chettinad Cement is a major shareholder of Anjani Portland Cement and owns five integrated cement plants with an annual cement production capacity of 14.8 million tons in 2014. Three plants are located in Tamil TamilNadu, intensifying competition in the regional market. Although it has no grinding stations in operation, Chettinad Cement has two under construction in Maharashtra and Andhra Pradesh. Chettinad Cement, India's third largest cement producer, acquired and increased its stake in Anjani Cement through open market and over-the-counter transactions in 2014. By the end of this year, Chettinad Cement raised its stake to 66.08%. Anjani Cement, a 1.3 million tonne per year cement plant in Nalgonda, Telangana, plans to build a 3 million tonne per year cement plant in Gulbarga, Karnataka.

In 2014, Chettinad Cement announced a number of expansion plans, including the opening of a 3 million ton cement plant in Guntur, Andhra Pradesh. And two affiliated 2 million tonne per year grinding stations at Solapur in Maharashtra. The company also plans to expand its 2.5 million tonnes per year cement plant in Gulbarga, Karnataka, to 5.75 million tonnes per year and build a 130 MW captive thermal power plant. [Page]

JK Lakshmi cement

In 2014, JK Lakshmi Cement has an integrated annual cement production capacity of 14.6 million tons in India, including 400,000 tons of white cement per year, making it the fourth largest cement producer in India. Six cement plants, four in the north-western state of Rajasthan, make regional markets sensitive to competition. In addition, the company also has three grinding stations with a total annual capacity of 6.35 million tons.

JK Cement's 2.7 million tonne per annum (mtpa) cement plant at Durg in Chhattisgarh was commissioned in 2014. In 2013, the factory under construction attracted the anger of local residents and arson. It was reported that the incident was caused by JK Cement's unwillingness to provide work to people who were affecting the progress of the project. During 2014, JK Cement began to export cement due to the expansion of cement production capacity at Mangrol and Chittorgarh in Rajasthan, and it plans to eventually increase the capacity of the plant to 3 million tons per year.

Dalmia Group: Dalmia Bharat and OCL India

Dalmia Cement, which operates Dalmia Bharat and OCL India, is the fifth largest cement producer in India, with a total of five cement enterprises in 2014, with a total annual cement production capacity of 14.5 million tons. Dalmia Group, through OCL, owns three grinding stations with a total annual capacity of 4.65 million tons, and the grinding station of Paschim Medinipur in West Bengal with an annual capacity of 2 million tons was completed in 2014.

In September 2014, Dalmia Group announced that it was moving forward with the merger of listed cement companies Dalmia Bharat and OCL India. Dalmia Bharat owns 48% of OCL. As part of the plan, Dalmia Bharat will also consolidate its unlisted assets, Dalmia Bharat Corporation. Dalmia Bharat has a minority stake in the listed entity after the eventual merger. The merger of Dalmia Bharat and OCL India ended in failure in 2008. At present, there is no news about the latest progress of the merger.

In March 2014, Dalmia Bharat acquired Jaiprakash's 74% stake in Bokaro Jaypee Cement, a 74:26 joint venture between Jaiprakash and Steel Authority of India (SAIL). Operates a 2.1 million tonne per annum grinding station at Bokaro in Jharkhand. At the end of 2014, Dalmia Bharat acquired the final 26% stake in SAIL for $150 million.

India Cements

India Cement is the sixth largest cement producer in India, including its affiliate Trinetra Cement. In 2014, the company had eight integrated cement plants with a cumulative annual cement production capacity of 12.9 million tons. Most of the cement plants are located in the southern Indian States of Andhra Pradesh and Tamil Nadu. Indian Cement also has two grinding stations in Maharashtra and Tamil Nadu with an annual production capacity of 2.2 million tonnes.

In May 2014, India Cement announced plans to consolidate its cement business through the merger of its subsidiary Trinetra Cement. The merger also includes the sale of Trishul concrete products and land involving factories in Tamil Nadu and Andhra Pradesh. At present, there are no further details of the announcement.

India Cement plans to increase cement capacity at its Salem plant in Tamil Nadu, investing $13.3 million to increase capacity from 600,000 tons to 1.7 million tons per year. The plant will have a new production line to optimize the existing cement kiln, and the project is currently awaiting environmental approval.

Vicat Group

Vicat Group is India's ninth largest cement producer, with two integrated cement plants in India with an annual capacity of 7.75 million tons and no independent grinding station. In September 2014, Vicat completed the acquisition of a 47% stake in Vicat Sagar Cement, a joint venture. In June 2008, Sagar and Vicat jointly ventured to build a cement plant with an annual capacity of 5.5 million tons in Gulbarga, Karnataka. The first phase of the plant, with a capacity of 2.75 million tons, was completed in December 2012 and put into operation in January 2013. The factory has its own power plant and railway line.

Shree cement

Shree Cement, India's tenth largest cement producer, has four cement plants with an annual cement production capacity of more than 6 million tons in 2014. It has only two plants in Rajasthan with a capacity of 3 million tonnes per year. Shree Cement has five cement grinding stations with a total annual capacity of 9.5 million tons, three of which are in Rajasthan.

In 2014, Shree Cement acquired Jaiprakash's 1.5 million tonne per annum grinding station at Panipat in Haryana for $59.6 million. In Kodala, Karnataka, Shree Cement has been granted two years from the government to build a 3 million tonne per year cement plant with its own limestone mine and 150 MW power plant.

In the future, Shree Cement plans to expand its self-owned limestone mine project in Raipur, Chhattisgarh, from 4.8 million tons to 8.6 million tons per year. The project is part of an integrated cement plant. At present, the project is in the stage of environmental protection approval and is expected to start within two years. The company also plans to invest US $74.4 million to build a grinding station with an annual output of 3 million tons in Dhenkanal, Odisha. Fly ash from a nearby power plant can be used at this location. A 2 million tonne per annum (MTPA) grinding plant in Aurangabad, Maharashtra, with an investment of about $54 million, is also on the agenda. The plant also has a biomass-based 12 MW captive power station.

JSW Group

JSW Cement, part of the JSW Group, India's 11th largest cement producer, has two cement plants with an annual production capacity of 5.4 million tonnes and, in addition, two grinding stations with a combined annual capacity of 1.5 million tonnes.

In 2014, JSW CEO Anil Kumar Pillai announced that the company plans to completely produce Portland Slag Cement (PSC), which can be used in infrastructure projects as well as in housing construction. In India, PSC is comparable in price to OPC. JSW expects demand for PSCs to rise significantly as the new Indian central and state governments push ahead with infrastructure projects. "The Andhra Pradesh government has mandated the use of PSC only for all government construction projects," Pillay said.

PSC is popular outside India, accounting for more than 90% of total cement production in some countries, he added. However, it accounts for only 7% of India's annual cement production of 360 million tons, according to Pillai.

In 2014, JSW's 4.8 million tonne per year cement plant in Kurnool, Andhra Pradesh, was put into operation, and it can also expand a production line with the same or more capacity. In order to meet the growing demand for slag, JSW will increase the capacity of its steel plants in Vijaynagar and Bellary in Karnataka from 12 million tons to 20 million tons per year. By 2025, its production capacity will increase to 30 million tons per year. To achieve this, JSW plans to build a 4.3 million tonne per year complex in Chittapur, Karnataka, with a grinding station near the steel plant. The company is also considering producing aluminum alloy if the government distributes bauxite.

Zuari Cement (Italcementi)

Zuari Cement, an Indian subsidiary of the Italian Cement Group, has two cement plants with a cumulative annual cement production capacity of 5.2 million tons in 2014. It is the twelfth largest cement producer in India.

Zuari Cement is currently constructing a 3.2 million tonnes per annum cement complex with a 50 MW captive power plant in Gulbarga, Karnataka. The plant is designed to double its capacity to meet the growing demand for cement in Karnataka and neighbouring Maharashtra in the future. In April 2014, Zuari broke ground on a 1 million tonne per year cement packing terminal at Kochi, Kerala, which is expected to be completed in the third quarter of 2015.

Sagar cement

Sagar Cement, the 14th largest cement producer in India, has three cement plants with a cumulative annual capacity of 5 million tons in 2014. In November 2014, the Company acquired BMM Cement, a 1 million tonne per annum cement plant with a captive limestone mine and 25 MW captive power plant in Anantapur, Andhra Pradesh.

Jaiprakash

At the end of 2014, Jaiprakash owned five integrated cement plants through Jaypee Cement, with a total annual cement production capacity of 3.56 million tons. In addition, the company also has seven grinding stations with a cumulative annual capacity of 11.7 million tons.

In recent years, Jaiprakash has been heavily indebted, with a debt of $10.3 billion in March 2014. The company has sold a number of assets in India, including two cement plants in Gujarat to UltraTech, a 74% stake in the Bokaro Jaypee cement plant, and its joint venture investor SAIL to Dalmia Bhara. Its grinding station in Haryana was sold to Shree Cement. In January 2015, Jaiprakash again sold two cement plants in Madhya Pradesh to UltraTech, one is a grinding plant and its power plant. Between 2013 and 2015, Jaiprakas sold $3.6 billion of assets, including $1.6 billion of cement assets.

In fact, 2014 was a bad year for Jaiprakash. In January 2014, the Himachal Pradesh government cancelled one of its approved cement projects in Chamba with an annual output of 2 million tons because Jaiprakash did not start within the stipulated time. Jaiprakash's cement factory in Solan, Himachal Pradesh is also conducting a survey within the year. The Solan plant is allowed to produce 2.05 million tons of cement per year, but the actual annual capacity reached 3.46 million tons in June 2014. The Himachal Pradesh State Pollution Control Board (HPSPCB) ordered an immediate halt to the overproduction. In order to ensure the execution of the order, the HPSPCB required the power plant to limit the power supply to the plant.

A rising star

Orient Cement (CK Birla Group)

Orient Cement, part of the CK Birla Group, has two integrated plants with an annual capacity of 4.35 million tons in 2014. During the year, the company's cement plant in Gulbarga, Karnataka, with an annual output of 3 million tons, will be completed and put into operation. Orient Cement plans to acquire another cement plant to increase production capacity to 15 million tons by 2020.

Wonder cement

In 2014, Wonder Cement had a cement plant in Chittorgarh, Rajasthan, with an annual capacity of 3.25 million tons of cement. The company plans to expand its production capacity to 6.75 million tons by the fourth quarter of 2015, and has ordered machinery including raw materials and coal mills from Gebr Pfeiffer, Germany, as well as a waste heat recovery (WHR) system for rotary kilns with a daily output of 8500 tons. [Page]

South India Market Competition

Demand for cement in the southern Indian market was subdued throughout 2014, partly due to regional overcapacity. The annual cement production capacity in the southern region is about 110 million tons, but the demand is only 70 million tons. Therefore, the capacity utilization rate of cement enterprises is only 55% -65%, and efforts are made to maintain prices to prevent losses.

In February 2014, southern producers such as Ramco Cement, Chettinad Cement, India Cement and and Dalmia Bharat began exporting cement to Myanmar in response to weak local demand. "In January 2014, we shipped 1 to 12 thousand tons to Myanmar, with a small profit, but we must ensure that we maintain our operations." According to the Dalmia Cements South Market CEO Vipin Agarwal. Other producers are trying to export to Sri Lanka.

In August 2014, some cement enterprises in Andhra Pradesh and Telengana were directly shut down or operated only seasonally. Temporarily suspended is the 400,000-tonne-per-year Panyam cement plant in Nandyal, Andhra Pradesh. Bheema Coromandel, a 1.2-million-ton-a-year cement plant near Vijayawada in Andhra Pradesh, has been converted to produce tokens. "There is little demand in southern India." According to N. Srinivasan, managing director and chief executive officer of India Cement, "improvements are expected in the new Union Finance Bill to boost economic growth and investment in infrastructure and housing.". Under the new government of Andhra Pradesh and Telengana, the differences in Andhra Pradesh are also expected to be resolved.

Lafarge merges with Holcim

In April 2014, Lafarge and Holcim announced their intention to merge their global operations. Holcim's ACC and Ambuja are said to retain their respective brands. The new company, Lahao, operates in about 90 countries and regions around the world, with a market share of more than 50%. The deal has been closely scrutinised by global competition authorities and has so far been largely approved on the condition that certain assets are divested.

In 2014, Holcim ACC and Ambuja had an annual cement production capacity of 44.9 million tons and an annual grinding capacity of more than 16.1 million tons. Lafarge India has two cement plants with a combined annual capacity of 2.15 million tons and two grinding stations with a combined annual capacity of 5.6 million tons. After the merger, Lahao will have a comprehensive cement production capacity of 47.1 million tons and a grinding capacity of more than 18.2 million tons, accounting for 15.5% of India's comprehensive production capacity and 16.6% of its grinding capacity, respectively. In October 2014, Lafarge and Holcim began internal process to divest certain Indian assets to enhance the competitiveness of the enterprise. The operation and personnel of the enterprise will be adjusted, but the enterprise strategy will not be adjusted for the time being.

In November 2014, according to CCI, the Lahau merger would likely have an adverse impact on competition in the cement industry. CCI asked the two companies to publish the trading details on its website and four working days earlier than daily newspaper. In addition, public comments or objections are required. The latest news came in January 2015, when Ashok Chawla, chairman of the CCI, said the final results of the project would be available within a month. CCI, one of the global competition authorities, has not yet made a judgment.

Coal door continues

Coal is the main fuel for cement and power production in India. However, as in 2013, the quantity and quality of coal supply in 2014 are inconsistent, and the price continues to rise. In December 2014, for example, SCCL cut coal supplies to cement plants, giving priority to thermal power plants in Telangana and Andhra Pradesh. The plants in the two States use 66% of the coal produced by SCCL, while the plants could not operate at full capacity in the second half of 2014 due to coal shortage.

In 2013, the state-owned Coal Corporation of India (CIL) produced about 82% of the country's coal, and 90% of India's coal mines were owned by the government. According to Coal and Power Minister Piyush Goyal, India has enough coal resources to meet demand, with estimated reserves of 302 billion tonnes. In 2013-14, CIL produced 462 million tonnes of coal, falling short of expectations of 482 million tonnes. The Ministry of Coal estimates that the country's demand will reach 950 million tons in 2016-2017, while the supply will fall by as much as 185 million tons. Since 2012, CIL's misconduct, market dominance and inefficiency have been dubbed the "Coalgate" scandal. This difference is usually made up by imported coal. Although the price of imported coal fell sharply in 2014, cement enterprises will face significant risks if the price fluctuates sharply. "We cannot rely solely on imported coal prices remaining low and the government guaranteeing quality coal on the open market." Says H M Bangur, managing director of Shree Cement.

On September 24, 2014, the Supreme Court of India revoked 214 of the 218 coal mining licenses issued since 1993. Coal is produced and consumed by industries such as cement, steel and power, but the distribution process is still criticized for its lack of transparency. In the cancellation of coal mining, 12 belong to cement enterprises. At the same time, the Government of India updated the Coal Mines (Special Provisions) Ordinance to allow commercial mining. The update sidesteps the regulatory mechanism that the government will have to face once commercial mining starts.

In December 2014, 36 of the 98 viable mining licenses were reallocated. In 2015, the 62 mining licenses that were cancelled were auctioned transparently and will eventually be used for electricity, cement and steel production. The first and second rounds of the auction each contained 23 licenses, which were held in February and March 2015, respectively. The remaining 16 mining licenses will be auctioned later. CIL agreed that the government would not participate in the first two rounds of the auction, although he asked the government to reallocate several licenses to her. When coal mining licenses are used for commercial auctions, CIL may participate in the bidding.

In January 2015, a strike by the coal union threatened industrial production across India. More than 75% of India's coal production has been hit. The strike action was in protest against CIL's disinvestment and restructuring. The day after the strike was halted, the government agreed to review its decision to auction the mine to private companies for its own use and to allow commercial mining in the future.

Environmental development

In February 2013, the Cement Sustainability Initiative (CSI) and the International Energy Agency (IEA) launched a new "Technology Roadmap" for low-carbon technologies in India's cement industry. The objectives of the roadmap are to reduce carbon dioxide emissions and increase fuel substitution rates. Although some enterprises in India have begun to use waste tires, coffee, rice husks and cashew shells as alternative fuels, the substitution rate is usually low and alternative fuels have no priority. In recent years, however, the absorption rate has increased, and Indian cement companies are increasingly using alternatives than before.

There were a lot of newsworthy environmental investments in Gujarat in 2014. According to the Gujarat State Pollution Control Board (GSPCB), the utilization rate of alternative fuels and raw materials for cement production increased from 15693 tonnes in 2009-2010 to 543569 tonnes in 2013-2014. It has previously been suggested that waste disposal is a major challenge in Gujarat. The Committee encourages cement companies to provide waste collection centres and pre-treatment facilities for hazardous waste. "The use of alternative fuels in cement plants in India has been restricted," the GSPCB said. "Compared with 10% in Japan and 40% in Europe, India has less than 1%.". The committee has set a target of 10% within three years.

In 2014, Ambuja invested $16.7 million to set up a solid/semi-solid waste pre-treatment plant in Kodinar, Gujarat. Similarly, Sanghi has started a trial operation for the disposal of hazardous waste in Kutch, Gujarat. Sanghi also recently announced that the company plans to invest in sustainability, innovation and energy reduction in 2015-2016. The plan includes a $24.3 million 15 MW cogeneration system at the Kutch plant that recovers more than 70% of the heat. In order to protect the coastal soil, Sanghi will undertake to protect the ecological environment and mangrove planting along the coast of Gujarat to improve socio-economic development.

The use of alternative fuels and other environmental issues are also evident in other parts of India. In December 2014, the Tamil Nadu Pollution Control Board sent 20,000 tons of sludge from the Perundurai textile enterprise to the Ariyalur cement plant for use as an alternative fuel. Cement enterprises begin to accept sludge treatment after sludge treatment without affecting the quality of cement. The next 8,000 tons of sludge will be disposed of.

Despite the growing trend towards green production, emissions remain high in India. In February 2014, the State Pollution Control Board of Odisha (OSPCB) had notified UltraTech of a violation of pollution standards at a grinding station in Arda, Odisha. Local residents have complained of health hazards from the dust produced by the factory. In October 2014, the open filling of fly ash in Bihar, a thermal power plant belonging to NTPC in Kahalgaon, attracted local attention. Bihar installed six fly ash bag loading machines, which can produce 4800 bags per hour or 4000 tons per day. The plant supplies fly ash to cement producers in northeast India.

Allegations of Cartel behaviour in India's cement industry have dominated global media since 2012. In May 2013, 11 Indian cement producers (Penna Cement, India Cement, Bharathi Cement, Dalmia Bharat, Bhavya Cement, Zuari Cement, Ultratech Cement, Jaypee Cement, Ramco Cement, KCP Cement and My Home Industries) were fined by the Competition Tribunal (CAT) and the CCI for allegedly forming a price alliance. The charges were dropped in March 2013 after complaints from other cement companies and the Cement Manufacturers Association (CMA). It is unfair for enterprises to claim that 10% of their turnover is used as punishment. CCI dropped the case in 2014 due to lack of evidence.

Amma Cement Program

In September 2014, the government of Tamil Nadu announced the "Amma Cement Scheme", which purchases cement from private manufacturers with the intention of reselling it at subsidized prices.

JJayalalithaa, chief minister of Tamil Nadu and head of the Amma scheme, recently discussed the cement industry in Tamil Nadu with the government. The state consumes 1.7 to 1.8 million tons of cement per month. Prices for 400,000-450,000 tonnes, supplied by Andhra Pradesh, have risen sharply recently. As a result, Tamil Nadu has reduced its purchases from Andhra Pradesh to between 150,000 and 300,000 tonnes per month. However, cement producers in Tamil Nadu have increased the price of cement as demand has increased.

In response, the Amma Cement program was proposed. The Tamil Nadu government arranged to buy 200,000 tonnes of cement a month from private producers and resell it through local distributors at subsidized prices. Beneficiaries are eligible to receive up to 750 bags of cement, which can be purchased by submitting a construction plan approved by the government or by road construction. Those used for repairs and alterations are entitled to purchase between 10 and 100 bags. The scheme is also used in government housing projects powered by green solar energy. The Tamil Nadu Cement Corporation will be the central agency and will be implemented through the Tamil Nadu Civil Supply Corporation and the Ministry of Rural Development.

In January 2015, the Government of Tamil Nadu launched the scheme. It was launched by Tiruchirappalli on 5 January 2015 and expanded in stages to cover the whole of Tamil Nadu by 10 January 2015. Two hundred thousand tons of cement are distributed uniformly at a price of $3 per bag. In the first 15 days, 100000 bags, or 5000 tons of cement, were sold out. At the end of January 2015, 16,000 tons of cement were sold. If the state government reaches its monthly sales target of 200,000 tons, the annual sales will exceed 2 million tons, which will be more than 20% of the total state sales.

Indian cement companies are looking for mines overseas to ensure that gypsum from cement production is available for use. Limited domestic supply has prompted Indian producers to seek to acquire gypsum mines in countries such as Thailand, Oman and Iran. The shortage of gypsum has led to an increase in import demand, which is also met by synthetic gypsum.

In India, gypsum reserves are located in Gujarat, Rajasthan, Jammu and Kashmir, Himachal Pradesh, Tamil Nadu and Uttar Pradesh. About 90% of India's total gypsum production comes from the western and northwestern regions of Rajasthan. At present, the available gypsum reserves in India are 140 ~ 150 million tons, of which 125 million tons are available in the cement industry. These reserves are limited to Rajasthan and Gujarat and are not available as reserves in other States. This means that it can meet the volume of the cement industry in 1978.

Binani Cement said the shortage of gypsum at home had forced it to consider acquiring overseas mines, but the high cost of acquisition was a deterrent. Some companies, such as JK Cement, have not yet decided how to cope with the gypsum shortage, while UltraTech has acquired Awam Mining, which has gypsum mines in Oman. The most common solution is imports, albeit with a 2.5% tariff.

In February 2015, India's mining centers placed 31 minerals, including gypsum, under the control of state governments by reducing the status of primary and secondary minerals as part of the mining policy. This allows States to determine their own mining leases for minerals. The policy changes will give the state the power to determine royalty rates, increase the mineral fund for the region, and establish procedures for granting mining concessions and rules. The state still cannot lease out major minerals, such as coal, without central authority. The decision is expected to significantly shorten the lease approval process and increase production, which will provide short-term assistance to cement producers.

Outlook

The International Monetary Fund (IMF) forecasts that India's GDP will increase by 6.3% in 2015 and 5.8% in 2016 (see table 2). This is lower than average emerging market and developing Asian countries, but much higher than global average. According to the IMF, India's economic outlook has improved due to falling oil prices and growing industrial investment under policy reforms. The International Monetary Fund (IMF) has also warned of weak trade demand due to economic instability in India's neighboring countries.

Table 2: GDP Growth Forecast for India, Emerging Asia and the World, 2014-2016

Source: IMF Global Economic Outlook (January 2015 update)

The report's analysts believe that India's cement industry will improve significantly in the coming years. Per capita cement consumption will increase from 185 kg in 2014 to 385-415 kg in 2025, according to a report by AT Kearny, a management consultant. At the same time, the demand for cement will increase by 2.5 to 2.7 times to 550 to 660 million tons per year. Infrastructure construction is expected to drive growth, and the housing market will continue to be the largest consumer, accounting for 42% -45% of total demand. Similarly, research and market analysts predict that India's cement market will grow at a compound annual growth rate of nearly 9% in 2014-2019, with the housing sector as the main driver. It commented that the industry is currently in a phase of transformation, striving to meet global standards in terms of production, safety and energy efficiency. The research and market forecasting industry will also be further consolidated, with more small and medium-sized companies being acquired by joint ventures.

India's cement producers are certainly happy with the country's prospects. Many companies have begun new construction and expansion projects, suggesting growing demand for cement. Indeed, JSW Cement expects that the boost in cement demand will increase the utilization rate of cement production capacity from 55% -60% at the end of 2014 to 75% in April 2015.

Despite a challenging year, India's cement industry is moving towards a bright future. India's cement industry could become a force to be reckoned with, not just on the basis of size, through increased investment in energy efficiency, increased demand from a growing population, improved supply chain management and more transparent government policies.