The Indian Cement Industry | | Government spending has led to a decline in the cement sector in this region. The northern region saw lower demand due to lack of rural demand and already built-up real estate inventories. But in the north-eastern states there has been huge government expenditure supported by the allocation of funds in the Union budget. This has led to an increase in demand for cement in this region. Demand for cement has been affected by demonetisation. This is also confirmed by reports of lower freight revenues by the railways. Indian Railways has witnessed a significant impact on revenue due to reduction in coal and cement traffic post-demonetisation. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original EssayIt is therefore possible to say that if demonetisation had not been invoked, growth would have been driven by the real estate segment based on the announcements made regarding PMAY: rural areas and housing for all by 2022, smart cities and various irrigation projects. Import and Export Scenario Cement imports into the country are almost negligible with adequate domestic supply. However, in fiscal 2016, 64% of our import demand in terms of quantity came from Pakistan. Imports increased from 1,095 million tonnes in fiscal 2011 to 1.35 million tonnes in fiscal 2016. Exports, on the other hand, increased from 3.49 million tonnes in FY11 to 6.22 million tonnes in FY16. It is an energy-intensive and freight-intensive sector. Energy and fuel costs, as well as transportation/freight costs, each contribute approximately 22-23% to the industry's overall production cost. Therefore, players' margins are susceptible to adverse changes in these input costs. Provides industry cost structure based on the cost structure of a select sample of 42 companies as of fiscal 2016. Industry cost breakdown in fiscal 2016. Source: Ace Equity. The increase in freight rates was however partially mitigated by softening diesel prices in fiscal 2015 and 2016. The same increased in FY17. Additionally, the cement industry benefited from low coal and pet coke prices in the fourth quarter of fiscal 2016-2017. However, coal prices have started to stabilize since July 2016. Furthermore, pet coke, which is an alternative to coal, has also seen an increase in prices since February 2016 (price increased by 78% since February 2016), mainly due to supply constraints and high demand. Therefore, companies' ability to pass on rising production costs would be crucial to sustaining margins. Coal is mainly used as a fuel in the cement manufacturing process. Approximately 0.12-0.14 tons of coal are required to produce one ton of OPC (excluding coal consumption in captive power plants). Due to limited availability and inferior quality of coal, the Indian cement industry depends on high calorific value coal from foreign countries such as Indonesia, Australia and African countries. Thus, making it vulnerable to international supply shocks, currency fluctuations and price volatility. Year-on-year growth in international coal prices. Source: CMIEPower: The standard energy requirement to produce one ton of cement varies between 80 and 110 units for different cement companies. To save themselves from regular supply cuts, companies 8.

Topic > The Indian Cement Industry | | Government spending has led to a decline in the cement sector in this region. The northern region saw lower demand due to lack of rural demand and already built-up real estate inventories. But in the north-eastern states there has been huge government expenditure supported by the allocation of funds in the Union budget. This has led to an increase in demand for cement in this region. Demand for cement has been affected by demonetisation. This is also confirmed by reports of lower freight revenues by the railways. Indian Railways has witnessed a significant impact on revenue due to reduction in coal and cement traffic post-demonetisation. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original EssayIt is therefore possible to say that if demonetisation had not been invoked, growth would have been driven by the real estate segment based on the announcements made regarding PMAY: rural areas and housing for all by 2022, smart cities and various irrigation projects. Import and Export Scenario Cement imports into the country are almost negligible with adequate domestic supply. However, in fiscal 2016, 64% of our import demand in terms of quantity came from Pakistan. Imports increased from 1,095 million tonnes in fiscal 2011 to 1.35 million tonnes in fiscal 2016. Exports, on the other hand, increased from 3.49 million tonnes in FY11 to 6.22 million tonnes in FY16. It is an energy-intensive and freight-intensive sector. Energy and fuel costs, as well as transportation/freight costs, each contribute approximately 22-23% to the industry's overall production cost. Therefore, players' margins are susceptible to adverse changes in these input costs. Provides industry cost structure based on the cost structure of a select sample of 42 companies as of fiscal 2016. Industry cost breakdown in fiscal 2016. Source: Ace Equity. The increase in freight rates was however partially mitigated by softening diesel prices in fiscal 2015 and 2016. The same increased in FY17. Additionally, the cement industry benefited from low coal and pet coke prices in the fourth quarter of fiscal 2016-2017. However, coal prices have started to stabilize since July 2016. Furthermore, pet coke, which is an alternative to coal, has also seen an increase in prices since February 2016 (price increased by 78% since February 2016), mainly due to supply constraints and high demand. Therefore, companies' ability to pass on rising production costs would be crucial to sustaining margins. Coal is mainly used as a fuel in the cement manufacturing process. Approximately 0.12-0.14 tons of coal are required to produce one ton of OPC (excluding coal consumption in captive power plants). Due to limited availability and inferior quality of coal, the Indian cement industry depends on high calorific value coal from foreign countries such as Indonesia, Australia and African countries. Thus, making it vulnerable to international supply shocks, currency fluctuations and price volatility. Year-on-year growth in international coal prices. Source: CMIEPower: The standard energy requirement to produce one ton of cement varies between 80 and 110 units for different cement companies. To save themselves from regular supply cuts, companies 8.