amit cement
TRANSCRIPT
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Indian Economy Overview-2009-2010:
Indias GDP growth for 2009-10 was at 7.2 per cent, up from 6.7 per cent recorded in 2008-09. Inthe latest estimates for third quarter of 2009-10, countrys GDP stood at 6 percent corresponding tothe growth of 6.2 percent during same period of 2008-09. With an assumption of a normal
monsoon and sustainable good performance of the industry and services sectors, the latest RBIprojection placed the real GDP growth at 8.0 per cent for the year 2010-11.
According to the latest IMF projection, India will grow at 8.8 percent during the year 2010. Indian industry recovered substantially in the latter half of 2009-10. The IIP figures available for
the entire fiscal shows industrial production register growth of 10.4 percent as against 2.8 percentduring the same period of 2008-09.
At the disaggregated level, all three sectors, i.e. mining, electricity and manufacturing witnessed aperceptible growth during the year 2009-10. The manufacturing sector, in particular, contributedsignificantly to this overall strong performance with a comprehensive growth of 10.9 percentduring the period. As per used based classification, capital goods industry led the frontier attaininggrowth of 19.2 percent during 2009-10. The consumer goods sector secured a robust growth of 7.4
percent on account of consumer durables segment. In 2009-10, fourteen (14) out of seventeen industries achieved higher growth than in the previous
year 2008-09. Only three sectors namely the food products, beverages, tobacco & related productsand jute textiles have still continued to suffer from discernibly low growth in output.
Core sectors grew at a satisfactory rate of 5.5 percent in 2009-10 as compared to 3.3 percentgrowth in the previous fiscal. The growth was mainly on account of the cement industry sectorfollowed by coal and power sectors.
The rise in inflation continued even in March 2010; the overall inflation headed 9.9 percent duringthe month whereas the rate of inflation was only 1.3 percent in March 2009. The upward pressureon prices of food articles and fuel commodities pushed up the aggregate price level of theeconomy.
The Reserve Bank raised the repo and reverse repo rates by 25 basis points each on March 19,2010 to anchor inflation expectations. (M3) Broad money supply increased by 17 percent during the year 2009-10. This growth was
slightly lower than the growth of 18.4 percent posted during last year. Over the year 2009-10 the expansion of aggregate deposits was around 17 percent corresponding
to the expansion by 19.9 percent seen during the same period last year
The increase in bank credit was marginally lower at around 16.7 percent while it was 17.5 percentduring the same period of the preceding year. After a phase of deceleration, there has been a
restoration in the flow of bank credit observed since November 2009. As a consequence the
indicative target of 16.0 per cent credit growth as set by RBI for the year was exceeded up to mid-
March 2010. In response to the large capital flight in portfolio investments throughout the year, Indian stock
market portrayed an optimistic picture in the financial year 2009-10. As a result the BSE sensex
rose from 9 k points in April 2009 to 16 k points in March 2010. Nevertheless, during the third and
fourth quarter of 2009-10 the BSE sensex remained between 16 k to 17 k points.
Fiscal deficit has been found to be reticent with a modest increase of 24 percent during the periodfrom April to February 2010 while the growth was 33 percent during the same period of 2008-
09.During this period of 2009-10, the level of fiscal deficit stepped up from Rs 307133 crores in
2008-09 to Rs 380901 crores in 2009-10.Growth in the gross tax revenue decelerated in February
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2009-10. The slide in overall tax collection was mainly on account of the weak collections in
indirect taxes.
Indian merchandise trade managed to recover from the severe impact of global turmoil. Indiasexport seems to gather momentum as it saw a tremendous growth of 54.1 percent during March
2010 compared to negative growth of (-)33.1 percent in March 2009. However, taking the entire
year 2009-10, Indian exports contracted by (-) 4.7 percent while the growth figure was positive 3.4
percent during 2008-09. Capital flows continued to remain buoyant throughout the year 2009-10. During the year 2009-10
total foreign investment amounted to be USD 66.5 billion as against USD 21.3 billion recorded
during the same period last year. This confirms more than a three- fold increase in capital flows
over the preceding year 2008-09.
Indias foreign exchange reserves increased by US$ 27.1 billion during 2009-10 to reach US$279.1 billion at the end of March 2010. This is mainly ascribed to higher capital inflows in the
form of portfolio investments during the year 2009-10.
CURRENT ECONOMIC PROFILE OF INDIA:
Gross Domestic Product (GDP) {current prices} in the year 2009-10: US$ 1,264.40 billion (Rs.58,68,331 crore) (Est.)
Gross Domestic Product (GDP) {current prices} in Q4 of 2009-10: US$ 349.43 billion (Rs. 16,21,812crore) (Est.)
Gross Domestic Product (GDP) {constant (2004-05) prices} in the year 2009-10: US$ 961.89 billion(Rs. 44,64,081 crore) (Est.)
Gross Domestic Product (GDP) {constant (2004-05) prices}in Q4 of 2009-10:US$ 259.69 billion (Rs.12,05,119 crore) (Est.)
Per capita income (at 2004-05 prices) during 2009-10: US$ 720.23 (Rs. 33,588) (Est.)
Per capita income (current prices) during 2009-10: US$ 950.87 (Rs. 44,345) (Est.)
GDP composition by sector during 2008-09: Services 57.0%, Agriculture 17.1%, and Industry 25.9%
Forex Reserves: US$ 273.36 billion (for the week ended May 21,2010)
Exports: US$ 16.89 billion (Rs. 75147 crore) (April 2010)
Imports: US$ 27.31 billion (Rs. 121517 crore) (April 2010)
Amount of FDI inflows during 2009-10: US$ 25.89 billion (Rs 1,23,378 crore) (April 2009-March2010)
Cumulative amount of FDI Inflows: US$ 132.43 billion (Rs 5,77,108 crore) (August 1991 to March2010)
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Sectors Attracting highest FDI inflows: Services Sector, Computer Software & Hardware,Telecommunications, Housing & Real Estate, Construction Activities, Power, Automobile Industry,Metallurgical Industries, Petroleum & Natural Gas and Chemicals.
Top Investing Countries: Mauritius, Singapore, U.S.A., U.K., Netherlands, Cyprus, Japan, Germany,U.A.E and France.
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PORTERS 5 FORCES IN
THREAT OF NEW ENTRAN
capital investment, requirement of broa
entrants. Access to limestone reserves
BARGANING POWER OF SUlicensing of coal and limestone reserve
for transport are all controlled by a sin
BARGANING POWER OF BU
of retail purchase, declining share of bu
power of the customers.
THREAT OF SUBSTITUTES:
engineering plastics in building offer
popular in India.
INTER FIRM RIVALRY: The i
in the industry and very little brand d
resorting to expanding reach and achie
The high bargaining power of govern
in a consolidation phase. Smaller co
have mining leases for coal and lim
result they either try to merge with lar
I
S
BARGANING
POWER OF
SUPPLIERS-
VERY HIGH
EMENT INDUSTRY:
: The threat of a new entrant in cement industry
d distribution network and over supplied marke
lso act as a significant entry barrier.
PLIER: The bargaining power of suppliers isupply of power from the state grid and availa
le entity, which is the government.
YERS: The bargaining power of buyers is lim
lk purchase by the government has taken away
The threat of substitution is low. Only bit
some element of competition otherwise no c
nter firm competition isvery high. Due to larg
ifferentiation to speak of, the competition is i
ing pan India presence.
ment and intense competition has resulted in
panies which do not have access to captive p
stone mines find it difficult to maintain thei
er players or liquidate their business.
TER FIRM
RIVALRY-
HIGH
HREAT OF
NEW
NTRANT-
LIMITED
BARGANING
POWER OF
BUYERS-
LIMITED
HREAT OFBSTITUTES
LOW
is limited. High
t deter new
s very high. The
ility of railways
ited. Rising share
the bargaining
umen in roads and
lose substitutes are
number of players
ntense with players
the industry going
wer plant or dont
bottom line. As a
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CEMENT MANUFACTURIN
There are two general processes forprocess. In general, the dry process issomewhat more energy efficient thanimportant role in Indian cement produc
Over the last decade, increased prefereas to obtain a cost advantage in a coprocess, many manufactures have switcsuitable modifications in their plants.expected to be completely phased out iused wet process kilns. These kilns hathe kilns are dry process, 3% are wet,larger, with capacities in India rangingcapacities in semi-dry kilns range frorange from 200-750 tpd (average 425 t
DRY PROCESS:
In dry process production, limestocrushed to a uniform and usableblended with certain additives (such aore and bauxite) and discharged onvertical roller mill where the raw matare ground to fine powder. An electroprecipitator dedusts the raw mill gasecollects the raw meal for a series of fstages of blending. The homogenizedmeal thus extracted is pumped to the ta pre heater by air lift pumps. In th
heaters the material is heated to 7Subsequently, the raw meal undergprocess of calcinations in a pre calci(in which the carbonates presentreduced fed to the kiln. The remacalcination and clinkerization reactions1,500C. The clinker formed is cooletransported to the cement mills for prand for producing PPC, clinker, gypsu
WET PROCESS:The wet process differs mainly in theproduce slurry. The chemical composievaporation of moisture, preheating, cand transported, as in the case of othewet process is more energy intensive,high.
The cement companies that still usoperating cost significantly by opting
PROCESS:
roducing clinker and cement in India: a dryuch more energy efficient than the wet proce
the semi-dry process. The semi-dry process htion and accounts for less than 0.2% of total pro
ce is being given to the energy efficient dry prmpetitive market. Moreover, since the initiatihed over from the wet technology to the dry teDue to new, even more efficient technologies,
the near future. In 1960, around 94% of the cee been phased out over the past 46 years andand only 1% are semidry process. Dry procesfrom 300- 8,000 tonnes per day (tpd) (average
600-1,200 tpd (average 521tpd), capacities id).
e issize,ironto arials
staticand
rtherraw
op ofpre
0C.es anator
areiningare completed in the kiln where the temperaturand conveyed to the clinker silo from wher
ducing cement. For producing OPC, clinker aand fly ash are used.
preparation of raw meal where water is addedtion is corrected and the slurry is then pumpelcinations and sintering reaction takes place. Tplants, with suitable conveyors to cement miland thus becomes expensive when power an
e wet process can increase their efficiencior dry process.
Dry Process
95.3%
Wet Process
3.5%
PROCESS WISE C
PRODUCTIO
process and a wets, and the semi-wetas never played anduction.
ocess technology soon of the decontrolhnology by makingthe wet process is
ment plants in Indiat present, 96.3% of
s kilns are typicallyf 2,880 tpd). While
n wet process kilns
e is raised to 1,450-it is extracted andd gypsum are used
to raw materials tod to the kiln wherehe clinker is cooledls for grinding. Thed energy prices are
s and lower their
Semi-Dry
Process
0.2%
MENT
N
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GLOBAL CEMENT OVERVIEW:
source: U.S. Geological Survey, Mineral Commodity Summaries, January 2010
The Global Cement market is largely dominated by China. China accounts for nearly 50% of world
cement production. India comes second with a share of 6% and then USA with a share of 3%
Global demand for cement is forecast to grow 4.7 percent annually through 2010 to 2800 MMT, valued at
over $200 billion. China, which is already by far the largest market for cement in the world, will register
the biggest increases. Product demand in China is projected to expand more than the total amount of
cement currently used annually in the next two largest markets -- India and the US -- combined.
Other developing parts of Asia and Eastern Europe, as well as a number of nations in the Africa/Mideast
and Latin America regions, will also record above average cement market gains, fueled by a robust
construction outlook. Product demand in India, for example, will climb at a healthy 6.4 percent annual rate
on account of increased infrastructure spending by the Government. Vietnam, Thailand, Turkey and
Indonesia will register some of the strongest increases in percentage terms. Market advances will be less
robust in the developed areas of the US, Japan and Western Europe, with maintenance and repair
construction accounting for much of the growth in cement demand through 2010. However, a pickup in
construction activity in Germany and Japan following an extended period of decline will help bolster
overall developed world market gains.
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Demand for straight Portland cement, which currently accounts for more than three-quarters of all cement
sales worldwide, will be healthy, spurred by increases in global construction spending and further
advances in manufacturing technology. Sales of blended cements will climb at a somewhat faster pace
through 2010, driven by their superior performance in selected applications. Demand for non-blended
pozzolanic cements, masonry cement and other types will record the strongest gains.
Ready-mix concrete is expected to be the fastest growing market through 2010, surpassing consumer sales
to become the largest single cement market. Ready-mix concrete companies account for a comparatively
small but rising share of total cement demand in a number of fast-growing developing countries, and
suppliers will benefit from an extremely favorable outlook in China, where large-scale construction
projects will require significant amounts of ready-mix concrete. Consumer demand for cement will also
expand at an above-average rate, stimulated by higher personal income levels in developing areas, where
consumer sales can account for half or more of all cement demand, and by new product introductions in
mature developed world markets.
WORLD CEMENT DEMAND(million metric tons)
% Growth over 5 years
Item 2000 2005 2010 2000-2005 2005-2010
Cement Demand 1630.0 2250.0 2830.0 36 25
North America 149.6 170.0 196.0 12 13
Western Europe 197.7 208.5 233.0 5 11
Asia/Pacific 954.5 1470.0 1895.0 54 20
Other Regions 328.2 401.5 506.0 22 26
The world cement demand will be led by emerging markets like Brazil, India, China, Russia. China and
India are the top two countries producing cement. Traditionally the demand of cement is linked to the
GDP growth, higher the GDP growth, higher is the demand for cement. Also the demand is driven by
the infrastructure spending by the government.
The volume of cement entering world trade has traditionally been low relative to overall production and
consumption - typically accounting for approximately 6-7% in aggregate terms. This is linked to the low
unit value of cement, the widespread availability of raw materials, and the link between economic growth
and cement consumption - all these factors favoring domestic production rather than import dependence.
The development of future cement trade volumes will continue to be dominated by essentially short-term
import requirements, set against an underlying background of clinker import dependency and other long-
term supply patterns. Trade volumes will remain highly susceptible to cost and availability factors, with
any major shift in shipping costs being of potential primary significance in this regard.
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INDIAN CEMENT INDUS
The cement industry in India dates baconsidered as one of the core infrastruthe world just behind China, with indu2009-10. It is consented to be a coreover 0.14 million people. Also the inducentral and state governments throughThe growth rate of cement was on anthe Indian Cement industry has been grfor growth in the long term because tworld average of over 263 kgs. Demanback of robust economic growth and inCement, being a bulk commodity, isdistances can prove to be uneconomicaindustry divided into five main regio
14%
15%
22%
36%
13%
REGION WICAPACITY(200
16%
20%
18%
31%
15%
REGION WISE CE
CONSUMPTION(20
RY:
ck to 1914, with the setting up of its first unitcture industries. India is the second largest prstry capacity of over 245 Million Metric Tonneector accounting for approximately 1-3% ofstry is a significant contributor to the revenue cxcise and sales taxes.average 9% to 10% during the period from 20owing at 9% to 10% for the last five years, it hhe per capita consumption is around 134 kgsd for cement in India is expected to continue itsrastructure development in the country.a freight intensive industry and transporting
l. This has resulted in cement being largely a res viz. north, south, west, east and the centra
southern region alwaysin the past owing to abulimestone, the western aare the most lucrative mahigher income levels. Hoaddition taking place atcompared to growth in ddemand supply parity hato some extent in theConsidering the pace atactivity is taking place ithe players have linedaccordingly.
The region wise distri
indicates a higher capacsouthern region. This is
reserves of limestone w
raw material in cement such huge capacity in t
the prices of cement are
rest of India.
The western region whitwo states Maharashtra a
20% of the total cement on account of rapid ecoof these regions.
E-09)
EAST
WEST
NORTH
SOUTH
CENTRAL
ENT
8-09)
EAST
WEST
NORTH
SOUTH
CENTRAL
in Porbunder. It isducer of cement in
s(MMT) in the yearDP and employing
ollected by both the
6-10. Even thoughs tremendous scopeas compared to thebuoyant ride on the
cement over longgional play with thel region. While thead excess capacitydant availability ofd northern regionsrkets on account ofever, with capacitya slower rate as
mand, recently thealso been restoredSouthern region.
hich infrastructuraln different regions,p expansion plans
ution of capacity
ity build up in theue to the available
ich is a principle
roduction. Due toe southern region
lower than that of
h constitutes onlyd Gujrat consume
roduction. This is omic development
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Out of the total states in India only 2
installed capacity of more than 1 MM
cement only after 2006-07. In most oflike Maharashtra, Uttar Pradesh, Wes
demand is more than the supply. These
companies who have pan India presenc
0
5
10
15
20
25
30
35
40
Rajasthan
AndhraPradesh
MadhyaPradesh
TamilNadu
Gujarat
Maharashtra
Karnataka
Chhattisgrah
UttarPradesh
10.98
17.96
8.38
15.88
12.09
21.88
11.65
4.16
17
MILLIONMETRICTONNES
CEMENT P
1 states have cement plants. Out of these onl
. The states like Uttarkhand and Haryana ha
the states the supply is more than the demand.t Bengal, Haryana, Kerala, Bihar, Jammu&
are very lucrative markets for the cement com
e will only be able to tap these diverse markets
HimachalPradesh
Orissa
Jharkhand
Punjab
WestBengal
Meghalaya
Haryana
Uttarkhand
Kerala
Bihar
Jammu&Kashmir
Assam
.86
1.93
5.47
3.11
6.257.65
0
7.27
2.43
7.89
5.1
1.081.68
RODUCING STATES
Ce
Ca
Ce
17 states have an
e started producing
However, in statesashmir, Assam the
anies. However the
profitably.
ent Production
acity
ent Consumption
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CEMENT-INPUTS:
Limestone
It is the main raw material req
production of cement. About 1.5
limestone is used in the manufacture
of cement. Cement grade limestone
only in certain areas in the country l
establishment of cement plants in
Limestone is available in large qu
Rajasthan, Madhya Pradesh, Gujarat
Pradesh, Karnataka, Tamil Nadu, and
Bihar.This has created pockets o
production called
The skewed distribution of capacitie
with transportation bottlenecks ha
pockets of surplus and deficit in thThis has led to pricing differentials acr
fluctuation in prices of limestone wou
cement companies have their own lim
Grasim Industries Ltd., The Associate
Shree Cement Ltd., Birla Corporation
Coal
Around 25 tonnes of coal are used to
tonnes of cement. Coal forms about 20
total operating cost. The industry us5% of coal produced in the country.
ownership of coal mines was not per
India and all purchases had to be m
government-owned coal mines.
government and Cement Manu
Association (CMA) make allocation
The quantities were fixed after
assessments of likely production and al
on past performance of the unit co
Units at a greater distance used t
because of high transport costs and (i
some units) delays in receiving coal be
additional transshipment time (loss in t
However, the scenario has changed so
larger cement companies have taken ad
from fluctuations in coal prices and unc
The union budget 2010-11 has levied cl
50 per tonne. This cess will also apply
coal demand from cement (excluding c
Gujarat
11%
Tamil
Nadu
8%
Chhattisgarh
8%
Karnataka8%
Other
States
12%
LIMESTONE PR
STATE
uired for
onnes of
f 1 tonne
is located
eading to
clusters.
ntities in
, Andhra
a part of
cement
clusters.
s coupled
created
country.ss markets. Since limestone is required in such
ld affect the bottom line of companies. Henc
stone mines. Some of the companies having l
d Cement Cos. Ltd., Ultra Tech Cement Ltd.,
td., Madras Cement Ltd. and Binani.
ake 100
% of the
s about. Private
itted in
de from
The
facturers
of coal.
making
so based
ncerned.
o suffer
case of
cause of
ansferring coal from broad gauge to meter gau
ewhat. The government has allowed captive co
vantage of this and got mining licenses. This ha
ertainty in allocation of coal.
ean energy cess on coal produced in India at a
n imported coal. The XIth plan project (2011-1
oal requirement of captive power plants) to be 3
0
20
40
60
80
100
120
A
pr
M
ay
Jun
Jul
A
ug
Sep
O
ct
N
ov
USD$
MONTHLY PRIC
INTERNATION
OF CO
Andhra
Pradesh
22%
Rajasthan
18%
Madhya
Pradesh
13%
ODUCING
high quantities any
most of the major
imestone mines are
India Cement Ltd.,
e wagons).
al mining. The
s protected them
ominal rate of Rs
2) had estimated
1.9 million tonne.
D
ec
J
an
Feb
M
ar
S 2009-10
L PRICES
L
Price
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So, the Rs 50 per tonne levy of clean e
sector. The actual impact could be high
thermal power plants, which also requi
The prices of international coal are e
coal depend on the availability of ship
up. The index to watch out for is the B
coal as well as the clean energy cess icoming under pressure.
Power
Cement industry is very power intensiv
produce one tonne of cement. The cons
units. Availability of stable and continu
Factories, particularly those in the Sout
are high in India and growing at 10% a
setting up captive thermal power plants
arrangement.Most of the cement companies have in
plants creates a win-win situation for
continuous and uninterrupted power s
electricity boards. The thermal
power plants generate fly ash
which is used in manufacturing
of cement.
TransportationCement is highly freight intensive
in nature. Every tonne of cement
manufactured involves the
transportation of 1.6 tonnes of
limestone, 0.25 tonnes of coal,
0.05 tonnes of gypsum and 1
tonne of the finished product. The
industry faces serious
transportation constraints in terms
of timely availability of railwagons. This has forced
manufacturers to move
progressively larger quantities by road.
this has been slashed by more than 40
gauge conversion - thus limiting carryi
To overcome its resource crunch, the R
lease transfer' (BOLT) schemes. It is cl
the same to the railways will be given
have already invested in the OYW sche
ergy cess means additional cost of Rs 159.50 c
er considering the fact that most of the cement
e use of coal.
pected to continue their upward journey. Also
ing recourses, non availability of ships can p
altic Dry Index. As a result of increase in pric
posed the cement companies would be seeing
e and about 120 kwh(kilo watt hour) of power i
umption is lower at around 90-100 kwh in new
ous power supply is of critical importance to th
h, have been experiencing erratic power supply.
nually. The industry is trying to insulate itself
while diesel generator sets are being used as a
vested heavily in setting up captive power plan
he companies. The companies not only are as
upply but also are insulated from the price hik
In spite of serious shortage of wagons, the plan
under resource constraints. The outlay has als
g capacity and turnaround time of wagons.
ailways is relying on 'Own your Wagon' (OYW
ar that the companies that have procured own
riority in allotment of wagons. Companies like
me.
0
50
100
150
200
250
300
350
Jan Mar May Jul Sep Nov Jan Mar
WholesalepriceIndex(W
PI)
Months from Jan 09-May 10
WPI of cement v/s WP
ore for the coal
lants have captive
since the prices of
sh the coal prices
of international
their margins
s required to
and more efficient
cement industry.
Also power costs
gainst this by
tandby
ts. Setting these
ured of
e by the state
ned expenditure on
been reduced on
) and 'build operate
agons and leased
Grasim and ACC
May
of inputs
Cement
Coaking Coal
Lime Stone
Gypsum
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Gujarat Ambuja pioneered the concept of transportation by sea. It has taken the advantage of its coast
location and has constructed its own jetties at Kodinar, Surat and New Bombay and has insulated itself
from otherwise poor port facilities. It uses these facilities and its own ships to move cement to markets in
Gujarat and Mumbai. It enjoys a significant cost advantage by using this route.
Thus it can be seen that the cement companies which are able to create their own infrastructure are able to
insulate themselves from the uncertainties of the supplies from the government. Thus the company would
gain competitive advantage over others thereby enjoying higher profit margins.
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IMPACT OF UNION BUDGET 2010-11 ON CEMENT INDUSTRY:
Clean energy cess on coal produced in India at a nominal rate of Rs 50 per tonne to be levied.This cess will also apply on imported coal. The XIth plan project (2011-12) had estimated coaldemand from cement (excluding coal requirement of captive power plants) to be 31.9 million
tonne. So, the Rs 50 per tonne levy of clean energy cess means additional cost of Rs 159.50crore for the coal sector. The actual impact could be higher considering the fact that most ofthe cement plants have captive thermal power plants, which also require use of coal.
Rs. 66100 crore provided for Rural Development. An amount of Rs 48,000 crore allocated for rural infrastructure programmes under Bharat
Nirman. Unit cost under Indira Awas Yojana increased to Rs 45,000 in the plain areas and to Rs 48,500
in the hilly areas. Allocation for this scheme increased to Rs 10000 crore. Allocation for urban development increased by more than 75% from Rs.3,060 crore to
Rs.5,400 crore in 2010-11. Allocation for Housing and Urban Poverty Alleviation rose from Rs 850 crore to Rs 1000 crore
in 2010-11. Scheme of one per cent interest subvention on housing loan upto Rs10 lakh, where the cost of
the house does not exceed Rs 20 lakh announced in the last Budget extended up toMarch 31, 2011.
Rs 1270 crore allocated forRajiv Awas Yojana as compared to Rs 150 crore last year. Standard excise rate up from 8% to 10%
The clean energy cess of Rs.50/tonne of coal would mean the energy cost would go up. The cementcompanies not only require coal for firing up their Kilns but also they require it in their captive power
plants for generating electricity. This would surely increase their cost.
E.g for producing 100 tonnes of cement we require 25 tonnes of coal. Now, for a 1 MMT plant the coalrequired would be 40000 tonnes which would cost additional 250000*50=12500000 i.e 12.5million
rupees.
The increase in allocation for infrastructure programmes would increase the demand for cement.Moreover the increased spending for rural development will help the cement companies tap in the rural
markets.
Increase in excise duty would result in cement companies trying to pass the cost to the consumers.