Cement majors’ market share to shrink post 2010

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Four top cement manufacturers in the country - ACC, Ambuja Cement (ACL), Grasim and UltraTech - will see a dip in their market share post 2010, when expanded capacities of all cement manufacturers go on stream.

Experts believe that the total market share of the four majors, which now stands at 39%, will drop to about 34% due to aggressive capacity expansion by other players like India Cements, Shree Cement and Binani, among others.

“Moreover, small companies and regional players are also increasing their footprint by entering other regions. This is creating a fear among cement majors about losing market share,” said Pawan Burde, an analyst with Angel Broking.

Among the top four cement manufacturers, ACC plans to expand its capacity to 30.4 mtpa, ACL to 25 mtpa and Grasim, including UltraTech, to 48.8 mtpa by 2010. This will take the production capacity of these companies taken together to about 104.2 mtpa against the expected industry capacity of 300 mtpa.

Among the smaller players, India Cement Ltd is expected to hike its capacity to 18 mtpa, while Shree Cement Ltd plans a 10 mtpa capacity expansion by 2010.

Similarly, Prism Cement plans to expand its capacity to 10 mtpa from the current 2.5 mtpa through its greenfield and brownfield expansions in Madhya Pradesh and Andhra Pradesh. According to a Mumbai based investment banker, “The capacity expansion announced by the top four in percentage terms is less as compared to others. Also, these players are not undertaking any acquisitions currently. This has already started impacting their market share.”

Industry players revealed that the market share of the top four cement manufacturers will drop to 34% post 2010, as mentioned earlier. The share of mid-large players (the likes of Shree Cement, Madras Cement, India Cement) will remain about 36%; and the share of small players (like My Home Industries Ltd, Orient and Binani) will be about 24%. New players (like Reliance, Murli Agro, JSW Cement) will hold 6% market share.