Increased activities in infrastructure coupled with consolidation has brought a change in the cyclical nature of the cement industry.

Cement companies in India are in the driver's seat and expanding their horizon to potential and lucrative export markets of South-East Asia and the Middle East. Backed by low-cost technology and extensive restructuring some of these have become efficient global majors. However, due to the consolidation drive in the recent past, the industry remains somewhat fragmented, and further scope for M&As is very much on the cards. The cumulative FDI inflow into the industry from 1991 to 2007 was $989 mn, which is 2.26% of the total FDI inflows into the country. The relative market share of all companies has changed over a period of time, as consolidation of capacities has seen Gujarat Ambuja, UltraTech, India Cement and Grasim emerge as key players along with ACC.

The impact of high demand is palpable as all the major players in the Indian cement sector have witnessed a surge in their sales volume. The installed capacity rose to more than 177 million tons per annum (mtpa) in 2006-07, and some of the biggest cement companies of the world are competing with each other to penetrate the Indian market, thus triggering a wave of M&As. Unable to withstand the cyclical nature of the industry, weaker and smaller companies are also willing to come under the umbrella of larger and more efficient units. In turn, these developments also anticipate the acquiring units to restructure their operations, reach out to new markets, and to achieve economies of scale by saving a lot of time and cost for setting up new units.

The Analyst Magazine, Cement Industry, Mergers and Acquisitions, M&As, Cement Companies in India, Foreign Direct Investment, Indian Cement Sector, Ambuja Cement India Limited, ACIL, Financial Management, Global Rating Agency, Excise Duties, Trading Business, Gross Domestic Products, GDP, Indian Economy, Indian Technology.