2013 CemWeek's India Cement Sector Sentiment Survey

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CW Group is excited to announce the availability of CemWeek’s 4th Annual India Cement Sector Business Sentiment Survey. For the past three years in a row, the CW Group and CemWeek have been at the very heart of the global cement industry, providing comprehensive and reliable market intelligence data and extensive coverage on important industry topics. With the release of the 4th edition of the Survey, we continue to bring you insightful information about the evolution of the views of the individuals participating in the development of this exciting global industry. Surveying the second largest cement market in the world would not have been possible without the support of certain industry members that manifested a particular dedication to understanding India’s cement sector and the sentiment among its professionals. In this respect, we thank Loesche, Testing Bluhm & Feuerherdt and GMI Global for their support, and our own India’s Cement and Construction Materials journal.

Text of 2013 CemWeek's India Cement Sector Sentiment Survey

  • CemWeekCemWeekCemWeekBMWeekBMWeekBMWeekCW GroupCW GroupCW Group

    india & CONSTRUCTION MATERIALSindiaCemWeek CEMENT

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    CW Group Coal Week

    2013 CEMWEEKS INDIA CEMENT SECTOR SENTIMENT SURVEYSupported by:

    4TH ANN

    UAL

    INDUSTRY

    SURVEY

    BMWeekBMWeek

    BMWeekCemWeekCemWeek

    CemWeekCW Group Coal WeekCW Group Coal Week

    CW Group Coal Week

    MAGAZINE

  • THE BESTTALENT ANENGINEER CAN HAVEIS THE WILL TO LEARNSOMETHING NEW EVERY DAY

    Theres always something new to learn in India. For further information please call +91 120 4018500, write an E-mail to loesche@loescheindia.com or visit www.loesche.com

    AZ_Letter_2011_india_RZ.indd 1 24.06.2011 12:18:17 Uhr

  • CemWeeks 2013 India Cement Sector Survey 1

    FOREWORD

    The CW Group is pleased to release the 4th Annual India Cement Sector Business Sentiment Survey and share the findings with the members of the industry.

    For the past three years in a row, the CW Group has been at the very heart of the global cement industry, providing comprehensive and reliable market intelligence data and extensive coverage on important industry topics. With the release of the 4th edition of the Annual India Cement Sector Business Sentiment Survey, we continue to bring you insightful information about the evolution of the views of the individuals participating in the development of this exciting global industry.

    The task of surveying the second largest cement market in the world would not have been possible without the support of certain industry members that manifested a particular dedication to understanding Indias cement sector and the sentiment among its professionals. In this respect, we thank Loesche, Testing Bluhm & Feuerherdt and GMI Global for their support, and our own Indias Cement and Construction Materials journal.

    As a leading cement sector research house, the CW Group is aware that the survey only mirrors the reality of the industry at a certain point in time. As such, the Survey is not intended to provide a complete view, nor answer all questions that may arise about the market. However, we see it as a starting point for further discussion and a source of insight for the development of future tailor-made business strategies. Do not hesitate to contact us should you wish to continue the dialog and hear more about our views.

    Robert MadeiraManaging Director and Head of Research, CW GroupE: rm@cwgrp.com | T: +1-702-430-1748

    Laura GoldnerSenior Consultant, CW GroupE: lg@cwgrp.com | T: +1-832-622-8921

    Tudor MirceaMarket Services & Marketing Manager, CW GroupE: tm@cwgrp.com | T: +4-075-223-4426

  • cwgrp.com2

    INTRODUCTION

    CemWeeks 2013 India Cement Sector Survey

    SURVEY EXECUTIVE SUMMARY

    Optimism continues to be the name of the game for the Indian cement industry a function of long-term trends as well as human nature. But on a closer

    look, the survey shows that the optimism only runs skin deep and that it has already been eroded by an increasing percentage of industry members who feel dissatisfied with the overall performance of the field last year.

    For instance, the percentage of those who believe the industry performed well dropped from 43 percent in 2012 to 26 percent in 2013, while the number of respondents who believe the industry performed poorly almost tripled from 8 percent last year to 22 percent in 2013.

    Regarding the future evolution of the industry, survey participants continue to be on the optimistic side and hope for a somewhat better or much better performance compared to the last 6 months.

    Confidence in career prospects looks nearly the same in this years survey of the industry, with the overall career-related sentiments on

    the positive side. A substantial part of respondents 47

    percent, believe they have a fairly good chance for a career boost during

    the next period. Some confidence erosion manifested in the percentage of those highly confident about their prospects, whose numbers dropped from 21 percent in 2013 to 13 percent this year.

    The first two major challenges for the industry to overcome in the next year are no surprises: industry overcapacity and profitability. These stay on the minds of 34 percent and 20 percent of respondents, respectively.

    Energy price stands third in the top of concerns for the next year, in spite of the global fuel price downtrend reported during the last period. Indias solid fuel supply-demand gap and dependence on imported coal will further deteriorate by May 2013 imports year over year increased by 43 percent. Currently energy prices are strongly subsidized an element which may change in the near future.

    Expectations about improvements in profitability are moderate. The findings show that the proportion of those who believe that the profitability will actually decrease more than doubled compared to last year, from 11 percent to 23 percent. This correlates with concerns about profitability mentioned earlier, and signals that in spite of declared optimism, more members of the industry are circumspect about its future evolution.

  • CemWeeks 2013 India Cement Sector Survey 3

    Our data reveals that capital expense reductions are on an upward trend. Survey participants who foresee cuts in capital expense doubled from 8 to 16 percent from last year, while the number of those expecting an increase in capital expenditures dropped from 57 to 36 percent.

    In terms of input costs, about 60 percent of survey participants believe these will be reduced or stay the same over the next year. This is an almost 15 percent drop compared to last year. On the other hand, the number of those who expect input costs to exert even more pressure on total costs increased from 25 to 40 percent. However, half of participants believe their company will hire a bit more/a lot more headcount in the next 12 months. This may indicate that the industry needs to identify in the near future ways to relieve the pressure of input costs on the total costs of doing business, ways which may include keeping the same headcount, or even reducing it.

    The overall pulse of the industry continues to be on the positive side, but this years survey highlights an underground current of concern and dissatisfaction. Issues such as energy price, overcapacity, controlling costs and operational efficiency linger in the

    minds of both top and middle management. While as a whole the economy is expected to slow down even further, cement industrys flag continues to fly high. But for how long?

  • cwgrp.comCemWeeks 2013 India Cement Sector Survey4

    SURVEY DEMOGRAPHICS

    INDUSTRY FUNCTIONAL AREA AND ORGANIZATION LEVELThe companies that participated in the survey represent a variety of roles within the industry from sales and marketing, production and engineering, to trading and logistics and planning.

    Several categories of companies in the cement industry answered the questions of the survey. As with previous editions, most of the respondents were cement producers 50 percent, followed by equipment vendors with 18 percent of respondents and industry analysts with 12 percent.

    Thirty-four percent of survey participants identified themselves as senior management defined at CEO, General Manager, Senior or Executive Vice President level. Another 23 percent were classified as managers (i.e., regional manager, director), and 42 percent as professional staff.

    For both 2013 and 2012 the sample base comprised a mix of Indian industry professionals, aiming to capture an accurate overview from their experience, perceptions and

    approaches. Compared to 2012, the pool of respondents has overall remained the same, but 2013 did experience a slight decrease in cement company and equipment vendor involvement.

    Consulting and research

    Other

    Planning, finance & other administrative

    Production, operations & engineering

    Sales & marketing

    Trading and logistics

    47%

    4%11%

    13%

    8%

    28%

    Cement company

    Cement trader

    Equipment vendor

    Industry analyst, consultant

    Other

    50%

    9%

    18%12%

    11%

  • CemWeeks 2013 India Cement Sector Survey 5

    LOCATIONThe sample corresponds to the five regions that comprise the Indian cement industry. The northern and western regions each participated at 28 percent and 32 percent respectively, consistent with last years survey, followed by the southern region which reached 25 percent survey presence (a 1% increase). The eastern and northeastern regions participated at 7 percent each.

    42%

    23%

    34%

    Senior management

    Management

    Professionalstaf

    35

    30

    25

    20

    15

    10

    5

    0

    7% 7%

    28%25%

    32%

    East

    North

    Northeast

    South

    West

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    SURVEY FINDINGS

    CemWeeks 2013 India Cement Sector Survey

    RECENT PERFORMANCE

    The 2013 survey included an increasing number of negative responses concerning thepast performance of the industry. While in 2012 only 9 percent believed

    the industry performed poorly or terribly, the percentage ramped up to 26 percent in 2013.

    Generally speaking, how has the cement industry performed in the past 6 months?

    Q.

    INDUSTRY PERFORMANCE IN THE LAST SIX MONTHS

    8% 26% 41% 22% 4%

    12% 43% 36% 8%

    Excellent Well OK Poorly Terrible

    We suspect the reason behind the increase in negative responses may be the recent

    YOY PRODUCTION

    Q2F

    Y20

    12

    Q3F