Fall in demand and aggressive capacity expansion by competitors to increase foot print pan India has, over the years, resulted in a dip in market share of cement majors like the Holcim Group and the Aditya Birla group companies.
According to The Cement Manufacturers Association (CMA) data, Swiss major Holcim Group, which has about 46% stake each in ACC and Ambuja Cements, witnessed its market share in FY2010 fall to 20.24% from 24.38% in FY2005.
Similarly, the AV Birla group, which, through group companies Grasim, UltraTech and Shree Digvijay Cement, commanded a market share of 20.49% in FY 2005, saw it fall to 18.39% in FY2010. Grasim in 2008 sold Shree Digvijay Cement. It later hived off its cement business into a separate subsidiary called Samruddhi Cement, which in September 2010 got merged into UltraTech Cement. On the other hand, a mid-size player like Shree Cement, which had 2.39% market share in FY 2005, is the sixth largest cement company with 4.69% market share in FY 2010. Similarly, Jaiprakash Associates has increased marketshare from 3.96% to 5.3%.
Experts believe small and mid tier companies are reaching beyond their traditional markets, posing a challenge to cement majors. ACC, the country’s second largest cement producer, whose volume market share witnessed an 8-year peak at 13.2% in FY2005, has seen a decline since then. Its share dropped at 11.8% in 2008. ACC in its AGM in April 2010 had also said that the company will be working on improving its market share as it grew 2.3% in 2009 against the industry growth of 10.3%.
An ACC spokesperson said, “We were constrained by lack of additional capacity as our projects had not come on stream. We have completed all the projects that were planned by us, bringing our capacity up to 27 million tonnes. We are taking steps to ramp up production at our new facilities, which will then give us additional availability,” he said. An Adtya Birla Group spokesperson said, “Last year, at this point in time, our market share was 18.05% and today it is 18.04%. Hence the loss in market share is insignificant. Moreover, this is true for the entire industry, due to continuing monsoons and weak demand."
Cement players like Dalmia Cement, Prisim, Binani and JK Lakshmi among others are moving from their tradition markets and investing heavily in expanding footprint in other regions.“The capacity expansion announced by the top four in percentage terms is less compared to others. Also, these players are not doing any acquisition currently, which has started impacting their market share,” said a Mumbai-based investment banker
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