High capacity utilization in the industry at present
In FY07, the available operational capacity was 159 million Tonnes. Against this the domestic consumption was 149 million tonnes and exports of 9 million tonnes, showing a capacity utilization of 99%.

Cement plant is a regional business
Most plants are located close to lime stone deposits (1 Tonne of cement needs 1.5 t of lime stone); Coal is another major raw material and fuel source. High transportation cost relative to low price

Industrial historically fragmented - Consolidation underway
The regional play and historic industrial licensing policy created several small units owned by regional small companies. Progressive liberalization leading to total de licensing has coincided with major growth in demand. This has led stronger player to set up(and expend) plants of large capacities. There has been consolidation at the top through acquisitions, participating by multi national giants such as Holcim and Lafarge and our Indian giants like the Aditya Birla group.

Strong demand and firm prices encouraging capacity addition
High capacity utilization helped firm prices in the years 2006-07 and boosted cement company profits and valuations. This has led to several existing players (and some new ones) announce plants for new green field and brown field projects. It is projected that about 80 to 90 million tonnes of new capacity would be set up by FY09-10, taking the total capacity to about 240 million tonnes.

Future cement demand to follow GDP growth and exceed if India follows the Chinese model!
India has registered over 8% GDP growth in the last two years. There is universal belief that this momentum is irreversible. Such a sustained growth requires enormous construction work and hence corresponding cement supply. Development momentum, as seen in china could be set the construction activity at a faster than economic growth to serve as a leading charge.