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How to set up a Cement Manufacturing Unit in India in 6 Easy Steps?
An Overview on the Indian Cement Industry
India has a total cement production capacity of around 545 million tons, the second-highest in the world after China. The total production in FY 22 will be close to 380 million tonnes. A good number of cement manufacturing units are located in the states of Andhra Pradesh, Rajasthan, and Tamil Nadu, and around 70 percent of the total cement production of the country is produced by the top 20 cement manufacturing companies (Major cement producers in India include, Ambuja Cement, Adani Cement, Birla Cement, Ultra Tech, ACC, etc). The southern region comprises around 35% of the aggregate production, whereas the north contributes to one-fifth of the production. Other regions include- East (18%), Central (13%), and West (14%).
In the previous 3 years, cement manufacturing has grown at a CAGR of 5.4%. India’s per capita consumption is rough to the tune of 200-225 KG. It is relatively less compared to the global average, which is around ~ 500 KG. In other major emerging economies like China, the per capita consumption is even higher at around ~ 1000 KG.
In the foreseeable future, the cement industry is expected to grow at a remarkable pace in India backed by the government’s focus on infrastructural development. Cement is a basic raw material used in the construction and infrastructure sector. India already has developed a prolific infrastructure grid of USD 1.4 trillion comprising of freight corridors, extensive railway lines, airports, shipping ports, new urban corridors, industrial parks, etc. The Indian real estate industry is expected to reach USD 1 trillion by 2030 and will further drive cement demand.
India is also emerging as an upcoming cement export destination. In FY 21, the total cement exports from India amounted to USD 627.7 million (including asbestos, clinkers, etc.) Major export destinations included Srilanka, USA, UAE, etc.
Consequently, cement production is a very promising prospect in India. However, individuals (or investors) looking to enter the sector should remember that cement manufacturing is a cumbersome task. There needs to be a lot of meticulous thinking before identifying the appropriate site for production. An appropriate site will ensure a constant supply of raw materials and power and will be close to potential markets.
Likewise, the process of manufacturing consists of several activities like raw materials mining, raw meal preparation, clinker calcination, cement grinding, along numerous auxiliary operations. Thus, starting even a small cement manufacturing plant is considered a large-scale engineering project in itself.
Meanwhile, we have compiled a step-by-step guide to help businesses and investors who are looking to start a cement manufacturing business in India.
Stage 1: Initial stage: Cement Type and Clarify Production Scale
In the initial stage, individuals/ investors planning to start a cement factory need to determine the type of cement, volume of cement, etc. Some of the common types of cement used for concrete work are Ordinary Portland Cement, Pozzolana Portland Cement, White Portland cement, Quick-Setting Cement, Refractory Cement, etc. To decide the type and amount of cement production in the new plants, investors should consider the local cement market size, cement prices, along their investment capacity. If the local cement demand is high and there is not much competition in the market, then having high output from the manufacturing unit is a profitable proposition.
Stage 2: Preliminary Analysis
Undoubtedly cement manufacturing is a lucrative and profitable business option but investors looking to start a cement manufacturing unit need to properly plan for it. While making a plan, investors will need to consider the availability of raw materials such as limestone, which constitutes around 95% of the overall raw materials. Other raw materials include Gypsum, clay, iron ore, etc. (It is advisable to set up the plant near mines to optimize the cost of raw materials. In case, if this is not feasible, then calculate the logistics price.)
Similarly, they have to plan out to fulfill their power and water supply requirements. While planning for raw materials, electricity, and water supplies, one should think long-term (30-40 years) rather than short-term. Besides, raw material and power supply, investors also need to plan for manpower, finances, real estate, and more.
Stage 3: Budget Planning
Investors now need to prepare the budget planning. The budget for starting a cement manufacturing unit will include land cost, raw materials, power supply procurement, salaries, operational expenses, along maintenance and transportation cost. While making a budget for the manufacturing unit, investors also need to take into consideration their daily/ monthly/ annual production estimate, as this will help them in calculating revenue and profit and accordingly adjusting the operating cost. Besides offering actionable strategic insights, budget planning will also help investors to calculate the value of loans/ financing required.
Stage 4: Find the best Site for the Cement Manufacturing Unit
Choosing the appropriate site for the cement manufacturing unit is vital because a cement manufacturing plant requires a very large area and also produces heavy pollution, so these plants should be ideally built-in rural areas or urban periphery. As discussed in stage 2, Investors should also choose a site location that is close to the limestone mine to optimize the raw materials transportation cost. Likewise, they need to look into the supplies of water and power. Locations with access to cheaper raw materials and a constant supply of water and electricity will be preferred.
Likewise, there should be the availability of quality manpower/labor force alongside transport facilities in the vicinity. An ideal location for cement manufacturing should also have access to potential customers and markets. Potential customers for a cement manufacturer will include traders, distributors, wholesalers, government infrastructure development agencies, real estate contractors, etc.
Stage 5: Know Cement Manufacturing Process
Individuals starting a cement manufacturing unit in India need to be aware of the complete cement manufacturing process that is discussed in detail below:
- The cement manufacturing process begins with the mining of limestone which is the base of cement manufacturing, so having some reliable mining companies in the nearby area will be an added advantage.
- The mined limestone is crushed and stacked to make it suitable for cement production. During this stage, the limestone is given the right shape and size and is mixed with other materials if required to give it proper consistency.
- The prepared raw material is next sent for grinding that comes out as raw meal, which is then stored and homogenized in a concrete silo and when the raw meal is extracted it is called kiln feed.
- Cement is then manufactured at the manufacturing unit by making use of manufacturing equipment. Different composition of the meal is used to get different types of cement.
- After the production process, the cement is packed and is sent from the silos to the automatic packers where it is packed in 25 or 50 kg packets.
Meanwhile, in the cement production process, a large amount of dust and exhausted gas is generated so the cement plant should be equipped with complete sets of a dust control system and waste heat power generation equipment.
Individuals starting a cement factory will also need licenses and environmental clearance to set up the factory. Individuals need to ensure that while establishing a cement factory they are not violating environmental laws, damaging trees and greenery in the vicinity, or causing pollution for the local community. Individuals also need to ensure that the waste discharge from the factory will be properly handled and will not pollute the environment. Following the verification of all these aspects related to the safety of the environment and community, the business will get the license and environmental clearance.
Stage 6: Final Implementation
The final implementation will include the following:
6.1 Purchase Equipment for Manufacturing Unit
Individuals setting up cement manufacturing units need to purchase different industrial equipment like thermal equipment, grinding equipment, dust removal system, transportation system, storage system, etc. Individuals will also require some large-scale equipment like vertical roller mill, cyclone preheater, rotary kiln, etc.
6.2 Construction of the Factory and Installation of the Equipment
After the structure design of the factory is ready, individuals can start with the factory construction work. Construction of the factory and installation of the equipment are the tasks that are undertaken by the two different professional teams. The equipment installation team needs to cooperate with the civil engineering team to complete the entire setup of the cement manufacturing unit.
6.3 Hire the Required Manpower and start production
With factory constructed and equipment installed, individuals will now require hiring the required staff to start with the cement manufacturing. They will need to hire trained and experienced production staff, engineers, supervisors, and labor force for operating and maintaining the equipment and machinery. Likewise, recruitment in support functions such as finance, HR, admin, logistics, etc will also be required.
6.4 Gain Competitive Intelligence
After becoming a full-fledged cement manufacturer, investors should invest time to know about their competitors. Right from the type of raw materials, they are using to the know-how of their operating cost will help investors understand where they stand in the cement manufacturing business and the way through which they can make the business more profitable.
Conclusion
Starting a cement manufacturing unit takes around a 6 to 9 months period for becoming completely operational. Following all the setup procedures patiently and carefully will reward individuals/ investors with more satisfactory results. Individuals who are not pretty confident of starting a cement manufacturing unit all by themselves can take the help of a professional company like the India Watch that provides all the necessary advice and suggestion for successfully establishing a manufacturing unit.
How The India Watch Can Help
- The India Watch is an India-focused market research and business intelligence advisory. We help businesses and investors with custom research and data solutions.
- Manufacturers and businesses looking to enter cement manufacturing and other allied businesses can hire use as their research advisories.
- We can offer market analysis, industry analysis, valuable industry commentaries, policy research, etc. finetuned to the client’s need, business objective, and overall budget
- We can render and research on industry size, market trends, competitive intelligence, future growth trends, etc. to enable businesses to make informed decisions.
- We can conduct customer assessment studies, opportunity assessment analyses to help our clients make better growth planning
- We can conduct feasibility studies and make business plans for individuals/ businesses/ investors looking to venture the cement manufacturing and other allied business.
- For more information feel free to drop us a mail at info@theindiawatch.com
Other Important Links to Read
https://www.theindiawatch.com/retail/how-to-start-an-e-commerce-venture-in-india-in-8-simple-steps
https://www.theindiawatch.com/retail/how-to-set-up-an-organic-food-business-in-india-in-2022
https://www.theindiawatch.com/economy-and-policy/private-limited-company-registration-in-india
