>Asbestos Cement Sheet

Asbestos Cement Sheet (ACS) is a building material in which asbestos fibres are used to reinforce thin rigid cement sheets. It is a very popular building material, largely due to its durability. The roofing industry is largely a commoditized business. While ACS started out as an industrial product, the increase in production and increase in the number of access points has made it into a retail product. With 4 dominant players in this oligopolistic industry, pricing is generally similar and there is limited brand premium. 80% of the sales come from rural markets with the balance 20% coming from the industrial and other segments (warehouses, poultry, urban slums etc).


The Key raw materials are Chrysotile (Asbestos Fibre), which constitutes 45% to 50% of the total raw material costs and is 100% imported, OPC (Ordinary Portland Cement), flyash and wood pulp. Overall, to make 100 kgs of fiber cement roofing sheet, 80 kgs of input are required (43 kg of cement, 8 kg of asbestos fibre, 28 kg of flyash and the balance is dry waste, pulp etc). The remaining is water weight gained during the manufacturing process. Raw material expense accounts for the largest operating expense in all companies (~60-70% of total operating expense). Freight is a large cost (also transporting over long distances could lead to breakages) hence location of the plant is key to cost competitiveness.


The ACS industry de-grew by ~5% in FY10, grew by ~3.5% in FY11 and grew further by ~7% in FY12. The industry is estimated to grow at ~6-9% for the next few years on account of increased income in rural areas coupled with various initiatives by the Government for affordable housing such as Indira Awas Yojna, Golden Jubilee Rural Housing Finance Scheme and Pradhan Mantri Adarsh Gram Yojana. Additionally, other schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) guarantee employment to low-income individuals, which also helps generate demand for the roofing industry.


Over 50% of the Indian population still lives under thatched roofs (Kuccha roofing) and clay tiles. Thatched roof is not waterproof, and poses a fire hazard besides needing regular replacement. Tiled roof needs recurring maintenance and is also not safe. Hence with security concern coupled with rising income level leads to shift from kuccha house to pucca house.


ACSs are good insulators of heat and sound as compared to thatched, tiled or galvanized metal roofs. Additionally, ACSs are water resistant and fire resistant. ACSs are also relatively cheaper than galvanized metal roofs. ACSs require minimal maintenance and infrequent replacement unlike thatched and tiled roofs. Hence, whenever disposable income increases, switching to ACS roofs is the most obvious choice.


Currently there are 20 entities in the Industry with about 68 manufacturing plants throughout the country. The products are marketed under their respective brand names mainly through dealers for the retail market and directly for projects and government departments. Traditionally most players are concentrated in the Southern markets due to easy access to raw materials such as cement and greater affordability and desire to move into pucca houses. However, in recent years, the market leaders have been expanding operations to other markets as they realize the vast untapped market in other regions and to benefit out of rising incomes in those regions. The leading players in the industry are Hyderabad Industries Ltd, Visaka Industries Ltd, Ramco Industries Ltd and Everest Industries Ltd. These players account for ~72% of the industry’s capacity.


To read report in detail: ACS
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