Economy & Market

Subdued demand hits cement cos

Published

11 years ago

May 31, 2015

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Indian cement industry hit a slowdown in the beginning of this year as cement production was down by 0.5 per cent in the Jan-March 2015 period. Cement price also came under pressure due to weak demand.

Due to weak demand from end-user segment, the nationwide cement demand remained sluggish. Cement price also came under pressure due top the weak demand.

Cement demand remains subdued due to weak demand from end user indusries Cement demand has remained sluggish in Q4 FY15 which is traditionally a seasonally strong quarter for the cement industry. All-India cement production declined by 0.5% YoY during Jan-Mar 2015 as against an increase of 9.7% during Apr-Sept 2014. While pre-election spending and delayed monsoon had supported the growth in cement demand in H1 FY15, the growth slowed down in H2 FY15 once the election cycle was over. Cement demand was also impacted by cut down in government spending in Q4 FY15, muted demand from real estate and construction projects and slow recovery in infrastructure spending. Further, decline in kharif crops production owing to poor monsoons affected agricultural incomes and post-monsoon rural demand for cement for housing and other purposes. Regional factors such as extension of monsoon in South, extremely cold weather in North India and unseasonal rains in North in Q4 FY15 also affected construction activities and consequently cement demand in some areas. The demand has showed no signs of recovery in April 2015 with cement production declining by 2.4% YoY during the month.

Significant slowdown in fresh capacity addition in FY17 to aid improvement in capacity utilisation
The industry has seen slowdown in addition of new capacities due to supply glut faced in recent times. For instance, between FY11-FY15, the industry added 92 MTPA cement capacities as against 122 MTPA in the preceding 4-year period FY07-FY11. However, slowdown in demand (cement production grew by 6.0% during FY11-FY15 as against 7.6% during FY07-FY11) resulted in decline in capacity utilization from 77% in FY12 to 72% in FY14 despite slowdown in fresh capacity addition. Going forward, we expect the industry to add 28 MTPA capacities during FY16-FY17- 21 MTPA in FY16 and 8 MTPA in FY17 as against the peak addition of 50 MTPA in FY10. Eastern region will lead the capacity expansion and is expected to witness about 12 MTPA capacity additions during FY16-FY17.

Southern region, which had witnessed the highest capacity addition in the last five years, will see a considerable slowdown adding only 6 MTPA of capacity addition in the next 2 years. Assuming a demand growth of 7% over the next two years, the incremental demand will be 19-20 MTPA, which will just match the incremental supply in FY16 resulting in stable capacity utilization vis-a-vis previous year. However, with slowdown in new project execution in FY17, the all-India cement capacity utilisation is likely to improve to 75% in FY17.

Prices come under pressure due to weak demand1

North: Cement companies in North raised prices by Rs. 20/bag in Jan 2015 ahead of the busy season in anticipation of recovery in demand. However, they were unable to sustain these hikes due to weak demand and unseasonal rains. For example, average wholesale cement prices in Chandigarh increased from Rs. 264/bag in Dec 2014 to Rs. 285/bag in Jan 2015 but declined to Rs. 276/bag in Feb 2015 due to subdued demand. Cement companies again raised prices by Rs. 10-15/bag in the month of Mar 2015 but prices corrected by Rs. 20/bag in May 2015. Cement prices in North have slid below last year?s prices.
West: Western region, particularly Maharashtra has seen a steep decline in prices. Average wholesale prices in Mumbai have declined to Rs. 285/bag from their peak level of Rs. 364/bag in Jan 2015. Prices in Ahmedabad have also declined by Rs. 15-20.bag due to weak demand.
East: The average wholesale prices in Kolkata market remained in the range of Rs. 340-360/ bag during FY15 and have increased to Rs. 363/bag in May 2015.
South: Cement companies took a major price hike in Dec 2014 to pass on the rising costs. For example, in the Hyderabad market, cement prices rose sharply by Rs. 60/bag MoM to Rs. 350/bag in Jan 2015. While there has been some disruption in pricing discipline in May 2015, the prices continue to be significantly higher on a YoY basis.

Q4 FY15 revenue growth remains modest due to weak demand; South based companies report healthy profitability in Q4 FY15
Most cement companies in ICRA Sample2 reported either a decline or a modest YoY increase in revenues in Q4 FY15. Only two companies, namely OCL India Limited and JK Cement Limited registered a double-digit YoY revenue growth due to volumetric growth aided by capacity expansion. The revenues of companies in ICRA sample registered mere 0.6% YoY growth. On a sequential basis, all companies reported an increase in revenues with revenues for ICRA Sample increasing by 9.0% QoQ in Q4 FY15.

The profitability margins of most cement companies declined on a YoY basis (except for South based companies). Despite this, the operating margins of ICRA Sample increased by 100 basis points to 19.2% n Q4 FY15 driven by performance of South based cement companies as well as ACC Limited. The operating profitability margins of South based companies namely, The Ramco Cements Limited and The India Cements Limited improved significantly both on a sequential and YoY basis due to significant hike in cement prices in South in Dec 2014. Cement companies in North had witnessed healthy profitability margins in Q4 FY14 driven by shutdown of 6MTPA capacity of Binani cement Limited and subsequent increase in cement prices in the region. As a result, on a YoY basis, the profitability margins in North (JK Cement Limited, JK Lakshmi Cement Limited, shree Cement Limited) came under pressure in Q4 FY15.

1Source for region-wise price data: CMIE
2ICRA Sample Includes ACC Limited, Ambuja Cements Limited, OCL India Limited, Shree Cement Limited, Ultratech cement Limited, JK Cement Limited, JK Lakshmi Cement Limited, Prism Cement Limited, the India Cements Limited, The Ramco Cements Limited

By Sabyasachi Majumdar, Sr.VP, Co-head, Corporate Sector Ratings, ICRA Ltd

Exhibit 3: Revenues and Profitability of Key Cement Players (Q4 FY15)
	Revenue (Rs. Billion)	YoY Revenue Growth	QoQ Revenue Growth	Operating Profits (Rs. Billion)			Operating Profitability Margin (%)
	Q4 FY15	%	%	Q4 FY14	Q4 FY15	Q3 FY15	Q4 FY14	Q4 FY15	Q3 FY15
ACC Limited	30.8	1.8%	8.6%	4.25	6.09	2.57	14.0%	19.8%	9.1%
Ambuja Cements Limited	24.6	-7.1%	2.4%	5.89	5.10	3.58	22.2%	20.7%	14.9%
JK Cement Limited	9.2	10.0%	14.7%	1.63	1.64	1.01	19.6%	17.9%	12.6%
JK Lakshmi Cement Limited	5.8	-10.8%	4.0%	1.12	0.71	0.75	17.3%	12.4%	13.6%
OCL India Limited	6.7	24.4%	22.2%	0.92	1.01	0.87	17.2%	15.2%	16.0%
Prism Cement Limited	15.3	0.4%	14.3%	1.19	0.84	0.37	7.8%	5.5%	2.7%
Shree Cement Limited	15.8	-5.3%	2.1%	4.31	3.41	3.06	25.9%	21.6%	19.8%
The India Cements Limited	10.4	-7.3%	0.3%	1.19	2.00	1.63	10.6%	19.2%	15.7%
The Ramco Cements Limited	10.0	1.2%	22.2%	1.29	2.74	1.30	13.1%	27.5%	15.9%
Ultratech Cement Limited	62.1	4.3%	10.9%	12.71	13.10	9.57	21.3%	21.1%	17.1%
TOTAL (ICRA Sample)	190.6	0.6%	9.0%	34.50	36.65	24.71	18.2%	19.2%	14.1%
Source: Financial Results of Companies, ICRA92s estimates

Economy & Market

TSR Will Define Which Cement Companies Win India’s Net-Zero Race

Published

3 days ago

April 27, 2026

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Jignesh Kundaria, Director and CEO, Fornnax Technology

India is simultaneously grappling with two crises: a mounting waste emergency and an urgent need to decarbonise its most carbon-intensive industries. The cement sector, the second-largest in the world and the backbone of the nation’s infrastructure ambitions, sits at the centre of both. It consumes enormous quantities of fossil fuel, and it has the technical capacity to consume something else entirely: the waste our cities cannot get rid of.

According to CPCB and NITI Aayog projections, India generates approximately 62.4 million tonnes of municipal solid waste annually, with that figure expected to reach 165 million tonnes by 2030. Much of this waste is energy-rich and non-recyclable. At the same time, cement kilns operate at material temperatures of approximately 1,450 degrees Celsius, with gas temperatures reaching 2,000 degrees. This high-temperature environment is ideal for co-processing, ensuring the complete thermal destruction of organic compounds without generating toxic residues. The physics are in our favour. The infrastructure is not.

Pre-processing is not the support act for co-processing. It is the main event. Get the particle size wrong, get the moisture wrong, get the calorific value wrong and your kiln thermal stability will suffer the consequences.

The Regulatory Push Is Real

The Solid Waste Management (SWM) Rules 2026 mandate that cement plants progressively replace solid fossil fuels with Refuse-Derived Fuel (RDF), starting at a 5 per cent baseline and scaling to 15 per cent within six years. NITI Aayog’s 2026 Roadmap for Cement Sector Decarbonisation targets 20 to 25 per cent Thermal Substitution Rate (TSR) by 2030. Beyond compliance, every tonne of coal replaced by RDF generates measurable carbon reductions which is monetisable under India’s emerging Carbon Credit Trading Scheme (CCTS). TSR is no longer a sustainability metric. It is a financial lever.

Yet our own field assessments across multiple Indian cement plants reveal a sobering reality: the primary barrier to scaling AFR adoption is not waste availability. It is the fragmented and under-engineered pre-processing ecosystem that sits between the waste and the kiln.

Why Indian Waste Is a Different Engineering Problem

Indian municipal solid waste is not the material that imported shredding equipment was designed for. Our waste streams frequently exceed 40 per cent to 50 per cent moisture content, particularly during monsoon cycles, saturated with abrasive inerts including sand, glass, and stone. Plants relying on imported OEM equipment face months of downtime awaiting proprietary spare parts. Machines built for segregated, low-moisture waste fail quickly and disrupt the entire pre-processing operation in Indian conditions.

The two most common failures we observe are what I call the biting teeth problem and the chewing teeth problem. Plants relying solely on a primary shredder reduce bulk waste to large fractions, but the output remains too coarse for stable kiln combustion. Others attempt to use a secondary shredder as a standalone unit without a primary stage to pre-size the feed, leading to catastrophic mechanical failure. When both stages are present but mismatched in throughput capacity, the system becomes a bottleneck. Achieving the 40 to 70 tonnes per hour required for meaningful coal displacement demands a precisely coordinated two-stage process.

Engineering a Made-in-India Answer

At Fornnax, our response to these challenges is grounded in one principle: Indian waste demands Indian engineering. Our systems are built around feedstock homogeneity, the holy grail of kiln stability. Consistent particle size and predictable calorific value are the foundation of stable kiln combustion. Without them, no TSR target is achievable at scale.

Our SR-MAX2500 Dual Shaft Primary Shredder (Hydraulic Drive) processes raw, baled, or loosely mixed MSW, C&I waste, bulky waste, and plastics, reducing them to approximately 150 mm fractions at throughputs of up to 40 tonnes per hour. The R-MAX 3300 Single Shaft Secondary Shredder (Hydraulic Drive), introduced in 2025, takes that primary output and produces RDF fractions in the 30 to 80 mm range at up to 30 tonnes per hour, specifically optimised for consistent kiln feeding. We have also introduced electric drive configurations under the SR-100 HD series, with capacities between 5 and 40 tonnes per hour, already operational at a leading Indian waste-processing facility.

Looking ahead, Fornnax is expanding its portfolio with the upcoming SR-MAX3600 Hydraulic Drive primary shredder at up to 70 tonnes per hour and the R-MAX2100 Hydraulic drive secondary shredder at up to 20 tonnes per hour, designed specifically for the large-scale throughput that higher TSR ambitions require.

The Investment Case Is Now

The 2070 Net-Zero target is not a distant goal for India’s cement sector. It starts today, with decisions being made on the plant floor.

The SWM Rules 2026 are already in effect, requiring cement plants to replace coal with RDF. Carbon credit markets are opening up, and coal prices are not going to get cheaper. Every tonne of coal a cement plant replaces with waste-derived fuel saves money on one side and generates carbon credit revenue on the other. Pre-processing infrastructure is no longer just a compliance requirement. It is a business investment with a measurable return.

The good news is that nothing is missing. The technology works. The waste is available in every Indian city. The government has provided the policy direction. The only thing standing between where the industry is today and where it needs to be is the commitment to build the right infrastructure.

The cement companies that move now will not just meet the regulations. They will be ahead of every competitor that waits.

About The Author

Jignesh Kundaria is the Director and CEO of Fornnax Technology. Over an experience spanning more than two decades in the recycling industry, he has established himself as one of India’s foremost voices on waste-to-fuel technology and alternative fuel infrastructure.

Concrete

WCA Welcomes SiloConnect as associate corporate member

Published

3 weeks ago

April 13, 2026

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The World Cement Association (WCA) has announced SiloConnect as its newest associate corporate member, expanding its network of technology providers supporting digitalisation in the cement industry. SiloConnect offers smart sensor technology that provides real-time visibility of cement inventory levels at customer silos, enabling producers to monitor stock remotely and plan deliveries more efficiently. The solution helps companies move from reactive to proactive logistics, improving delivery planning, operational efficiency and safety by reducing manual inspections. The technology is already used by major cement producers such as Holcim, Cemex and Heidelberg Materials and is deployed across more than 30 countries worldwide.

Concrete

TotalEnergies and Holcim Launch Floating Solar Plant in Belgium

Published

3 weeks ago

April 13, 2026

admin

TotalEnergies and Holcim have commissioned a floating solar power plant in Obourg, Belgium, built on a rehabilitated former chalk quarry that has been converted into a lake. The project has a generation capacity of 31 MW and produces around 30 GWh of renewable electricity annually, which will be used to power Holcim’s nearby industrial operations. The project is currently the largest floating solar installation in Europe dedicated entirely to industrial self-consumption. To ensure minimal impact on the surrounding landscape, more than 700 metres of horizontal directional drilling were used to connect the solar installation to the electrical substation. The project reflects ongoing collaboration between the two companies to support industrial decarbonisation through renewable energy solutions and innovative infrastructure development.