Economy & Market

A perfect distribution?

Published

11 years ago

September 30, 2015

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The distribution of cement to the end user from the manufacturer is a major cost factor in the landed cost of cement at the user end. ICR takes a look at the major obstacles in cement distribution.

Till 80s cement was available only as a commodity, and the production and distribution of cement was controlled by the Government. One had to apply to a district collector to get cement allotted for a job. It is only during the late 80s that cement was decontrolled and as a result many players entered into cement production, triggering competition into the cement industry.

It has been almost 28 years since cement has been decontrolled. Since then industry has witnessed high level of competition which has forced all the players to create their brand image in the minds of the customer so they can fetch premium price over competitors. But slowly all the companies have started replicating the activities undertaken by any pioneer company and so the companies were forced to control their cost in order to ensure reasonable profits during the lean period, i.e., when the demand is low and prices are under pressure. It is important to note the recent development of selling cement through online shops like Snapdeal, etc.

Mechanics of distribution channels
Companies invariably hire carry and forwarding agents (CFAs) to transport cement to their own or dealers? warehouses, which is either done via road or railways. From CFAs or warehouses, the cement is then transported to dealers/distributors and further to sub dealers who finally sell it to the end user. The physical ownership of goods every time does not get transferred. In the other case, dealers and sub dealers take order from buyers and place it to the companies, distributors coordinate and monitor for the timely dispatch of said orders, transportation of goods and final delivery and in return get their commission. It must be borne in mind that it is high volume and low margin business as stated by both – Nikhil Phadke, Partner, Vaidya & Co, and Senan Shah, Om Swastik Trading.

Distributor network in cement industry is highly dominating, and companies are compelled to hire the services as they rarely have any rapport or contact with the end consumer of their product. Apart from this, distributors have storage facilities, which enable them to control the supply chain. Therefore it becomes an important link in the business chain.

Three major factors affect the cost of cement. These include: logistic (20 to 22 per cent), excise and VAT of which excise and VAT are Government duties and thus cannot be controlled by the manufacturer. So only cost that is in the hands of manufacturer is the logistic cost, and in order to reduce the logistic cost, the companies try to sell their production in the nearby areas.

Moreover as the cement plant has to be installed nearby limestone deposits, plants of various companies are located very near to each other. This creates an intense competition in the nearby areas as all the companies try to sell their product with minimal logistic cost. Largely this is applicable to all the cement plants but as the big companies have huge production capacity at the single plant they have low cost of production and so they can afford to distribute their product at far off places at a slightly higher price. But the small players have limited production capacity so they try to increase their profits by saving on the logistic cost by selling in a limited area, and this technique of saving on logistic cost is shrinking their area of operation. This can be experienced in the states of Telangana and Andhra Pradesh. Thus intense competition is experienced in local areas as big players have to sell some part of their production in local area to get higher realisation and the local companies have to sell in local areas as they cannot afford to sell in far-off places due to increasing logistic cost. Moreover the transportation cost always has an increasing trend, so every company prefers to sell their maximum possible production in the nearby area which increases competition to a great extent.

Today we can say, in all the developed countries, cement is still treated as a commodity whereas in India it is somewhere between commodity and brand. In short, for a retail buyer, companies sell it as a brand whereas for institutional buyers it is sold as a commodity. The dealer is extremely important for both buyer and manufacturer.

Distribution Channel: Cement v/s FMCG
The business is driven on relationship more than that of a brand. The market is extremely price-sensitive and therefore the brand cannot fetch a value beyond a certain level. Typically the institutional buyers squeeze the manufacturers and dealers to a maximum. The systems of payment and collection are better in FMCG sector than that of cement. The channel has to improve on that. Many a times as referred by Phadke, deliveries are effected just on telephone calls without any documentation and dealers have been exposed to a great risk. Probably the younger generation has to learn from it and correct their actions.

According to Rahul Akkara, Associate Vice President – Brand, JSW Cement, "In the cement business, the dealer is accountable for expanding the base across his/her territory and for doing this, he/she needs to have a good sub dealer base, which would help him achieve this. Also the dealer should also have good networking with influencers such as contractors, engineers, masons and builders, who are also equally responsible to increase business for a cement brand in his territory."

Exclusivity so called is meaningless and forced only by the companies even though they understand that exclusive dealers are doing business with other brands, may be in equal volumes only under different names. Secondly as expressed by Phadke, it is not legally enforceable but still cement companies are going on creating exclusive dealers. It needs second thinking.

Cement bags does not carry an expiry date but it does not mean that the old stock can be put to use for any job like casting a slab or column. Here it differs far from that of FMCG products and procedures. Leftover or damaged products are returned to the manufacturers, however it does not apply to cement. Another major difference with that of FMCG products is that the manufacturer scores over that of the distributor and he is dominant where as in cement business chain the dealer is more valued than the manufacturer.

The other issue raised by Phadke is very valid but has no immediate answer. CFAs are becoming cement dealers and competing with traditional channel members. It is important to remember that as CFAs have access to very vital information about the dealers customers and that can be used to compete with them. Even legally it will not be possible for any one to stop such entry but what can be done is they can be allotted different territory for doing business so as to protect the interest of the existing dealers. On the other hand some of the existing dealers have been investing money to have their own transport but it has not been very common.

Surprisingly no one has talked about the loss of cement either by the way of using hooks or because of transloading of shipment. The quantum of loss is significant but since it is a high volume business no one seems to be worried.

Economy & Market

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

Published

1 week 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

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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.