Concrete

Bad News in New Year

Published

10 years ago

December 31, 2016

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This December, we were privileged to organise the ICR Cement Expo and Cement Conference concurrently. The theme of the conference was ‘Infrastructure to drive cement demand’. When we planned the conference a few months back, and narrowed down on to the proposed theme, it seemed perfectly logical that the cement demand would look up in 2017, and it also looked certain that new upcoming infrastructure projects will help drive up cement demand, duly aided by the positive effects of a great monsoon on rural housing demand.

Little did we know that on 8th November, an upheaval will be triggered in the economy in general, and in all such sectors which substantially transact in cash, including cement, and all our expectations based on industry analysis, would be rudely belied.

The sudden shock of demonetisation adversely impacted the trade or retail component of cement off-take, because at the cement counters of retailers all over India, bags are purchased mostly in cash. However, different regions of the country were affected differently in the early days of demonetisation. For example, in the early days post 8th November, southern markets withstood the shock much better than the eastern or northern markets. This discrepancy was mostly caused by the difference in the extent to which the cement makers in the regions pushed cement into the distribution pipeline ignoring the drop in retail off-take.

But as time passed, let’s say in December, the southern markets are drying up as well. Overall, the drop in demand has varied widely from 20 per cent to 70 per cent in different regional markets of India, and insiders say that this trend will continue into January 2017. In spite of brave attempts of cement players, prices have started sliding down as well, and some analysts say that prices have corrected by Rs 15-30/bag across markets. As a result, the stocks of cement companies have already fallen by 15-30 per cent since that fateful November day.

As if this was not enough, the industry has been also hit by increasing fuel prices, which account for at least 40 per cent of its cost structure. Prices of pet coke, imported coal and diesel are going up. According to the data from S&P Global Platts, pet coke and imported coal prices rose between 30 and 37 per cent between July and December. The companies and plants which are located far away from domestic coalfields and/or depended more on pet coke as fuel, are going to be affected sharply. Together with the demand shocker and softening of retail prices, this cost push is going to come as a double whammy for a number of cement companies. Margins of cement companies will get squeezed to various degrees as a result of all this.

Coming back to the theme of our conference, it seems that the government’s infrastructure investments, both in the Central and state sectors, will be the only saviour of the cement industry in the next 12 months. Even so, the infra players and EPC contractors, being volume buyers, have quite a lot of negotiating leverage, and therefore, overall profitability of cement is going to take a hit in relation to retail markets.

End of the day, it does seem that everything has got postponed by a year. Let us now gear up to face a year of tribulations, and look forward to 2018 for recovery of the industry. We would like to underline the fact that the fundamental strengths of the cement industry continue to be enduring in the longer term.

Concrete

Lokesh Lays Stone For Rs 31 Billion Cement Unit In Kadapa

Line-2 expansion to make Kadapa a major cement hub

Published

4 days ago

July 20, 2026

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Andhra Pradesh Education and IT Minister Nara Lokesh on Wednesday laid the foundation stone for the Line-2 expansion of Dalmia Bharat Cement at Chinnakomerla village in Mylavaram Mandal in Kadapa district. The project carries an investment of Rs 31 billion (bn) and is slated for completion by the third quarter of the financial year 2028. The expansion is intended to boost industrial growth and employment generation across the Rayalaseema region.

Once commissioned, the Kadapa facility will become Dalmia Bharat’s largest integrated cement manufacturing ecosystem in southern India, creating over 1,000 direct and indirect jobs and opening new business avenues for regional micro, small and medium enterprises and transport operators. Lokesh said the expansion signalled growing corporate confidence in the state and reflected the practical ease of doing business that secured repeat investment.

He placed the project within the government’s wider economic targets and recalled the Yuvagalam padayatra commitment to generate two million (mn) jobs within five years, noting that the state would cultivate talent while industry created opportunities. Lokesh highlighted Andhra Pradesh’s competitive pursuit of major manufacturing accounts, mentioning past successes and a personal initiative to engage global investors when persuading them to anchor expansion in the state.

The plant will leverage Kadapa’s abundant limestone reserves to scale production and sustainability. Clinker capacity is planned to rise from two point five million tonnes per annum (mn tpa) to six point one mn tpa, while overall cement output will increase from three point six mn tpa to nine point six mn tpa. The unit is designed to operate on over eighty per cent renewable energy and deploy waste heat recovery, zero liquid discharge, water recycling and advanced AI systems to optimise efficiency. Industries Minister TG Bharat, BC Welfare Minister S. Savitha and Jammalamadugu MLA C. Adinarayana Reddy attended the ceremony.

Concrete

Cement Prices to Stay Flat in Q2 FY27 as Costs Squeeze Margins

HDFC Securities warns monsoon slowdown and higher fuel costs

Published

1 week ago

July 17, 2026

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HDFC Securities has said the cement industry is unlikely to register a sequential increase in prices in Q2 FY27 as monsoon-related demand moderation coincides with rising fuel and packaging costs that will squeeze margins. The brokerage observed that price gains remained modest, with increases of two to three per cent quarter-on-quarter across regions, and noted subdued offtake in May with improvement in June as a delayed monsoon supported construction activity. The brokerage added that modest pricing gains so far have been insufficient to offset the input cost escalation.

The report stated that input cost pressures intensified in Q1 FY27 owing to the West Asia conflict, which pushed up coal and pet coke prices and is expected to keep fuel costs elevated, with a likely peak in Q2 FY27. It assessed that total variable costs, including packing, could rise by around Rs 150 per t quarter-on-quarter and that lower offtake and seasonal operating deleverage could further raise operating expenditure by about Rs 50 per t quarter-on-quarter.

Overall, cement prices were estimated to remain flat in Q2 FY27 as monsoon-led demand weakness offsets limited upside in realisation, and rising fuel costs alongside seasonal deleverage were expected to compress industry margins by over Rs 100 per t quarter-on-quarter to below Rs 880 per t. The brokerage indicated that the combined impact of energy inflation and higher packing expenditure would be the principal drivers of margin contraction in the near term. HDFC Securities projected a recovery in margins in H2 FY27 should the West Asia turmoil subside and energy and packing costs cool off.

The brokerage expressed optimism on long-term demand fundamentals and said improving realisation together with an anticipated cost cool-off should support a margin rebound from H2 FY27 onward, underpinning favourable industry prospects over the medium term. Its outlook rests on monsoon normalisation and a decline in imported fuel prices in the second half of the fiscal year.

Concrete

Dalmia Bharat Begins Rs 31 Bn Green Cement Unit in Kadapa

New Andhra Pradesh plant to add 9.6 MTPA cement capacity by FY28

Published

1 week ago

July 16, 2026

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Dalmia Bharat Limited recently laid the foundation stone for its second manufacturing unit at Kadapa in Andhra Pradesh. The company will invest Rs 31 billion in developing the next-generation integrated cement manufacturing facility.

The foundation-laying ceremony was attended by Nara Lokesh, Andhra Pradesh Minister for Information Technology, Electronics and Communications, Real-Time Governance and Human Resources Development, along with Puneet Dalmia, Managing Director and Chief Executive Officer, Dalmia Bharat, senior government officials and company representatives.

Scheduled to be commissioned by the third quarter of FY28, the Kadapa unit will become Dalmia Bharat’s largest integrated manufacturing facility in southern India. It will have a clinker production capacity of 6.1 million tonnes per annum and a cement manufacturing capacity of 9.6 million tonnes per annum.

The facility is designed to produce what the company describes as one of the world’s greenest cements. It is also expected to generate approximately 1,000 direct and indirect employment opportunities while supporting local MSMEs, transporters, contractors and service providers.

Lokesh said the investment reflected Dalmia Bharat’s confidence in Andhra Pradesh and aligned with the state’s objective of promoting sustainable industrialisation, job creation and technology-led economic growth.

Puneet Dalmia said the project represented the company’s long-term vision of developing low-carbon cement manufacturing assets. He added that the facility would establish new benchmarks in operational efficiency and sustainability while supporting India’s infrastructure and environmental goals.

Dalmia Bharat will also expand its regional community development programmes in education, healthcare, skill development and welfare through its DIKSHa and Gram Parivartan initiatives.

The company currently has an installed cement manufacturing capacity of 54.7 million tonnes across 19 manufacturing units in 12 states. It is also the first cement company globally to commit to the RE100, EP100 and EV100 initiatives.