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Overview of Indian aggregate industry

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ICR shall be publishing a series of six articles starting from this month to cover the subject of aggregates. Manufactured sand is one subset of aggregates. Cement is used as a binder with aggregates. The aggregate industry in India is an unorganised sector and undergoing a lot of changes, which were long pending, writes Sanjay Nikam, a founding member of the Aggregate Association of India.


Sanjay Nikam

Aggregate is very important building material for construction industry. Aggregate includes coarse aggregate, river sand and gravel, M-sand and aggregate for other applications. Other applications includes road base, railway ballast, soling, pitching and coastal applications. Majority of aggregates find routes in which aggregates are combined with other materials such as cement and bitumen to be used in the construction industry. Aggregates going through the cementation route is the largest user segment for aggregates and is easy to estimate as cement consumption data is well recorded and available.

Aggregates consumed in this application are typically six to eight times of the cement consumption. Adding the consumption through the other routes the overall aggregates consumption factor will be around nine to 10 times the cement consumption. In this article, we will see overview of aggregate industry in India, which include broad trends and evolution of technology.

Broad trends

Globally, India is the largest aggregates market after China, it continues to grow fast and is structurally transforming. In the absence of official statistics, the current estimated size of the market is around 3.4 billion tonne. The overall aggregates market is growing at a higher CAGR than cement over the past five years and should continue the same trend going forward on account of the government?? infrastructure thrust on expanding road and rail network.

Aggregates market in India is fragmented with more than 12,000 family businesses with small quarries and low capacity plants, dominated by local players and has very minimal presence of organised players. Every State in India has unique market and is driven by local conditions. Even royalty rules are not uniformly implemented and every state has different royalty rates/ways of collecting royalty. State-to-state sand dredging regulations are also different in India.

There are a few local aggregate manufacturers??associations in scattered clusters mainly involved in addressing cluster specific issues. However, there is no national level aggregates association for raising the standards of the Indian aggregates industry.

At present, aggregates industry in India is fragmented with low capacity plants and lack of organised players. Due to poor implementation of Health, Safety & Environment (HSE) rules by regulators, HSE standards are at nascent stage. In the past, small players were breaching HSE norms easily.However now, consequences for injuries, fatalities and breaching environmental norms are far more serious than before. With the implementation of labour laws and minimum wages act becoming stricter it will erode the competitive position of local unorganised small players who have been flouting these rules to cut costs.

As cities are growing outwards, old quarries near the city borders are finding it difficult to operate due to noise, dust and blasting issues. Simultaneously, the jump in real estate value makes existing quarry locations an attractive destination for real estate development. Both these factors exert pressure on present owners to shut the quarries and shift away from the cities.

The Indian aggregates industry is changing fast with the entry of organised players. This is happening due to the growth of RMC industry and large infrastructure projects demanding high/consistent quality aggregates and higher volumes. Urbanisation is growing at a fast rate. The proportion of urban population, which is expected to reach 30 per cent of the total population by 2020, is slated to grow further and reach 40 per cent by 2041. In fact, as per the UN Atlas of Urban Expansion, India is going to lead the world in urban growth by adding 416 million people in urban area by 2050. Thus to cater to the urban demand, major cities in India will require good quality, high volume building construction materials. Also, the compliance norms are bound to become more stringent.

Fulfilling all these parameters is difficult for local aggregate players; thus, there is an opportunity for the organised players to make an entry in the aggregate business.

In developed countries, most of the leading and successful cement players have cement, aggregates and RMC businesses and they are vertically integrated. Though India is still a developing country, some major cities of India resemble global developed countries to an extent and will have similar opportunities for leading cement companies.

Evolution of technology for aggregates

In the 1980s most aggregate crushers were of small capacities between 3 to 25 TPH. They were mostly jaw crushers with rotary screens, which were not technically up-to-date and their products were of lower quality.

However, due to initiatives of the Ministry of Surface Transport & Highways in introducing higher quality standards in 2000, aggregates were required to have flakiness and elongation index of not more than 30 per cent. In fact, the latest revision to IS383 published in 2016 limits the combined flakiness and elongation index to a maximum of 40 per cent and aggregate crushing and impact values to 30 per cent (for non-wearing surfaces) and 45 per cent (for wearing surfaces). Since, existing technology was not able to meet these new demands of quality and/or quantity, transition was made to mid-sized capacity plants (50 to 150 TPH) by introduction of cone and impact crushers. These changes incentivised the crusher/screen manufactures to innovate and design the plants to meet the market requirements.

In the last decade, with the government?? thrust on large infrastructure projects such as golden quadrilateral, express highways, airports, freight corridors, etc., the demand of high quantities of aggregates resulted in higher capacity plants ranging 200 to 350 TPH. This trend of higher capacity plants continued in commercial aggregates industry also. Enforcement of all statutory compliance are not uniform. There are many challenges for organised/responsible players to enter into long term commercial aggregates business.

One more development during the last decade was that a few States in India started restricting dredging of river sand. Due to this, crushing technology had to evolve to make good quality manufactured sand. This opened the door for advanced manufactured sand technologies made available by Terex, KEMCO (Japan), BHS (Germany), CDE (Ireland), who are globally the best technology provider.

ABOUT THE AUTHOR:

Sanjay Nikam holds a degree in Mechanical Engineering and a post graduate diploma in management. Has more than 20 years of experience in the field of ready-mixed concrete including aggregates. He has extensive exposure to international aggregate business, and presently heads a consultancy organisation since 2016. He can be reached at: suru0913@gmail.com.

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Concrete

Lokesh Lays Stone For Rs 31 Billion Cement Unit In Kadapa

Line-2 expansion to make Kadapa a major cement hub

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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.

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Concrete

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

HDFC Securities warns monsoon slowdown and higher fuel costs

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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.

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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

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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.

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