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A Quizzical Quarter

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With the cement industry’s combined quarterly earnings in the second quarter of the current financial years reaching its nadir since July-September 2013, the industry is facing tough times. Is this a temporary phase or is it likely to prolong into the next calendar year? ICR analyses various facets of this development to find the answers.

Nearly two years after the Covid-19 pandemic brought the Indian economy to a screeching halt, things are slowly returning back to normal in 2022. Year 2022 was one of reconsolidation for India Inc. While the United States of America is facing a recession, it has resulted directly in the inflow of cash in developing countries such as India, in the form of foreign direct investment. And since the infrastructure is one of the major sectors allowing 100 per cent foreign direct investment [1], it would be expected to boost the entire industry with allied industries such as cement experiencing massive growth. However, it can be noticed that this has yet to happen. In fact, the combined net profits of the top cement companies in India were the lowest in a decade [2] in July-September 2022. The fact that this situation has arisen even after the entry of a wealthy entity such as the Adani Group in the cement sector is even more surprising. So, what exactly does this imply, and what kind of an impact will the weakness of the infrastructure and cement industry have on the overall Indian economy?

Global perspective
Hetal Gandhi, Director – Research, CRISIL Market Intelligence and Analytics, says, “The cascading effect of fuel price hikes and global supply disruptions owing to Russia-Ukraine war in early 2022 has resulted in sharp rise in critical input materials such as coal, oil and gas, which in turn drove cement prices to an all-time high.”
In the light of the above comment, let’s take a look at India’s position on the global level. India is one of the largest players in the global cement industry with over 7 per cent of the total global installed capacity [3]. Within India, about 98 per cent of the total cement production capacity is held by the private sector while the Government only holds 2 per cent. But despite the private sector dominating the cement industry in India, one of the biggest drivers for demand for cement is and always has been the Government. Various infrastructure projects undertaken by the Government of India within the last two years, which include the development of urban infrastructure, commercial real estate, roads, etc., have given a massive boost to the cement sector. In addition to that, the 2022 Union Budget had made allocations worth Rs 4,28,400 crore for various infrastructure-related projects.


Within the time span of 2020 to 2022, the foreign direct investment into manufacturing cement and gypsum-related products reached US$ 5.48 billion. As per Directorate General of Commercial Intelligence and Statistics (DGCIS), India’s export of Portland cement, aluminous cement, slag cement, super sulphate cement, and similar hydraulic types of cement stood at US$ 118.15 million in FY21. India exported cement to countries such as Sri Lanka, Nepal, the US, the UAE, and Bangladesh. In addition to this, within the next 10 years, India is expected to become the main exporter of clinker and gray cement to the Middle East, Africa, and other developing nations of the world [2].
Gandhi points out, “Share of cement in total construction costs varies across segments, with rural housing having the highest share of 15-20 per cent while urban housing and real estate each have a relatively lower share of 5-10 per cent. In infra segment cost of cement as a proportion of overall costs varies from 4-10 per cent. Cement, a key raw material for the construction industry, witnessed a moderate ~3 per cent on-year price growth in H1 FY23 on an already high base (~6 per cent growth compared to same period in 2020). While cement prices had seen relatively moderate price growth, prices of other crucial construction materials like steel, bricks, sand, aggregates, etc. had surged through the roof in 2022 adversely impacting construction demand. Rising material costs impacted launches and completion of projects with many projects getting delayed.”

Market Dynamics
“Cement prices saw a temporary blip in Q3 2022 amidst seasonally lean demand period, however, with peak construction period in H2FY23, cement prices are expected to further increase to abate the impact of high input costs and growing by 4-5 per cent on-year in fiscal 2023, on an already high base of. Despite elevated prices, construction demand to remain strong amidst strong execution in real estate space, higher rural housing shortage and government impetus to infra projects before elections in 2024, driving cement demand growth of 10-12 per cent in FY23,” explains Gandhi.
“Selling and distribution costs, on the other hand, are expected to remain flat this fiscal despite elevated fuel prices. Diesel prices witnessed ~5 per cent on-year growth in H1FY23 on an already high base (~22 per cent growth in H1FY22), however, freight costs to remain stable in current fiscal on back of continued uptick in rail transport and falling lead distances. Further, gradual easing of diesel costs in second half of the fiscal will also limit cost flare-up,” she adds.
The overall cement consumption in India was expected to grow at a CAGR of 5.65 per cent throughout 2016-2022[3]. However, the situation turned out to be vastly different. According to Business Standard, the biggest factor in the reduced margins and earnings for the players in the cement industry was a mix of high operating costs and lower-than-expected volume growth. This has led to the combined profits of 10 of the largest cement manufacturers in India to drop to 71.8 per cent YoY in this quarter. It is important to note that private players dominate the cement industry, as stated above, and even among them, the top 20 companies account for nearly 70 per cent of total cement production in India. Because of this, reduced margins and profits for some of the largest players including Ambuja Cement, Shree Cement, ACC, India Cement, and UltraTech Cement can have implications for the entire sector and the entire economy as well.
So, what should be expected from this turbulence within the sector? Well, the obvious implication is that infrastructure projects undertaken within the country will be affected. This ranges from Government projects on a large scale, to small-scale individual projects. Rural housing demand has been a major driving force in favor of the cement industry in recent years. But even a slight increase in the costs of raw materials can cause that demand to slow down, which would further lead to a negative impact on the economy. The Government, on the other hand, has other options to counter the increase in demand. A large-scale Government project such as the ‘PM Gati Shakti – National Master Plan (NMP)’, or the initiative for the development of 98 smart cities will surely favour the industry and ensure that an evergreen sector such as cement never truly suffers too many losses due to rising demand from such projects.

Optimistic Outlook
Having said that, it is more likely than not that this weak position of the cement industry is only temporary. It is apparent that the drivers behind the demand for cement are still stable and strong, and that the Government is actively pushing for development in all kinds of public infrastructure, as well as providing aid in the development of private infrastructure. Some of the biggest drivers in the sector, roads, and railways, are expecting major expansions in the near future, and cement plants at port ¬¬cities in Gujarat and Vishakhapatnam are also expected to offer other significant boosts to the industry by gaining logistical advantages over the traditional production states such as Andhra Pradesh, Madhya Pradesh, and Chhattisgarh. As far as the fears of the global recession are concerned, it will lead to increased foreign direct investment into developing countries for now. Once the developed countries become attractive for investment again, the increased foreign direct investment will dry up, however, by that point, we will have other advantages to work with. All things considered, the current situation is only a small speed-breaker in the journey toward expansion of the cement industry, and 2023 appears to be good for the economy and every sector therein, especially the ones related to infrastructure, such as cement.

References:
[1] www.dpiit.gov.in
[2] and [3] www.ibef.org

-Aniruddha Bhandare

Concrete

India Sets Up First Carbon Capture Testbeds for Cement Industry

Five CCU testbeds launched to decarbonise cement production

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The Department of Science and Technology (DST) recently unveiled a pioneering national initiative: five Carbon Capture and Utilisation (CCU) testbeds in the cement sector, forming a first-of-its-kind research and innovation cluster to combat industrial carbon emissions.
This is a significant step towards India’s Climate Action for fostering National Determined Contributions (NDCs) targets and to achieve net zero decarbonisation pathways for Industry Transition., towards the Government’s goal to achieve a carbon-neutral economy by 2070.
Carbon Capture Utilisation (CCU) holds significant importance in hard-to-abate sectors like Cement, Steel, Power, Oil &Natural Gas, Chemicals & Fertilizers in reducing emissions by capturing carbon dioxide from industrial processes and converting it to value add products such as synthetic fuels, Urea, Soda, Ash, chemicals, food grade CO2 or concrete aggregates. CCU provides a feasible pathway for these tough to decarbonise industries to lower their carbon footprint and move towards achieving Net Zero Goals while continuing their operations efficiently. DST has taken major strides in fostering R&D in the CCUS domain.
Concrete is vital for India’s economy and the Cement industry being one of the main hard-to-abate sectors, is committed to align with the national decarbonisation commitments. New technologies to decarbonise emission intensity of the cement sector would play a key role in achieving of national net zero targets.
Recognizing the critical need for decarbonising the Cement sector, the Energy and Sustainable Technology (CEST) Division of Department launched a unique call for mobilising Academia-Industry Consortia proposals for deployment of Carbon Capture Utilisation (CCU) in Cement Sector. This Special call envisaged to develop and deploy innovative CCU Test bed in Cement Sector with thrust on Developing CO2 capture + CO2 Utilisation integrated unit in an Industrial set up through an innovative Public Private Partnership (PPP) funding model.
As a unique initiative and one of its first kind in India, DST has approved setting up of five CCU testbeds for translational R&D, to be set up in Academia-Industry collaboration under this significant initiative of DST in PPP mode, engaging with premier research laboratories as knowledge partners and top Cement companies as the industry partner.
On the occasion of National Technology Day celebrations, on May 11, 2025 the 5 CCU Cement Test beds were announced and grants had been handed over to the Test bed teams by the Chief Guest, Union Minister of State (Independent Charge) for Science and Technology; Earth Sciences and Minister of State for PMO, Department of Atomic Energy, Department of Space, Personnel, Public Grievances and Pensions, Dr Jitendra Singh in the presence of Secretary DST Prof. Abhay Karandikar.
The five testbeds are not just academic experiments — they are collaborative industrial pilot projects bringing together India’s top research institutions and leading cement manufacturers under a unique Public-Private Partnership (PPP) model. Each testbed addresses a different facet of CCU, from cutting-edge catalysis to vacuum-based gas separation.
The outcomes of this innovative initiative will not only showcase the pathways of decarbonisation towards Net zero goals through CCU route in cement sector, but should also be a critical confidence building measure for potential stakeholders to uptake the deployed CCU technology for further scale up and commercialisation.
It is envisioned that through continuous research and innovation under these test beds in developing innovative catalysts, materials, electrolyser technology, reactors, and electronics, the cost of Green Cement via the deployed CCU technology in Cement Sector may considerably be made more sustainable.
Secretary DBT Dr Rajesh Gokhale, Dr Ajai Choudhary, Co-Founder HCL, Dr. Rajesh Pathak, Secretary, TDB, Dr Anita Gupta Head CEST, DST and Dr Neelima Alam, Associate Head, DST were also present at the programme organized at Dr Ambedkar International Centre, New Delhi.

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Concrete

JK Lakshmi Adopts EVs to Cut Emissions in Logistics

Electric vehicles deployed between JK Puram and Kalol units

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JK Lakshmi Cement, a key player in the Indian cement industry, has announced the deployment of electric vehicles (EVs) in its logistics operations. This move, made in partnership with SwitchLabs Automobiles, will see EVs transporting goods between the JK Puram Plant in Sirohi, Rajasthan, and the Kalol Grinding Unit in Gujarat.
The announcement follows a successful pilot project that showcased measurable reductions in carbon emissions while maintaining efficiency. Building on this, the company is scaling up EV integration to enhance sustainability across its supply chain.
“Sustainability is integral to our vision at JK Lakshmi Cement. Our collaboration with SwitchLabs Automobiles reflects our continued focus on driving innovation in our logistics operations while taking responsibility for our environmental footprint. This initiative positions us as a leader in transforming the cement sector’s logistics landscape,” said Arun Shukla, President & Director, JK Lakshmi Cement.
This deployment marks a significant step in aligning with India’s push for greener transport infrastructure. By embracing clean mobility, JK Lakshmi Cement is setting an example for the industry, demonstrating that environmental responsibility can go hand in hand with operational efficiency.
The company continues to embed sustainability into its operations as part of a broader goal to reduce its carbon footprint. This initiative adds to its vision of building a more sustainable and eco-friendly future.
JK Lakshmi Cement, part of the 135-year-old JK Organisation, began operations in 1982 and has grown to become a recognised name in Indian cement. With a presence across Northern, Western, and Eastern India, the company has a cement capacity of 16.5 MTPA, with a target to reach 30 MT by 2030. Its product range includes ready-mix concrete, gypsum plaster, wall putty, and autoclaved aerated fly ash blocks.

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Concrete

Holcim UK drives sustainable construction

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Holcim UK has released a report titled ‘Making Sustainable Construction a Reality,’ outlining its five-fold commitment to a greener future. The company aims to focus on decarbonisation, circular economy principles, smarter building methods, community engagement, and integrating nature. Based on a survey of 2,000 people, only 41 per cent felt urban spaces in the UK are sustainably built. A significant majority (82 per cent) advocated for more green spaces, 69 per cent called for government leadership in sustainability, and 54 per cent saw businesses as key players. Additionally, 80 per cent of respondents stressed the need for greater transparency from companies regarding their environmental practices.

Image source:holcim

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