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A Balancing Act

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As the Indian cement sector grapples with the paradox of turnover growth and decreased profitability, ICR explores the reason behind this phenomenon.

As per an estimate by CareEdge Research, India’s cement production ranged between 380-390 million tonnes in FY23, docking a growth rate of 8-9 per cent y-o-y. This growth in production is spurred by increased demand and this will continue in FY24, too, thanks to the upcoming general elections. However, that does not ensure higher profit margins. As is seen in the economic analysis, although cement production and consumption grew by 11 per cent in FY23 in the period from April to November on a year-on-year (y-o-y) basis, the EBITDA margins of cement players declined by almost 10 per cent y-o-y in H1FY23. Price hikes in per bag of cement failed to tackle inflation, resulting in cement companies grappling with restricted profit margins. This unprecedented anomaly has got trade pundits to reconsider the dynamics of the cement industry.
The cement players were not able to pass the input cost escalation entirely, which impacted the EBITDA margins in H1FY23. The power and fuel costs were expected to remain elevated in the near term due to concerns about global supply while the price hikes may not be sufficient to cover the elevated costs, thereby adversely impacting margins. The profit margin of the cement companies were expected to decline by 400-500 bps in FY23.
Cement is a cyclical industry, which means that fluctuations in the economy tend to adversely affect profitability. This has resulted in cement players facing the antithesis of high turnover and low profitability. This can be attributed to some of the major causes such as input costs and logistics cost that eat into the revenues. Let’s backtrack a little to the last quarter of the previous financial year to look at how trends have progressed in order to get a clear perspective of the current situation.

Taking Stock
As per a report by CareEdge Ratings, the operating profit margins of cement contracted by 320-380 basis points to 16.3-16.8 per cent in FY23 as input cost pressures remained constant. The surge in power and fuel costs as well as the escalation of limestone prices affected the cement margins considerably. But this trend changed as markets have witnessed a stabilisation of coal prices. A Motilal Oswal Financial Services report states, “As per our calculations, the average spread for cement companies should improve by ~INR300/t based on spot coal/petcoke prices and most of the benefits will start reflecting in Jun’23, as per companies’ commentaries, as they are carrying high-cost coal inventory.
“Current spot prices of US/Saudi Arabia petcoke and South African coal are at similar levels of 1QFY22 average. Though domestic pet coke prices seem to be higher than imported pet coke prices, we expect a reduction in domestic petcoke prices in coming weeks. Recently, IOCL reduced the petcoke price by 4-9 per cent on 23rd May’23 (total reduction of 11-17 per cent in May’23),” stated the report.
The favourable trend of fuel and raw material prices that the cement sector has witnessed is yet to reflect on the profit margins. However, input costs are not the only parameters affecting profitability of cement.

Demand Surge
One of the major highlights of the pre-election period in India is speedy mobilisation of infrastructure projects across the country. The Central Government is focussed on completion of major projects including the affordable housing schemes. This has called for a boost in demand for cement. So far expert analyses have predicted that Indian cement companies are geared up to meet the as cement supply is marginally surpassing projected demand. However, cement demand has been surging since FY23 itself as India’s cement production and consumption each grew 11 per cent year-on-year (YoY), according to a report by CareEdge.
In this tug-of-war between cost inputs and rise in demand, the former had an upper hand, resulting in lower margins for the cement companies. Although the demand is surging, it is not enough to battle the high input costs, especially of fuel, thereby being detrimental to the profit margins of cement companies. So, where does cement price figure in all of this?

Pay the price
It is a common practise for cement makers to hike prices for end-users during certain peak periods across the year. The pricing vastly differs in different states as cement is basically a sectoral industry. Depending on the location of the cement plants and the logistics expense, price per cement bag differs from state to state. Additionally, on a sectoral
level, pan-India brands have to compete with local ones and pricing becomes an important distinguishing factor. From an end-user’s perspective, cement as a product largely remains the same and there is no brand loyalty, therefore, price becomes an all-important factor.
While cement companies tried increasing price per bag in February-March 2023, these hikes did not translate into actual revenue for a number of reasons. Most of the hikes metamorphosed into discounts, price cuts or incentives, given the tough competition. So, when you look at the bigger picture of cement pricing across India, the last two quarters of FY23 saw a flat graph, with occasional negative dipping.
This meant that cement companies were unable to pass on the input costs to the consumer and had to internalise the same, resulting in negatively impacted bottom lines.
To summarise, the Indian cement sector is witnessing a rise in turnover due to robust demand fuelled by infrastructure projects and real estate development. However, profitability is being hampered by escalating input costs, rising costs of logistics and last mile connectivity, the inability to pass on the entire burden to consumers and intense market competition. However, the outlook remains positive as cement companies are already operating on the background of a sturdy turnover and the demand only going to increase going forward. Margin corrections will take place eventually as other factors fall in line, making FY24 a profitable year for cement. This forecast has kept the sector’s outlook positive, with sustained demand growth anticipated in the coming months, which could support improved profitability in the long run.

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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