Concrete

A Balancing Act

Published

3 years ago

June 12, 2023

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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.

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Cement Makers Reaffirm Commitment to Sustainable Growth

Published

7 days ago

June 5, 2026

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World Environment Day spotlight on innovation and circularity

On World Environment Day, the Indian cement industry reiterated its commitment to supporting India’s climate ambitions through sustainable manufacturing, resource efficiency and the adoption of cleaner technologies.

The Cement Manufacturers’ Association (CMA) said the sector remains aligned with the Government of India’s Net Zero commitments and is accelerating efforts to reduce its environmental footprint while supporting the country’s infrastructure and development agenda.

Parth Jindal, President, CMA and Managing Director, JSW Cement, said the industry is increasingly adopting cleaner technologies, improving energy efficiency and expanding the use of alternative fuels and raw materials. He also highlighted the growing importance of circular economy practices, where industrial by-products and waste streams from one sector are utilised as resources in another.

“The Indian Cement Industry is aligned to the Government’s commitments on carbon mitigation and is accelerating the adoption of cleaner technologies, resource efficiency and circular economy practices while actively exploring the potential of Carbon Capture, Utilisation and Storage (CCUS) as a critical pathway for deep decarbonisation,” said Jindal.

He added that coprocessing industrial waste and by-products helps conserve natural resources, reduce disposal requirements and lower the environmental footprint across multiple sectors.

According to Jindal, sustainability is no longer limited to manufacturing processes but is increasingly influencing investment decisions, innovation strategies and long-term growth plans within the industry.

Echoing similar views, Dr Raghavpat Singhania, Vice President, CMA and Managing Director, JK Cement, said sustainable development extends beyond emissions reduction and must also focus on responsible resource utilisation and waste minimisation.

“Sustainability in the built environment cannot be measured by emissions alone. It is equally about how efficiently we use resources, how effectively we minimise waste and how responsibly we create the infrastructure that will serve future generations,” said Singhania.

He noted that the cement industry is advancing its sustainability agenda through greater resource efficiency, increased circularity, technological innovation and continuous improvements in manufacturing practices. As a key contributor to India’s infrastructure development, the sector has a critical role to play in balancing economic growth with environmental responsibility.

On the occasion of World Environment Day, industry leaders reaffirmed their commitment to supporting India’s climate goals while delivering the materials required for resilient, durable and sustainable infrastructure.

Concrete

Building a Greener Future Together

Published

1 week ago

June 4, 2026

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Environmental sustainability requires immediate action, not just long-term commitments and discussions. Recycling, circular economy practices, and technology-driven waste management can help industries reduce environmental impact while supporting sustainable growth.

Author: Jignesh Kundaria, Director and CEO, Fornnax Technology

World Environment Day serves as an important reminder that environmental sustainability can no longer remain confined to discussions, reports, or long-term commitments. The environmental challenges facing the world today demand immediate, measurable, and collective action. Across industries and communities, waste generation continues to outpace our ability to process it responsibly, placing increasing pressure on ecosystems, natural resources, public health, and the well-being of future generations.

One of the most significant shifts required today is a change in how society perceives waste. Rather than being viewed as a material to be discarded, waste must be recognised as a valuable resource that can contribute to both economic growth and environmental protection when managed through the right technologies and systems. This mindset forms the foundation of the circular economy model that countries across the world are increasingly adopting to reduce landfill dependence, recover valuable materials, and create more sustainable industrial ecosystems.

India has made meaningful progress in strengthening awareness around sustainability, recycling, and environmental responsibility over the past decade. Significant efforts are being made to formalise the recycling sector through improved infrastructure, technology adoption, policy implementation, and broader stakeholder participation. These developments are creating a stronger foundation for responsible waste management and resource recovery across the country.

However, achieving long-term environmental impact requires collaboration from all stakeholders. Industries, policymakers, technology providers, and communities must work together with greater accountability to strengthen recycling ecosystems, encourage responsible waste management practices, and create sustainable outcomes through consistent execution rather than temporary interventions.

As someone closely associated with the recycling industry, I firmly believe that technology will play a decisive role in addressing future environmental challenges. Advanced recycling systems have the potential to recover valuable resources, reduce pollution, minimise landfill burdens, and conserve energy, creating a more sustainable future for generations to come. This belief is deeply reflected in Fornnax’s motto, “Committed to Create a Green Future,” which embodies our commitment to building long-term environmental value through innovation and responsible action.

At the same time, technology alone cannot deliver meaningful change. Real progress requires intent, awareness, participation, and a shared sense of responsibility. Sustainable development can only be achieved when innovation is supported by collective action and a genuine commitment to environmental stewardship.

On this World Environment Day, let us move beyond conversations and take meaningful steps towards creating a cleaner, greener, and more sustainable planet. By embracing innovation, strengthening recycling ecosystems, and acting responsibly today, we can create lasting environmental impact and secure a better future for generations to come.

Concrete

JK Lakshmi Advances LC3 Cement Expansion

Company highlights commercial production and research partnerships

Published

1 week ago

June 1, 2026

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The meeting reviewed progress in limestone calcined clay cement (LC3) technology and its commercial adoption in India’s cement sector, focusing on low-carbon alternatives to conventional binders. JK Lakshmi Cement noted that limestone calcined clay cement can reduce carbon dioxide emissions by up to 40 per cent compared with conventional cement and said this reduction supports industry decarbonisation. The company highlighted that it was among the first two cement manufacturers in India to move LC3 into commercial production after the Bureau of Indian Standards approved the technology as a cement standard.

Vinita Singhania said the transition of LC3 from research to commercial production reflected collaboration between industry, academia and international institutions. Maya Tissafi acknowledged JK Lakshmi Cement’s role in advancing LC3 adoption in India and its contribution in taking the technology from laboratory trials to commercial implementation. Both representatives underlined the growing relevance of sustainable construction materials as India expands infrastructure and urban development.

The meeting explored continued collaboration with Swiss research institutions such as EPFL, EMPA and ETH Zurich alongside Indian academic partners and development organisations. JK Lakshmi Cement has been associated with the LC3 initiative since 2014 and worked with EPFL, IIT Delhi, IIT Madras, Development Alternatives and Technology and Action for Rural Advancement. The company conducted one of the earliest industrial trials of LC3 and recently announced commercial production of Green Pro LC3 cement from its Jaykaypuram plant in Rajasthan.

India remains the world’s second-largest cement producer and expansion of infrastructure, urbanisation and housing demand continue to support long-term sector growth, increasing interest in low-carbon technologies. The company reported an annual turnover of more than Rupees (Rs) 60 bn and current cement capacity of about 18 million (mn) tonnes (t) per annum, with a target of reaching 30 million (mn) tonnes (t) by 2030. Apart from grey cement, the company also makes ready-mix concrete, gypsum plaster, wall putty, primers, adhesives and fly ash blocks, and both sides concluded on the need for continued collaboration to develop sustainable construction solutions.