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AFR supports circular resource use

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Saurabh Palsania, Joint President, Shree Cement, discusses pragmatic pathways to decarbonisation using AFR, and the pressing challenge of India’s fragmented waste ecosystem.

For Shree Cement, alternative fuels and raw materials (AFR) is a strategic lever that sits at the intersection of operational efficiency, regulatory compliance, and long-term cost resilience. In this conversation, Saurabh Palsania, Joint President, Shree Cement, speaks candidly about supply chain challenges of scaling AFR across plants, the role of government policies, and what it will realistically take for the Indian cement industry to push Thermal Substitution Rates (TSR) toward the 30 per cent mark over the next decade.

How does AFR fit into your company’s long-term decarbonisation and cost optimisation strategy?
Alternative fuels and raw materials (AFR) are non-fossil substitutes that replace conventional fuels such as coal and pet coke in cement production. By utilising waste from industries, municipal bodies, and agricultural sources, AFR helps reduce dependence on fossil fuels and supports circular resource use. This approach contributes directly to lowering carbon emissions while also improving long-term cost efficiency by reducing reliance on conventional energy sources. As a result, AFR forms a key pillar of both decarbonisation and sustainable cost optimisation strategies.

What operational or technological challenges have you faced in scaling AFR usage across plants, and how have you addressed them?
One of the biggest challenges in India’s waste management ecosystem is the lack of segregation at source, which affects the quality and consistency of waste streams. Even after procurement, significant pre-processing is often required before the material can be effectively used. Operationally, fluctuations in calorific value and the absence of precise measurement systems for waste quality and quantity can create instability in kiln feeding and impact production efficiency. In addition, high ash and chloride content in certain waste streams limits usability.
These challenges are being addressed through stronger pre-processing practices, better quality control, and optimisation of AFR blends with conventional fuels to maintain consistent kiln performance and product quality.

How do you balance clinker quality, kiln stability, and emission norms while increasing AFR substitution rates?
Clinker quality remains stable when AFR usage is supported by robust monitoring and process control systems. Regular sampling of ash and chloride levels helps optimise AFR consumption while maintaining raw mix balance and kiln stability. Modern cement plants are equipped with Electrostatic Precipitators (ESPs), which enable efficient recirculation of unburnt particles into the production process. With kiln temperatures exceeding 1300°C, most harmful compounds are effectively neutralised, ensuring compliance with emission norms, including the control of dioxins and furans. This allows higher AFR substitution without compromising product quality or environmental compliance.

What role do policy frameworks and regulatory support in India play in accelerating AFR adoption, and where are the gaps?
Government policies, particularly from the Ministry of Environment and Forests, have played an important role in supporting AFR adoption through frameworks such as the ‘polluter pays’ principle and Extended Producer Responsibility (EPR). However, implementation challenges remain, especially around cost structures, enforcement, and consistent access to quality waste streams. The development of centralised digital platforms for tracking EPR credits is a positive step, but stronger policy support for waste segregation at source, both industrial and municipal, is still essential. Improved enforcement and better waste management systems will be critical to accelerating AFR adoption at scale.

How are you building supply chain ecosystems for consistent and quality AFR sourcing in a fragmented waste market?
Ensuring reliable AFR sourcing requires strong partnerships with waste generators, including municipal corporations and industries. Participation in waste auctions, along with direct collaborations, helps secure a steady supply of usable material. At the same time, tie-ups with pre-processors are essential to improve waste quality and prepare materials for efficient co-processing. This combination of direct sourcing and pre-processing partnerships helps build a more reliable, scalable and quality-driven AFR supply chain.

Can digitalisation and process optimisation unlock higher TSR, and what innovations are you investing in?
Digitalisation and process optimisation are critical to improving TSR. Advanced control systems in Central Control Rooms (CCR) help monitor equipment performance, operational parameters, and AFR feed rates in real time, enabling better operational control. Investments are also being made in intelligent systems that improve AFR feeding precision and optimise clinker production. These innovations support faster decision-making, better operator control, and improved process efficiency, all of which are essential for scaling TSR sustainably.

What is your realistic TSR target for the next 5–10 years, and what will it take for the industry to get there?
Currently, TSR levels across the industry range from five to 30 per cent. Over the next five years, this is expected to increase to 15 to 40 per cent, with an average target of around 30 per cent over the next decade. Achieving this will require sustained investments in training, process adaptation, and stronger collaboration between waste generators and co-processors. Improvements in waste segregation, pre-processing technologies, and fuel quality enhancement will also play a major role in enabling higher and more consistent TSR adoption across the industry.

  • Kanika Mathur

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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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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