As India’s expenditure on infrastructure grows, cement companies are adopting different strategies to attract a share of the rise in demand.
Expanding the network of large buyers, entry into ready-mix cement, and catering to a niche of blended cement are some strategies being considered.
While UltraTech Cement dominates this segment, each large producer is shaping up strategies to tap into it.
Infrastructure contributed 24 per cent of India’s cement demand in FY23 and is expected to witness higher growth rates than demand in some other areas in the next three financial years, according to estimates of cement companies.
Adani Cement is planning to expand its ACC ready-mix network, and develop stronger large-buyer sales to tap into the demand generated by India’s growing infrastructure needs.
“Thirty per cent of our demand will come from large buyers. That might happen two-three years down the line,” said an executive from Adani Cement, the second-largest cement producer in the country.
The executive added: “As we aspire to increase our capacity from 67.5 million tonnes to 140 million tonnes, we cannot realise that ambition without servicing the infrastructure segment.” The share of large buyers at present for Adani Cement is around 20 per cent.
Ready-mix cement is another segment that companies are expanding into. In July, Shree Cement announced its entry into ready-mix cement, with plans to set up five such units this financial year. “Some large projects have their own ready-mix cement units while others may not have them. Ready-mix cement will typically cater to large projects that outsource the concrete. It may be builders, individual home builders as well as projects like metro and roads,” said Prashant Bangur, vice-chairman of Shree Cement. Ready-mix cement refers to concrete that is ready to use and does not require any additional processing on site, making it ideal for projects with space constraints.
In August, Nuvoco Vistas Corp announced setting up two ready-mix cement units, one each in Mumbai and Pune, which, the company said, would help leverage “Mumbai’s significant infrastructure transformation and Pune’s impressive expansion in the construction domain”.
Certain others such as Dalmia Cement are aiming to supply more infrastructure projects in the sub-category of blended cement. Top executives of the company told analysts in its earnings call in July the National Highways Authority of India and other important projects had started using blended low-carbon cement on account of carbon awareness. The company is going to increase its share only in blended low-carbon cement. Blended cement refers to cement manufactured through blending clinker with other materials such as slag and fly ash, reducing its carbon content. However, not everyone is sure of a market for blended cement.
“Ordinary Portland cement is the major cement type for infrastructure companies. Cement firms are looking at blended cement from an ESG point of view, but cost is the main factor in the large buyer segment for infrastructure,” said an analyst with a domestic brokerage firm.