The Indian market for cement and ready-mix concrete (RMC) has evolved but is still not quite there. CW spoke to a few users to identify what’s missing and the best practices that can help optimise this major expenditure head. Supply disruptions Despite India being one of the largest cement producers globally, there have been instances when production capacities have fallen short of increasing demand, notes Anoop Bhargava, CEO and Director, Empire Centrum. “This supply-demand gap results in availability challenges, price fluctuations and longer lead times for procurement.” Cement shortages in India are seasonal or sometimes caused by the production capacity being impacted by maintenance shutdowns, technological limitations, or regulatory issues, mining restrictions and environmental concerns, points out Anil Reddy, Managing Director, Concorde. To address these challenges, users want the cement industry to focus on enhancing production capacity, improving the logistics infrastructure, addressing regional disparities and ensuring a stable supply of raw materials. Production enhancements are on the cards. “The present pan-India cement grinding capacity is around 590 million tonne (mt) as against the 381-mt demand for cement in FY23,” clarifies Ravleen Kaur Sethi, Associate Director, CareEdge Ratings. “In FY24, the demand is expected to be around 410-420 mt. However, enough headroom is available in all the regional capacities to take care of the incremental demand. As such, there is no major supply-related concern in the cement industry that may impact the infra sectors. With enough capacity available in all regions and more being planned by players to take care of the incremental demand from the infra sectors, the supply side in the medium term is covered.” Coming to RMC, availability is limited in certain locations, which leads to delays, says Reddy. “On top of that, delays due to traffic, logistics or unforeseen circumstances that disrupt schedules and impose additional costs must sometimes be reckoned with.” RMC or onsite mixing? Bhargava estimates that RMC costs approximately 10-12 per cent more than traditional onsite mixed concrete, after factoring in the cost of transportation, production and quality control. “This higher cost can be hard to absorb in small-scale construction projects.” RMC tends to be more expensive than onsite mixing as well as less amenable to customisation, limiting modifications onsite, adds Reddy. The limited scope for customisation in batch manufacturing becomes a constraint for projects that demand unique concrete compositions or specialised admixtures, explains Bhargava. For instance, “we usually use C-25 or C-30 grade cement for the construction of slabs and columns; for plain cement concrete we use C-15 grade and for fast construction or construction in the sea bed we use C-53 grade.” Variations in delivered concrete or between batches also cause issues, adds Reddy. And waste management can become a concern. To address these challenges, Bhargava suggests: “Combine the onsite production of RMC and procurement from outside sources. This diversifies supply sources, ensures reliable and cost-effective supplies and minimises risk.” Reddy points out that for Concorde’s small villa projects like Abode 99, where the pour size was small, the company partially opted for site mix. Other recommendations include carefully selecting your supplier, establishing clear communication channels with your suppliers, and establishing quality control processes. Quality concerns also abound. “Although RMC is known for its consistency and quality, concerns occasionally arise about the standards maintained by some manufacturers,” says Bhargava. So, he lays emphasis on the need to choose reputed suppliers such as UltraTech RMC, Concrete India, ACC Ltd, Unicorn RMC, RDC Concrete (India), etc. Use of alternatives “Using fly ash in RMC can reduce the cost by about Rs 150 per cu m and the need for cement by up to 50 kg in one cubic metre, with no loss of workability or quality of the finished product,” shares Dinesh Singh, Executive Director and Chief - Highways, VRC Group. “The saving from using fly ash in RMC is about Rs 400 per cu m.” Missing products India relies on imports to meet the demand for specialised or high-quality cement varieties used for projects where speed is the essence; for instance, construction in the sea, where the time available for setting is much less than 28 days, etc, notes Bhargava. “Disruptions or delays in imports due to changes in trade policies or international market conditions can disrupt supply.” Users want these issues addressed. Good tidings: cement prices may decline Overall, the demand for cement is expected to remain robust owing to the increased government spend and focus on bulking up heavy infrastructure projects in a pre-election year, according to Ravleen Kaur Sethi, Associate Director, CareEdge Ratings. “We expect to see 8-9 per cent volume growth in FY24.” As for consumer demand, Sethi expects the softening of commodity pressure and inflation to cheer up this segment, which, in turn, will also be favourable for the construction and infra sectors. She doesn’t expect cement prices to witness any large jump amid this softening on the cost side and also the spree among cement players to capture a larger market share given the strong demand scenario. Thus, cement prices for construction companies are expected to largely remain the same or even decline by 1-3 per cent on a year-on-year basis. Tips to get the best prices A hands-on approach can help contain your outlay on cement and RMC. First, focus on gathering intel. “We thoroughly research the market and stay updated on industry dynamics to optimise our cement procurement,” shares Anil Reddy, Managing Director, Concorde. “We monitor cement prices, demand-supply patterns and upcoming regulatory changes. Collaborating with industry associations representing cement buyers can provide access to useful market intelligence and collective bargaining power.” Second, plan well in advance. “Planning procurements in advance and purchasing cement in bulk quantities ensure better pricing arrangements,” advises Reddy. “Planning cement procurements in advance allows for taking advantage of lower prices during periods of lower demand,” adds Anoop Bhargava, CEO and Director, Empire Centrum. “Exploring cost-saving opportunities, such as discounts for early payment or bulk orders, can help optimise pricing.” Incidentally, planning underlies long-term contracts (see next point). Third, think long term. “Long-term contracts help ensure steady supplies and favourable pricing terms during market fluctuations,” says Reddy. “So, for Auriga, we have a long-term contract with Ultratech that has helped us procure RMC at competitive prices with quality assurance and timely service.” Fourth, spread your net far. “We build relationships with multiple reliable suppliers to negotiate better terms; we compare supplier prices and their track record,” continues Reddy. “We consider alternate suppliers such as new entrants, regional suppliers or smaller manufacturers, as they may offer competitive pricing or unique solutions.” Last but not the least, “monitor and optimise the usage of cement to maximise the value obtained from each unit purchase,” advises Bhargava.