Cement makers are buying green power and private ships. Here's why

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Subscribe to enjoy similar stories. Indian cement makers, once reliant on pricing power, are shifting gears to survive a bruising price war that’s eroding margins even as demand climbs. With intense competition cutting into cement prices, manufacturers are pursuing aggressive cost-cutting measures, from buying their own railway cars and ships to slashing energy costs—all in an effort to outlast rivals in an industry facing one of its most competitive eras yet.

Across the sector, there’s a push to reduce production costs per tonne of cement. Some industry players believe the outcome of this cost race could ultimately determine the survivors. “The focus has shifted from pricing to cost and volumes.

In a way, cost could be the decider on who survives the market competition," said Ritesh Shah, head of mid-market research coverage and ESG at Investec, a financial services firm. The shift comes as rising demand fails to prevent declining prices, with fierce competition driving down the industry’s earnings before interest, tax, depreciation, and amortization (Ebitda) per tonne from over ₹1,200 in FY21 to roughly ₹750 in recent quarters. Read this | Is India’s cement sector finally turning a corner? For the cement industry, two of the biggest costs are energy and logistics.

Production is highly energy-intensive, requiring substantial coal and electricity inputs, while logistics costs weigh heavily due to the commodity’s bulk. Together, they make up 60-70% of total costs for cement makers. Cement makers are looking to save an average of ₹200 per tonne, according to analysts.