Few things are as reliable as cement – a substance that hardens to bind other materials together. But sometimes, even something so durable can be subject to change.
Indeed, the past few years have been eventful for India’s cement industry – particularly in the south, where Bharathi Cement, the flagship brand under the Vicat Group, is the dominant player.
“A rapid consolidation has taken place in the south, which was previously a very fragmented market,” CEO Anoop Saxena tells The CEO Magazine. “The south was operating with 40 players, but the national players did not have a very strong hold on the market.”
What changed was the consolidation of the two major companies. In 2022, Indian conglomerate Adani acquired Swiss company Holcim’s cement assets – Ambuja Cement and ACC – for roughly US$10.5 billion, making it the country’s second-largest cement producer.
“Since 2019, we have consolidated our presence down south.”
Meanwhile, the top producer UltraTech has been simultaneously growing with other acquisitions in the field, such as Kesoram Industries.
“These two companies have analyzed themselves and tried to consolidate their presence in the south. Several companies in the south have been taken over by these companies as a result,” Saxena explains.
“So it was a very challenging situation, which has led to a catastrophe in terms of pricing. Because the only way by which the local players can compete is on price, so as a result, the southern companies are bleeding.”
Stemming the flow
As this weakened position left local operators vulnerable to takeover, Saxena and the entire Bharathi Cement team battled under intense pressure to keep the company both alive and profitable.
But more than that, with France-headquartered Vicat India one of the only remaining international players in the Indian cement market, along with Germany’s Heidelberg Materials, Saxena felt responsible for safeguarding the company’s future amid a fiercely competitive landscape.
His strategy for keeping the company buoyant has been dual-pronged, focusing primarily on cost throughout the value chain through partnerships with firms such as Reitz India, as well as on the crucial area of logistics.
“Since 2019, we have consolidated our presence down south by installing one of our most modern terminals in Coimbatore, which is a gateway to Kerala for us,” he explains.
“Otherwise, serving Kerala at such a long distance, my logistic costs were going beyond US$26.85 per metric ton, which made it very difficult to survive in the market.”
The terminal has a capacity of one million metric tons, drastically changing the company’s capabilities in the region.
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Now, it is looking to Maharashtra, which is fast developing in terms of infrastructure, housing and commercial spaces, creating significant opportunities. Hyderabad, Pune and Mumbai have been Bharathi Cement’s largest growth center for the last three years. As a result, the company is firming up its footprint in these destinations, adding the facilities needed to further fuel its growth.
“We need to be ready to compete in this market, which is only going to grow,” Saxena says.
But expansion will not come at any cost, he stresses.
“We want to know we have sufficient funds in our kitty, that we have a strong balance sheet and that we have good cash flow,” he says.
“This is the right time to put money back into the expansion trajectory, because the group is very particular about the debt–equity ratio and doesn’t want to spend money when our leverage ratios become higher.”
Thinking ahead
Sustainability is another key focus, with Bharathi Cement undertaking some promising trials around calcined clay – the production of which requires significantly lower temperatures than cement.
Translating that into the production line is now the challenge, with Saxena warning that this will take some time. However, the incentives are there, not least the cost efficiencies that come as a result of reduced power costs.
“We want to cut down fossil fuel power generation and increase this sustainable green energy solution. And in order to do that, you have to work on each efficiency parameter of each generation unit,” he points out.
To date, the company has increased its green energy usage to between five and seven percent.
“We are targeting further increases, with my aim to reach 35 percent green energy with our already existing assets by optimization,” he adds.
“We want to cut down fossil fuel power generation and increase this sustainable green energy solution.”
That’s not the only green initiative currently underway.
“We are also aggressively working on replacing coal with waste to generate energy,” Saxena says. “In India, we are the only company substituting fossil fuel with waste, including municipally grown waste.”
It has already achieved a level of 40 percent against a national average of 10–11 percent.
“So we are very much ahead in this. We did a lot of investment on this and we’ll continue to do investment on these sustainable technologies,” he says.
Of course, AI also features in the plan, with Bharathi Cement harnessing the technology to automate its logistical operations in the Mumbai market as well as create a logistics control center in Hyderabad, which will enable the company to track its entire network of trucks, trains and other vehicles as well as dealers using radio-frequency identification technology.
“We are halfway done,” Saxena reveals, adding that he expects it to be complete by December 2026.
“This will showcase it not only to India, but also to the entire group, because this type of automation in logistics is not available in any of the group’s other countries. We are ahead of the competition in this.
“These are the areas where we are working very aggressively, and we are getting results. And this year will see the completion of all these initiatives.”
