With increasing demand from rural, public infrastructure and enabled by the government’s impetus on infrastructure, the cement industry in India is growing.

With the macro-factors primed for bringing a new phase of growth in the cement segment, Qwixpert has identified key trends that companies should be cognizant of:

• Asset utilisation is key in cement industry due to high CapEx: Since mines are on lease basis for limited period and heavy-duty expensive machinery is used for transportation and crushing activities; the utilisation of asset in both extraction and production process are key to maximise value. Interventions targeting line balancing from the mining activity, transportation, crusher to the kiln can yield healthy bottom-lines. With healthy growth forecasts for the industry, the importance of improving capacity utilisation (from median 75%) can generate better returns. Qwixpert has experience in helping companies plan production around bottle neck processes in order to enhance the overall productivity of the system.

• Strong focus on logistics cost reduction prevalent across the sector: Compared to traditional consumer goods, pharma etc. the share of logistics cost in revenue (~25% in cement) is 5 -8x more. Transporting a low-value but bulky material over long distances is challenging and requires large fleet size, diligent planning of dispatches and careful balance of inventory levels. Through government support of cement corridors, measures taken such as integrated plants, optimising fleet usage and network design to identify right location for nodes, we believe there are multiple levers for realising savings in logistics. Qwixpert has a strong portfolio in logistics cost reduction. We have designed the entire outbound network for a large manufacturer consisting of Logistics, warehousing and inventory strategy. Our solution focused on reducing multiple handlings, increasing share of long-haul direct dispatches to customers and recommending larger truck sizes that can increase utilisation rates. 8% reduction on supply chain cost was unlocked through this engagement. In another engagement, Qwixpert undertook route-optimisation of dispatches from warehouse to customer (Dealer) by identifying the right routes for milk-run, planning for fleet requirement during peak and non-peak months and vendor negotiations.

• Input material availability and inflationary pressure: Apart from the challenge of inbound logistics with material such as coal, limestone that are produced in specific geographies and are transported for ~700 kms to integrated units; the challenge of surges in input prices and shortages of raw material also threaten margins. Increase in coal and crude oil prices due to geopolitical disruptions had previously resulted in a ~10% decline in margins (H1FY23). By exploring low-cost additives or alternate fuel sources, reusing and reducing wastages in raw material and by establishing long-term contracts or vertical integrations, companies can counter the challenges of input price volatility. Product innovations like blended and premium products can also help with margin pressures.

The favourable growth projections makes this an ideal time to invest in capacity expansion and other expansion projects; but for long term value generation, cost-reduction and efficiency improvement measures are important. Qwixpert has experience in doing just that. Let us help you get healthy bottom lines while helping you realise your growth ambitions.