Indian cement meets both new bridges and broken roads

**Lavika** (0:04)
Today, we will discuss two topics. First, what separated seven giants this quarter? And the second, what happens to the world when America's R&D shrinks? Welcome to The Daily Brief by Zero Dha, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets.
I'm your host, Lavika. Today is Wednesday, 12th August.
Let's start with the first one. Cement sales are evidence of a building going up, a road being laid, or a bridge taking shape. That makes cement one of the more honest windows into actual construction activity in the economy. This quarter, we looked at India's three largest cement makers, Ultratech, Ambuja, and Sri Cement. All three made the same underlying bet. What you sell matters almost as much as how much you sell. They also face the same external shock as the war in West Asia pushed off fuel and freight costs.
Yet, their results moved in very different directions. Ultratech's profit grew comfortably while profits at Ambuja and Sri Cement fell.
So, we looked at what was happening across the three companies, despite them facing broadly the same disruptions. For all three companies, selling more cement was only part of the story. What mattered just as much was what kind of cement they sold, who bought it, and how much they could charge for it. For context, there are two broad ways to sell cement.
Trade sales go through retail dealers, usually in bags, to people building their own homes. These buyers tend to trust brand names and are willing to pay a little more for them.
Non-trade sales go directly to large buyers, where price is usually the bigger consideration. Think contractors, garment agencies, or EPC companies building large projects. But trade versus not trade is really a part of a broader game of getting customers to pay more for every ton you sell.
Ultratec approached that through its brand. Before the quarter began, Ultratec had already completely re-branded the Kesaram and India Cement plants it acquired. These were earlier price like B or C category brands, which typically sell at a discount to premium brands like Ultratec. After the re-branding, Ultratec could charge its own higher prices. What changed this quarter was that the strategy kept working. In simple terms, customer continued to buy Ultratec Cement even after the price went up. Ambuja pushed the same idea through its sales mix.
Trade sales rose from 74% to 78% of total sales, while premium products now make up to 34% of everything it sells through trade. To get there, it deliberately cut lower margin non-trade volumes by 21% year on year, choosing to sell less cement overall, so that the cement it did sell earned more money per ton. Shree, on the other hand, wants to get back to a 70-30 split between trade and non-trade sales, a mix it has spent years building. But this quarter, its mix actually moved the wrong way. This is really a continuation of what we saw in quarter 4 in financial year 26 Ultratech was already getting more out of its acquired plans after rebranding them. Amuja's trade share was moving up towards 74%, while Shree's had fallen to a multi-quarter low.
Quarter 1 only pushed those differences further. Cement demand itself was not the problem. Ultratech said industry demand grew 7-8% during the quarter, and all three companies described demand as healthy or stable. The West Asia tensions did not really hurt cement demand but made cement more expensive to produce. But even that hit showed up very differently across the three companies, depending on what fuel they had, how much they had stocked up, and what they could do to offset the higher costs. Sri was hit the hardest. Cement plants need huge amounts of heat to make clinker, the hard intermediate material that is later ground and blended into cement. That heat usually comes from fuels like coal and pet coke. Pet coke is often preferred because it produces more heat and leaves behind less ash. But pet coke shipment Sri had already contracted for did not arrive, so it had to switch heavily to coal.
Pet coke's share of its fuel mix fell from 54% to just 9%, while coal jumped from 32% to 81%.
That switch affected more than just its fuel bill. Coal leaves behind more ash, which increased impurities in the kill output. That limited how much cheaper blending material like fly ash or slag Sri could use in final cement mix.
The result was more plain cement with less blending. That tends to be sold more through non-trade channels to large bulk buyers where margins are usually lower. And yet, Sri is also the most confident that the worst is already behind it. Management expects things to improve in quarter two, though that depends on something it obviously cannot control, calm holding in the Middle East, and in its own words, calm holding in the mind of the US president. Amuja also felt the war immediately. Management said it added about 110 rupees to the cost of every ton of cement it sold, but Amuja found enough savings elsewhere to more than absorb that hit. It used more cheaper blending material, lowered power costs, and got more cement out of the same amount of clinker. In fact, even after the extra 110 rupees, Amuja's overall cost was still 206 rupees per ton, lower than a year ago. So the war made one part of its cost base worse, but the business as a whole still became cheaper to run.