India’s infrastructure growth ambitions could be held back by a limited pool of large-scale engineering, procurement and construction (EPC) contractors and outdated construction methods, warns Parth Jindal, managing director, JSW Cement.
In a recent interaction, Jindal said that while the Indian economy has the potential to grow faster than 7%, one of the major stumbling blocks is the lack of sufficient high-quality EPC players. “Whenever we try to build a factory, my team always comes back and says, there’s only L&T,” Jindal said, stressing the urgent need for at least 10 to 20 L&T-like firms to support India’s infrastructure and industrial ambitions.
Jindal pointed out that while companies like Tata Projects, KEC International, and J Kumar Infra are stepping up, the broader industry still relies heavily on manual labour. “We are still pouring cement and bending TMT bars manually,” he noted, adding that a shift to mechanised civil work, akin to practices in China and other advanced economies, is essential for speeding up project execution.
“Today, it takes longer in India to build a road or a building compared to China,” he said. “It is improving, but it can be much faster.”
Jindal blamed lack of large EPCs to sales realization in the cement sector. He said that sales realisations in cement have declined for the past two years. The 10-year CAGR in cement prices in India is less than 1%, which he says, is a serious concern.
“Despite cost-saving measures, the benefits have been passed on to customers, and EBITDA margins remain stagnant compared to a decade ago,” says the MD of JSW Cement, whose initial public offer opened for subscription on Thursday. The IPO, which is priced at Rs 139-147, got subscribed 29% on the first day. The retail investors’ portion got subscribed 36% on the first day.
Meanwhile, Jindal says though there’s no direct impact of the 50% US tariffs on Indian exports, the move has dented market sentiment. “The impact will mostly be on gems and jewellery, textiles, toys and auto components,” he said. “But sentiment matters.”