Monday, September 25, 2017

Special Feature - Readymix Concrete & Equipment

Churning challenge

 

 

SHALINI AMARNANI attempts an overview of the readymix concrete and equipment business

 

India’s construction industry is experiencing depressed growth, with players involved in key infrastructure projects and developers in the commercial and residential property space struggling cope to due to difficulties in land acquisition and securing environment clearances.  Delayed projects have led to subdued performance of the ready mix concrete market. CRISIL Research estimates that during 2008-09 to 2012-13, the all India RMC market expanded at a healthy 24 per cent CAGR to reach Rs 261 billion, which translates into a demand of about 69 MCM (million cubic meters).

 

However, the overall economic slowdown, sluggishness in construction activity, liquidity crunch and policy hurdles resulted in subdued RMC demand growth through 2012-13, affecting the industry in terms of reduced production volumes and cash flows.

 

With the main raw material for producing ready mix concrete being cement the periodic fluctuations in cement prices and higher transportation costs due to fuel price rises impacted the price realisation for the sector. Cement is one of the chief agents in ready mix concrete and in the coming years the Readymix Concrete industry is likely to consume more than 5 per cent of the cement produced from the current levels of around 3 per cent.

 

Now with the general elections around the corner, all new developmental activities have come to a standstill.

 

But there also lies promise ahead since India’s infrastructural growth needs requires it to pick up soon after with the new incumbent government comes in. Admittedly therefore market leaders are gung ho about the prospects for the business in the coming days. The increased use of RMC is expected to encourage  players like Ultratech, Lafarge, Holcim, Heidelburg etc to add to their product portfolio besides putting in place a well spread network of RMC plants across the country, and boosting production capacity levels at existing manufacturing facilities to keep up with the expected demand. 

 

Prabir Ray, Head- Ready Mix Concrete, Building Products and Key Accounts, UltraTech Cement Limited, which is largest manufacturer of ready-mix concrete in the country with presence in 35 cities, is led by optimism when he says, “Our expectation from the incumbent government is that it will give the growth engine a firm push, that it will kickstart infrastructure projects and ease the liquidity situation.”

 

 

HISTORICAL PERSPECTIVE

 

The ready mix concrete industry made its entry into the country in the 70s but it has picked up pace only in the last decade and half owing to rapid infrastructure development. Incidentally, the first commercial plant was set up in Pune in 1991 and followed two years later with two corporate firms ACC and Unitech Construction starting their own commercial RMC plants to exploit the potential of the sunrise sector.  The industry has grown to all parts of the country including the metros and the Tier 2 and 3 cities. The concrete industry is estimated to be a gigantic 300 million cubic metres a year of which the plant produced share is less than 35 million. Ready Mixed Concrete makes up only 7-8 per cent of the concrete industry – which is around 21-24 million cubic metres.

Six-seven years ago, the RMC market was primarily dominated by big raw material, essentially cement suppliers. The scenario has changed a lot over the last two-three years with the arrival of many smaller companies in the market.  Some of the main players in the ready mix concrete space are Ultratech, Godrej & Boyce, Lafarge Aggregates and Concrete, RDC Concrete India, RMC India (Prism Cements), Ultratech Concrete, Bharath Cement Products and Ahlcon Ready Mix.

 

 

CURRENT SCENARIO

 

Though the RMC sector in India is growing rapidly at a pace of 25-30 per cent annually the business is still in its infancy – the gap between the organised and unorganised sector wide. In industrialised countries ready mix concrete forms around 70-75 per cent of the market share. With India building up its infrastructure and cities see a spurt in verticalisation the ready mix sector is expected to play an increasingly dominant role mainly because it is seen as the most viable option to speed up construction. RMC is also being increasingly preferred alternative for most real estate developers because site mixed concrete is dependent on the availability of labour.

“The RMC  industry is  directly linked with the real-estate business. Due to the slowdown in recent years, RMC corporates have not expanded much, and are consciously investing in dedicated products instead,” explains VG Sakthikumar, Whole-Time Director – Operations, Schwing Stetter India, a leading manufacturer of batching plants. 

 

 

BOOST FOR RMC EQUIPMENT SECTOR

 

With the Centre planning a $ 1 trillion infrastructure boost leading to the construction of roads, power, airports, metro rail systems and industrial corridors, also in the process giving a fillip to real estate activity – both the residential and commercial segments are witnessing requirement for additional supply – the demand for readymix concrete and ready mix concrete equipment is expected to grow. Players like Putzmeister, Schwing Stetter, Greaves Cotton , Apollo Infratech, ReadyMix Construction Machinery have increased their presence with expectation of strong growth in the ready mix concrete industry. Despite the global economic slowdown, readymix equipment manufacturers have not sounded retreat.  Schwing Stetter India for instance, has launched eleven new products over the last one year, in order to meet the requirements and demands of its customers.  Says Sakthikumar, “India is a vast country and many areas are yet to catch up with the rest of the nation in terms of mechanisation. We plan to popularise the use of our machines in such areas where mechanisation is not yet prevalent.” According to industry estimates, the size of concrete equipment in terms of value till 2014 is expected to be around $1.25 billion where the demand of transit mixers is expected to be around 9000 units, concrete batching plants 2800 units, and concrete pumps around 3600 units.

With that in mind concrete solutions providers like Masa Gmbh, KYB Conmat,  Hesse Concrete Machinery Pvt Ltd and Toyoto Forms are looking to up their presence in India’s construction space. Says Kalpesh Soni, Senior Manager, KYB Conmat, “We are extremely confident the market will see improvement. And as a company in the concrete space we are looking to contribute to the India growth story.” 

 

 

CHALLENGES

 

Despite the seeming optimism of the growth of the RMC sector there is a growing need to address existing fault zones. Apart from the various clearances which required to kickstart projects growth of India’s readymix industry has been thwarted due to factors like poor roads and transportation conditions which are a major impediment for supply of the product which is perishable and has a short shelf life – concrete has to be transported in truck mixers and requires to be discharged within two hours from the time of loading.  Another prime requirement is good water sources at the vicinity of the plant because in the event of non availability it will be required to be transported from other locations. The other issue is of quality and stems from non-standard suppliers of concrete – those that are not certified by QCI or equivalent bodies. Admittedly while serious RMC players have developed an expertise in creating products that match the requirements of the user in terms of design, quality and strength in the most sustainable manner there are not too many of them leading to risks associated with the use of RMC. Customers need to be aware that from a quality and sustainability perspective, they need to use only certified concrete.

Cement companies will be able to leverage the market in a better way due to one of the essential commodities in RMC i.e. cement being under their control. But in order to grow they may have to control the unstructured supply of aggregates. Production of aggregates will not be an impossible mission for cement companies having technical competency of running such captive operations as they also possess sufficient experience in limestone quarrying. Real estate sector in large metros, which consumes nearly 70 per cent of RMC has been witnessing slowdown and a severe cash crunch. This is sure to impact the RMC industry. They will need to refocus their marketing to semi-urban areas which are still witnessing a steady growth. There is a huge need for the government to ensure growth of the sector by providing tax breaks, including ready mix concrete as a mandatory item in specifications for CPWD and PWD jobs, regulations to restrict the piling of materials in public spaces and to bring in awareness of the benefits of RMC    

 

 

FUTURE OUTLOOK

 

The current weak market environment is expected to gradually improve with the expected revival in construction. Consequently, the long term outlook of RMC market continues to be moderately positive.  As per the CRISIL Report, the Construction is set to grow 1.5 times between 2013-14 and 2017-18. Accordingly, RMC demand would grow by around 18 per cent CAGR to reach a total market size of Rs 586 billion by 2017-18, which translates into a demand of about 129 MCM at a 14 per cent CAGR. Wilfried Theissen, Managing Director India, Putzmeister Concrete Machines Pvt Ltd drives home the enormous prospects of the industry when he says. “The Indian ready mix concrete market is relatively small in comparison to its population. For example the market in a country like Turkey is 3 times bigger in size with only 70 million people. But this shows the potential India has.”

 

 

SELF LEVELLING CONCRETE FROM LAFARGE

   Case Study: Hiranandani Hospital

Lafarge has been redefining construction in India - right from ushering in safe work practices onsite to introducing innovative high performance concrete in the market. Everywhere in the world the company’s innovative cement, concrete and aggregates solutions have served cities. Every project has its own peculiar challenges however this project was different since it was for a hospital. The project was for the Oncology Radiation Chamber Room at Hiranadani Hospital, Mumbai. Lafarge had to retrofit a bunker in the basement pouring concrete in RCC all covered by 1 mt thick top RCC slab. It was a challenging project because we had to pour concrete in the basement bunker of the operating hospital without disturbing the facility’s daily routine. The concrete had to be poured beneath the existing RCC slab in the basement with uniform density throughout the bunker as per AERB (Atomic Energy Regulatory Board) standards. It must be mentioned here that the guidelines are stringent and AERB as a Regulatory Body does not permit commissioning of a facility till the most stringent specifications are met. Lafarge India took up the challenge and ensured that pouring of the concrete was done in a manner that did not hinder hospital operation even for a day. For the final slab, the pouring of concrete was done through core cuts from the ground floor. To achieve the required density and uniform spreading of the self compacting concrete the mixing had to be 100 per cent accurate, and this was accomplished by Lafarge. The job was done so meticulously that the centre passed the AERB Radiation Leak Test with flying colours. It was not a small achievement as the area above the bunker had 100 per cent occupancy of people. To complete the project successfully, Lafarge used Agilia concrete with a compressive strength of 40 MPa. Around 700 cu.m concrete was used for the entire project. Agilia® is a self-compacting, s elf-leveling concrete that provides solutions and opportunities for design and placement. It is a fluid concrete that flows freely around congested steel reinforcement and fully compact without any added placing energy. The main advantages of Agilia are:  there is no vibration, it is easier to place, it affords worksite flexibility and reduces labour time.

 

 

SELF-WATER DRAINING CONCRETE FROM ACC 

ACC Limited's RMX Concrete Division has introduced a high performance concrete, Permecrete which is porous therefore permitting water drainage to lower surface, thus improving ground water table. The benefits of using this cement are – it allows drainage of water, the large pores present in the no-fines concrete allow easy drainage in to ground under appropriate conditions. It can be used for internal partition walls in domestic buildings, in filling panels in framed structures. It can be used in open air car parks (overlaying permeable sub grade). The drainage retains wall drains exposed car parks to allow water to seep to ground. The Ready Mix Concrete is prepared keeping in mind the ease in process required by mega infrastructure projects. It is engineered in such a way that it will be directly delivered to the construction site in a freshly mix state or unhardened state. RMX is usually purchased in volumes and expressed in cubic meters. The high performance concrete, Permecrete is porous within its body to permit water drainage to lower surface, thus improving ground water table. The benefits of using this cement are that it allows drainage of water: the large pores present in the no-fines concrete allow easy drainage in to ground under appropriate conditions. It helps keep the area dry and clean and prevents warm and polluted water from entering our streams. It enables more efficient land developments, by making it possible for integrated land utilisation for water retention and drainage with more active use, such as parking lots, pedestrian ways, etc. It carries technical benefits, permits alternations and additions on the structural members with minimum possible dead loads. It can be used for internal partition walls in domestic buildings, in filling panels in framed structures. It can also be used in open air car parks (overlaying permeable sub grade). The drainage retains wall drains exposed car parks to allow water to seep to ground. Precautions are to be taken during application since moist curing is important especially in a dry climate or under sandy conditions due to the minimal thickness involved in the cement paste. This concrete needs no vibration. The finishing of this is to be completed by leveling tool.

 

 




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