Sunday, November 19, 2017

Construction Chemicals

Growth path bound 

 

 

The Indian construction chemical industry is expected to maintain its growth momentum on the back of a host of policy measures taken up by the new government. ANUJA ABRAHAM reports.

 

The FICCI 5th National Conference on Construction Chemicals held in Mumbai last month  provided a  much-needed platform for industry professionals to come together to discuss issues  related to the construction industry, including the challenges and growth opportunities. Among the topics  discussed were new developments and innovations in construction chemicals and the industry’s role as an enabler for improving quality of construction, structural repair and rehabilitation using construction chemicals, and future trends. The delegates agreed that innovation was the need of the hour.  The construction  chemicals industry—which broadly comprises cement admixtures, resin, membranes, epoxies, waterproofing solvents, hot-applied products, cold-applied products—which saw the debilitating impact of the economic slowdown over the last few years is looking for a much needed respite with the formation of the new government.

 

It is expected that the new dispensation will, beginning this year, activate stalled projects underlining the urgency to bolster much needed infrastructure development across India – this includes construction of national highways, townships, ports, hospitals, schools and railway projects, irrigation and other agricultural systems which will give a big boost to the construction chemicals sector.

 

Incidentally, the Indian construction chemicals (ICC) sector contributes to the national GDP to the extent of 15 percent.  Construction chemicals increase project costs by a meagre 2-3 percent but the expense is offset by the increase in the lifespan of the structure. The construction chemicals market is worth Rs 3,600 crore in India with admixtures amounting to 42 per cent of the share, followed by flooring and waterproofing agents, 14 per cent; chemicals for rehabilitation, 12 per cent; and adhesives and sealants, 18 per cent. The principal challenges for the sector include low awareness among end-users, poor enforcement, absence of quality standards or regulatory practices, shortage of skilled labour not to mention a price-sensitive market. Sunny Surlaker, Head-Admixtures, MC Bauchemie (I) Pvt. Ltd, is given to say, “People don’t often estimate the cost to benefit ratio.”  

 

It is easy to see therefore why the penetration of construction chemicals is currently very low in the Indian market as compared to other countries like China, which accounted for 42 per cent of global consumption in 2012, as highlighted by a knowledge paper by Tata Strategic Management Group and FICCI. In terms of product usage in Asia and South America, there is a strong demand for admixtures. There are stringent mandates in place in China, Latin America and other developed countries over the use of construction chemicals.

 

One reason why the Indian construction sector has not made as much progress as its counterpart in say, China, or even the Western countries is because the use of construction chemicals is not mandated in large Public Private Partnership projects such as roads, dams and bridges. Dr Kishore Shah, Past President of Indian Speciality Chemical Manufacturer’s Association (ISCMA) and CMD, Suradip Chemicals, is led to ask: “Why do buildings here face leakages within 5-7 years? Construction chemicals are meant to be utilised but their application is not mandated here as done by governments of countries abroad.” It is no secret that contractors across India show a marked preference for subtraction of costs and opt for convenient short cuts with cheaper substitutes. A downside of this is that it only leads to recurring costs.

 

 

 

Concrete Corrosion

 

Manufacture of concrete is among the most energy intensive processes with roughly 6 billion tonnes of concrete being used across India. While concrete is used on a large scale, very little measures are taken to prevent it from degradation. The main reason for this is leaching, carbonation, attack of chlorides and sulphates, thermal expansion, not to mention physical and chemical corrosion. Corrosion hampers the national GDP to the tune of 3 percent or roughly $2 million annually.


DP Sengupta, President, STP Ltd adds, “Even basics like anti-carbonation coatings are missing on bridges and structures built in coastal areas in India.”  Understandably therefore use of construction chemicals needs to be made mandatory and should be regulated to avert colossal loss nationally. Innovation in this segment is the key to address issues like sustainability, corrosion etc.apart from proving low-cost products for the price sensitive market. 

 

Another downside stems from the failure of the educational system – it is missing in engineering and architecture courses – to focus on usage of construction chemicals and the impact of concrete degradation on the economy. “An entire chapter on the lifecycle of the structure is missing from the syllabus of engineering colleges,” laments Upen Patel, Business Director, Construction Chemicals-South Asia, BASF. “Students only gain theoretical knowledge and later learn about it from experience. Unfortunately, our product life cycle is between 30-100 years. So by the time you build something, it starts deteriorating and you learn something and start correcting it you are already out of the role of the designer.” To mitigate this, he points out, the government should review the current engineering syllabus to include latest international construction methods.

 

 

 

FRAGMENTED MARKET

 

Another feature of the Indian Construction Chemicals market is that it is large and fragmented. Small time players dealing in specialty chemicals cater to small scale developers who do not have the wherewithal to import chemicals. Oftentimes, these manufacturers may also lack the resources to set up R&D facilities and provide technical leverage in their domain. The Indian market comprises roughly 200 such small operators who contribute roughly 25 percent to this sector. Also it has been noted that players offering a wide ambit of chemicals have lower margins than those compared to speciality chemicals. Chemical manufacturers involved in high end real estate and infra projects derive more profits than those involved in low-end projects. This further reiterates the point that though the construction chemical market may be highly fragmented with a notable presence of cut-throat competition amongst players, innovation and quality has a niche market with higher payback. 

 

The changing market dynamics and entry of international giants have led to Indian companies to strengthen their R&D in India. While some may have announced strategic partnerships in order to source technology for the products which are in various stages of development, others are marketing international brands in India. Surlakar points out, “In today’s fast changing world of technology innovation is the key to stay ahead and to fuel the growth of any organisation. We follow the same trend.”

 

Admittedly, there is a lot the Indian construction chemicals industry can learn from the international market. “In India we do not use the right construction chemicals in the right quantity. Quality and quantity is often compromised,” explains Dr Shah. “Brand building will be useful for ICC to add value to their products to focus on their area of growth. Indian companies are required to grow in size and volume in comparison to international companies.”

 

 

 

SKILL DEFICIT 

 

Skill gap is a major issue hampering the growth of the construction sector in the view of Sanjay Bahadur, CEO-Global Construction Chemicals, Pidilite Industries Ltd. This serious lacuna can be addressed only through training.  There is a general consensus now in the industry that manufacturers should assign a dedicated training centre to train workers on the right usage of construction chemicals. 

 

“It depends on how much they (contractors) are willing to spend on the skills of the labours. Generally an issue arises, when they want to use certain products that require a trained applicator,” says
Deepak Kanitkar, General Manager – Technology and Business Development, Chembond Chemicals Ltd. “For example, there are a lot of workers available in the market who can work with normal cement injections. But when you use a polyurethane injection it is a very complex process. It  needs to be done by a trained applicator with good equipment. So if the applicator does not have good equipment or is not trained, he will try to convince the customer that polyurethane is not required and that the cementitious substitute will do the same job. Some of the critical jobs require high-cost equipment. Like  for polyurethane injections, the equipment may cost around Rs 5-10 lakh. In case the applicator doesn’t have the equipment then he may convince customer to forgo polyurethane injections.” Obviously then such wrong direction can impact negatively on the lifecycle of the built structure.  Many leading players, including Sika, address this issue by training applicators at their factories and training centres. “The objective is to ensure that domestic users can derive optimum benefits from using our products as this sector is difficult for us to control directly and correct application plays a vital role in that,” explains Subu Venkataraman, Managing Director, Sika (I) Pvt. Ltd.

 

 

 

The road ahead

 

It is easy to see therefore that innovation is only way out for the Indian construction chemicals industry. Leading firms in the sector have now taken to various methods to spread awareness about the benefits of their products. Apart from increasing the lifespan of the structures, the new formulations enable cost-savings in the operations of the building. BASF has introduced patented modified polycarboxylates chemistry under the brand name of Master PolyHeed, which is more targeted towards everyday concrete and offsets deficient quality of ingredients like sand and aggregates.

 

With a new government stepping in there is growing evidence that construction activities will see a twofold increase in use of concrete admixtures, there will also be a rise in the use of waterproofing compounds. A shift in demand is also expected for sustainable, eco-friendly products which will give a boost to the economy and lead to a rise in exports of these chemicals. Overall the outlook for the sector looks bright. As per FICCI estimates the industry is expected to grow by 15-16 per cent per annum over the next five years and reach Rs 7,000-8,000 crore by FY18.  That should be happy news for the construction chemicals czars.




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