24 October 2019

Special Focus-Concrete & Concrete Equipment

Advantage concrete

 

NHAI’s ambitious agenda of developing road projects spanning 50,000 kilometers with investments of about $250 billion over the next five to six years has opened up significant business prospects for the concrete and the concrete equipment industry.

 

2016 promises to be an interesting year. The world economy is recouping from a protracted slowdown, with the key economies, including the USA, Europe and the BRICS region expected to perform significantly better over the next few years. The implications of this dynamic global landscape must be factored in while India prepares to accomplish its Make-in-India’ target. To build investor confidence, India needs to not only maintain its cost advantage, but also sharpen its competitiveness in non-cost factors, especially by overhauling its poor infrastructure.

Fortunately, India now seems to be standing on the cusp of a grand revival in the infrastructure sector.

The recently-announced budget, which envisions a double-digit growth by 2020, has announced a slew of measures to kick-start infrastructure investment and seed the growth trajectory across the economy.

For the fiscal year 2017, Rs.2.21 lakh crore have been allocated for the infrastructure sector, with Rs.55,000 Crore set aside for roads and highways. More importantly, with a new fiscal framework creating a division of taxes between the central and state governments, it is expected that states will now be more invested to spend on infrastructure capacity creation.

The budget has also proposed the creation of a ‘National Investment in Infrastructure Fund’ with an initial annual allocation of $3.25 billion, to invest in public sector infrastructure finance companies. The private sector investment cycle is yet to go on full steam and this move will hopefully improve liquidity in the system by pushing forward EPC, Cash Contract and Annuity models for the awarding of projects in these sectors.

The main focus of the infra budget is on urban development, setting up of commercial hubs, expansion of roads, flyovers, metros, airports, railways, ports, and irrigation projects. The rise of development activities in tier II and tier III cities is providing the added thrust to the sector.

 

THE EXPECTED GROWTH TRAJECTORY

In overall construction market, the government vertical continues to remain the leading revenue generating segment. NHAI’s ambitious agenda of developing road projects spanning 50,000 kilometers with investments of about $250 billion over the next five to six years has opened up significant business prospects for the concrete and the concrete equipment industry.

Also with the entry of global developers and operators in key segments like ports, airports and transportation, the need for globally compliant production methods is pushing the demand for innovation in the construction sector.

The flurry of activity is fairly evident. Recently, KEF Infra, the infrastructure arm of KEF Holdings, announced that it is all set to deliver the 1.5 mn sq. ft. Embassy 7B project worth Rs.375 crore within 14 months.

MEP Infrastructure, in a joint venture (JV) with its Spanish partner, has won three contracts worth Rs.1,763 crore in Maharashtra and Rajasthan from NHAI and MoRTH.

On the railways front, while India has tied up with Japan for its first high-speed train between Mumbai and Ahmedabad, China is carrying out feasibility studies for high-speed lines on the 2,200-km Chennai-New Delhi route and the 1,200-km long New Delhi-Mumbai corridor. The proposed Chennai-New Delhi corridor could be the second largest in the world, after the 2,298 km-long Beijing-Guangzhou line.

While on ports, the government has allocated an investment of Rs.1 lakh Crore with an emphasis on modernizing and integrating them with special economic zones, port-based smart cities, industrial parks, warehouses, logistics parks and transport corridors. The recent Maritime Summit in Mumbai resulted in investment commitments of nearly Rs.83,000 crore ($13 billion) in the shipping, ports, and allied sectors.

The global shipping and logistics firm Maersk, which has already invested about $800 million in India, is looking at expanding its footprint by tapping into "a number of opportunities" available in the country.

Therefore a significant chunk of growth in the construction industry is likely to come from 3 main segments - the urban, rural and the transportation sector.

As a result, cement companies, which had witnessed poor growth in 2015 due to excess capacity and declining prices, are now expecting a healthy demand to grow in line with GDP over the next 3-5 year period.

Also the government is keen to expand the capacity of the railways and the facilities for handling and storage to ease the transportation of cement and reduce transportation costs.

This is further expected to push demand for demand for concrete production, earthmoving, construction and material handling equipment.

While the Urban and Development Ministry’s allocation of Rs.50,802 crore for development 20 smart cities may serve as the biggest driver for RMC business. This is because builders are increasingly realizing that for large projects, the cost difference with conventional concrete is virtually zero.

According to Abhijit Lunkad, CEO,  Birla Shakti Concrete, “Time-bound projects, labor shortage, need for very high strength concrete (especially for sky scrapers and multi-storey buildings), increasing space constraints in metros, new construction techniques, and the backlog of infrastructure projects are increasing the use of ready-mixed concrete (RMC).

Besides RMC, precast concrete, which was so far limited to tunnels, bridges and flyovers, is fast emerging as a preferred choice for the affordable housing sector, as it makes it easier to stick to project timelines and eradicate unexpected interruptions in work.

More over increasing customer awareness and preference for intuitive living spaces such as multi-generational housing, walkable neighborhoods and mixed-use facilities will further push the demand for new ideas and product innovations in concrete manufacture and use.

According to Wilfried Theissen, Managing Director, Putzmeister Concrete Machines, “The outlook for the concrete equipment manufacturer have never been better, with roads, industrial corridors, smart cities needing a substantial amount of mechanization to fulfill the ambitious timelines set by the government.”

Also, according to a study by India Ratings (Ind-Ra), cash flow for construction companies is likely to improve in 2016-17, as most of the orders procured in the last few years are expected to be executed this year.
 

 

GLOBAL OUTLOOK

The size of the global cement market in 2016 is about $394.55 billion. While the global sales of construction equipment are forecast to grow +3.9 per cent in unit terms in 2016 (Specialist economic forecasting and market research consultant, Off-Highway Research.)

According to Cement Vision 2025, a Confederation of Indian Industry-AT Kearney report released on 30 April 2014, RMC which accounts for 8 per cent of overall cement demand in India is expected to increase up to 25 per cent by 2025.

India is also emerging as a key potential market for construction equipment, for it contributes nearly 7 per cent to the India’s GDP. By 2025, India’s construction market is expected to emerge as the third largest in the world, which would exhibit a huge demand for construction equipment in the coming year with unit sales expected to rise to 46,414 machines, compared to 38,554 in 2015.

 

CHALLENGES

Despite the bullish scenario, structural constraints continue to slow the growth.

Wilfried Theissen, Managing Director, Putzmeister, pointed out that while the number of enquiries is increasing, but the numbers of sales were still not measuring up because companies with a long track record in the market are still suffering from bad debts and underfunding.”

On the urban development front, the biggest challenge afflicting the sector according to V. G. Sakthikumar, Managing Director, SCHWING Stetter Sales and Services Pvt Ltd, is realty stagnation where unsold properties are not absorbed and new projects are slowing down for the construction of commercial office spaces in buildings, apartments.”

“Also, we see a good growth in the infrastructure in locations where the Central and State Government are the same and where there is a good understanding of the infrastructure projects. But, when it comes to other states in the country, this is not quite true. So, GST is another measure which will help the smooth transfer of goods which in turn will cut down the unnecessary costs associated with the product transfer & benefit the entire nation”, V. G. Sakthikumar, MD, SCHWING Stetter Sales and Services Private Limited added.

Other factors like continued uncertainty in land acquisition, constrictive regulatory processes, unskilled labor, delays in approvals, weak commodity prices, continuing skepticism of state governments and lack of financial leverage, and rising environmental concerns about CO2 pollution continue to hamper the growth.

 

 

FORTHCOMING TRENDS and INNOVATIONS IN CONCRETE

 

The future challenge for the concrete industry in India is clearly to meet the growing demand for infrastructure development, while at the same time reducing costs and limiting the production of CO2 emissions with more innovative and efficient approach to production and use of alternative. There is also an urgent need for skill development and manpower enhancement.

 

The world over, many new technologies in concrete are transforming the very manner in which we design and build with concrete.

  • Light-Transmitting Concrete: Here optical fiber strands are placed in a concrete mix to conduct light, into spaces enclosed by the translucent concrete panels. This innovation has radically changed the perception of concrete as an opaque mass. The fibers run parallel to each other, diffusing light between two surfaces of the concrete element in which they are embedded. Thickness of the optical fibers can vary between 2 µm and 2 mm. Optical fibers transmit light effectively, and can also reflect colors to create new design element. The concrete mixture is fine and does not contain any coarse aggregate.
  • Reactive powder concrete: This concrete is highly workable, durable and yields ultra-high strengths without using coarse aggregates. Reaching compressive strengths of 30,000 pounds per square inch (psi), this new-age concrete also has tensile strength with the inclusion of steel and synthetic fibers.
  • Self Consolidating Concrete (SCC): This concrete excludes the need for mechanical consolidation and yields a smooth surface finish without mix segregation.
  • Decorative Concrete: Here white cement is the key ingredient and, along with coloring agents and admixtures, you can create more intuitive and aesthetic spaces.
  • Formwork : With the explosive growth in high-rise residential construction, the Load-Bearing Wall (LBW) system is gaining recognition. The walls and slab are poured simultaneously when using the innovative tunnelform construction method. Since the forms are stripped in 24 hours, the daily cycle meets the demand of fast-track construction for repetitive cell layouts, synonymous with many hotel and condominium projects.
  • Spun Concrete: Load bearing columns, are usually large in size, taking up precious space and obstructing free vision and movement. Spun concrete is a German process, used to make hollow core, high strength yet slimmer poles, columns and pipes. A steel mould in the shape of the column is made, in two halves. The reinforcement cage for the column is also made in two parts. One part is placed in each half of the mould, anchored to fixing devices, which are a part of the mould, and pretensioned. High strength concrete, up to M-100, is then poured into the mould halves. After that the halves are bolted together and placed in a centrifuge. The relatively light weight and intrinsic durability of concrete makes spun concrete ideal for many construction projects and in some cases has even replaced steel poles and columns.
  • Ultra-Thin White Topping:  A concrete overlay, usually of thickness of 100 mm or more, is placed directly and bonded on top of an existing bitumen pavement. As a result, the concrete overlay and the underlying bitumen act as a composite section rather than two independent layers. This composite action significantly reduces the load-induced stresses in the concrete overlay and also reduces the required thickness for the same loading.
  • Whisper Concrete: This concrete technique first developed in Belgium, is geared towards making the concrete pavement more skid resistant, and also reduce noise levels of heavy traffic on road surface. In this technique, some of the aggregate is left exposed, rather than being brushed into grooves. This lends the pavement surface a rough texture that is safe for high speed vehicles and also produces less noise.
  • Pervious concrete: It’s a special type of structural concrete with a sponge-like network of voids that allows water to pass through readily. When used for driveways, sidewalks, parking lots, and other pavements, pervious concrete can help to retain stormwater runoff and recharge groundwater supplies.
  • Nanotechnology for Stronger Concrete: Researchers, at Purdue University in Indiana, and in the UK are exploring the possibilities of using nanotechnology to locate and employ cellulose nanocrystals to increase tensile strength of concrete by 30per cent. On another front, researchers at Cambridge University are working on a kind of self-healing concrete inspired by mimicking human skin. They have developed microcapsules, containing a load of mineral-based healing agent: physical and chemical prompts the capsules to break open, allowing the healing and sealing agents to repair the lesion.

 

CONCLUSION

With renewed thrust on new projects, rising public–private partnerships and new funding approach, the concrete sector is looking forward to a growth of 10% over the next 2-3 years.

What remains to be seen, however, is how these new policy directions, asset management innovations and investments create the required impact on the ground and place the Indian economy on a stronger footing for the future. In many ways, therefore, the stage is set for India to transform its infrastructure and seek global leadership.

 

 

V. G. Sakthikumar, MD, SCHWING Stetter Sales and Services Pvt Ltd & Chairman of Mechanization Committee, BAI

 

“The main drivers for concreting equipment business right now are road and metro rail projects, which is creating a healthy demand for our batching plants. Going forward, we expect power projects, like hydroelectric, thermal, atomic, wind power to carry on the growth momentum in concreting, with an expected growth of approximately 10 per cent in the next three years. Once the growth in the realty segment starts happening, hopefully 2018, we can expect a better growth rate for concreting machinery. The biggest challenge for the sector is realty stagnation where unsold properties are not absorbed and new projects for the construction of commercial office spaces in buildings and apartments are slowing down. We can expect this to revive a little later and once that happens, we can expect the ready mix business also to see a growth jump. Also, land acquisition is one of the key areas where the Government is struggling with implementation in infrastructure. As far as the funds are concerned, we are quite convinced that the Government has a plan to spend and bring in more funds for investment. But, land acquisition is going to be a major challenge. Also, we are seeing a pattern of good growth in the infrastructure in locations where the Central and State Governments are the same and there is a common understanding of the infrastructure projects. GST is another measure which will help the smooth transfer of goods which in turn will cut down the unnecessary costs associated with the product transfer and benefit the entire nation.“

 

 

Wilfried Theissen, MD, Putzmeister Concrete Machines,

“We foresee positive trends for the next 5-10 years for the construction equipment industry, provided the goal post will not be moved again. The major challenges continue to be macro-economic in nature, with the lack of easy access to credit, un-friendly legislation, and low pace of projects per annum continuing to derail the growth process. Moreover, more than 80% of the concrete in the industry is still transported manually by unskilled labor. With the absence of many large-scale projects, the speed of execution is of little importance and therefore, mechanization of construction is low priority. The sector continues to be plagued by lack of skilled contractors and poor access to basic amenities like water and electricity, making construction a difficult business in India. The Central and State governments must gear up to fulfill the basic needs of the industry. Also the government needs to provide easier access to funding to promote investment by established players. Secondly, the government along with industry should rapidly intensify the skill development to leverage the opportunity offered by growing markets. Thirdly lowering of interest rates to make funding cheaper, so that double digit ROI is no longer necessary. The fourth one is to budget the correct amount of funds for each project. Currently, the project cost is nearly always underestimated which pushes the contractors to play with the specifications of raw material and equipment just to survive.”

 

 

KEY PLAYERS
  • ACC
  • Bianchi Casseforme India
  • Birla Shakti Concrete
  • Elematic India
  • Godrej Construction
  • Hess Concrete Machinery India
  • JK Cement
  • JSW Cement
  • Lafarge
  • Larsen & Toubro
  • Magicrete
  • Masa Concrete Plants India
  • Peikko India
  • Precast India
  • Putzmeister Concrete Machines
  • Schwing Stetter India
  • Spancrete
  • Spiroll
  • UltraTech Concrete
  • Vollert India
  • Webau India



Leave a Comment

Name  
Email Address
(will not be published)    
Website
Comment