22 October 2019

Table of Contents for Special Focus-Construction Chemicals





Special Focus-Construction Chemicals

Gathering oomph

 

With India’s urban footprint looking to expand dramatically by 2030 the need of the hour is for high-end construction elements which can guarantee durability and sustainability in structures. VEENA KURUP reports on the developments in the Indian construction chemical industry, evolving opportunities and business strategies adopted by stakeholders to achieve a qualitative growth.

 

Thanks to a proactive government, increased focus on infrastructure investment, vertical growth in metros, investor friendly climate, initiatives like ‘100 Smart Cities’ and ‘Make in India’ campaigns have propelled the identity of India as a hub for smart construction. A sector increasingly becoming popular owing to the growing need for smart, sustainable and durable infrastructure facilities is the construction chemicals industry – popularly termed as the ‘Sunrise Industry’. This niche specialty chemical sector is today a critical component for the economic development of the country and provides technically rich solutions in virtually all the revenue driving sectors. The market requirements have catapulted India as one of the key destinations for global chemical companies. With the current market size of about Rs.3,500 crore (FY14), the Indian chemical industry accounts for about 3 per cent of the global chemical industry.

Despite its increasing popularity in the infrastructure and construction segments the industry, according to market analysts and manufacturers, still lacks a focused approach and is mostly driven by multinationals. According to the Planning Commission of India, the specialty chemicals industry in India needs to expand its investments on R&D (research and development) activities to approximately $12 billion by 2017 to address this concern. However increasing penetration of multinationals into the industry has in the process widened the technical potential and knowledge among Indian construction chemical firms. “In today’s fast changing world of technology, ‘Innovation’ is the key to stay ahead in the market and for fuelling growth of any organisation. We follow the same trend. MC-Bauchemie’s motto for years has been – Innovation, Competence and Service,” opines Sunny Surlaker, Head Admixtures Division, MC-Bauchemie (India) Pvt Ltd.

 

PERFORMANCE ANALYSIS

While construction chemicals account for 2-5 per cent of the total project cost, the benefits accrued through these products considerably help to minimise the expense on repair and maintenance; and ultimately increase the structures’ overall lifespan. Some of these chemical components also help in minimising the over-usage of raw materials – for eg. the quantity of cement and water used in construction. Though the country still lags behind developed markets and neighbouring countries like China India is witnessing a gradual surge in the market for specialty chemical solutions. This has led to the expansion of the construction chemicals market in India from Rs.1,900 crore in 2009 to about Rs.3,500 in 2014. According to a recent study by industry body FICCI, the market for construction chemicals is expected to grow further by about 14-16 per cent per annum in the next five years.

The market for Indian construction chemicals is segmented on the basis of product type into flooring chemicals, admixtures, adhesives and sealants, water-proofing compounds, and repair and rehabilitation solutions. Of these sub-segments, according to the FICCI report, the market is largely driven by concrete admixtures (42 per cent) and is followed by flooring and waterproofing chemicals (14 per cent each). The other segments like sealants, grouts and adhesives together account of about 18 per cent of the total market volume.

The demand for these niche products is driven by residential, commercial, industrial, defense and infrastructure sectors. Infrastructure stands as the largest contributor with 60 per cent of the demand share. Furthermore, the demand from the sector is expected to shoot up with the government’s increasing focus on development and grow 1.2 times more than the residential and non-residential segments. The residential and non-residential segment, on the other hand, according to a study by Future Market Insights, will witness a CAGR (compound annual growth rate) of 15.3 per cent. While western region dominates the market for construction chemicals with a 30 per cent share, the country’s northern region is being identified as the fastest growing market with a CAGR of 17.8 per cent. The demand though is minimal in southern and eastern parts are also witnessing a gradual rise owing to the rapid infrastructure and mega construction projects.

For Cera Chem Pvt Ltd, a South India based manufacturer the demand though is driven by infrastructure sector areas like transport, power and energy have opened up immense scope for generating increased business volumes. “The contribution from infrastructure, power and energy and transport segments can be denoted in an ascending order of performance as 50 per cent, 30 per cent and 20 per cent. But with projects like metros and mass transport system the contribution from the sector is on a higher score,” says T D Prathaban, Managing Director, Cera Chem Pvt Ltd.

Whereas, for Berger Paints India Ltd, a latest entrant into the field of construction chemicals, both segments – construction and infrastructure – play a crucial role in driving its business volumes. Says Abhijit Roy, MD and CEO, Berger Paints India Ltd, “Our products have supported numerous building construction projects. We were also able to bag few road and infrastructure development projects by government. Despite, being a new entrant into the construction chemical segment, we have already made our presence felt in the market.”

However apart from the infrastructure and construction sectors, manufacturing is the other industry expected to widen the business volumes for the specialty chemical segment in India. According to analysts, the market for construction chemicals will widen because of the government’s emphasis on encouraging ‘Make in India’ initiatives and measures like National Manufacturing Policy which aims to increase the industry’s share in GDP from 16 to 25 per cent by 2022.
 

 

UNTAPPED AREAS

Structural refinement can come not just from development of aesthetically appealing and smart new infrastructure facilities but also from renovation and redevelopment of existing old structures. Repair and rehabilitation of old structures still remain a largely unexplored and underdeveloped area in India. The latest estimate from the Corrosion Management Committee of CII indicates that India loses about Rs.2 trillion--which is about 4 per cent of our GDP -- every year due to corrosion of infrastructure, industrial equipment and other vital installations.

The situation hence is ripe for the employment of construction chemicals  which save not just costs due to corrosion but also to enhance the total lifecycle of structures. The market size of the repair and rehabilitation segment today is estimated to be Rs.430 crore (FY14). Cementitious mortars remain as the most frequently used material in the segment due to their lower prices as well as ease of usage. Also, polymer based repair and rehabilitation products are widely used as they cost less than epoxy based material and also comply with the desired strength criteria. The market for epoxy based solvents on the other hand is expanding at a rather slow pace. The evolving opportunities have attracted and encouraged numerous manufacturers to widen their scope of business and introduce specialised chemical solvents.

“Repair is an important segment and at the moment forms about 12 per cent our industry sales volume. It is quite developed in certain segments, but has not generally picked up in an organised manner. The increasing awareness can create bright business opportunities in this segment,” avers Surlaker. Apart from offering such solutions for existing old building structures, MC-Bauchemie (India) today also offers specialised products in repair and rehabilitation of heritage structures.

For Cera Chem India, the sector opens new opportunities to prove a manufacturer’s technical expertise. “In this new arena, the clients’ focus is to reduce the cost involved in time, labour and maintenance. Further, it also has got a commercial value for money attached to it as the basic concept is to preserve the structure,” echoes Prathaban.

 

 

GREEN MANTRA

The other favourable indicators in the Indian construction chemical industry is owing to the increasing popularity of Green Buildings. Stakeholders involved in the development and usage of infra-construction facilities are now becoming more conscious on carbon footprint and are using eco-friendly building materials. This growing requirement for environment friendly resources has also resulted in reforms in the manufacturing process among players involved in the construction chemical business. Manufacturers are increasingly focused towards producing and supplying solvents which have low VOC and are free from toxic pollutants.

One such player which is steadfast in green adoption and practice is Berger Paints India. “Conserving natural resources and ensuring protection of environment remains our top priority. All our products are free from Lead, Mercury and Chromium and have low VOC. We do not just take responsibility for environmental protection but also ensure that our employees are aware and committed to the cause,” informs Roy.

Also adopting the green wave is Cera Chem. The company maintaining its eco-friendly approach today mostly uses organic raw materials in its production process. “Today everybody is ‘Going Green’ and we are also into the phase of offering low VOC/NO VOC products. Most of our formulations have been modified to suit these requirements and we, in a methodical manner, are transmuting into this mode wherever possible,” reveals Prathaban.

There are a few manufacturers who are aggressively utilising their international experience to refine their production approach and to embrace advanced energy efficient technologies. One such manufacturer is MC-Bauchemie India, which has well-equipped plants in Gujarat and Goa run under technical and financial collaboration of the parent company in Germany. The specialty chemicals company ensures energy efficiency not just in products but also in the process of manufacturing by utilising state-of-the-art German technologies and Quality Assurance Systems at its units.

 

 

SKILL DEFICIT

But, despite all such favourable opportunities, the Indian construction chemical industry still lags far behind its counterparts in the West, and even neighbouring countries like China, on a global performance map. While the construction chemical market in China accounts for about 42 per cent of the global consumption, the Indian contribution stands only at 3 per cent. A recent report by the Planning Commission of India also states that the current expenditure on admixtures is only $1/cu.m of concrete as against $2/ cu.m of concrete in China and $4.5/ cu.m in the US. A major cause for this major roadblock is low consumer awareness and concentrated use of high value products only on luxury housing and mega infrastructure projects.

According to Roy from Berger Paints India, the success of such solvents depends on public awareness and technical knowledge of the masses or end customers. He states, “Public awareness is a must for the success of any such product segment. We can expect a decent growth in the demand for this market segment only with increased awarenessand application of such technologies.”

Market experts also suggest increased focus and investment on creation and upliftment of human resourcesy. As per estimates from the Planning Commission of India, India will need over 14,000 highly skilled chemical engineers within the next decade to join the specialty chemical industry. A potential shortfall of 8,000 to 10,000 chemical engineers is indicated due to limited availability of talent from Tier 1 universities and lack of job attractiveness of the chemical sector. To resolve this shortfall, the industry must improve the value proposition for chemical engineers. The government needs to work in tandem with industries to upgrade the current chemical departments in Tier 2 universities to the state-of-the-art faccilities. Also, adequate educational infrastructure facilities will be required to introduce vocational training programs to develop about 4.5-5 million skilled workers by 2017.

Thanks to growing advancements in technology ta few manufacturers, considering the growing requirement for skilled applicators and painters, have come forward to individually start in-house training centers, workshops and such quality enhancement programmes. Pointing out the need for skilled applicators, Prathaban states, “The product despite being good…if the application methodology is even partially wrong, the whole system fails. We firmly believe in methodical training programmes and keep conducting continuously applicator and painter meets to educate them at a lower level so as to enable us and the end customer reap the benefits equally.”

Expressing similar views, Roy says, “It is extremely important that we have skilled applicators as performances of our product are dependent on the application.” Owing to such requirements, Berger Paints India has now set up a training centre for painters and masons. “Through this exercise we believe that we will be able to develop quality applicators across the country. These applicators in turn can perform a quality job for our customers,” adds Roy.

With such initiatives by stakeholders, coupled with a proactive government approach the construction chemical industry alone has the potential to generate employment opportunities to about 8-9 million population in the next five years. The process of quality enhancement will further brighten the prospects for the Sunrise Industry which is looking to achieve market volumes of Rs.7,000 crore by 2019 and a growth rate of 15 per cent per annum.




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