RMC: Building a concrete future
The global story
A recently published report by Market Research Future proclaims that the global ready-mix concrete market is anticipated to register a CAGR of 8.02 per cent during the 2017-2023 periods. The introduction of foreign direct investment for the construction of infrastructure is likely to favour market growth.
Market Research Future report further says, "Considering the global scenario, the Asia Pacific re-gion is estimated to acquire the significant share in the worldwide market and is predicted to retain its dominance in the long run. The rising number of latest infrastructural projects, especially in economies likes Singapore, India, Thailand, and China.
"With the rapid urbanisation and industrialisation in these areas, the market is anticipated to flour-ish. Moreover, the ever-increasing population, favourable government policies, high availability of skilled workforce and cheap resources, and low labour and operational costs are contributing to the market growth. The advent of new infrastructure construction projects is also estimated to generate an inflated demand for the RMC market.
"In this region, China has accounted for the lion's share owing to the refurbishment and expansion of old structures like railway terminals, and airports, along with the implementation of new infra-structural projects. India is also considered as a driving cause for the market owing to the develop-ment of smart cities."
However, the Indian ready-mix concrete market is still in an early stage of its development in India. The uptick in construction of new housing, urbanisation and infrastructure create a favourable cli-mate for RMC in the country. Indian market cement is one of the crucial contributors of Indian economy. With a target of achieving the $5 trillion economies, India offers massive potential in concrete and construction market. With an annual output of 460 million tonnes per year (mtpa) of cement production capacity, India is the second-largest producer of cement in the world.
However, the ready-mix concrete market is minuscule. While the share of ready mix concrete mar-ket in the developed countries stands above 55 per cent on an average, it is believed that the Indian market still hovering around the double-digit mark. For example, Devendra Kumar Pandey, Technical Head RMC business in One UltraTech, says the RMC contribution to the entire busi-ness is between 8-10 per cent, which is a reflection of the industry.
According to Pandey, for the RMC industry, real estate remains the primary growth driver with commercial and residential construction. He added, "At least for the last two years infrastructure has been a major anchor for RMC volumes. That means there were consistency volumes also means there was a good payment cycle that was coming. So even though volume-wise it was not the larg-est sector, which we are serving; still, it becomes an anchor to have a good kind of order profiles."
There is a movement towards specialised solution-oriented products in the market now. The indus-try sees a growing demand for concrete which is water-resistant, industrial flooring segments, deco-rative concretes.
Traditionally, some products were typically very compatible with manual and lever oriented process are being replaced now. Instead, these products are being replaced by concrete and mechanised product, which is less labour intensive and can be run in a more engineered way. Take the example of lightweight concrete. Traditionally, in the construction of a pillar, sand and broken bricks were used as fillers, which were a very manual process not very environmentally friendly. Now the super-efficient engineered lightweight concrete replaced them. It reduces the dead load on the structure and is equally-priced as the traditional materials (if the labour cost is taken into consideration). It helps the construction industry to overcome the challenge of non-availability of sand owing to the existing ban orders on sand mining. These are thermally very efficient and are greener. The customer demand is refining every passing day; they are looking for an end to end solutions rather than not just concrete but has additional features.
A cross-section of the industry is of the opinion that the RMC as a product is not marketed well enough. RMC industry, in the beginning, was considered as a technical extension of the existed mix. Eventually, the market started to supply products from the perspective of customers. Thus the industry has taken the remedial step to address the issue.
The announcement of India aiming to be a $5 trillion economy and the announcement of the alloca-tion of Rs 1 lakh crore for infrastructure capacity addition in the current year's budget was jubilant news for the industry. However, the trickling effect of the global slowdown had marred a shadow over the industrial segments.
But, the industry stakeholders seem to be optimistic. Pandey added, "Demand does exist, and ac-cording to my calculation on the market for some of these products, these are barely touching the 3 or 4 per cent of the real market potential."
Green, going green, reducing waste extra is the most prominent subjects of discussion. So going forward, the RMC industry develops mechanisms to have zero discharge of RMC plants. While the economic slowdown can create a negative sentiment, the industry is all geared to cater to the ex-pected surge in demand.