Logistics is the biggest cost component in the whole chain of RMC business.

Logistics is the biggest cost component in the whole chain of RMC business.

More than 80 per cent of concrete produced in developed nations is used as ready- mix. In India, however, it is less than nine per cent. What is stopping the RMC market from taking off? ICR interacts with Bankat Mandhania, Director, Ashtech (India), a leading cement and ready- mix concrete manufacturer in the country, to get some insights. Excerpts from the interview.

How is the RMC market performing?
If you talk about growth, yes it is there as more people are realising the advantages of using RMC. Once someone uses RMC, he is bound to be convinced of the advantages. After this, he will be ready to shell out extra for the product since what is gained in return is good service along with a good product. As per sustainability, the business goes on as there is no entry barrier to the RMC sector. Anybody can set up a RMC unit. So it is open to competition. We do not get premium for a brand name. Leading cement companies are out there in the RMC business, but if you see the revenues, they are not making too much money there. But they are there for sure.

Why is the demand for RMC so little in India compared to foreign countries?
Though the demand is less in India, the RMC market is growing. Yes, it is true that in foreign countries today, 90 per cent of the concrete manufactured is sold in RMC form. Here things are a bit different. If you check Indian markets, almost 70 per cent of the cement is sold in bags. That gives you a comparison between the two. Masons and builders here need to be updated and that takes time. But once the builder uses RMC, he understands the advantage. It also requires some volume of work to be done over a period of time. But those into constructing small buildings and two floor apartments are will not go for RMC. Once we start doing sizeable projects, the construction community will experience the benefits of RMC first- hand.

Is the equipment readily available for RMC production?
You have the entire spectrum of manufacturers in India. You have players from Ahmedabad-based companies catering to local markets and foreign multinationals. There is a vast spectrum of RMC equipment to choose from. All the standard equipment is from standard manufacturers worldwide so you are not compromising on quality of equipment for sure. Availability is not a problem, the choice is there, and any type or size is there.

It is said that crushed sand is not as good as natural sand. What is your take on this?
The natural sand that we are talking about is no longer available. There is no river sand anymore in the area of Mumbai. We are using creek sand which is by itself, never recommended. It is as an alkaline material. River sand was used in the British era, ferried from Gujarat. So Marine Drive and everything that is British- built, was all done with river sand. They got it 60 years back to ensure quality construction; there is no river sand as such in India today. Also, in the name of manufactured sand, we are using powder and that is stone dust. For manufactured sand you need a VSI plant, which has come into Mumbai just a few years ago. Pune is more mature in terms of sand use. They are using crushed sand for plasters too. Now crushed sand manufactures here too, have fantastic gradations available with them.

Are we stuck with the minimum grades of concrete?
The grade of concrete depends on the end application. The more challenging the structural demand, the higher the grade of concrete used is. It is wrong to say we cannot do it. M70 is what we used for the JJ flyover about seven years ago. The Bandra-Worli Sea link is made with M60 grade concrete. All Metros have got M60 specified material. So we are able to manufacture a wide range of concrete. The biggest market here is the residential market where buildings are from four floors to 40 floors. M30 grade concrete will satisfy the structural demands of a four- floor building. The higher the building, the higher the grade requirement is. World One (the world´s tallest residential tower by the Lodha Group) is using M90; they are producing it and they are doing a good job. We have variations in grade available to suit our requirements and we also have a good knowledge base.

Is skilled workforce available adequately?
We are definitely falling short of good quality manpower. There is a shortage of quality control people, too. We are nowhere near the international standards of an available workforce in terms of quality and in sufficient quantity. In India, people have little option but to compromise on a lot of things. Although the country sees large numbers of engineers graduating every year, very few of them are employable. Whether we can handle this type of concrete demand is a question mark. You have enough civil engineers but are they really employable?

How do you deal with it? Do you have a separate training module for them?
We take two to three civil engineers every year and we mould them. You have to nurture them. Employability or job requirement is something you have to pay attention to and you have to take that effort and make sure that they understand and learn the industry´s requirements. Then, a couple of years down the line, you can give them additional responsibilities. We take fresh engineers every year. When we see candidates with good potential, we create opportunities for them and ensure that they stay with us. Skill shortage is an issue in RMC.

What are the other challenges encountered in the RMC sector?
Logistics is the biggest cost component in the whole chain. The transit mixer costs almost Rs 30 lakh and it can deliver only that much quantity in a day. The stronger the asset base, the better the company, and it can be relied upon by the consumer as a supplier. It works both ways. You have to ensure that the deliveries are made on time and that the material is poured as per schedule irrespective of hassles such as traffic or roadblocks. The system must be robust enough to absorb and respond to any issue that can pop up on the fly.

So how do you manage this?
We have 74 transit mixers and 24 pumps. We follow a process of sending a questionnaire to our consumer that asks for all the details including the peak requirement for the material. Based on this, we design equipment required for the work. That determines if there are going to be two slabs every day for one site, so a minimum of two pumps and seven transit mixers are required, and that too, if the site is close. But if the same site is far away, I will need 12 transit mixers. So having a complete understanding of the customer`s requirement and a solid contingency plan in place is key in this business.

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