indian construction chemicals industry imperatives of growth

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Knowledge paper on
INDIAN CONSTRUCTION CHEMICALS INDUSTRY
IMPERATIVES OF GROWTH
May 2014
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Indian Construction Chemicals Industry: Imperatives of Growth
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Message
India's "Sunrise Industry - The Construction Chemicals industry" is
experiencing growth at a rapid pace. The market is still at a nascent stage in
India as compared to developed countries because of the limited awareness
with end users on the benefits that construction chemicals can provide. With
overall economic growth, increased investments by Government in
infrastructure and real estate, coupled with participation of overseas
investors and contracting companies, construction chemicals segment is
witnessing a surge in demand which is expected to accelerate in coming
years. The prospects are bright with awareness about the sector gathering
momentum.
Federation of Indian Chambers of Commerce and Industry (FICCI) in
association with Department of Chemicals and Petrochemicals (C & PC)
Ministry of Chemicals and Fertilizers, Government of India has organized
four editions of "Construction Chemical Conclaves" from 2010 onwards at
Mumbai, Bengaluru , Chennai and Ahmedabad respectively very successfully
to bring focus to the sector. Now the next Conference in the series which is
also being supported by the Government of Gujarat, is being held at Mumbai
on May 7-8, 2014.
I wish it all the success.
Deepak C Mehta
Chairman - FICCI Chemicals Committee
Vice Chairman and Managing Director
Deepak Nitrite Limited
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Preface
Manish Panchal
Practice Head - Chemical & Energy
Tata Strategic Management Group
Manish.panchal@tsmg.com
Charu Kapoor
Principal - Chemicals
Tata Strategic Management Group
charu.kapoor@tsmg.com
P S Singh
Head- Chemicals
FICCI
prabhsharan.singh@ficci.com
Federation of Indian Chambers of Commerce & Industry (FICCI) & TATA Strategic Management
Group (TSMG) have been regularly tracking the trends in the Construction Chemials industry
and supporting companies, both big and small, across various verticals to achieve business
excellence. The same knowledge and experience gives us an additional advantage to realize
this report
Indian construction chemicals market is still at a nascent stage as usage levels are much lower
compared to other peer markets due to limited awareness about the products and their
benefits as well as price conscious customers. However, the industry has showcased significant
growth in the last 5 years with new and complex molecules enhancing properties such as
strength, reduced water requirement, increased resistance to abrasion and corrosion etc.
Entry of global construction chemical companies in Indian markets have further intensified the
competition and boosted the market growth.
In future, changing dynamics of Indian construction industry are expected to significantly
impact the construction chemicals market. Adoption of international standards and increase in
high rise buildings in Tier I cities is driving the usage of admixtures and related construction
chemicals in concrete. Corrosion prevention and control is another area which is driving the
adoption of construction chemicals. Hence, going forward, the focus will be on price to
performance ratio and not price alone. Through this report, we have attempted to highlight the
key growth imperatives for industry players as well as the regulatory bodies.
We sincerely thank all industry leaders whose valuable inputs have helped in building this
report.
We sincerely thank all industry leaders whose valuable inputs have helped in building this
report. As always it was an insightful experience for the team to materialize this report. We
hope it acts as a guiding light both for the players and the consumers of crop protection
products.
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CONTENT
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03
I.
Introduction to Construction Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05
II. Indian Construction Chemicals Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07
1. Market size and past growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07
2. Construction chemicals segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
3.Major players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.Key challenges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.Growth drivers and Future Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.Key growth imperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
III. Special Focus: Corrosion Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
IV. Annexure I: Major Players. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
V. About Tata Strategic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
VI. About FICCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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Table of Figures
Figure 1: Categories of Construction Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05
Figure 2: Indian Construction Chemical industry (INR Crores) . . . . . . . . . . . . . . . . 07
Figure 3: Indian Construction Chemical product share (%age) . . . . . . . . . . . . . . . . 08
Figure 4: Cement consumption in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 5: Construction industry in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 6: Spending on concrete admixtures in India . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 7: Indian Construction Chemical industry (INR Cr) . . . . . . . . . . . . . . . . . . . . 18
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Executive Summary
T
his report is developed by Tata Strategic Management Group with support of
FICCI as the knowledge paper for the "5th Conference on Construction
Chemicals, 2014".
Indian construction chemicals industry currently stands at INR 3,600 Crores and has
shown a strong growth of 17% over the last 5 years. Admixtures constitute majority of
the market with 42% share. Flooring and waterproofing agents are the next leading
segments with 14% share each. Chemicals for repair and rehabilitation constitute
another 12% of the market while the remaining 18% is formed by adhesives & sealants.
The share of flooring chemicals is high in Indian market as compared to developed
world while India has a low share of tiling, sealants and waterproofing.
Overall market is fairly consolidated but there is considerable fragmentation of
individual products and application areas. A large number of global construction
companies have set up local manufacturing operations in India. The top 7 players
account for ~50% of the market; next 20 players ~25% and the remaining 25% comprises
of small and unorganized players.
Going forward, the industry is expected to maintain its growth momentum driven by
untapped potential of the market and expected growth in construction industry over
the next 5-7 years due to government's investment plans. The industry is expected to
grow by 15-16% p.a. over the next 5 years and reach INR 7,000-8,000 by FY18. Also,
increasing awareness amongst industry players regarding compliance with
international standards is expected to promote the adoption of best practices in the
industry. Ban on onsite mixing of cement and compulsory usage of ready to mix
cement in metros are the key government regulations which could have significant
impact on the industry growth.
In spite of the strong growth drivers, the industry faces challenges in terms of low
awareness levels, lack of skilled labor and high price-sensitivity of customers. Hence, it
becomes imperative for construction chemicals manufacturers to invest in effective
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marketing of products to make users aware of their applications and benefits.
Providing technical training to workers about appropriate usage of chemicals in
construction will also ensure correct application and better results, reinforcing the
customers' belief in the utility of construction chemicals.
Going ahead, the construction chemicals industry should focus on developing new
processes and products with sustainability as the core principle. This requires
developing a collaborative platform in which the academia, government and
regulatory bodies, manufacturers and customers come together and promote and
execute strategies for implementing judicious use of chemicals in the construction
industry.
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Introduction to
Construction Chemicals
C
onstruction Chemicals, as the name suggests, are the chemical compounds
used in construction activities, be it residential, non-residential or non-building.
These compounds belong to a niche specialty segment of the chemical industry
and can be used either in existing construction projects to speed up the work or in new
construction projects to impart durability and strengthen the structures. The benefits
of using construction chemicals are far more than the increase in the cost of the project
which is 2-5%. Certain chemical products help in minimizing the quantities of cement
and water used in the construction. These compounds impart chemical as well as
physical properties in applications such as cross-linking or phase change (from liquid to
solid). Construction chemicals are essential for high quality concrete and for
promoting the improvement of concrete performance. They also increase the life of
construction work and impart additional protection from environmental hazards.
Based on end use applications, these compounds can be broadly classified into five
categories as shown in Figure 1.
Figure 1: Categories of Construction Chemicals
CONSTRUCTION
CHEMICALS
Concrete
Admixtures
Water Proofing
Chemicals
Flooring
Compounds
Repair And
Rehabilitation
Miscellaneous
Lignobased
Polyurethane
based
Epoxy & floor
hardners
Cementitious
repair mortars
Sealants
*SNF & SMF
based
Bitumin based
Polyurethane
coatings
Polymer repair
mortars
Grouts
*PCE based
Polymer SBR, Acrylic
Polyurea based
Epoxy based
resin mortars
Adhesives
*PCE :Polycar boxylic ether; SNF: Sodium Naphthalene Formaldehyde; SMF:
Sulphonated Melamine Formaldehyde
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A representative picture of the chemicals is as below
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T
Indian Construction
Chemicals Market
he Indian construction chemical market is at a nascent stage, but is attracting
lots of attention with an increasing number of global construction companies
making a foray into manufacturing operations in India. The industry is
becoming more attractive and is expected to experience strong growth in the next 5
years owing to the trends in the industry as detailed in the report later.
1. Market size and past growth
The Indian construction chemicals market has shown a strong growth rate of ~17% p.a.,
historically due to the construction boom in India and growing awareness in the
industry for better quality of construction. Increase in urbanization has further
boosted the growth of construction chemicals industry. It increased from INR 1,400
Crores in 2007 to INR 3,600 Crores in 2013.
Figure 2: Indian Construction Chemical industry (INR Crores)
Construction chemicals ( INR Crore)
3600
17%
2100
1400
2007
2010
2013
Source : Industry reports, Tata Strategic estimates
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2. Construction chemicals segments
Construction chemicals market is largely driven by concrete admixtures, which
accounted for 42% of the total market in 2013. Flooring and waterproofing chemicals
are the next big segments with a share of 14% each. Other segments include sealants,
grouts and adhesives which together account for ~18% of the total construction
chemicals market. The share of flooring is high in Indian market as compared to
developed world while India have low share of Tiling, Sealants and waterproofing.
Indian construction chemical market has >80% business in new builts.
Figure 3: Indian Construction Chemical product share (%age)
Adhesives
& Sealants18%
Admixtures
42%
Repair &
rehabilitation12%
Waterproofing
14%
Flooring 14%
Source: Industry reports, Primary & Secondary research
2.1 Admixtures
Cement is a widely used as binding material in construction. For concreting, cement is
mixed with crushed rock, sand and water in specific proportion to produce concrete.
For getting better results, better workability, more strength, and finishing, cement or
mortar admixtures are used. Chemical admixtures are added to the mix immediately
before or during mixing. Admixtures are primarily used
l
To reduce water content in concrete.
l
To increase compressive strength and durability parameter of concrete.
l
To enhance the workability and giving more transportation and placing time.
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Admixtures are used during the first stage of construction. The market in India was
valued ~INR 1,500 Cr in 2013. Three types of admixtures are most prevalent in the
market - Ligno based, SNF (Sulfonated Naphthalene Formaldehyde) & SMF
(Sulfonated Melamine Formaldehyde) based and PCE based. Ligno based admixtures
were the first generation admixtures and gave lower performance compared to SNF
and PCE based admixtures. PCE based admixtures are the 3rd generation admixtures
and are usually 3-4 times more expensive than SNF/ Ligno based admixtures. The raw
materials for manufacturing of PCE admixtures are not easily available in India and
~80% are imported from Korea, China and Japan. Apple Chemie India Pvt. Ltd. is
currently the only manufacturer of PCE in India.
2.2 Flooring agents
Flooring compounds are mostly epoxy and polyurethane based. Industrial flooring
compounds are used to meet various industrial needs such as abrasion, load impact,
chemical attack, moisture penetration, strengthening of damaged floors, as well as
improving the aesthetic appeal of the floor. They are also used to provide certain
special features such as slip resistance, static resistance, fire resistance, antibacterial
properties, and so on.
Flooring compounds are largely used at the finishing stage of the construction. Major
commercial complexes and shopping malls prefer such products. The market for such
compounds in India is valued ~INR 500 Cr in 2013. Epoxy and floor hardeners constitute
the major share of the market followed by PU based flooring agents.
2.3 Waterproofing agents
Water proofing caters to various end use applications with products based on
Bitumen, PU and polymers like SBR & Acrylic. These compounds are available in liquid,
solid, slurry and two-component coating forms.
Water proofing compounds are designed to stop water infiltration. These compounds
or membranes can be extremely effective when applied on the exterior of a
foundation system. Application of the water proofing compounds can be done by
implant treatments i.e. either dipping or spraying or by low-pressure spraying on the
surface.
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Water proofing compounds are added during the construction as integral water
proofer during the construction, for waterproofing of concrete and also post
construction as a preventive and maintenance waterproofing ingredients. The size of
this segment is estimated ~INR 500 Cr in 2013. The price of products varies depending
on the raw material used. The industry is moving away from bituminous compounds
due to their lower performance and non- eco-friendly nature.
2.4 Repair & Rehabilitation
The repair and rehabilitation is a highly unexplored and underdeveloped market.
Retrofitting is basically addition of new technology or features to older systems and
improving the structures with energy efficiency. Rehabilitation is reconstruction of the
structural components which were damaged. These products include cementations
repair mortars, epoxy based mortars and other products like rust removers, anticorrosion products etc.
The size of this segment is estimated ~INR 430 Cr in 2013. Cementitious mortars are
most frequently used due to their lower prices as well as the ease of usage. Polymer
based repair and rehabilitation products are widely used as they are less expensive
than epoxy based material and also comply with the desired strength criteria. Epoxy
based mortars are the growing segment and skilled labor is required for most of the
product applications.
2.5Miscellaneous
2.5.1 Sealants
Sealants are used to seal expansion joints, cracks, joints in concrete roads and to fill
gaps between concrete. Major types of sealants include the following:
l
Polysulphide sealants: These are most commonly used in the construction industry
as expansion joints for concrete roads, structural joints and others.
l
Polyurethane
sealants: These are used for high-end applications where high
flexibility and bonding strength are required.
l
Silicone sealants: These are generally used where good bonding is required between
two dissimilar surfaces such as fixing of glass on metal frame.
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2.5.2 Grouts
Grouts are compounds used for giving extra strength for the foundations of loadbearing structures. They are also used for repair and sealing of cracks and gaps. Grouts
have different chemistries depending on the applications as discussed below:
l
Epoxy-based
liquid grouting compounds are mainly injected into the walls to fill
hairline cracks and gaps, thereby improving the strength of the structure.
l
Cementitious grouts are used for imparting extra strength to machine foundations,
base plate or anchor bolts for machines or equipment and others. They are also used
for repair of building structures and in heavy industries such as steel, power plants
and ports.
l
Polyester-based
grouts are also available, which are used for anchoring to impart
strength to foundations that must be achieved in limited available space. Grouts can
also be made to have special characteristics such as fast setting, free flow, on-shrink
and others by addition of different additives as per the end-user requirement.
2.5.3 Tile adhesives
Tile Adhesives are made using high quality material which enhances the durability of
the adhesive and its bonding span is increased. They are primarily based on cement,
epoxy and polymer formulation (mainly acrylic polymer). Cementitious adhesives are
most commonly used in India owing to their lower price. They are used in a variety of
applications as discussed below:
l
Cementitious
adhesives: Cement based adhesives are largely used as wall tile
adhesives & ceramic floor tile adhesives. Water resistant cements and polymer
modified cements are suitable both for internal and external use.
l
Epoxy
adhesives: Epoxy resins are two component cold curing adhesives which
produce high strength durable bonds. These adhesives may be used internally or
externally and are resistant to oils, water, dilute acids, alkalis and most solvents
l
Polymer based adhesives are suitable for fixing wall tiles in damp and wet conditions
like domestic showers, swimming pools.
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3. Major players
The overall market is fairly consolidated but there is considerable fragmentation of
individual products and application areas. There are a large number of global
construction companies who have set up local manufacturing operations in India. The
top 7 players account for ~50% of the market; next 20 players ~25% and the remaining
25% comprises of small and unorganized players. In the past there has been a
considerable change in the market share of companies due to which Medium-sized and
regional manufacturers have gained considerable share of market. Based on revenues
top 5 players are Pidilite, BASF, SIKA, FOSROC & SWC. There are many other regional
and smaller players as well. Approximately 300 companies are estimated to be
operating in this segment.
*Top 5 Player profiles are given in Annexure I.
4.Key challenges
The construction chemicals market in India is still highly under-developed when
compared to other countries, such as China, which accounted for 42% of the global
construction chemicals consumption in 2012. Consumer awareness is very low
regarding new chemical techniques and construction aids. Margins are lower because
most contractors prefer low-cost chemicals to reduce the overall construction cost.
High value products have limited demand and are used only by premium construction
houses. Some of the key challenges faced by the industry are as follows:
l
Price
sensitive market: Indian construction chemicals market is highly cost-
conscious. The customers are not willing to spend much on construction chemicals.
They are still not fully aware of the benefits of various construction chemicals and
hence tend to use low-cost substitutes. Decisions are taken based on immediate
cost and not on overall benefits achieved from the usage of these materials.
l
Low entry barriers: The construction chemicals market is comprised of large MNCs
as well as several local small-scale manufacturers. Due to low entry barriers,
competition is high and several low value products are being sold in the market.
l
Low awareness levels: Contractors are not adequately aware about the use of right
type and quality of construction chemicals for durable structures. The durability of
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material is not been studied extensively by the manufacturer under Indian condition.
The chemical protection and maintenance is not well understood by the user. The
application tools or accessories need to be updated. The code provision or the user
guide line with product is missing
l
Unskilled
labourers: The practice of employing unskilled workers in construction
activity is still hampering the growth of the sector, as construction chemicals are
sensitive products and their use requires basic technical expertise and training.
l
Lack of stringent regulations: The industry lacks in relevant consumer standards for
construction. Market participants are also frequently challenged by the absence of
quality standards for manufacture and application of construction chemicals which
leads to price wars.
l
Ban on
illegal sand mining in India: National green tribunal (NGT) banned sand
mining from river beds without an environmental clearance across the country in
August, 2013. Sand and bricks, apart from steel, cement and aggregate, are the
prime raw material that goes into construction. Due to non-availability of natural
sand, industry has started using crushed stone sand and artificial sand. This is likely to
impact the usage and requirements of construction chemicals in the market as the
quality specifications of the concrete from artificial sand would be different than
that of the natural sand.
5. Growth drivers and Future Outlook
Construction chemicals market has a huge growth potential due to the expected
growth in construction and manufacturing sector in India. With growth primarily
driven by increasing construction activities in both new construction and repairs &
rehabilitation technologies, demand for construction chemicals has increased. Many
newly developed products give better performance and results. Hence, there is a shift
in demand towards products offering better performance value-added products such
as silicon caulks, specialty cement additives, polymer-based grouts and mortars etc.
Key growth drivers for the construction chemicals market in India are as follows:
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Growth in urban housing sector:
The cement consumption in India is growing at a rate of 5-6% driven by the growth in
urban housing sector. Housing sector contributes to 59% of overall cement
consumption followed by commercial and industrial construction. Concrete
consumption is likely to follow similar growth trends in India.
Figure 4: Cement consumption in India
Cement consumption in India
5.3%
CAGR
6.5%
~301 MT
~232 MT
~169 MT
37
49
50
60
58
Central
24
West
32
East
25
South
54
North
34
46
58
2008
2013
2018
39
75
60
Source: Crisil, Industry reports, Tata Strategic analysis
Growth in end-use market:
The Indian construction opportunity is expected to grow by 1.9 times over the next 5
years.
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Figure 5: Construction industry in India
Construction Market Opportunity (INR Trillion)
18
16
12
10
2
2
Industrial
Total
Infrastructure
FY08-13
FY14-18
Source : Crisil research
This growth will be driven by investments in the infrastructure segment, which are
expected to almost double over the next 5 years. Government spending has been one
of the key drivers of the growth of the construction industry. The financial constraint
on the government has been reduced by several public-private partnerships, hence
increasing the focus on development. Other growth drivers are as follows:
l
National
Manufacturing Policy which aims at enhancing share of manufacturing in
national GDP from 16% to 25 % by 2022.
l
Focus
on infrastructure development: Government of India's commitment to
increase spend in infrastructure to 10% of GDP in the 12th Five-Year Plan
l
Rising aspirations of large middle income group and changing demographics driving
demand for residential real estate
l
Increasing
urbanisation: ~30% of Indian population is urban and Urbanization to
grow to 40% by 2030
l
100% Foreign Direct Investment (FDI) in real estate to boost construction activities
l
Increasing
acceptability of ready mix concrete (RMC) is also leading to increased
demand for construction chemicals. Currently, the use of RMC in construction is
around 7% of domestic cement demand. This is expected to rise to 20 to 25% over the
next few years
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Increasing penetration of construction chemical products:
The penetration level of construction chemicals is currently very low in India as
compared to other countries.
Figure 6: Spending on concrete admixtures in India
Spending on concrete admixtures ( $/ m3)
4.5
2
1
India
China
USA
Source : Secondary research, Industry reports
This is mainly due to insufficient understanding of the benefits of these compounds
along with a lack of technical skills to use construction chemicals. However,
construction chemicals are finding increased usage driven by:
l
Increase
in awareness about quality construction materials such as performance-
enhancing products among consumers and builders.
l
Increased
construction activities triggered by urbanization and development of
rural areas which are still largely untapped markets
l
The use and access to foreign technology and the entry of foreign companies in the
construction chemicals sector has eventually resulted in quicker growth of the
construction chemical sector. Today several projects funded by multilateral
agencies like ADB and World Bank have made use of good quality construction
chemicals mandatory
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l
Architects
and consultants have realised the importance of quality construction
chemicals and they generally tend to specify trusted brands of construction
chemicals
l
CCMA
(Construction Chemical Manufacturers Association) India, is an organized
body working to promote the use of Construction Chemicals in India". They conduct
technical seminars and awareness programmes for the benefit of construction
industry.
l
The construction
chemicals industry also provides technologies and products to
provide additional performance and endurance to structures and hence reduce the
impact of corrosion. Chemicals including surface coatings, floorings, concrete
admixtures, corrosion inhibitors, grouts and sealants, repair mortars protect the
surface from corrosion by restricting the ingress of moisture and providing a 'sealed'
structure.
With increasing awareness in the industry, the usage of construction chemicals as
corrosion inhibitors is gaining popularity. Most projects in the country are expected to
use these chemicals to reduce corrosions and increase the life of the asset. A special
section has been included on Corrosion issue in the later part of this report.
Changing regulatory environment:
Lack of government policies have always been the matter of concern for the growth of
construction chemicals industry. However, upcoming government regulations as
below aim to fix some of the loopholes in the industry:
l
Current
and prospective regulatory guidelines incentivizing energy-efficient and
green buildings are expected to drive demand for suitable, innovative protective
coatings and safe chemicals.
l
Compulsory usage of Ready Mix Concrete in Metros like Mumbai, Bangalore etc. is a
key regulatory change. Similar regulations in Tier-I & other cities would be a key
driver in increasing the usage of construction chemicals.
l
With increased
government focus on investments in infrastructure, increase in
usage of RMC in Govt, infrastructure projects would boost the growth further
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Increasing compliance with international manufacturing standards:
Indian Construction industry is fast adopting the best practices from across the world
and implementing consumer standards matching with international standards. This
will help increase the current penetration levels of construction chemicals. The
following illustrations explain the upcoming trends which are driving the usage of
construction chemicals:
l
Ban on
onsite mixing of concrete is aimed at reducing pollution levels and in turn
would generate demand for ready-mix concrete admixtures
l
Self-compacting concrete (SSC) is being preferred over normal-strength concrete as
SSC doesn't require external compaction and enhances strength of structure.
Increased usage of SSC would drive the growth of special admixtures like
plasticizers and retardants
l
High rise
buildings are being developed in cities owing to space constraints. This
trend is driving the growth of high performance concrete and increased use of
admixtures and related construction chemicals
The Indian construction chemicals market is expected to show high growth rate of 1516% p.a., in the future. It is expected to reach ~INR 7,000-8,000 Cr by 2018 mainly driven
by the untapped potential of the market and steady growth in the construction
industry over the next 5 to 7 years.
Figure 7: Indian Construction Chemical industry (INR Cr)
Construction chemicals (INR Cr)
7,000-8,000
15-16%
3,600
2013
2018
Source : Industry reports, Tata Strategic estimates
Source: Secondary research
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6. Key growth imperatives
Construction chemicals industry has a good growth potential in the next 5 years. The
industry needs initiatives from leading players, government, regulatory bodies, as well
as industry associations/ federations to for growth.
Key growth imperatives for industry players could be highlighted as:
l
Strong
marketing and increased customer awareness: Effective marketing of
products is essential to make users aware of their applications and benefits.
Manufacturers could consider investing in programmes to educate construction
contractors about the benefits of using superior construction chemicals, in terms of
lower project completion time and ease of usage. It is imperative to maintain longterm relationships with customers and exert influence over channel partners to
retain foothold in the industry.
l
Skill development
among workers: Providing technical training to workers about
appropriate usage of these chemicals in construction will ensure correct application
and better results, reinforcing the customers' belief in the utility of construction
chemicals. Industry and academia could tie-up to provide dedicated courses/
training on construction chemicals in engineering institutes as well as ITIs.
l
Product innovation: Product innovation requires international standards. Focus on
sustainability / green aspects, corrosion issues (which takes almost 3% of national
GDP) will require innovation. Construction chemical manufacturers must focus on
development and marketing of innovative products (e.g. silicon-based sealants)
which are expected to outgrow traditional products.
l
Low cost
products: Companies with innovative, low cost products are likely to
capture significant share of the market. Given the low awareness and price sensitive
nature of the market, it will be challenging to get consumers to accept more
expensive products. Thus product innovation must also focus on creating affordable
products with wide applications.
l
Adoption
of modern techniques of delivery: Construction chemical companies
could focus on adopting modern techniques of delivery such as on-site mixing of
concrete and energy consumption in buildings by effectively liasoning with the
government and the construction industry. The ability to deliver the product at the
consumer's doorstep would be key to success for construction chemicals players.
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Government and regulatory bodies could play an important role in driving the growth
of industry by focusing along the following lines:
l
Increase
infrastructural investments: Government's initiatives towards
infrastructural development are one of the major factors driving the growth of
construction chemicals industry. The construction industry is witnessing support
from World Bank and ADB and all the projects funded by these organizations
necessitate the use of construction chemicals. 100% FDI in real estate sector would
also significantly drive the growth of construction chemicals
l
Policies
for promotion of construction chemicals: Indian government's initiative
towards favourable policies like National Building Code and Green Building is
estimated to boost the growth in construction chemicals market.
l
Define quality standards: Government and regulatory bodies could come together
to define set quality standards for the industry. This would dampen the growth of
low quality, cheap construction chemicals and incentivise players to invest in the
industry. Organizations such as CCMA (Construction Chemical Manufacturers
Association) India, can promote the use of Construction Chemicals in India by
conducting technical seminars and awareness programmes for the benefit of
construction industry.
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3
C
Special Focus:
Corrosion Management
orrosion is a naturally occurring phenomenon commonly defined as the
deterioration of a substance (usually a metal) or its properties because of a
reaction with its environment. According to the NACE International's 2002
U.S. corrosion study, the direct cost of metallic corrosion is $276 billion on an annual
basis, which represents 3.1% of the U.S. Gross Domestic Product (GDP). Extrapolating
this figure globally, the cost of corrosion is over a trillion US dollars. Unlike weather
related disasters, however, corrosion can be controlled, but at a cost. It is estimated
that a third of this cost can be saved by current technologies and awareness of the
problem.
Corrosion Control Methods
Corrosion is so prevalent and takes so many forms that its occurrence and associated
costs cannot be eliminated completely. However, it has been estimated that 25 to 30%
of annual corrosion costs could be saved if optimum corrosion management practices
were employed. The use of appropriate corrosion prevention and control methods can
ensure public safety, prevent damage to property and the environment, and saves
billion of dollars worldwide.
Various time proven methods for preventing and controlling corrosion depend on the
specific material to be protected; environmental concerns such as soil resistivity,
humidity, and exposure to saltwater or industrial environments; the type of product to
be processed or transported; and many other factors. The most commonly used
methods include organic and metallic protective coatings; corrosion resistant alloys,
plastics, and polymers; corrosion inhibitors; and cathodic protection-a technique used
on pipelines, underground storage tanks, and offshore structures that creates an
electrochemical cell in which the surface to be protected is the cathode and corrosion
reactions are mitigated.
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While technological advancements have provided many new ways to prevent
corrosion, better corrosion management can be achieved using preventive strategies
in nontechnical and technical areas. These strategies are identified as follows:
l
Increase awareness of significant corrosion costs and potential cost savings.
l
Change the misconception that nothing can be done about corrosion.
l
Change
policies, regulations, standards, and management practices to increase
corrosion cost savings through sound corrosion management.
l
Improve education and training of staff in the recognition of corrosion control.
l
Implement advanced design practices for better corrosion management.
l
Develop advanced life-prediction and performance-assessment methods.
l
Improve
corrosion technology through research, development, and
implementation.
l
The construction chemicals industry provides technologies and products to provide
additional performance and endurance to structures, which in turn provide for a
reduction in corrosion of the asset. These chemicals include among others, surface
coatings, floorings, concrete admixtures, corrosion inhibitors, grouts and sealants,
repair mortars and fireproofing. By restricting the ingress of moisture and providing
a 'sealed' structure, these materials make it difficult for the corrosion cell to be set
up. The industry today is maturing and most projects in the country use these
technologies to reduce corrosions and increase the lit elf the asset.
The world continues to face critical challenges in the field of corrosion prevention and
control,where aging equipment,new product formulations, environmental
requirements, and strict budgets require corrosion control programs that are
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Knowledge Paper on
4
Annexure I:
Major Players
Brief profile: Pidilite
Pidilite
www.pidilite.com
Company overview
Key products
Manufacturing
locations
·
Started operations in 1959, a pioneer in consumer and
specialties chemicals in India
·
Adhesives and sealants
·
Himachal Pradesh
·
Maharashtra
Company Profile - BASF Construction Chemicals
BASF Construction Chemicals Division
www.basf-cc.co.in
Company overview
·
Wholly owned by the BASF group
Key products
·
Concrete admixtures, joint sealants, flooring and
waterproofing
Manufacturing
locations
·
Turbhe, Navi Mumbai
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Company Profile - SIKA India
SIKA India
www.sika.in
Company overview
·
Convened India operations in 1987
Key products
·
Waterproofing: Sikacim
·
Tiling: Sika Tilofix
·
Subsidiary of Switzerland-based parent company
·
Sealing: SikaBoom
Manufacturing
locations
·
Kalyani, West Bengal
·
Goa
·
Jaipur
·
Blending units in Mumbai and Chennai
Company Profile - Fosroc India
Fosroc India
www.fosroc.com
Company overview
Wholly owned subsidiary of Fosroc International
Key products
Admixtures, joint sealants, surface treatments
Manufacturing
locations
Bangalore
Ankleshwar
Rudrapur
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Company Profile - SWC
Structural Waterproofing Company Private
Limited (SWC)
Company overview
·
Established in 1930
Key products
·
Concrete admixtures,water proofing and cement grinding aid
Manufacturing
locations
·
Mumbai (Vapi)
·
Kolkata (Salt Lake)
·
New Delhi (Noida)
·
Chennai (Ambattur)
Other Key domestic players in Indian Market Space Include
CICO
Sunanda
Cipy polyurethane
Chembond
Fairmate
Apple Chemie India
LRC specialty chemicals
Perma Construction
Balmer Lawrie
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5
About Tata Strategic
Founded in 1991 as a division of Tata Industries Ltd, Tata Strategic Management Group
is the largest Indian own management consulting firm. It's strong consulting team is
supported by a panel of domain experts. Tata Strategic has undertaken 500+
engagements, with over 100 clients, across countries and sectors.
It has a growing client base outside India with increasing presence outside the Tata
Group. A majority of revenues now come from outside the group and more than 20%
revenues from clients outside India.
Tata Strategic offers a comprehensive range of solutions covering Direction Setting,
Driving Strategic Initiatives and Implementation Support
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Knowledge Paper on
Our Offerings
Strategy
l
Vision
Set Direction
Entry
& Acquisition Planning
l
Strategic due diligence
l
Scenario Planning
l
Manufacturing Strategy
insights
l
Growth Strategy/Business Plans
l
Rural Strategy
l
Digital Strategy
Organization Effectiveness
l
Organization
Drive Strategic
Initiatives
l
India
l
Market
Structure
l
Corporate Center Design
l
Roles & Decision rules
l
Performance Management
l
Capability Assessment
l
Talent Management
l
Delegation & MIS
l
Alliance
Operations
Marketing & Sales
l
Revenue
Enhancement
l
Product Innovation
l
Market Share
Rura/Urban
l
Go to Market
l
Dealer Effectiveness
l
Supply
Chain Optimization
l
Throughput enhancement
l
Superior Fulfillment
l
Project Excellence
l
Procurement Transformation
l
Strategic Cost Reduction
l
Vendor Compliance
Implementation Support
Support
Implementation
l
Implementation
Plan
Management
l
Refinements/Course
Corrections
l
Program
About Tata Strategic – Our Expertise Areas
Typical Client Concerns
l
How can
I grow – portfolio optimization, new
products, new technologies, new
geographies?
l
What should
be the levers of growth –
organic vs. inorganic growth, strategic
alliances etc.?
l
How do
I make existing businesses effective sales & distribution strategy, pricing strategy
etc.?
l
How do
I reduce costs (material, conversion,
overheads, manpower), reduce risks, &
improve productivity?
l
What should
be my logistics and supply
chain strategies? How do I optimize costs
and services?
I manage people, align resources,
improve retention?
l
How do I ensure that people are aligned with
vision?
Tata Strategic Expertise
l
Growth/
entry strategy
l
Business
l
Target
due diligence
Identification and Valuation for M&A
l
Functional
strategies
l
Integrated
cost reduction ; OPTIC/ OSMIC
l
Strategic
Risk Management
l
Procurement,
optimization
logistics and supply chain
l
How do
l
Organizational
Effectiveness
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Tata Strategic Contacts
Manish Panchal
Practice Head - Chemicals, Logistics and Energy
Mobile: +91 98205 20303
E-mail: manish.panchal@tsmg.com
Phone: +91 22 6637 6713
Charu Kapoor
Principal – Chemicals
Mobile: +91 98218 06071
E-mail: charu.kapoor@tsmg.com
Phone: +91 22 6637 6756
This report has been authored by: Manish Panchal (manish.panchal@tsmg.com), Charu Kapoor (charu.kapoor@tsmg.com)
and Pulkit Agarwal (pulkit.agarwal@tsmg.com)
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Knowledge Paper on
About FICCI
Established in 1927, FICCI is one of the largest and oldest apex business organizations in
India. FICCI's history is closely interwoven with India's struggle for independence,
industrialization and emergence as one of the most rapidly growing global economies.
FICCI has contributed to this historical process by encouraging debate, articulating the
private sector's views and influencing policy.
A not-for-profit organization, FICCI is the voice of India's business and industry.
FICCI draws its membership from the corporate sector, both private and public, including
MNCs; FICCI enjoys direct and indirect membership of over 2,50,000 companies from
various regional chambers of commerce and through its 70 industry association.
FICCI provides a platform for sector specific consensus building and networking and is the
first port of call for Indian industry and the international business community.
Our Vision
To be the thought leader for industry, its voice for policy change and its guardian for
effective implementation.
Our Mission
To carry forward our initiatives in support of rapid, inclusive and sustainable growth that
encompasses health, education, livelihood, governance and skill development.
To enhance the efficiency and global competitiveness of the Indian industry and to expand
business opportunities both in domestic and foreign markets through a range of
specialized services and global linkages.
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indian construction chemicals industry imperatives of growth

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