Concrete is truly an amazing building material. There aren’t a lot of materials that have persisted for millennia while hunger for this commodity has only become more ravenous. We’re completely surrounded by concrete today. The world is practically wrapped in it. However, the Ready mix concrete business in India is still in its infancy.
The Ready Mix Concrete industry is perhaps among the fastest growing sector in India. In the coming years the country will witness increased construction activity with faster development in our cities and infrastructure. RMC is expected to play a very important role in the scenario. As India builds its infra-structure, the RMC industry is steadily gaining pace as the most viable option to speed up construction.
Over the next 5 years, the size of the RMC industry is estimated to grow from INR 155-160 billion in 2009-10 to ` 395-400 billion in 2014-15. Though the penetration of RMC is higher in the metropolitan cities as compared to all India average, there is scope for further penetration of RMC in these cities with higher verticalisation and expected infrastructure development.
Witnessing a decade of rapid growth
In early 70s both pricing and distribution of cement were controlled due to shortage of supply, Ready mix concrete technology could not be implemented as investors felt that RMC plant will starve due to non-availability of cement. The levy of additional taxes & duties on RMC, entry tax, excise duty also contributed to the slow development of the concept. In the late 80s, after cement was fully decontrolled, RMC was manufactured on a commercial basis.
RMC industry has been on a continual growth path ever since the first commercial RMC plant was established in Pune in the year 1991. The year 1993 saw the entry of two corporate companies, ACC Cements and Unitech construction starting their commercial RMC plants in Mumbai to commercially exploit the potential of this sunrise industry. Ever since, the industry has grown leafs and bounds and as we see today the industry is growing and geographically spreading to all the corners of India covering, metros, tier 2 cities and even tier 3 cities as real estate and infrastructure projects line up in developing urban regions.
Today commercial RMC plants are present in more than 90 cities and towns across India and there are numbering more than 2500 RMC plants in operation in cities, and various projects locations across the country.
Production & trade: Current market statistics
The production capacity of a ready-mix concrete plant depends on the capacity of the batching plant. An ave-rage plant has a production capacity of 30 cubic meters per hour. The plant will be able to produce about 90,000 cubic meters a year. But the ready mix concrete (RMC) business in India has been facing continued hiccups over some time now. Established players have to take on intense competition from smaller region-specific companies. Major RMC companies are thus reworking strategies.
“The current slowdown has started slowly affecting the RMC industry in terms of reduced production volumes and cash flows. The main raw material being cement, the periodic fluctuations in cement prices and higher transportation costs due to fuel price rises have also affected the price realization for the industry.” remarked Dr. Aswath, Technical Advisor RMCMA-Karnataka.
In India, ready-mix concrete accounts for 4-7 per cent of the cement consumption as the economy fluctuates. In contrast, 70 per cent of the cement produced in a developed country such as Japan is used by the ready-mix concrete business. Currently RMC conversion ratio of Europe is 65%, of USA is 75% and that of UAE is 90% of cement. The growth of ready-mix concrete business in India is predominantly driven by demand from metros and Tier-2 cities. But now, since the focus has shifted to Tier-3 and-4 cities, the demand for it has shown a steady increase.
The total concrete market in India is estimated at 300 million cubic meters per annum of which the plant produced share is less than 35 million. Its share is expected to go up gradually from the present level of less than 6 per cent of the total cement production to the global average of 70 per cent, industry players say. “RMC is my undoubted preference. Besides savings in cement, there is a full control on the quality of the concrete without sacrificing the speed while site mixed concrete is the slave of the labor availability and end results on large volumes are not encouraging” said Mr. Ashok Dalwani, COO- City Head, Nirmal Lifestyle Ltd.
Major obstacles hindering the growth
Despite the growing acclamation there are many hurdles in the healthy growth of this industry. A RMC plant has to be located in an area where Concrete consumptions are there, as the concrete has to be transported. Also good water source at the plant site is a prime requirement because in case of non-availability of potable water in and around the location of plant, water has to be transported from distant location.
In Mumbai, growth of Ready Mix Concrete is slow as compared to Bangalore and other cities as its use has been made compulsory by their government. RMC also attracts sales tax of 15.8 per cent. Soon, more states will start levying sales tax on RMC. For example, today, Delhi charges 10 per cent sales tax on RMC whereas in Karnataka it is 12 per cent.
Government help is extremely necessary for the growth of this sector and Government specifications for CPWD and PWD jobs should include Ready mix concrete as a mandatory item. Moreover, Tax breaks are required for the growth of RMC. Also, developers /contractors should be discouraged from piling up materials like metal, sand etc. on roads/foot paths. Government bodies, private builders, architects/engineers, contractors, and individuals should be made fully aware about the advantages of using ready mix concrete.Said Mr. Vijaykumar Kulkarni, Principal Consultant, RMCMA, “Two Indian experts have tried to estimate the future growth potential of RMC industry in the country. Basing their estimate on the cement consumed through RMC route, they postulate that the percentage of cement consumption through RMC may reach the 10% mark by 2013-14. Thereafter, the growth may be faster and the cement consumption through RMC may reach the 25% mark by 2022, when the total number of commercial RMC plants in the country will reach 1,516.”
RMC sector: Key players target fast-track growth
Today’s fast-paced construction industry demands top quality products, delivered efficiently and on time. Many project managers prefer ready-mix concrete to on-site mixing, as the product is made with more precision. Anticipating a huge potential for the product, several major manufacturers of cement have launched ready-mix concrete.
The Indian market for Ready Mix Concrete has been showing a consistent positive growth, year after year, in spite of a few policy hurdles on the way. With the big infrastructure projects slowly turning to RMC, experts in this segment predict a business growth rate of 25% in India.
The increased use of RMC, as against the sluggish cement market, has made local producers as well as a host of major international players focused on the RMC business; Holcim, Lafarge, Heidelberg, etc. to name a few. With major investments flooding into this segment, the focus has now shifted to increasing the brand presence in the shortest possible time. The strategy is to have a well spread network of RMC plants, through timely execution of greenfield projects across the country.
Holcim, a major player in this segment, through its local associates ACC and Ambuja Cements, has already taken dynamic steps to revolutionize this in-dustry. Other big players that dominate the Indian market are Ultratech, RMC India (Prism cements), Godrej and Boyce, India cements, Madras cements, Lafarge (which overtook the L&T RMC business last year for INR 1450 crore), RDC concrete, Ahlcon RMC, IJM concrete, Bharath cement products RMC and CI concrete India.
The National Ready Mixed Concrete Association (NRMCA) had launched certifications for both ready mixed concrete industry facilities and professionals involved. These certifications have provided a competitive edge in the industry, showing customers and regulatory agencies that certified producers have an understanding of and support measures to provide the highest quality RMC in the safest and most efficient ways possible. There are about 260 RMC plants that have been certified by the association.
“RMCMA has taken enormous efforts in evolving a quality scheme for RMC and implementing the same in different parts of the country. Two of the world’s leading organizations dealing with ready- mixed concrete, namely the NRMCA, USA and ERMCO, Europe, have highly appreciated the work done by the RMCMA.” said Dr. Aswath, Technical Advisor RMCMA-Karnataka.
Innovation and technology trends
Today the entire RMC process is fully computerized, leaving no scope for human errors. All the control systems are Windows based. Cement and other raw material are checked as per the quality plans of the companies. All the raw materials are stacked in separate bins and are stored under cover so that aggregates are not exposed to direct sunlight and environment pollution.
Cement, Fly ash, Slag etc. are stored in separate silos for better control on recipe and handling of fly ash and slag are done from closed bunkers to silos directly. Also, separate weigh-batchers are provided for each ingredient like cement, water, admixtures and aggregates. The weighing is done on sophisticated electronic weigh batchers. Precise weighing of all materials is done through electronic load cells made up of special alloys.
Moreover, homogeneous mixing of concrete is ensured by use of special high-efficiency mixers like pan-type or turbo-twin shaft mixers and a fully equipped onsite plant laboratory is available at each plant. A Sprinkler system is installed to ensure temperature control of aggregates in hot weather.
In line with NRMCA’s focus towards environment and eco-friendliness all member silos are installed with bag filters and level indicators to avoid any kind of pollution and processes are in place for effective and periodic maintenance and calibration of all critical components. Also, laser sensor and moisture control are used for a stringent quality assurance while well trained and experienced engineers are available at every plant to take care of the quality of concrete.
Recently ACC Concrete introduced an innovative concrete solution M100 grade for construction of high intensity towers. It is for the first time in the world that M100 was manufactured without natural sand but by using fine aggregates. With this innovation ACC Concrete has become the only ready mix concrete company in India to offer specialized solutions for high intensity towers.
Future: Cementing the growth
If you’ve noticed a gang of laborers reminding you of the past century, standing in line and passing head-loads of concrete mixture up a stairway at a construction site, no proof is required to underline the rudimentary systems that continue to prevail in a nation’s infrastructure sector.
With the concern over liquidity there has been a general slowdown in both real estate and infrastructure projects. Many of the high-end residential projects, especially in metro cities, have been delayed. Unfortunately, only these projects depend on RMC as these buildings come up generally in congested residential areas.
While China has embarked on a furious pace of construction building express highways and high-rises galore, India seems to lag. For a country focused on development, it is imperative to mechanize its infrastructure creation. Most countries of the world have banned head-load supplies of concrete at construction sites and insist on pumped concrete. The concept of using site-mix concrete is thus slowly fading away across the world.
With RMC you can achieve almost 15.5% savings in construction costs in terms of factors such as quality and wastage-avoidance. One reason why India is beginning to shed its dependence on manual concrete mixing is the penalties now associated with infra-structure projects. Delays cost the builder now, in contrast to even a few years ago when the builder would pass on cost escalation to the buyer in case of a delay in the project.
“It is safe to conclude that we have not achieved as much as we should have. Because of added component of transportation cost, RMC will always be costlier than site-mixed concrete of identical mix proportions. Once the owners of construction projects are ready to pay the extra cost to ensure quality, speed of construction, lower the life-cycle cost and reduce C&D wastes, RMC will have its rightful place in the construction sector.” said Dr. A.K. Mullick, former DG, NCBM.
India is in fast-forward mode and time is of essence. Players like BPOs often want to start operations straight away and have no time to wait. All this is tipping the scales in favor of use of ready-mix concrete, and mechanized construction equipment at sites. So we conclude that if the quality of concrete is something that you cannot compromise on in your project owing to many critical factors at stake, RMC is the way to go!