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Taj Ul Masjid project where Cico has worked

The construction chemicals industry realises that the time is right to address its key issues and reorganise itself for the future boom, which is as inevitable as the current slowdown. Niranjan Mudholkar finds out why this sector can play a catalyst’s role in the growth of the construction industry.

Due to its direct linkage with the construction industry, the construction chemicals sector was showing an upward growth trend for the last five years. However, with the financial crisis wrecking havoc, the sector is now readying itself for at least 1-2 years of downturn.

“The recent slowdown in the global economy has definitely affected the Indian construction industry and hence the growth trend in construction chemicals sector is most likely to be affected,” says Anasuya Gupta, managing director, Cico Technologies Ltd, one of the market leaders.

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Current scenario
Besides Cico, the other major players include Fosroc, BASF, Sika and Pidilite. Dominic Britto, principal consultant - chemicals, materials & foods practice, Frost & Sullivan - South Asia & Middle East, explains the reason for the anticipated slowdown.

He says: “FDI in the construction business influenced the usage of higher quality materials resulting in high growth of construction chemicals. Now with the economic slowdown and reversal of FDI, the domestic contractors may not be particular about high quality resulting in lower use of construction chemicals.”

However, the slowdown, according to some, can actually be a blessing in disguise. “This is the time when the industry needs to get together and tackle the age-old problems that it has been facing. With the boom in the infrastructure and real estate industry, everybody was moving at break-neck speed. The time is right to analyse the ground realities, identify what’s wrong and take substantial corrective action,” says Dr SK Manjrekar, chairman & managing director, Sunanda Speciality Coatings Pvt Ltd.

Although, it is a relatively smaller player, Sunanda has been holding the fort for a long time purely due to its focus on R&D and exposure to the US, African and UAE markets besides the domestic. The other relatively small but key players in the market according to Upen Patel, head-marketing, BASF Construction Chemicals (India) Pvt Ltd, include Choksey, SWC-Chryso, Chembond, Don, Cerachem, MYK Group, Bal Ardex, WR Grace, STP, Carlisle Syntec, Texsa, Firestone, Cipy, Apurva and Krishna Conchem.

“There are many other regional and smaller players. Overall we estimate about 300 companies operating in this segment,” he says. Interestingly, the big 4-5 players account for more than 40% market share. “The industry is currently very fragmented in many product categories while in admixtures for concrete the retail segment is quite consolidated,” adds Patel.

With the construction industry driving on the fast track of growth, the last few years have seen unprecedented growth for the construction chemicals sector.

“For the past three years the sector has grown at a rate of 15-20%. In fact a recent Frost and Sullivan survey had projected a CAGR of 21.9% for the sector up to the year 2013. Most of the growth has come from concrete admixtures, waterproofing systems and industrial floorings. Besides, there has been a substantial growth in the sealants product category,” says Gupta of Cico.

“Our industry is growing 50% above the growth of construction industry in last five years and would continue to do so in next ten years period,” Patel remarks.