Massive infrastructure build-up is assuring high growth for India’s RMC and batching plants segment with high capacity plants playing a major role.
BY Madhukar Joshi
Growth and only relentless growth has been the common theme of ready-mix-concrete (RMC) and batching plants in India in the recent past. These two inter-related categories have been demonstrating an illustriously strong demand in spite of the prolonged slowdown witnessed in India’s residential and commercial real estate sectors.
As the name suggests, ready-mix concrete (RMC) is concrete that is made or batched for a client’s project-specific construction needs. The key constituents of RMC include Portland cement, sand, crushed stone, microsilica, pulverised fuel ash, slag, air and water. Transacted in multiples of cubic meters, RMC is delivered using drum cradles or barrel trucks or transported dry via transit mixers and then mixed at the construction sites. Due to its long life-span—nearly 30 years—and the cost- and time-savings advantages, RMC has gained immense popularity in India.
Various types of RMC are sold today based on different applications including decorative RMC for aesthetic look and feel, fibre-reinforced for structural applications, fluid-fill RMC as protective-layer for pipes or cables, rapid-setting type for precast works or early strength development, permeable RMC for bridges and tunnels, and antibacterial type for hospital buildings, laboratories or food-storage godowns. Some of the leading players in this segment include (but are not limited to) ACC, Jaypee, JSW, Lafarge, Prism, Ramco, Shree, and UltraTech.
A batching plant is the equipment used to make concrete using the materials mentioned above. Three types of batching plants are used today: transit-mix plants, central-mix plants and hybrid plants with both transit-mix and central-mix affixed next to each other.
Multiple types of batching plants are available with variations based on types of mixer drums such as tilted, single-shaft, twin shaft, etc., and their concrete manufacturing capacities measured in cubic meters per hour. A few leading players in this segment include (but are not limited to) Akona Engineering, Apollo Inffratech, Macons, Putzmeister Concrete Machines, Sany Heavy Industry India, Schwing Stetter, Speedcrafts, and Universal.
The growth drivers
The biggest demand drivers for India’s RMC and batching plants segments have been the Indian government’s large-scale infrastructure and housing projects. These projects include Bharat Mala Pariyojana, Sagarmala, and Pradhanmantri Awas Yojana.
Bharat Mala Pariyojana
This ambitious road construction project by the government of India has a range of developmental objectives including boost to industrial development, tourism, tribal sector, port connectivity, trade with neighbouring countries, and to border transport, besides employment generation. The phase 1 of Bharat Mala will commence in 2018 and involve construction of 34,800 km of roads. Of this, 24,800 km will be new roads and 10,000 km will be those that are currently under National Highway Development Project. The total Bharat Mala project outlay is expected to be Rs 5.35 lakh crore and the government claims to have already acquired land and approved detailed project reports (DPRs) for nearly 25,000km roads.
In line with the objectives mentioned above, the Phase 1 will cover various types of road projects including two greenfield expressways (800km), 58 port connectivity projects, seven coastal roads (2011km), ring roads and by-passes for 22 cities and towns, roads for 44 economic corridors (9,000km), inter-corridor roads, 4-lane roads connecting 550 districts, feeder roads for national highways, border road projects, and 22 international road projects. The project will comprise construction of 4-lane, 6-lane, and 8-lane roads to minimise traffic congestion in future.
According to the Universal Axis Lifting Solutions’ MD Ranjeet More, the road infrastructure push of the government is providing a strong push to batching plant sector in India. “Roads and Highways continue to be in the centre of action with many infrastructure projects under-way while more projects are in the pipeline. Our inquiry level has increased substantially compared to last year,” he says.
Another equally ambitious programme, Sagarmala has been undertaken by the Government of India. Under Sagarmala, 415 independent projects, at an estimated investment of Rs 7.99 lakh crore, have been identified across new port development and port modernisation, port connectivity enhancement, port-linked industrialisation, and coastal community development.
Two components of Sagarmala are extremely relevant to the prospect of RMC and batching plants segments. The project plan includes 170 port connectivity enhancement projects at a total cost of Rs 2.3 lakh crore and port-linked industrialisation with a total outlay of Rs 4.2 lakh crore. (See table: Sagarmala at a glance).
To be completed in multiple phases till 2035, Sagarmala will create modern port cities, establish port connectivity, and erect port infrastructure.
According to a study published by the Nirmal Bang Institutional Equities Research, 27mnmt of additional cement demand will be created by Sagarmala over the next five years. (See graph: Cement demand due to Sagarmala). Terming it as a “well thought-out project”, the research firm also lists out reduced logistics costs due to affordability of ocean freight over road transport and nearly 50mnmt cement demand due to industrial development around port infrastructure as two major additional advantages to the cement sector.
Pradhan Mantri Awas Yojana (PMAY)
This affordable housing for all scheme is being implemented in 500 Indian towns and is targeted to be executed by 2022. By 2019, the government plans to complete the first phase by constructing nearly 1 crore houses ready with water supply, sanitation and power supply. The scheme will extend loan subsidy to households with annual income of ₹ 3 lakh or lower, and those with household income of Rs₹6 lakh or below.
The slum areas will be developed in collaboration with private sector. The scheme covers a loan subsidy for new construction as well as renovation of existing homes for economically weaker sections (EWS), low income group (LIG), and middle income group (MIG) households.
“The initiatives including 100 smart cities project, urban infrastructure projects, metro rail, affordable housing schemes, port development, creation of industrial corridor and a dedicated freight corridor, would provide a strong boost to batching plants business in the near future,” says Kalpesh Soni, GM – marketing at KYB-Conmat, a major player in concrete batching plants, concrete paving machines and transit mixers.
While the slump in residential and commercial real estate sector has resulted in a corresponding dip in demand for small capacity batching plants, the demand for larger capacities has grown phenomenally. “As a result of rise in requirement for infrastructure projects and their aggressive implementation time-lines, the demand for high capacity batching plants of upto 240 cu.t./h has shot up. We have already been able to sell 40 large-capacity plants in the range of 120 cu.m./h. to 240 cu.m./h. during the past one year only,” Soni informs.
Several players in India’s batching plants segment have engaged with global majors in the form of joint ventures. While the Indian players possess vast knowledge of the domestic market besides domain knowledge, the foreign partners usually bring the strengths such as advanced technology and research capabilities and the global best practices. A few recent examples will illustrate the point:
The worldwide energy, construction and infrastructure projects player Isolux Corsán tied up with Morgan Stanley Infrastructure fund (MSI) while investing $400 million in India’s road infrastructure projects.
Japan’s Kayaba (KYB) Industry and Conmat India formed a JV, KYB-Conmat, to emerge as a dominant player.
S-T Group and Linnhoff Group established a JV, Linnhoff India, for manufacturing asphalt and batching plants.
Aquarius Engineers engaged foreign companies in JV partnerships to bring advanced technology equipment to India.
“The government’s Make in India initiative along with infrastructure push will strongly encourage joint ventures in India’s construction equipment sector,” says Mitul Patel, MD, Apollo Inffratech Group, a leading player in construction equipment. “As a result of these global engagements, the overall quality standards in equipment manufacturing as well as service delivery have significantly improved in the Indian market,” he observes.
Apollo Inffratech has formed independent JVs with global players. Apollo HawkeyePedershaab Concrete Technologies (AHCT) is a JV between Apollo and USA’s HawkeyePedershaab, USA, to make and sell machines to produce concrete pipes, manhole systems and box culverts with vibrated casting technology. It has formed a JV Apollo Carmix Equipments with Italy’s Carmix to manufacture and sell self-loading mobile concrete mixers in India and Apollo Zenith, a JV with Germany’s Zenith to manufacture concrete block making machines in India.
Two key trends can be observed in India’s batching plants segment – integration of IT in products and use of IT to improve process efficiencies. Today, construction equipment are being produced with IT interface technologies like USB, HMI and SCADA to turn control systems user-friendly. More of Universal Axis cites examples of his company’s Inline Batching Plants that come in capacities of 22, 30, 45, 60 and 120 Cu.Mt./Hr. and Crossbin Batching Plant with capacities of 22 Cu.Mt./Hr and 30 Cu.Mt./Hr. These series, he mentions, are SCADA powered and with automatic PLC controls.
At another level, RMC and batching plants companies are making use of GPS technology. “GPS helps monitor the status of every project in terms of material availability and progress report,” says Patel of Apollo Inffratech.
Already, cement companies have embraced IT automation in every sphere from manufacturing to supply chain to sales. Going forward, more and more companies will adopt advanced technologies such as internet of things (IoT), cloud, and enterprise mobility to ride the digital wave of business transformation in the years to come.