1. Home
  2. >

Ready for concrete


Despite offering quality, time, man power and long-term cost benefits, ready mix concrete is still a long way from realising its potential in India. The ongoing financial crunch has certainly impacted the industry’s prospects for now but there is hope in the long run. At least the mid-sized organised players are confident. Niranjan Mudholkar reports

Ready mix concrete (RMC) business is still in its infancy but holds great significance in the light of the massive construction and infrastructure activities taking place across the country. Although fragmented in nature with only 5-6 national players, the industry has seen unprecedented growth in recent times.

“The Indian RMC market has been fast developing for the last few years and it has come up in new cities and locations,” says Alex Thomas, MD, Neptune Readymix Concrete (P) Ltd expressing his personal views. Neptune is a wholly-owned subsidiary of RDC Concrete and presently operates only in the state of Kerala where it is a market leader with more than 35% share with premium pricing.

“There has been good scope in the market and new players have put up plants even where there are existing players,” Thomas says illustrating the growth.

AB Marathe, manager-service, Aquarius Engineers Pvt Ltd agrees with Thomas. Marathe, whose company provides equipment to the RMC companies, says the Indian market for RMC has been showing a consistent positive growth, year after year, in spite of a few policy hurdles.

“From the first commercial RMC plant set up in 1993 by Ready-Mix Concrete Industries to the state-of-the-art plants currently producing over 37-lakh cu.m annually, it has been an eventful journey for the industry. With the big infrastructure projects slowly turning to RMC, experts in this segment had predicted a business growth rate of 25% in the Indian market.”

The industry too has been gearing up to meet the growing demand. “Though no conclusive figures are available it is estimated that commercial RMC manufacturers  put together are producing around 1.5 million cu.m each month which is roughly 3% of India’s total cement consumption. If we consider mechanically converted  concrete  using batching plants of minimum 30 cu.m/hour at various sites also as RMC it will add up to another 4 or 5 million cu.m,” states Thomas.

In fact, a lot of existing players had announced expansion plans and many new players were planning to enter this sector. It was just when things had started to get brighter for this sunrise sector that the recession hit. With the construction industry – particularly the realty sector – taking a big blow during the ongoing financial crisis, the RMC market has been badly hurt. “It is a chaotic situation for RMC players catering to the realty segment,” says Vikaas Ahluwalia, MD, Ahlcon RMC.

“Everybody is saying that real estate sector will bounce back but till then these RMC companies will have to hold on,” he adds. Incidentally, Ahluwalia’s firm hasn’t been affected to a great extent. “That’s because we changed our strategy sometime back and reduced our exposure to the realty sector. We have been focusing more on government and infrastructure projects,” he says.

Ahluwalia also says the recession has forced many local players to shut down their plants. “RMC sales have come down by at least 15-20% in the last few months due to the slowdown and no new plants are coming up. Also some companies have closed down operations at certain locations,” says Thomas.

Since the RMC equipment players are directly linked to the RMC industry, their business too has been affected. “The ongoing financial crunch has resulted in a rough phase for the Indian real estate sector. This scenario, coupled with high interest rates, has taken a toll on the RMC equipment business segment, as there has been a significant fall in demand from customers,” says VG Sakthikumar, chief operating officer, Schwing Stetter India Pvt Ltd. Marathe echoes the sentiment. He says: “The residential and commercial building segments, which has been a major market for RMC, is seeing a slowdown. This has affected the RMC industry and in turn the RMC equipment sector.”

Of course, even before the recession hit, the RMC industry was facing quite a few challenges. The current phase has only intensified the situation. Besides regular issues like competition, pricing, distribution, market structure, and capacity utilisation that is faced by any industry, the RMC sector has also had to deal with other issues. The biggest competition to RMC comes from its cousin – site mixed concrete (SMC). This despite offering clear quality, time, man power and long-term cost benefits over SMC.

There are various reasons for this including the immediate extra cost. But most customers deterred by the cost factor are primarily unaware about the benefits. “If the RMC industry is to grow, customers should be made aware of the advantages of RMC like savings on capital investment, benefits of input tax credit, lesser man power and better control over materials,” says Thomas.

Incidentally, the cement consumption by the Indian RMC sector (about 3-7%) is negligible compared to that by developed countries (70%). This will naturally go up as RMC becomes more popular against SMC.

As an industry in the nascent stages, the regulatory and environmental norms in the RMC industry are either not very stringent or not followed in the right spirit. The boom in the recent past had given rise to plenty of local players who wanted to exploit the demand to the fullest without paying heed to any norms.

“Many of these players have not been serious about giving good quality product and service to the customers and hence could not gain customer confidence. Several players are content by offering minimum concrete strength. Being relatively nascent, the industry needs to engage in a lot of customers hand-holding and focus on developing newer and better products,” says Thomas.

“The government too needs to impose norms to protect the genuine players as well as the environment by imposing stricter monitoring and scrutiny,” says Ahluwalia. Incidentally, it is the unscrupulous players who have been affected the most by the recession. “One of the best effects of the recession has been that it is wiping out the fly-by-night operators. I am happy to see the recession in this context. Going ahead, the government should check such players and establish a minimum size for operating plants,” Ahluwalia states.

Of course, there is more expected from the government beyond reforms related to operational norms for local players or environmental issues. “The government should insist on the use of RMC for all projects, which will scale up the industry as a whole and also help source quality concrete for construction. Uniform taxation throughout India is another aspect; while introduction of VAT and further refinement of VAT may bring about this change. Entry tax, road permits, way bills are other issues that have to be abolished for RMC growth,” remarks Sakthikumar. “Taxation is one area where government can support by reducing VAT to 4% or so,” adds Thomas.

 “The industry also needs government support in terms of banning SMC in city limits like it has been done in Mumbai,” says Ahluwalia.

It is often argued that RMC trucks moving in the city would add to the traffic woes. Thomas counters this by saying: “If RMC trucks are allowed to ply in the city during the day, it will help ease traffic congestion. When SMC is used at a site more number of trucks will have to reach there carrying cement, aggregate, sand or water, separately.

"Sadly, the city administration does not realise this and in most places bars RMC trucks from entering during the day. Also mixing concrete within city limits will add to pollution with dust flying from dumping materials, mixing concrete and so on.” 

One of the best ways of tackling industry issues is through direct involvement by the industry players. For example, Ahluwalia of Ahlcon RMC is trying to work with the Bureau of Indian Standards to push for more stringent regulatory norms.

“However, more government initiative is required on this front,” he says. Equally important is having a common industry platform. “With attempts like the formation of the Readymix Concrete Manufacturers’ Association, one hopes that self regulation and standardisation will happen leading to better customer confidence and consequent market development,” says Thomas of Neptune.

The industry is currently going through an ironical situation. There is demand but there’s no money in the market. “Liquidity is the major challenge in today’s market. Demand still exists but people do not have liquidity to fulfill these demands,” says Ahluwalia of Ahlcon RMC.

Nevertheless, players like Ahlcon remain positive about the future. While the big MNC players are shelving or deferring their expansion plans, Ahlcon is showing courage. “Besides Delhi, we have a presence in Bangalore and will soon have operations in Hyderabad, Chennai and Kolkata. Going ahead, we will be focusing on the upcoming metros. As of now, we have about 11 plants and are expanding our capacity in Delhi,” Ahluwalia informs. He feels this is the right time to consolidate and focus on core competence. Even Neptune, which already has three commercial plants and one dedicated plant, is not afraid.

“We are looking at expanding our capacity and will do so at the right time,” says Thomas. The long-term prospects of the RMC industry in India, as Ahluwalia asserts, are definitely very good. “It remains a sunrise industry in the long run,” he adds on a positive note.

Most Popular


Olympia Group announces to build up 1.1mn sq-ft greenfield it park in Guindy
The project will have a total investment of about Rs 750 crore


Vital pre-monsoon building works resume in Maharashtra
The state government has permitted pre-monsoon work by BMC and other agencies

Latest Issue

Sept 2020
01 Sep 2020