Ready to grow
BY JAYASHREE MENDES
The construction industry has vastly benefited since ready mix concrete (RMC) was first introduced to India in the 70s. The technology has since grown in terms of acceptance in Europe and USA, and these countries consume more than 60% of the cement produced. In India, the concrete industry is gradually seeing a structural shift from site mix concrete (SMC) to RMC. An increasing awareness for quality, hassle-free construction, and economic sustainability is resulting in the greater penetration of RMC.
The government’s target to spend about $1 trillion on infrastructure in the 12th Five-Year Plan (2012-2017) has spelled good news to manufacturers of RMC. This pronounced focus on developing infrastructure and promised large spends in mass transit systems (metros), building smart cities, upgrading ports and airports, building highways and flyovers will see a surge in demand for RMC.
RMC enjoys certain advantages over SMC as a result of the precise consistency achieved due to the technological advancements in the production, transportation and dispensing of the concrete. In India, while cement is predominantly used, RMC is gaining ground in urban areas. Many infrastructure projects have shown preference for RMC and specifications in tenders by municipal corporations and similar government bodies have also started specifying RMC as part of their requirements.
But the industry has its challenges. VG Sakthikumar, whole time director, operations, Schwing Stetter India Pvt. Ltd, says that his company has found the last two years very challenging. “In anticipation of massive investments on infrastructure projects, most of us expanded our capacity substantially, whereas currently, the capacity utilization is only 50%. Some of the major challenges are reduced new project announcements and even more its implementation.” But this is not a deterrent for companies looking at RMC as a steady material.
Apart from the performance, the speed of today’s construction could be achieved only through the use of RMC.
The high-end mechanised batching plants not only deliver large volumes in less time and save cost, but also comply with timing restrictions of urban residential areas. RMC uses state-of-the-art knowhow and equipment to deliver tailor-made concrete for each project.
This way, it makes possible to realise difficult-to-execute structures, and gives the architects free rein to their artistic imagination. Though manufacturers are buoyant about the future scenario, the RMC industry has some more afflictions. The more serious issue is the lack of good quality aggregates. Aggregates are the lifeline of continuing RMC supplies. Over the last one year, many sites have faced acute aggregate shortages.
Aggregates occupy 70% of concrete volume. Understanding such critical importance of good quality aggregates, RMC Readymix India, a division of Prism Cement Limited, ventured into the aggregates business in 2000 and currently operates large quarries and crushers. It manages high-tech aggregate setups in Mumbai, Bengaluru, Hyderabad, Mangalore, Sawantwadi and Bhubaneswar. The company’s aggregates vertical maintains product quality by selecting the right quarry, employing the best techniques in the quarrying industry to extract good quality rock with proper fragmentation and engaging machinery and plants of internationally proven standards. The skilled workforce is trained to maintain these crushers in immaculate working condition and derive the full bounty of their produce, in line with international norms.
A couple of other RMC players have also recently gone ahead with this backward integration.
Anil Kulkarni, technical head, RMC, UltraTech Cement Ltd, says, “Some of the factors affecting the quality of aggregates are traditional crushing technology, lack of organised players, business controlled by local players, etc.”
Recently, the government imposed a ban on mining of natural river sand for sustainability reasons. Now, the alternative is to switch over to manufacture sand which is possible only through a modern three-stage crushing configuration.
As it is not readily available in all the markets, it poses a lot of challenges for switch over. In order to mitigate this challenge, Ultratech has developed integrated mining and crushing facilities to manufacture aggregates of the best quality in order to produce quality concrete matching international standards.
Rashid Merchant, associate vice president, RMC Readymix (India), says, “The aggregate market is traditionally known to be highly unorganised and dominated by muscle power. As such, RMC players have to face the brunt of these problems such as – inconsistent quality, erratic availability, frequent price hikes, etc.”
Over the years, the company has found a solution. At most of their business locations, through healthy discussions and transparent dealings, they have been able to convert these challenges into long term and mutually fruitful business relationships with their aggregate vendors.
Kulkarni says, “The industry faces numerous challenges apart from raw materials and manufacturing. A key challenge in transporting RMC from the point of mixer to the point of placing is timing and methods that will maintain the required workability and will prevent segregation, loss of any constituents or ingress of foreign matter or water.”
According to Kulkarni, generally, the concrete is transported in a truck mixer and is required to be discharged within two hours from the time of loading.
Thus, constraint is not the distance travelled but the time for travelling, where the limit is only two hours. The worsening traffic conditions and the municipality restrictions in cities are continuous impediments to supply chain movement of truck mixers. Concrete, being perishable in nature and having limited shelf-life, should be permitted to be transported uninterruptedly.
UltraTech has a fleet of application engineers who are posted at the customers’ sites during the concreting process who supervise the pumping and laying of concrete and educate the customer on the right pumping and laying processes of concrete. Apart from this, the company has placed quality control staff who meet customers and educate them about the features of concrete and the dos and donts during concreting. Kulkarni adds, “We conduct mason’s and contractors meets to educate them about the right raw materials and finished products. For all the concrete that gets produced from our plants, we have standard testing and batching protocols and a very rigorous testing and documentation mechanism to ensure the best quality of RMC.”
For Schwing Stetter, the major challenges are fluctuating demand, which makes planning difficult.
RMC Readymix too faces difficulty in sourcing raw materials in few major cities. As an alternative to river sand, the company uses manufactured sand from crushed rock. “Inconsistency of physical properties of aggregate (namely shape, size, grading, etc) is a bane for the RMC industry. I had an opportunity to work in one of the Gulf countries and was spellbound by the consistency of the properties of aggregate available there,” says Merchant.
Over the last few months, raw material prices too have soared. The sky seemed to be the limit for scarce input commodities like aggregates and natural sand. They go up and down without any discernible pattern. Ready-mix companies have a hard time judging the risk of strongly fluctuating raw material costs. If they pass on increasing costs only minimally, delayed or too conservatively, or if increasing raw material costs coincide with decreasing sales prices, a margin squeeze is inevitable.
The general industry consensus is that the challenges for transportation can be overcome by authorities’ intervention.
They could either allow RMC transportation through specific routes or permitting critical projects to carry the construction activities during the night can be a resolution to face such problems.
Another way is to co-work with the customers in terms of their demands and time restrictions, and to schedule the dispatches as per the feasible timing of site execution and route-entry restriction. However, this is not practically applicable for mass concrete pours, this is good only for small pour sizes.
The government too needs to play a critical role. The current market situation is perverse and overall economic slowdown, sluggishness in construction activity, liquidity crunch, and policy hurdles are resulting in slow demand and lower innovation in concrete technology. Kulkarni says, “It is further accentuated by the existing market-based design specification for concrete which sets prescriptions like minimum cement content, and specifications like pure OPC concrete only or limiting supplementary cementetious material to 15-20% only, etc. It leads serious RMC players with no scope to demonstrate their understanding of making good concrete with optimum OPC contents matching the strength requirements of the grade or having better control in terms of QC/production manpower, emphasis on training, research & development facilities.”
Merchant says, “High levies and taxes increase the cost of the product to the end user vis-à-vis that of SMC. The most important aspect here is the current tax structure. The purchaser has to pay an excise of 2.06% and applicable VAT in the state to buy RMC from the market, so most construction contractors / builders prefer to make concrete at site. The tax burden may weigh heavy for large projects running into long durations.”
It is important for the government to recognise these measures and lay down durability-based specifications in addition to strength based specification and also application oriented concrete harnessing the full potential of the material.
The focus should be on concrete performance rather than stipulating the limits on concrete ingredients. In addition, regulatory oversight to prevent non-compliant players, bringing down tax rate, and curb on no-entry timing of RMC transit mixer in cities will promote the growth of the industry.
There’s another concern. The ratio of unorganised RMC manufacturers to organised players is rising, and the reasons need to be examined. Industry heads feel that the regulatory bodies should initiate steps to curb the overarching impact of these unhealthy developments.
Being a low capital intensive industry, the entry for an unorganised manufacturer is easy. The regulatory authority should license only those players who have a sustainable quality plan, infrastructure and business processes capable of catering to the challenging requirements of today. Regulatory bodies also should have an audit mechanism in place to ensure quality practices and safety norms.
There is also a rising trend for special concretes like SCC, temperature controlled concrete, lightweight concrete, etc. UltraTech has a series of special concretes and the right infrastructure which the unorganized players lack. In future, this would be a key differentiator between the organised and unorganised players in the market.