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Message
India's "Sunrise Industry - The Construction Chemicals industry" is
experiencing growth at a rapid pace. The market is still at a nascent stage in
India as compared to developed countries because of the limited awareness
with end users on the benefits that construction chemicals can provide. With
overall economic growth, increased investments by Government in
infrastructure and real estate, coupled with participation of overseas
investors and contracting companies, construction chemicals segment is
witnessing a surge in demand which is expected to accelerate in coming
years. The prospects are bright with awareness about the sector gathering
momentum.
Federation of Indian Chambers of Commerce and Industry (FICCI) in
association with Department of Chemicals and Petrochemicals (C & PC)
Ministry of Chemicals and Fertilizers, Government of India has organized
four editions of "Construction Chemical Conclaves" from 2010 onwards at
Mumbai, Bengaluru , Chennai and Ahmedabad respectively very successfully
to bring focus to the sector. Now the next Conference in the series which is
also being supported by the Government of Gujarat, is being held at Mumbai
on May 7-8, 2014.
I wish it all the success.
Deepak C Mehta
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Preface
Manish Panchal
Charu Kapoor
Principal - Chemicals
Tata Strategic Management Group
charu.kapoor@tsmg.com
P S Singh
Head- Chemicals
FICCI
prabhsharan.singh@ficci.com
Federation of Indian Chambers of Commerce & Industry (FICCI) & TATA Strategic Management
Group (TSMG) have been regularly tracking the trends in the Construction Chemials industry
and supporting companies, both big and small, across various verticals to achieve business
excellence. The same knowledge and experience gives us an additional advantage to realize
this report
Indian construction chemicals market is still at a nascent stage as usage levels are much lower
compared to other peer markets due to limited awareness about the products and their
benefits as well as price conscious customers. However, the industry has showcased significant
growth in the last 5 years with new and complex molecules enhancing properties such as
strength, reduced water requirement, increased resistance to abrasion and corrosion etc.
Entry of global construction chemical companies in Indian markets have further intensified the
competition and boosted the market growth.
In future, changing dynamics of Indian construction industry are expected to significantly
impact the construction chemicals market. Adoption of international standards and increase in
high rise buildings in Tier I cities is driving the usage of admixtures and related construction
chemicals in concrete. Corrosion prevention and control is another area which is driving the
adoption of construction chemicals. Hence, going forward, the focus will be on price to
performance ratio and not price alone. Through this report, we have attempted to highlight the
key growth imperatives for industry players as well as the regulatory bodies.
We sincerely thank all industry leaders whose valuable inputs have helped in building this
report.
We sincerely thank all industry leaders whose valuable inputs have helped in building this
report. As always it was an insightful experience for the team to materialize this report. We
hope it acts as a guiding light both for the players and the consumers of crop protection
products.
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CONTENT
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03
I.
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Table of Figures
Figure 1: Categories of Construction Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05
Figure 2: Indian Construction Chemical industry (INR Crores) . . . . . . . . . . . . . . . . 07
Figure 3: Indian Construction Chemical product share (%age) . . . . . . . . . . . . . . . . 08
Figure 4: Cement consumption in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 5: Construction industry in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 6: Spending on concrete admixtures in India . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 7: Indian Construction Chemical industry (INR Cr) . . . . . . . . . . . . . . . . . . . . 18
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Executive Summary
Indian construction chemicals industry currently stands at INR 3,600 Crores and has
shown a strong growth of 17% over the last 5 years. Admixtures constitute majority of
the market with 42% share. Flooring and waterproofing agents are the next leading
segments with 14% share each. Chemicals for repair and rehabilitation constitute
another 12% of the market while the remaining 18% is formed by adhesives & sealants.
The share of flooring chemicals is high in Indian market as compared to developed
world while India has a low share of tiling, sealants and waterproofing.
Overall market is fairly consolidated but there is considerable fragmentation of
individual products and application areas. A large number of global construction
companies have set up local manufacturing operations in India. The top 7 players
account for ~50% of the market; next 20 players ~25% and the remaining 25% comprises
of small and unorganized players.
Going forward, the industry is expected to maintain its growth momentum driven by
untapped potential of the market and expected growth in construction industry over
the next 5-7 years due to government's investment plans. The industry is expected to
grow by 15-16% p.a. over the next 5 years and reach INR 7,000-8,000 by FY18. Also,
increasing awareness amongst industry players regarding compliance with
international standards is expected to promote the adoption of best practices in the
industry. Ban on onsite mixing of cement and compulsory usage of ready to mix
cement in metros are the key government regulations which could have significant
impact on the industry growth.
In spite of the strong growth drivers, the industry faces challenges in terms of low
awareness levels, lack of skilled labor and high price-sensitivity of customers. Hence, it
becomes imperative for construction chemicals manufacturers to invest in effective
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Introduction to
Construction Chemicals
Concrete
Admixtures
Water Proofing
Chemicals
Flooring
Compounds
Repair And
Rehabilitation
Miscellaneous
Lignobased
Polyurethane
based
Cementitious
repair mortars
Sealants
Bitumin based
Polyurethane
coatings
Polymer repair
mortars
Grouts
*PCE based
Polyurea based
Epoxy based
resin mortars
Adhesives
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2
T
Indian Construction
Chemicals Market
becoming more attractive and is expected to experience strong growth in the next 5
years owing to the trends in the industry as detailed in the report later.
2007
2010
2013
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Admixtures
42%
Repair &
rehabilitation12%
Waterproofing
14%
Flooring 14%
2.1 Admixtures
Cement is a widely used as binding material in construction. For concreting, cement is
mixed with crushed rock, sand and water in specific proportion to produce concrete.
For getting better results, better workability, more strength, and finishing, cement or
mortar admixtures are used. Chemical admixtures are added to the mix immediately
before or during mixing. Admixtures are primarily used
l
To reduce water content in concrete.
l
To increase compressive strength and durability parameter of concrete.
l
To enhance the workability and giving more transportation and placing time.
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Admixtures are used during the first stage of construction. The market in India was
valued ~INR 1,500 Cr in 2013. Three types of admixtures are most prevalent in the
market - Ligno based, SNF (Sulfonated Naphthalene Formaldehyde) & SMF
(Sulfonated Melamine Formaldehyde) based and PCE based. Ligno based admixtures
were the first generation admixtures and gave lower performance compared to SNF
and PCE based admixtures. PCE based admixtures are the 3rd generation admixtures
and are usually 3-4 times more expensive than SNF/ Ligno based admixtures. The raw
materials for manufacturing of PCE admixtures are not easily available in India and
~80% are imported from Korea, China and Japan. Apple Chemie India Pvt. Ltd. is
currently the only manufacturer of PCE in India.
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Water proofing compounds are added during the construction as integral water
proofer during the construction, for waterproofing of concrete and also post
construction as a preventive and maintenance waterproofing ingredients. The size of
this segment is estimated ~INR 500 Cr in 2013. The price of products varies depending
on the raw material used. The industry is moving away from bituminous compounds
due to their lower performance and non- eco-friendly nature.
2.5Miscellaneous
2.5.1 Sealants
Sealants are used to seal expansion joints, cracks, joints in concrete roads and to fill
gaps between concrete. Major types of sealants include the following:
l
Polysulphide sealants: These are most commonly used in the construction industry
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2.5.2 Grouts
Grouts are compounds used for giving extra strength for the foundations of loadbearing structures. They are also used for repair and sealing of cracks and gaps. Grouts
have different chemistries depending on the applications as discussed below:
l
Epoxy-based
liquid grouting compounds are mainly injected into the walls to fill
hairline cracks and gaps, thereby improving the strength of the structure.
l
Cementitious grouts are used for imparting extra strength to machine foundations,
base plate or anchor bolts for machines or equipment and others. They are also used
for repair of building structures and in heavy industries such as steel, power plants
and ports.
l
Polyester-based
grouts are also available, which are used for anchoring to impart
strength to foundations that must be achieved in limited available space. Grouts can
also be made to have special characteristics such as fast setting, free flow, on-shrink
and others by addition of different additives as per the end-user requirement.
2.5.3 Tile adhesives
Tile Adhesives are made using high quality material which enhances the durability of
the adhesive and its bonding span is increased. They are primarily based on cement,
epoxy and polymer formulation (mainly acrylic polymer). Cementitious adhesives are
most commonly used in India owing to their lower price. They are used in a variety of
applications as discussed below:
l
Cementitious
adhesives & ceramic floor tile adhesives. Water resistant cements and polymer
modified cements are suitable both for internal and external use.
l
Epoxy
adhesives: Epoxy resins are two component cold curing adhesives which
produce high strength durable bonds. These adhesives may be used internally or
externally and are resistant to oils, water, dilute acids, alkalis and most solvents
l
Polymer based adhesives are suitable for fixing wall tiles in damp and wet conditions
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3. Major players
The overall market is fairly consolidated but there is considerable fragmentation of
individual products and application areas. There are a large number of global
construction companies who have set up local manufacturing operations in India. The
top 7 players account for ~50% of the market; next 20 players ~25% and the remaining
25% comprises of small and unorganized players. In the past there has been a
considerable change in the market share of companies due to which Medium-sized and
regional manufacturers have gained considerable share of market. Based on revenues
top 5 players are Pidilite, BASF, SIKA, FOSROC & SWC. There are many other regional
and smaller players as well. Approximately 300 companies are estimated to be
operating in this segment.
*Top 5 Player profiles are given in Annexure I.
4.Key challenges
The construction chemicals market in India is still highly under-developed when
compared to other countries, such as China, which accounted for 42% of the global
construction chemicals consumption in 2012. Consumer awareness is very low
regarding new chemical techniques and construction aids. Margins are lower because
most contractors prefer low-cost chemicals to reduce the overall construction cost.
High value products have limited demand and are used only by premium construction
houses. Some of the key challenges faced by the industry are as follows:
l
Price
conscious. The customers are not willing to spend much on construction chemicals.
They are still not fully aware of the benefits of various construction chemicals and
hence tend to use low-cost substitutes. Decisions are taken based on immediate
cost and not on overall benefits achieved from the usage of these materials.
l
Low entry barriers: The construction chemicals market is comprised of large MNCs
type and quality of construction chemicals for durable structures. The durability of
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material is not been studied extensively by the manufacturer under Indian condition.
The chemical protection and maintenance is not well understood by the user. The
application tools or accessories need to be updated. The code provision or the user
guide line with product is missing
l
Unskilled
activity is still hampering the growth of the sector, as construction chemicals are
sensitive products and their use requires basic technical expertise and training.
l
Lack of stringent regulations: The industry lacks in relevant consumer standards for
illegal sand mining in India: National green tribunal (NGT) banned sand
mining from river beds without an environmental clearance across the country in
August, 2013. Sand and bricks, apart from steel, cement and aggregate, are the
prime raw material that goes into construction. Due to non-availability of natural
sand, industry has started using crushed stone sand and artificial sand. This is likely to
impact the usage and requirements of construction chemicals in the market as the
quality specifications of the concrete from artificial sand would be different than
that of the natural sand.
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CAGR
6.5%
~301 MT
~232 MT
~169 MT
37
49
50
60
58
Central
24
West
32
East
25
South
54
North
34
46
58
2008
2013
2018
39
75
60
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Industrial
Total
Infrastructure
FY08-13
FY14-18
This growth will be driven by investments in the infrastructure segment, which are
expected to almost double over the next 5 years. Government spending has been one
of the key drivers of the growth of the construction industry. The financial constraint
on the government has been reduced by several public-private partnerships, hence
increasing the focus on development. Other growth drivers are as follows:
l
National
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2
1
India
China
USA
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l
Architects
body working to promote the use of Construction Chemicals in India". They conduct
technical seminars and awareness programmes for the benefit of construction
industry.
l
The construction
provide additional performance and endurance to structures and hence reduce the
impact of corrosion. Chemicals including surface coatings, floorings, concrete
admixtures, corrosion inhibitors, grouts and sealants, repair mortars protect the
surface from corrosion by restricting the ingress of moisture and providing a 'sealed'
structure.
With increasing awareness in the industry, the usage of construction chemicals as
corrosion inhibitors is gaining popularity. Most projects in the country are expected to
use these chemicals to reduce corrosions and increase the life of the asset. A special
section has been included on Corrosion issue in the later part of this report.
Changing regulatory environment:
Lack of government policies have always been the matter of concern for the growth of
construction chemicals industry. However, upcoming government regulations as
below aim to fix some of the loopholes in the industry:
l
Current
green buildings are expected to drive demand for suitable, innovative protective
coatings and safe chemicals.
l
Compulsory usage of Ready Mix Concrete in Metros like Mumbai, Bangalore etc. is a
key regulatory change. Similar regulations in Tier-I & other cities would be a key
driver in increasing the usage of construction chemicals.
l
With increased
usage of RMC in Govt, infrastructure projects would boost the growth further
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l
Self-compacting concrete (SSC) is being preferred over normal-strength concrete as
The Indian construction chemicals market is expected to show high growth rate of 1516% p.a., in the future. It is expected to reach ~INR 7,000-8,000 Cr by 2018 mainly driven
by the untapped potential of the market and steady growth in the construction
industry over the next 5 to 7 years.
15-16%
3,600
2013
2018
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capture significant share of the market. Given the low awareness and price sensitive
nature of the market, it will be challenging to get consumers to accept more
expensive products. Thus product innovation must also focus on creating affordable
products with wide applications.
l
Adoption
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Government and regulatory bodies could play an important role in driving the growth
of industry by focusing along the following lines:
l
Increase
infrastructural development are one of the major factors driving the growth of
construction chemicals industry. The construction industry is witnessing support
from World Bank and ADB and all the projects funded by these organizations
necessitate the use of construction chemicals. 100% FDI in real estate sector would
also significantly drive the growth of construction chemicals
l
Policies
towards favourable policies like National Building Code and Green Building is
estimated to boost the growth in construction chemicals market.
l
Define quality standards: Government and regulatory bodies could come together
to define set quality standards for the industry. This would dampen the growth of
low quality, cheap construction chemicals and incentivise players to invest in the
industry. Organizations such as CCMA (Construction Chemical Manufacturers
Association) India, can promote the use of Construction Chemicals in India by
conducting technical seminars and awareness programmes for the benefit of
construction industry.
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3
C
Special Focus:
Corrosion Management
U.S. corrosion study, the direct cost of metallic corrosion is $276 billion on an annual
basis, which represents 3.1% of the U.S. Gross Domestic Product (GDP). Extrapolating
this figure globally, the cost of corrosion is over a trillion US dollars. Unlike weather
related disasters, however, corrosion can be controlled, but at a cost. It is estimated
that a third of this cost can be saved by current technologies and awareness of the
problem.
Corrosion Control Methods
Corrosion is so prevalent and takes so many forms that its occurrence and associated
costs cannot be eliminated completely. However, it has been estimated that 25 to 30%
of annual corrosion costs could be saved if optimum corrosion management practices
were employed. The use of appropriate corrosion prevention and control methods can
ensure public safety, prevent damage to property and the environment, and saves
billion of dollars worldwide.
Various time proven methods for preventing and controlling corrosion depend on the
specific material to be protected; environmental concerns such as soil resistivity,
humidity, and exposure to saltwater or industrial environments; the type of product to
be processed or transported; and many other factors. The most commonly used
methods include organic and metallic protective coatings; corrosion resistant alloys,
plastics, and polymers; corrosion inhibitors; and cathodic protection-a technique used
on pipelines, underground storage tanks, and offshore structures that creates an
electrochemical cell in which the surface to be protected is the cathode and corrosion
reactions are mitigated.
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implementation.
l
The construction chemicals industry provides technologies and products to provide
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Annexure I:
Major Players
Himachal Pradesh
Maharashtra
Key products
waterproofing
Manufacturing
locations
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SIKA India
www.sika.in
Company overview
Key products
Waterproofing: Sikacim
Sealing: SikaBoom
Manufacturing
locations
Goa
Jaipur
Key products
Manufacturing
locations
Bangalore
Ankleshwar
Rudrapur
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Established in 1930
Key products
Manufacturing
locations
Mumbai (Vapi)
Chennai (Ambattur)
CICO
Sunanda
Cipy polyurethane
Chembond
Fairmate
Perma Construction
Balmer Lawrie
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Founded in 1991 as a division of Tata Industries Ltd, Tata Strategic Management Group
is the largest Indian own management consulting firm. It's strong consulting team is
supported by a panel of domain experts. Tata Strategic has undertaken 500+
engagements, with over 100 clients, across countries and sectors.
It has a growing client base outside India with increasing presence outside the Tata
Group. A majority of revenues now come from outside the group and more than 20%
revenues from clients outside India.
Tata Strategic offers a comprehensive range of solutions covering Direction Setting,
Driving Strategic Initiatives and Implementation Support
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Our Offerings
Strategy
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Vision
Set Direction
Entry
& Acquisition Planning
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insights
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Organization Effectiveness
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Drive Strategic
Initiatives
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Market
Structure
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Roles & Decision rules
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Operations
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Charu Kapoor
Principal Chemicals
Mobile: +91 98218 06071
E-mail: charu.kapoor@tsmg.com
Phone: +91 22 6637 6756
This report has been authored by: Manish Panchal (manish.panchal@tsmg.com), Charu Kapoor (charu.kapoor@tsmg.com)
and Pulkit Agarwal (pulkit.agarwal@tsmg.com)
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About FICCI
Established in 1927, FICCI is one of the largest and oldest apex business organizations in
India. FICCI's history is closely interwoven with India's struggle for independence,
industrialization and emergence as one of the most rapidly growing global economies.
FICCI has contributed to this historical process by encouraging debate, articulating the
private sector's views and influencing policy.
A not-for-profit organization, FICCI is the voice of India's business and industry.
FICCI draws its membership from the corporate sector, both private and public, including
MNCs; FICCI enjoys direct and indirect membership of over 2,50,000 companies from
various regional chambers of commerce and through its 70 industry association.
FICCI provides a platform for sector specific consensus building and networking and is the
first port of call for Indian industry and the international business community.
Our Vision
To be the thought leader for industry, its voice for policy change and its guardian for
effective implementation.
Our Mission
To carry forward our initiatives in support of rapid, inclusive and sustainable growth that
encompasses health, education, livelihood, governance and skill development.
To enhance the efficiency and global competitiveness of the Indian industry and to expand
business opportunities both in domestic and foreign markets through a range of
specialized services and global linkages.
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