Cm octorber 2017 100mb by Icon Media Group

EDITOR’S DESK Editor

P. S. Syal

Sub-Editor

Ambika Gagar

Associate Editor N.P.K. Reddy

Editorial Advisor

Priyanka Roy Chaudhary

Design & Production

Sr. Designer - Mukesh Kumar Sah

National Business Head

Subhash Chandra s.chandra@constructionmirror.com

Business Head-West & South

Pradeep Kumar - 09702818098 pradeep.k@constructionmirror.com

Sales & Marketing Neha Chauhan neha@constructionmirror.com Hemant Kumar hemant@constructionmirror.com Ms. Manju manju@constructionmirror.com

Subscription

Praveen Chauhan Email: subscribe@constructionmirror.com Call: 011-6510 4350, 011-22758660 All rights reserved by all events are made to ensure that the information published is correct; Construction Mirror holds no responsibility any unlikely errors that might occur. Printed, published and owned by Usha, Published from 13/455, Block No. 13, Trilok Puri, Delhi-110091 and printed at Bright Tree, C-40, Gate No.-4, Okhla Industrial Area, Phase-II, New Delhi-110020. E-mail: brighttreesolutions@gmail.com Editor: P. S. Syal

Dear Reader! India’s Infra. sector is expected to grow at a CAGR of 35.65% over the period FY 2008-25. In the Union Budget 2017-18, the GoI has allocated US$ 62.16 billion for Infra. Iron & steel make up a core component of the real estate sector. There is significant scope for new mining capacities in iron ore, bauxite, coal and considerable opportunities for future discoveries of subsurface deposits. Demand for these metals is set to continue given strong growth expectations for the residential and commercial building industry. The EPC sector has witnessed consistent changes over past decade and has seen a smooth transition in terms of increasing project size, scale and market maturity. Proper implementation of the Smart Cities program would ensure the leveraging of technology to improve the quality of life. Better planning and provision of basic requirements in these smart cities is also important. Construction of earthquake resistant buildings, effcient drainage and waste disposal systems, local security, surveillance and vigilance systems are also important. The PEB market is estimated to be around 600,000 MT per annum currently. The industry is driven by growth in infra and manufacturing sectors. The Indian smart city plan is taking inspiration from successful models elsewhere such as Japan, US, UK, China and trying to emulate the same in our local scenario. After 3 years of decline, domestic commercial vehicles (CV) sales revived in FY16 and is likely to sustain the growth momentum. Healthy outlook on economic growth, subdued interest rates, govt’s strong focus on infra development, defence sector, urban infra, increased freight movement due to the expected increase in activity in sectors such as agriculture, e-commerce, mining etc, increasing proliferation of the hub & spoke model and greater thrust of CV manufacturers on expanding global footprint will be the key factors that will drive growth and expansion of the CV industry in the coming years. Dun & Bradstreet expects CV sales to grow by an annual average rate of 10% during FY17-19. Contrary to it, the Indian tyre industry has been reporting good growth figures over the past few years, spurred by the growing passenger vehicle and 2-wheeler market. It has emerged as one of the most competitive markets in the world and with the emergence of new technology, ultra-modern production facilities and availability of raw materials, the sector is poised to grow further. Manufacturers are also investing in the development of ‘green tyres’ and in capacity expansion for radial tyres. Innovative technologies like self-inflation and run flat tyres are also gaining popularity in the Indian market. Despite this, overall tyre imports are still expected to grow by 10%-12% in FY’17.

Wishing You Happy Reading $ Safe Diwali Thank you, Please give us your feedback at editor@constructionmirror.com For more details check out our Website www.constructionmirror.com/net & you can also visit our facebook page www.facebook.com/constructionmirror

Editor

S T N

E T N

Industry Focus Commercial Vehicless

Focus A brief review on Indian Tyre Industry

Guest Article

Shriram Automall Inaugurates 70th Facility in Guntur

Cover Story A Brief Review on India’s Metals and Mining Sector

News Update

30 08

Essar Investing Rs 830 Crore

IFAT India 2017: Top Marks on Its Fifth Anniversary Company Profile

Gandhi Automations Pvt Ltd

EPC Scenario Report

Post Event

|| Subhash Sethi || || Chairman || SPML Infra Limited ||

“Backhoe Loaders - Export Special” (Escorts Construction Equipment)

Product Info Report

Mahindra Forays into Road Construction Equipment Segment

Speical Features:

HAMM

Tenders Projects

74 75

Event Diary

Advertisement Index

Pre Engineered Buildings: Wings of Steel

Special Focus: Off Highway Vehicles and Equipment

N ews Metal & Mining

Essar Investing Rs 830 Crore

Essar Ports said its Rs 830 crore expansion plan to almost double the iron ore handling capacity to 23 million tonne per annum (MTPA) at Vizag port is nearing completion. After completion of the project, the loading capacity will increase to 120,000 tonnes per day (TPD) from 70,000 TPD, the company said in a statement. The facility will be able to berth vessels up to 200,000 DWT, with a draft of 18 metres, on the outer harbour, it said, adding that the upgraded terminal will have a loading rate of 8,000 TPH (tonnes per hour), which will be among the highest for an Indian port.

The “Rs 830-crore expansion plan to upgrade the iron ore handling capacity of the Vizag Terminal from 12.5 MTPA to 23 MTPA is nearing completion,” the company said. EVTL’s Iron Ore Handling Terminal at Vizag Port is an all-weather deep draft facility that has the wherewithal to serve the markets of South East Asia, including China, Japan, and Korea. The company took over the project in May 2015 on a Design-Build-Finance-Operate-Transfer (DBFOT) basis for a period of 30 years. It, since then, has ramped up the iron ore loading capacity of the terminal from 25,000 TPD (tonnes per day) to 70,000 TPD.

Stressing that the company has taken care of environmental concerns, it said an increased focus on global best practices and sustainable environment protection has reduced spillage to a mere 0.18 per cent at the terminal. EVTL is aiming to bring this number down to zero, which will result in lower emissions and a cleaner environment, it said. A 9.3-km open conveyor has been covered, it said adding, all steps have been taken to minimise pollution. Rajiv Agarwal, Managing Director, Essar Ports, said, “The facility is one of a kind in India with a state-of-the- art mechanised system, and one of the highest loading rates (8,000 TPH). It has significant potential to increase our share of third-party cargo business to more than 40 per cent. “As a result of the enhanced performance parameters, exporters on the east coast will benefit immensely from shorter turnaround times, which will translate into competitive freight costs.” The company aims to be the preferred choice of exporters in eastern India,” said CH Satyanand, CEO, Essar Vizag Port, adding: “We are determined to cut down spillage and emissions to virtually near-zero levels.” Essar Ports specialises in development and operations of ports and terminals for handling liquid, dry bulk, break bulk and general cargo and aims to increase its India capacity to 110 MTPA in 2017-18 from 82 MTPA at present.

Operation Freedom on Price and Sale India is planning a simple, attractive system for auctioning coal blocks to private firms by the year end, a measure government officials believe will help accelerate the infrastructure industry and have a multiplier effect on the economy. Major foreign and Indian companies are eyeing the auction, which is expected to grant operational freedom on pricing and the sale of coal, official said. According to the proposal, the company that offers to pay the highest amount of royalty to the state will win the block. The government does not propose to quote the value of the blocks, as has been the practice for the captive coal-block auctions. Miners will offer value for the blocks depending on their own assessments and the highest bidders will succeed.

CONSTRUCTION MIR ROR

“The awardee of the commercial coal mine will not face any restrictions on selling the coal or pricing the coal. However, in case of undue profits, when coal prices rise above normal, the miner will have to share a percentage of the gains with the state government,” a government official said. The winning price bid will be linked to an inflationlinked escalation index for the life of the mine. The index is likely to be benchmarked to Coal India’s notified price for an equivalent grade. The government has already identified coal blocks for auction to private firms for commercial coal mining in states such as Odisha, Chhattisgarh and Jharkhand. The blocks include Chendipada I and II, Durgapur II, Mahanadi, Machhakata, Mednirai, Madanpur, Shankarpur Bhatgaon II Extension, and Dongri Tal ..

|| OCTOBER 2017

“Commercial coal mining by private companies is a stimulus. If the coal sector picks up, the infrastructure performance will pick up and that will have a multiplier effect on the economy. The auction is expected to attract global mining giants to the country and make the sector more competitive and cost-effective,” the official said. The Coal Mines Special Provision Act 2015 gives government the power to allow private companies to mine coal and sell it in the open market. So far, private firms could mine coal only for captive consumption. The move also ends four decades of state monopoly of Coal India Ltd but the government has several times assured the company that its interests will be protected. However, industry insiders expressed apprehensions of tepid response for small and medium sized blocks. ||www.constructionmirror.com||

N ews Metal & Mining

NALCO Expanding a New “Immune” Sectors to Counter Downturn

Faced with a muted global metal market and a weak bottomline, aluminium major NALCO announced plans to diversify into areas like green power, caustic soda and merchant mining, which are “immune” to downturns.aluminium major NALCO today announced plans to diversify into areas like green power, caustic soda and merchant mining, which are “immune” to downturns. Given the “tough going” in the market, NALCO is framing a New Business Model (NBM) and a new corporate plan to withstand market onslaughts and keep the company afloat with profitability, Chairman and Managing Director Tapan Kumar

Chand said. The model envisages diversification into green power, IPP, caustic soda, rare metal like titanium, recovery of iron from red mud waste and merchant mining that are immune to downturns in the metal market, he said. “This NBM will not only give a new dimension to the company’s growth plans but also redefine business sustainability,” Chand said at the company’s annual general meeting here. With sluggishness in the metal market across the globe, fluctuating prices and increase in input costs

of raw materials, the company registered a net profit of Rs 669 crore in fiscal 2016-17, compared with Rs 787 crore achieved during the previous year, the CMD said The state-owned company posted a 4.4 per cent year-on-year decline in net profit to Rs 129 crore in the June quarter. On NALCO’s performance during 2016-17, Chand said bauxite mines achieved the highest-ever production with bauxite transportation of 68.25 lakh MT with 100 per cent capacity utilisation, and surpassed the previous best of 63.40 lakh MT. The Alumina Refinery also hit highest-ever production with alumina hydrate output of 21.00 lakh MT (100 per cent of normative capacity), topping the previous best of 19.53 lakh MT achieved, he said. Referring to projects under implementation, the CMD said NALCO is in the process of setting up its fifth stream in its existing alumina refinery with a capacity of 1 million tonne per annum, at a capital expenditure of Rs 5,540 crore. NALCO also declared a 56 per cent total dividend, including Dividend Distribution Tax, amounting to Rs 651.40 crore for 2016-17, as against a dividend of 562.22 crore in the last fiscal.

NMDC to Divest at Least 50% in Iron and Steel Plant

India’s largest iron ore producer NMDC will divest at least manage ment control in its upcoming Nagarnar iron and steel plant in Chhattisgarh as part of government’s strategic divestment plan, said its new MD N Baijendra Kumar. The state-owned iron ore miner, which may even 10 CONSTRUCTION MIR ROR

consider divesting more than 50% stake in steel project, has hired SBI Capital, J Sagar Associates and Protocol Insurance as transaction, legal and asset valuation consultants, respectively, he said. Speaking to journalists on the sidelines of the company’s annual general meeting in Hyderabad on , Kumar said construction works of the 3-million-tonne a year steel plant were currently going on in full swing, albeit cost and time overruns. On the exact quantum of divestment in Nagarnar steel plant being proposed, he said: “The consultants are working on it and it will be decided at the higher level.After the consultants submit their report, the NMDC board will consider it and then send for approval of the union steel

|| OCTOBER 2017

ministry and in ter-ministerial committee of Cabinet.“ Kumar said the consultants are currently working on the mandate and that NMDC expects to receive their reports soon“The guidance from the government is strategic divestment with transfer of management control, which is normally when the transfer of shareholding is 50% and upwards.“ Kumar said NMDC, which had reported Rs 8,830 crore of revenues last fiscal with 37% growth over 2015-16, expects to post a growth of at least 20% during the current fiscal. Though the prices of steel raw materials such as iron ore and coking coal saw an upsurge on account of robust Chinese steel production during January-July 2017, the “iron ore demand and prices are likely to come under pressure with expectation of Chinese steel production stagnating, seaborne iron ore supplies with large-scale mines ramping up production and competition from scrap as a feedstock“, said Kumar. ||www.constructionmirror.com||

N ews Metal & Mining

Iron Ore Demand Under Pressure With Expectation of Chinese Steel Production

State-owned NMDC Limited today said iron ore prices and demand may come under pressure due to factors such as subdued production in China and ramping up production by some of the large mines across the globe. N Baijendra Kumar, Chairman-cum-Managing Director of NMDC also said though the global demand may come under pressure, Indian scenario would be different as domestic demand may go up due to expected growth in steel demand. “Going ahead, however, iron ore demand and prices are likely to come under pressure with expectation

of Chinese steel production stagnating, sea-borne iron ore supplies increasing with large-scale mines ramping up production and competition from scrap as feedstock,” Kumar said in the Annual General Meeting here. “Fortunately for us, India’s steel demand is poised for an impressive growth in the years to come, which would certainly translate into higher consumption of iron ore domestically,” he said. Later talking to reporters, he said NMDC is expected to spend Rs 3,000 towards capex including the expenditure on Nagarnar steel plant in Chhattisgarh, during the current fiscal. Replying to a query, he said the miner is aiming to achieve a sales target of 37 million tonnes during the current year against 35.6 million tonnes last year.

On the cost escalation of the steel plant due to delays, Director (Finance) Davinder Singh Ahluwalia said the company is currently working on the cost overruns and has not come to a certain figure. NMDC is setting up a new Greenfield 3-million tonne per annum steel plant in Nargarnar. The PSU has so far spent Rs 12,560 crore so far on the project. Ahluwalia said, the US Dollar was about Rs 52 when the project estimate was conceived in 2008 or 2009 and currently it was Rs 62 and the difference may have impacted the project cost to that extent. “We have appointed transaction advisor, legal advisor and valuation advisor for the divestment of stake in the steel plant. Once we receive their reports, the Board will discuss it and send the proposal to the Government. “An inter-ministerial group will decide on the quantity of stake that should be divested,” Kumar said. The Department of Investment and Public Asset Management (DIPAM) has prepared strategic divestment plan as per the decision of the Cabinet Committee on Economic Affairs (CCEA) for strategic divestment of various public sector enterprises (PSEs), including Nagarnar Steel plant.

Vedanta Power Plant Closure: Odisha Green Board Revokes Order

Vedanta Ltd said it will resume power generation at three power plant units after Odisha State Pollution Control Board (SPCB) revoked its earlier order to 12 CONSTRUCTION MIR ROR

close mining conglomerate’s five such units. On September 14, the metals and mining major had said that it has been directed by the SPCB to temporarily close five units of its power plants. “...the SPCB has revoked closure of three units (two units of 135 MW each and one unit of 600 MW) on September 20, 2017,” it said in a BSE filing.

|| OCTOBER 2017

The SPCB had directed to temporary close three units of 135 MW each of the 1,215 MW power plant and two units of 600 MW each of the 2,400 MW power plant. Following the directions from the SPCB, Vedanta had said the action may call for purchase of power of temporarily. “The action may require a temporary power purchase of up to 200 MW and hence a marginal impact on cost of production of aluminium. The company expects to be able to sustain the smelter capacity without affecting its production volume,” it had said. The revocation will help the company get complete reliable power generation back in place, satisfying the requirement for smelter operations and there will not be any need to purchase the 200 MW power, the company said. ||www.constructionmirror.com||

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

N ews Steel

Government Invest Rs 500 Crore for New Set Up

The government is planning to set up five scrapbased steel plants at an investment of Rs 500 crore within a year to ensure that a chunk of the country’s targeted 300 million tonne steel output is met through scrap. India’s target is to more than double the steel output by 2030, from 10 MT at present. “...from 126 MT (million tonnes) to 300 MT (of steel output) that we are eyeing, in that everything will not come from the fresh iron. So it will be coming from the scrap,” Steel Secretary Aruna Sharma

told . “Within one year all the five (scrap-based) plants will come,” she said, adding that in each plant around Rs 100 crore would be invested. Stressing that all the scrap will be reused to make steel, Sharma said that by 2030 around 30-40 million tonnes of steel would be made from scrap. Stating that the first such plant would come up next month in Noida, Uttar Pradesh, she said, “after Noida we will start in Southern India, then

in Western India, Central India then one more in Northern India”. State-run metal scrap trading firm MSTC has signed a joint venture (JV) agreement with Mahindra Intertrade for setting up the first such plant. “As of now the JV is between MSTC and Mahindra. Hyundai has shown interest for Southern India. So they will also join the same group. What we are saying is that it is MSTC Mahindra JV (and) anybody can join them,” Sharma said. Mahindra Intertrade is a part of Mahindra Partners Division of the USD 17.8 billion diversified Mahindra Group, while the mini-ratna public sector undertaking (PSU) is engaged in the export of ferrous scrap. The country’s annual scrap requirement is 5-6 million tonnes, which at present is done through imports. The government had earlier said that the scrap based steel plants which are environment friendly, energy efficient and cost effective would be on the lines of ‘melt and manufacture’ steel technology used in the US

Export Surges 36% Import 62% in August

India’s total export of finished steel in August jumped 36 per cent to 0.923 million tonne, official data showed. In the same month last year, the corresponding figure was 0.679 million tonne (mt). During April-August of 2017-18, the export of 14 CONSTRUCTION MIR ROR

finished steel went up 57.1 per cent to 3.73 mt, from 2.37 mt in the year-ago period, the Joint Plant Committee (JPC) has said in its latest report. The import during last month at 0.955 mt was higher by 62 per cent year on year. The import of finished steel during April-August

|| OCTOBER 2017

came in at 3.458 mt, up 15.9 per cent, as against 2.983 mt in the previous year. “India was a net importer of total finished steel in August 2017, but maintained its net exporter status for the cumulative period, i.e. April-August 2017,” the report said. In April-August, the consumption of finished steel saw a growth of 4.4 per cent at 35.329 mt as against 33.829 mt during the same period last year “under the influence of rising production for sale and imports”, it said. Empowered by the Ministry of Steel, the JPC is the only institution in the country that collects data on the Indian iron and steel industry. India, the third-largest global producer of crude steel, after China and Japan, is now aiming to take the second spot. Empowered by the Ministry of Steel, the JPC is the only institution in the country that collects data on the Indian iron and steel industry. India, the third-largest global producer of crude steel, after China and Japan, is now aiming to take the second spot. ||www.constructionmirror.com||

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

N ews Steel

Thyssenkrupp to Set Up Working Group With Unions Over Tata Steel Merger

Thyssenkrupp AG is to set up a joint working group of board members and labour representatives to help implement the plan to merge with Tata Steel, it said in a statement issued after a supervisory board meeting. The meeting was held after Thyssenkrupp top management’s move this week to sign

a memorandum of understanding with Tata Steel for a 50-50 joint venture. If approved, it would create Europe’s secondbiggest steelmaker after ArcelorMittal, with combined sales of about 15 billion euros. The working group will consist of members of the executive boards of Thyssenkrupp AG, Thyssenkrupp Steel Europe, which is the unit for the steel activities within the wider group, representatives of Thyssenkrupp’s works councils and the works councils of the steel sites, the statement said. Thyssenkrupp AG Chief Executive Heinrich Hiesinger

depends on the support of labour representatives, who hold half of the 20 seats on the group’s supervisory board and have fiercely opposed the deal with Tata Steel. Several thousand steel workers took to the streets of Bochum in Germany’s industrial heartland to protest against the deal, which would include up to 4,000 job cuts, about 8 percent of the combined workforce. Opposition from Thyssenkrupp’s workforce could mean prolonged negotiations with management and delay any approval of the plan by the supervisory board, scheduled for early next year. If all labour representatives on the supervisory board vote against the plans, its chairman Ulrich Lehner could still push them through with his casting vote but it is Hiesinger’s declared goal to get labour leaders to agree.

Maoists Damage Essar Steel’s Slurry Pipeline From Dantewada to Vizag Members of the banned CPI (Maoist) have allegedly damaged Essar Steel’s 273-km iron ore slurry pipeline from Dantewada in Chhattisgarh to Visakhapatnam in Andhra Pradesh near OdishaAndhra border. The pipeline is critical for Essar’s Visakhapatnam steel plant, bringing 22,000 tonnes of iron ore daily from state miner NMDC’s Bailadila mines in

Dantewada to the plant with annual capacity of eight million tonnes. “There are reports that the pipeline has been cut in the Odisha-Andhra Pradesh border, Jagmohan Meena, superintendent of police of Malkangiri district in Odisha, said. “A company mechanic is on his way to fix it, but there is no conclusive evidence yet that Maoists have broken it.

A company spokesperson declined to comment. Damage to the slurry pipeline couldn’t have come at a worse time for Essar Steel as lenders, led by the State Bank of India, have initiated corporate insolvency proceedings against the firm that owes them Rs 45,655 crore in debt. Essar is hoping for Rs 1,000-crore working capital loan to manage its credit crisis.

Hot Strip Mill at Rourkela Steel Plant (RSP) by 2018: SAIL Steel Authority of India (SAIL) is poised to install a new 3 million tonne per annum (mtpa) Hot Strip Mill at Rourkela Steel Plant (RSP) by 2018 in a bid to enlarge its basket of value added products. The new facilities at IISCO Steel Plant (ISP) have also been ramped up significantly with the plant’s Wire Rod Mill soon tipped to produce wire rods in special grades to meet the requirement of domestic and global steel industry, chairman P K Singh said at the company’s 45th annual general meeting (AGM) in Delhi. 16 CONSTRUCTION MIR ROR

This is part of SAIL’s focus on value addition in its product mix, with higher grades of steel like API X-70 from RSP’s New Plate Mill for the oil & gas sector, SAIL HT-600 for the automotive sector and high strength LPG steel grade from Bokaro Steel Plant. Products from the RSP NPM and BSL CRM-3 have been well received in export markets too. “Continuous product development efforts are being made with intensive R&D efforts especially from the new state of the art mills commissioned under the Modernisation and Expansion Plan. Amongst the Indian steel producers your company continues to be in the forefront in R&D with the highest spending,” Singh told shareholders at the AGM. Along with increased production, focus is being given to efficient and strategic marketing for

|| OCTOBER 2017

improving sales and realisations, he added. At SAIL, emphasis is being given on last mile connectivity with the end users, marketing in regions where the company has a natural freight advantage, increasing retail & rural sales and leveraging its brand image. To service local demand, SAIL is setting up Steel Processing Units (SPU) at several smaller centres including Kandrori (Himachal Pradesh) and Jagdishpur (Uttar Pradesh). SAIL has also commenced commercial operations at its Joint Venture Company with RITES in Kulti, West Bengal. The JV, SAIL-RITES Bengal Wagon Industry Pvt. Ltd. (SRBWIPL), which was formed for manufacture and rehabilitation of railway wagons, has been executing orders from Indian Railways. ||www.constructionmirror.com||

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

N ews Steel

SAIL Aims to Tap Big Into the Steel Demand in India

Armed with latest technologies and higher product mix, SAIL aims to tap big into the steel demand in India, which is projected to become “the fifthlargest economy” this year, its Chairman P K Singh said. Addressing the 45th annual general meeting of the state- owned Steel Authority of India Ltd (SAIL) here, Singh said the steel demand in India will witness a significant growth in future, given the current stage of development in Indian economy. The World Steel Association, in its short range

outlook, has forecast 6.1 per cent growth in steel consumption for India in 2017, the SAIL chief added. According to Singh, the domestic steel demand is improving on the back of government policies and developmental goals, and SAIL is expeditiously equipping itself to serve market requirements fully and claim a broader market share. “SAIL with newer and better technologies at its disposal aims to leverage potential of growth in steel demand by operating at rated capacities, product differentiation and customer satisfaction,” Singh said. The chairman also shared the company’s efforts towards product value addition. “SAIL has done significant value addition in its product mix, with higher grades of steel... from Rourkela Steel Plant’s new plate mill for the oil and gas sector, SAIL HT-600 for the automotive sector

and high strength LPG steel grade from Bokaro Steel Plant, etc,” Singh said. At Bhilai Steel Plant (BSP), the world’s longest single piece rail of 130 metres is being produced and supplies of welded 260 metres rail panels to the Indian Railways are in progress. Besides, a 3 mtpa hot strip mill in Rourkela is slated to be installed by 2018. He further said, “World economic recovery is on track... and presents a healthy sign for industrial and manufacturing activities across globe. India is projected to become the world’s fifth-largest economy in 2017, surpassing UK and France and the world’s third largest economy by 2023, surpassing Japan and Germany.” Such kind of growth will definitely create larger steel demand and boost consumption in country, the chairman added. Listing out the achievements of SAIL, Singh said the company since inception has produced 475 million tonnes (mt) of crude steel and partnered in all major national projects requiring steel. The company is also taking initiatives towards remodelling its operations.

14% Increase in Domestic Steel Prices Since June 2017

A 14% increase in domestic steel prices since June 2017, led by a sharp recovery in international steel prices and growth in domestic demand in the AprilAugust period has brought much-needed cheer in the steel sector. Buoyant international steel prices have also led to a 57% year-on-year growth in exports during April-August 2017, helping the domestic steel industry operate at a capacity utilisation of above 80% in the current financial year. Analysts like ICRA feel this is expected to improve profitability of domestic steel mills in the near term. 18 CONSTRUCTION MIR ROR

Domestic demand has nearly doubled to 4.4% in April-August 2017, from 2.6% in FY17, as per ICRA estimates Industry experts feel the post monsoon period and the coming festive season is likely to boost demand further both in construction grade steel and in steel used by consumer durables sector like automobiles and white goods. “The sharp rise in domestic steel prices has been fuelled by rising international prices. The Chinese hot rolled coil (HRC) export prices increased by about 40% since mid-May 2017, reaching US$ 588 per tonne in the third week of September 2017, supported by China’s resilient domestic demand and its supply-side reforms to check the domestic steel overcapacity”, Jayanta Roy, senior vice-president, ICRA said. Earlier, increased raw material costs, particularly coking coal led to a squeeze in operating margins of the steel industry in Q1FY18. Citing a sample of 22 large and mid-sized steel players, accounting for about 60% of the current domestic capacity, ICRA said margins went down to 12.5% in Q1FY18 from 15.7% in Q4FY17.

|| OCTOBER 2017

While the prices of coking coal and iron ore have also increased recently, “the extent of increase in domestic steel prices in Q2FY18 remains higher than that in raw material costs, which points to a sequential expansion in gross contribution levels of steel players,” the ratings agency said. However, elevated debt levels of most steel companies are likely to keep the coverage indicators of the industry depressed. For instance, interest coverage ratio of the industry stood at 1.26 times in Q1FY2018 as against 1.53 times in Q1FY2017. Therefore, ICRA believes that credit profile of domestic steel companies are unlikely to improve significantly in the near term despite the current buoyancy in steel prices. ICRA said it believes stronger domestic steel players with healthy financial profile remain potential investors for stressed steel sector assets. “This could result in industry consolidation to an extent going forward,” Roy added. Incidentally, five out of the first 12 accounts referred under the Insolvency and Bankruptcy Code, 2016 (IBC) are from steel sector, with a total debt of above Rs. 1.5 lakh crore as on March 31, 2017. ||www.constructionmirror.com||

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

N ews Steel

Domestic Metals Sector is Seeing Robust Demand With Higher Prices

The domestic metals sector is seeing robust demand with higher prices, capacity expansion and trade policies for steel that supporting volumes and profitability. While there is enough headroom for growth in per capita usage of metals in the Indian economy, given favourable policies like National Steel Policy, Smart City, Make in India etc., metal sector players especially in steel would do well to employ smart digital solutions to meet challenges in productivity, resource security and capital cost, says a recent report by EY, titled ‘Metals on Track: Digital to sustain growth.’ Digital transformation embraces the information technology, process automation technology and communication technology to create value across the value chain. The metals industry aims to improve efficiency, productivity, adaptability and sustainability of production & supply chain systems and their integration within agile business models and processes. To achieve this, the technology domains that are relevant include: IOT, Robotics, Big Data & Advanced Analytics, Mobility, AI, wearable technology, social media etc. While digital technologies offer a gamut of solutions and distinct benefits, employing the

most relevant technology that suits the company’s business model is most crucial, the report added. “While challenges to achieve a 300 million tonne steel capacity remain, in terms of access to equity capital, bank loans, attracting new promoters etc, there is a lot that the industry needs to do for itself by embracing digital technology,” Anjani Kumar Agarwal, Global Steel Leader at EY said. “Industry can help improve productivity, efficiency, and environment, health and safety issues and open up “new revenue streams and enhance customer and social contacts, he added. Successful digital transformation is not limited to the technology in question, but is also a function of several factors that are critical for success, including alignment with enterprise goals and overall strategy, enterprise-wide integrated architecture, technology enabled workforce, well-defined operating model and business case, culture of innovation and clearly defined implementation pathway amongst others, the report said. Given the early stages of adoption in our country, the right appro .. Similarly, digital technologies will have a greater say in the course of domestic mining industry and help shape its future across the value chain in India, according to the latest EY report on mining. Titled ‘Tomorrow’s mine: How digital can shape the future?’ it discusses potential benefits of digital technology to help exploit the top operational opportunity in mining — productivity. Digital can enable new ways to drive productivity, manage

the variability challenges of the sector and pursue commercial excellence. The report explores the common pitfalls and how digital can be a solution to the challenges faced by the Indian mining industry. India has been a major participant of the global mining industry with a large resource base, and now the use of digital in mining with technologies such as, IOT, Robotics, Big Data & Advanced Analytics, Mobility, Remote centre, AI, Wearable Technology, Social Media etc., it will have significant benefits for the Indian mining industry and help shape its future, it said. Use of digital in mining has slowly evolved with technologies such as, plant automation systems, Global Positioning Systems (GPS), mine planning systems etc. and recently to cloud computing. Significant benefits have already been realized but much more can be done with a holistic approachThe report further highlights the current trends and developments in digital mining in India pertaining to enterprise integration & organisational efficiency, productivity and growth, mine safety, exploration, governance, regulatory and procedural streamlining, infrastructure, human capital and skill development. As the Indian mining industry moves in to the digital age, technology -enabled solutions will become a necessity for survival and growth. Some of the prevalent themes in the Indian Mining sector over the near future would include Automation, IOT, Remote command centers, Big Data and next-generation analytics, Digital enablement of the workforces and Cyber Security. Agarwal who is also National Leader – Metals and Mining at EY said: “The Indian mining industry is at the cusp of a transformational change, and digital is at the forefront driving this change. The average miner’s focus has shifted from targeting volume growth to achieving cost reduction and productivity growth.”

Growth of 4 Per Cent to 8.4 Million Tonnes (Mt) in August this Year India’s crude steel production registered a growth of 4 per cent to 8.4 million tonnes (MT) in August this year, according to the latest report of World Steel Association. The steel output stood at 8.1 MT in August last year, it said. India’s domestic production in the January-August 20 CONSTRUCTION MIR ROR

period of 2017 increased by 5 per cent to 66.4 MT over 63.2 MT in the same period of 2016, the data showed. Global steel production for the 67 countries reporting to World Steel Association (world steel) was 143.6 MT in August this year, registering an increase of 6.2 per cent over 135.1 MT in August

|| OCTOBER 2017

2016. The crude steel production of China for August was 74.6 MT, an increase of 8.7 per cent compared to the same month in 2016. “Japan produced 8.7 MT of crude steel in August 2017, a decrease of 2.0 per cent compared to August 2016,” it said. ||www.constructionmirror.com||

Decks Cleared for Chardham Highway Project, NGT Disposes Plea

Decks have been cleared for the ambitious Chardham highway project for all-weather connectivity to four holy towns of Uttarakhand, with the National Green Tribunal disposing of a plea alleging that the road widening work was being carried out in violation of the green laws. The Uttarakhand government and Border Roads Organisation (BRO) assured a bench headed by NGT Chairperson Justice Swatanter Kumar that they would carry out the project after due compliance with the laws, especially the Bhagirathi ecosensitive zone notification of December 18, 2012.

They also told the green panel that during the project’s implementation, they would ensure that no muck is thrown either into the river or in the forest areas down the hill. The four pilgrimage towns to be connected by the 900 km- long highway are Kedarnath, Badrinath, Yamunotri and Gangotri. “In view of the statement made, nothing survives in this application and the same is disposed of, without any order as to cost. “We make it clear that in the event (of) violation of any law or breach of the statement as made before the Tribunal, the Applicant would have the right to approach the Tribunal, in accordance with law,” the bench said. Earlier, the BRO had told the NGT that the Chardham highway project connecting the four Uttarakhand towns was extremely important from a strategic point of view also, as it was close to the China border. It had said that the improvement of the national

highway will also facilitate better connection with India-China border roads. However, all possible precautions will be taken to ensure that stability of mountain does not get disturbed in the process, it had added. The submissions were made in an affidavit filed before the tribunal in response to a plea filed by Birendra Singh Matura and others alleging that the road widening work for the project was being carried in violation of the Bhagirathi Eco Sensitive Zone Notification. It had claimed there was continuous blasting of mountains and dumping of debris in the river Ganga in the stretch of NH-34 between Gangotri and Bhaironghati. On May 4, the green panel had issued notices to the Ministry of Environment and Forests, Ministry of Road Transport, NHIDCL, BRO and Uttarakhand government on the plea. On May 4, the green panel had issued notices to the Ministry of Environment and Forests, Ministry of Road Transport, NHIDCL, BRO and Uttarakhand government on the plea. Prime Minister Narendra Modi in December last year had laid the foundation stone for the Chardham highway development project to be built with an investment of Rs 12,000 crore in Uttarakhand.

Seats Can Soon Be Book on Select Bengaluru Buses Booking a seat in advance on a city bus could become a reality. It may not extend to all buses and all route but surely the Bangalore Metropolitan Transport Corporation is working at allowing pre-booking on some air-conditioned buses, especially those bound to the airport. While the facility of booking tickets online is already available for longdistance and intercity state-run and private services, no such option is available in the intra-city services. BMTC Managing Director V Ponnuraj said the idea is still in the planning stage. “The proposal is still in the discussion level but we plan to implement it. We are talking to all stakeholders for resource and logis tical support,“ said. The new head is chalking out plans to bring back passengers which BMTC lost for taxi aggregators. “The option for pre-booking of seats, once in place, will be provided on our offi cial website ||www.constructionmirror.com||

and mobile application.Along with a text message on seat confirmation, the mobile number of bus conductor will also be shared with the passenger,“ Ponnuraj said. The BMTC’s mobile app has had more than one lakh downloads. The public transport service has around 800 air-conditioned buses (Volvo and Corona) and 5,300 non airconditioned buses. Of the AC buses, 90 ply to the international airport from 12 different routes, catering to about 10,000 passengers a day . For long, the airport services were the most profit-making routes. The corporation now faces aggressive competition from the likes of Uber and Ola and is apparently seeing a fall in ridership. “This could be due to door-to-door transport services being provided by cab aggregators,“ Ponnuraj, who took charge as MD almost a month ago, said.

The demand for BMTC’s premier services that run within the city is also not encouraging, except in the case of air-conditioned buses that shuttle between Majestic and Kadugodi. Pawan K Mulukutla, head, Integrated Transport, WRI India, welcomed the new effort. “ Adopting technology to improve efficiency is a welcome step. Though the feature may not work in all kinds of BMTC services, allowing people to reserve seats online in some of the services such as to airport, would definitely succeed,“ he said. In the past, several rounds of meetings were held between the airport management and BMTC on the possibility of allowing check-in facilities enroute on airport-bound BMTC buses. BMTC officials also said they would look at the possibility of having a separate system to deliver luggage of air passengers who use BMTC services.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

N ews of the Month

Usha Martin Mulls Selling Either Steel or Wire Rope Business

The Usha Martin Limited, currently in financial distress, is contemplating selling its wire rope or steel business for which it has appointed a consultant. “We have hired a consultant which will prepare a roadmap for the company. Selling off one of two divisions (steel and wire rope) is also contemplated”, Managing Director of Usha Martin Rajeev Jhawar said after the AGM. Jhawar, who owns nearly 25 per cent of shareholding

in the company, said the Royal Bank of Canada had been engaged as merchant banker which was expected to submit its report in two months. He said the wire rope division contributed Rs 1200 crore in total revenue. The other steel division generated the balance two-thirds of the revenue, he said. Jhawar said the company was looking at raising resources through asset sale and other means. The majority portion of resources raised would go towards paying off the debt which was eating into the company’s financials, he said. Although the company had been making losses, both the wire rope and steel businesses were EBIDTA positive, he added. “We will strategize after receiving the report and execution of the suggestion will be done within

March next year”, he said. The total debt burden stood at Rs 3800 crore including Rs 500 crore in working capital. The other promoter-director Prashant Jhawar was absent at the AGM. Prashant Jhawar moved the NCLT challenging Rajeev Jhawar’s fund infusion into the company. Prashant also holds around 25 per cent. The next hearing is slated for November seven. The leader of the lending consortium SBI has asked Prashant Jhawar to quit as chairman of the company on non-resolution on governance issues. Subsequently he resigned. Former SEBI and LIC Chairman G N Bajpai was appointed as new chairman. Because of his indisposition, he could not attend the meeting. Jhawar told the shareholders that the lenders were extending full support to the company.

5 Private Equity Funds Interesting in Debt-Laden Monnet Ispat

Private equity funds KKR, Apollo Global Management, Oaktree Capital, SSG Asia, Piramal Capital, and AION Capital have shown their initial interest in debt-laden steel company Monnet Ispat and Energy, which has been admitted for recovery proceedings by India’s dedicated bankruptcy courts. JSW Group might also put in a revised offer for Monnet, which put out a newspaper advertisement inviting potential strategic and financial partners to submit expressions of interest (EoIs). The

22 CONSTRUCTION MIR ROR

advertisement was placed on Saturday and interested players can send in their EoIs until September 25. An official in the know of matters related to the insolvency proceedings at the company said that before putting out the advertisement, it had received “informal expressions of interest” by the private-equity funds for the troubled company headed by Sandeep Jajodia. Formal EoIs can be expected to start flowing in from the coming week,

|| OCTOBER 2017

he said. “Apart from Indian companies such as JSW Steel and Tata Steel, we have also been approached informally by some private equity funds in Singapore and London,” The PE funds are likely to bid for stressed assets funds or special situation funds that buy bad loans from banks with exposure to such assets. The company under the court-appointed Interim Resolution Practitioner (IRP) recently had its first meeting with the committee of creditors (CoC) in which the appointment of the IRP, Sumit Binani of Grant Thornton Advisory, was finalised for the next six months. The company is now focusing on managing the operations and ensuring a strategy toward debt resolution, the official said. An email sent to JSW Steel officials remained unanswered. KKR and Oaktree Capital refused to comment, while emails sent out to SSG Asia and Apollo Global Management were not answered until the publication of this report. Separately, Piramal Capital said that it did “not comment on market speculation.”

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

N ews of the Month

Railways’ Campaign to Rescue Kids to Cover 75 Busiest Stations

Buoyed by the rise in the number of cases of missing children being rescued from its premises, the Indian Railways has decided to extend its campaign in this regard to cover the 75 busiest railway stations in the country.

The Operation Muskaan, launched in 2015 to rescue the children found on the railway premises, currently covers only 35 railway stations. The railway ministry has now decided to bring 47 additional stations within the ambit of the campaign, taking the number of stations covered under it to 82, a statement from the ministry said. With this, all the 75 ‘A1’ category railway stations in the country would be covered under the campaign,

it added. According to data provided by the ministry, in 2014, 2015 and 2016, the Railway Protection Force (RPF) rescued 20,931 children, including 1,317 (944 boys, 373 girls) trafficked children, who were found from across the railway network. In the current year, till August, 7,126 children have been rescued by the RPF, including 185 (124 boys, 61 girls) trafficked children. “The RPF rescues 20-25 of such children daily from trains and railway premises and hand them over to their parents, relatives, NGOs, child welfare committees or other rehabilitation institutions established by law,” the statement said. Under the Operation Muskaan campaign, special kiosks and child help desks had been set up at the designated stations, which were being manned round-the-clock by the RPF personnel and members of NGOs nominated by the Ministry of Women and Child Development, it added.

Metro Plans to Firmly Cover West Delhi Soon

For lakhs of west Delhi residents, Blue Line -connecting Dwarka Sector 21 with Noida City CentreVaishali -is the only Metro link with the rest of the city . To take any other Metro line, they have to travel till Rajiv Chowk. However, this is going to change in six months with the opening of the Janakpuri West-Kalkaji section of the Magenta Line. This line, along with the Pink Line that goes to Rajouri Garden, will put west Delhi firmly on the Metro map for the first time. Not only will the Majenta Line cover densely populated areas of west 24 CONSTRUCTION MIR ROR

Delhi like Palam, Dabri, Mahavir Enclave, Sagarpur, Dashrath Puri, etc, it will also bring that part of the city closer to the domestic airport, south Delhi, Gurgaon and Faridabad. “At present, west Delhi commuters have no option but to travel till Rajiv Chowk to change trains. When the Magenta Line opens by March 2018, they can directly go to Hauz Khas in south Delhi or take a train to Gurgaon,” said a senior Delhi Metro Rail Corporation (DMRC) official.”The commuters will save at least 25 minutes of travel time when the line opens,” he said. “The entire Magenta Line will also act as a feeder for the presently operational Blue Line as both the originating sta tions of this corridor Janakpuri West and Botanical Garden ¬ are important stations of

|| OCTOBER 2017

the Blue Line as well,” he said. Apart from the Magenta Line, the upcoming Pink Line (Majlis Park-Shiv Vihar) will also open up more options for west Delhi residents. Commuters will be able to change trains at the Rajouri Garden Metro station to reach northwest Delhi, north Delhi and south Delhi areas such as Sarojini Nagar and INA -an interchange station for the Yellow Line (Samaypur Badli-HUDA City Centre). “The Magenta Line will cover areas that are only connected by buses at present. We expect it to reduce congestion on the Palam flyover, which gets choked during peak hours. The corridor has the same alignment as the flyover,” the official said. The line will also go to the domestic Terminal 1 of the Delhi airport that, at present, can’t be accessed by Metro directly and commuters have to take a shuttle service from the Airport Express Line. The Metro official also said that constructing an underground Metro corridor under congested parts of west Delhi was a challenge for DMRC.”We had to be extra cautious as we were tunnelling below densely populated areas and most dwellings in these areas don’t have very strong foundations,” he said. “The tunnel is also close to the foundations of the Palam flyover and Metro’s Line 3,” he added.

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

R eport

“Backhoe Loaders - Export Special”

Rajinder Raina G.M. - Marketing

Escorts Construction Equipment

Celebrating the International day following the launching of DIGMAX II P

26 CONSTRUCTION MIR ROR

Given the focus on Make In India, we at Escorts see exports play an increasingly important role in our overall business. Having captured a sizable market in Nepal in quick time and exporting regularly to Middle-East, the reach was expanded to Latin America. The exports in the past two years have encouraged us to tap added markets & geographies. With contemporary hydraulics & drive axle/sIt was important to get an international calibre engine fitted on Escorts backhoe loader DIGMAX-II to make it globally acceptable with contemporary homologation compliance & readily availability after sales service.The structure of the machine is robust enough for the targeted application segments. To detailed announcement about positioning of exports as a significant part of our future business was made recently on the eve of International Day of Escorts Limited, with a series of tractors were unveiled for the international market. Construction equipment comprising of cranes and compactors were also unveiled on 6th September’17 at a function held specially for the media. The CEO Mr. Ajay Mandhr, presented Escorts backhoe loader, DIGMAX-II P to the print & electronic media. This backhoe loader has been designed and developed especially for South American, South African and Middle East markets. It is powered by a 100 Horse power Perkins diesel engine which has international level contemporary homo-location and can be serviced locally to the wide network of Perkins service sectors. This addresses the major concern of the customers. This engine is highly dual efficient with performance

|| OCTOBER 2017

characteristics to endure heavy duty and continuous workload. The heat balance of the engine is its USP which makes it fit enough to work in temperatures ranging from -20 to +50 degrees. DIGMAX –II P boasts of a robust structure design to withstand hostile working conditions making it suitable for a varied range of applications. Performance of the machine can match the best in the world as measured on productivity per hour, fuel used per cubic metre of output delivered and cost maintenance. It is highly competitively priced for the international market. We expect it to make inroads and establish itself in quick time. On 7th September, we had the international dealer conference and the response from the dealers was really encouraging with on the spot bookings, beyond our projected/expected numbers. The exports will help us add to the bottom line & also reduce the seasonal & cyclic vagaries of Indian market. Things are falling in place & we are optimistic about performance on the exports front as Escorts has the wherewithal to achieve the aggressive export targets.

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

R eport

Mahindra Forays into Road Construction Equipment Segment Launches the Motor Grader - Mahindra RoadMaster G75 under Construction Equipment business Mahindra & Mahindra Ltd., part of the USD 19 billion Mahindra Group, announced its foray into the road construction segment with the launch of its first Motor Grader - the Mahindra RoadMaster G75 under the aegis of its Construction Equipment business. Speaking at the launch, Rajan Wadhera, President, Automotive Sector, Mahindra & Mahindra Ltd., said, “In line with Mahindra’s vision to provide disruptive products and services for our customers, we have entered into the fast growing road construction equipment segment with the launch of Motor Grader, the Mahindra Road Master G75. This product has been designed and developed in India after an in-depth understanding of the needs of the road contractor fraternity. Our aim is to liberate them from deployment of various sub-optimal methods with limited mechanization and thereby improve their productivity. A truly customized solution, the Road Master provides an opportunity for maximum equipment utilization and delivers excellent quality output, increasing the profitability of road contractors”. Vinod Sahay, CEO, Truck and Bus Division and Construction Equipment Division, Mahindra & Mahindra Ltd. said, “The G75 is a disruptive, category creating motor grader which is set to deliver Affordable Uncompromised Mechanization. It is most suitable for constructing small to medium roads as well as widening of state and national highways. It is also apt for applications such as embankment or earthwork for laying of railway tracks and levelling of large plots for industrial construction”.

About Mahindra RoadMaster G75

The G75 offers a host of benefits to road contractors and is the ideal machine for spreading and grading applications for the entire road contractors fraternity.

28 CONSTRUCTION MIR ROR

|| OCTOBER 2017

It offers an optimized solution and precisely caters to the road contractor’s grading needs for government flagship programs as Pradhan Mantri Gram Sadak Yognaand Smart City, as well as for major district roads, other district roads, border roads, rural roads and expansion of roads. The G75 is powered by a 79 HP DiTEC engine developed by Mahindra which is coupled with a 3 m (10 ft) wide blade. This equipment is optimized to deliver zero compromise grading at 33% as compared to conventional motor graders. The product comes with a one year, unlimited hours warranty, eliminating the customer’s anxiety when it comes to expensive repairs. This is possible due to Mahindra’s engineering and manufacturing capability, backed up by a gruelling testing regime and sourcing of the best components. The G75 has undergone over 6,000 hours of rigorous testing in the harshest of terrains and for the toughest of applications. It has been validated on all performance, safety and reliability parameters and is backed by Mahindra’s dealer sales and service network which has unparalleled reach across the country. It is equipped with apt technology that is affordable and coupled with unmatched quality, superior style, operator comfort and its innovative telematics technology, DiGiSENSE. The Mahindra Road Master G75 is being manufactured at Mahindra’s stateof-the-art facility at Chakan, Pune. Mahindra’s Product Development team has utilized extensive consumer insight and feedback to develop this product which is built to withstand India’s rough terrain and heavy usage. In addition, the product offers all the relevant features using the latest vehicle systems and technologies at competitive prices.

||www.constructionmirror.com||

E vent Report

Schwing Stetter Showcased Their Exclusive Range of Sludge Pumps and Muck Pumps at IFAT Expo 2017 Over 1, 43,449 Metric Tons (MT) of municipal solid waste is generated daily in the country. This is estimated to increase at 5% annually. About 8 million tons/year of hazardous waste is generated in each year out of 4.8 million tons is recyclable. Schwing Stetter India, one of the prominent concrete equipment manufacturing companies in India was a part of IFAT Expo 2017, India’s Leading Trade Fair for Water, Sewage, Refuse and Recycling. Schwing Stetter marched their way into the Industrial Equipment Segment with the launch of an exclusive range of Sludge pumps and muck pumps back in IFAT 2015. The market for sustainable technologies in water as well as waste water treatment is driven by new opportunities arising due to the global economic meltdown. Sludge pumps is also highly useful to the mineral, petrochemical, food processing and thermal power industries. This product will be highly beneficial to our country, where drainage water can be filtered into a sludge that is converted to bio organizers – fit for direct consumption. Our Prime Minister, Mr. Narendra Modi has been emphasizing The Swachh Bharat Abhiyan, India’s most significant cleanliness campaign. With this objective in mind, Schwing Stetter India has launched its exclusive high capacity, high volume “Sludge Pumps and Muck Pumps”. Schwing sludge

||www.constructionmirror.com||

pumps provides turnkey solutions for transport and storage of sludge’s as well as materials with high solid content.

The KSP range of sludge pumps can be used for the following: • Waste Water Treatment Plants (WWTP) – Where sewage sludge is mechanically dewatered with foreign particles • Waste Recycling – Recycling waste sludge, oil sludge, salt mud and radioactive waste • Construction industry - Recycling Bentonite Clay mud Mortar tailings • Mining, Refineries and Power Plants Recycling red mud, gold slime, iron sludge, zinc sludge, metallic oxide sludge and Fly ash • Chemistry and industry - Recycling organic and inorganic materials, stabilized chemical waste, lime slurry, food-processing, by-products and paint sludge’s Mr. Anand Sundaresan, Vice Chairman & MD,

SCHWING Stetter India Pvt. Ltd said, “With detailed project planning, the sludge pump system has been tailored precisely to adapt easily to the inflexibilities of wastewater treatment plant service. These pumps are used worldwide in waste water treatment plants, waste recycling, refining and in the chemical industry. We are sure that these products will play a key role in cleaning and discarding of sludge and waste in many industries. The IFAT exhibition is indeed a great platform for the introduction and launch of these products in the Indian market.” Mr. V.G. Sakthikumar, Managing Director, SCHWING Stetter Sales & Services Pvt. Ltd said, “At Schwing Stetter, we have always paid attention to environmental issues. Sludge transportation is the most challenging pumping application in a wastewater treatment plant and Schwing Stetter has gained extensive experience through decades of involvement in this area. It gives us great pleasure to have launched the first ever high capacity, high volume sludge pumps and muck pumps in India.”

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

C over Story

Despite of being slow growth in the mining sector if compare to other major countries like wise China and US , The real value add of Indiaâ&#x20AC;&#x2122;s mining sector to the GDP is very low at $14.4 billion against that of China ($150 billion), Australia ($38 billion) and Brazil ($21 billion). Indiaâ&#x20AC;&#x2122;s mining sector grew at 0.8% compared to 15% for China, 5.3% for the United States, 2.5% for Canada and 2% for Brazil. Also,

India is 3rd largest producer of crude steel in the Asia-Pacific region in 2016. while the total crude steel production was 88 MT. India accounted for 5.89% of the total steel production in the world in the year 2016. Total finished steel production (alloy & non-alloy) in India reached 83.01 MT in FY17. In FY16, offshore region accounted for 20.20% share in India’s share of states in value of mineral production. India ranks 4th globally in terms of iron ore production. In FY17, production was expected to reach 175.51 MT of iron ore. India has around 8 % of world’s deposit of iron ore.

According to Ministry of Mines, India has the 7th largest bauxite reserves which was around 2,908.85 MT in FY17. Aluminium production stood at 1.7 MMT in FY17. Coal production stood at 453.10 MT in FY17. In 2015, India had the 5th largest coal proved reserves globally, of which 92.6% was Anthracite and Bituminous while 7.4% was Sub Bituminous and Lignite. In 2016, India contributed around 11% of the world’s production of coal. CIL, is the world’s largest coal company based on raw coal production and coal reserves. India has vast mineral potential with mining leases granted for longer durations of 20 to 30 years.

A brief review on India’s Metals and Mining Sector India is ranked low on the composite mineral and policy potential, with a Fraser rank of 59 amongst 96 mining regions making India less attractive for investments.

Introduction

India holds a fair advantage in cost of production and conversion costs in steel and alumina. Its strategic location enables convenient exports to developed as well as the fast-developing Asian markets. Rise in Infra. development and automotive production are driving growth in the sector. Power and cement industries are also aiding growth in the metals and mining sector. Demand for iron and steel is set to continue, given the strong growth expectations for the residential and commercial building industry.

Cover Story

consists of lead, zinc, copper, nickel and tin. Precious metals market includes gold, silver, platinum, palladium, rhodium and diamond

Market Size & Notable trends

Iron and steel segment offers a product mix which includes hot rolled parallel flange beams and columns rails, plates, coils, wire rods and continuously cast products such as billets, blooms, beam, blank, rounds and slab and metallics and ferro alloy. Coal market consists of primary coal (anthracite, bituminous and lignite). Aluminium segment includes primary aluminium, aluminium extrusions, aluminium rolled products, alumina chemicals. Bauxites are sub-divided into 2 basic types based on the processing methods - Tropical bauxite and European bauxite. Base metals market 32 CONSTRUCTION MIR ROR

In FY16, India had 1,878 operative mines excluding mining areas for minor minerals, crude petroleum, natural gas and atomic minerals. India is the 3rd largest producer of coal. Coal production stood at 453.10 MT in FY17. India has the 5th largest estimated coal reserves in the world, standing at 308.802 billion tonnes in FY16. In 2016, India contributed around 11% of the worldâ&#x20AC;&#x2122;s production of coal. India ranks 4th in terms of iron ore production globally. In FY17, production was expected to reach 175.51 MT of iron ore. India has around 8% of worldâ&#x20AC;&#x2122;s deposits of iron ore. India has become the 3rd largest steel producer in FY17 with the production of finished steel at 83.01 MT. India stood as the 3rd largest crude steel producer in 2016, while its production increased to 90 MT in FY16 as compared to 88 MT in FY15. India accounted for 5.89% of the total steel production in the year 2016. According to Ministry of Mines, India has the 7th largest bauxite reserves- around 2,908.85 MT in FY17. Aluminium production stood at 1.7 MMT in FY17. India has vast mineral potential with mining leases granted for longer durations of 20-30 years. In captive mining for coal, CoS are permitted to set up coal washeries and for specified end uses,

|| OCTOBER 2017

including the setting up of power plants, fertilizers and steel units As per government, US$ 413.35 million of revenue was generated from 83 coal mines till November 2016. In the last few years, India has seen a significant growth in minerals with the government granting leases for longer durations of 20 to 30 years. The demand for metal and metal products is rising in the domestic market with India being a net importer in the metals segment. In search of greater mineral opportunities, an increasing number of Indian mining CoS are venturing overseas in a bid to secure stable, long-term supplies of minerals especially in the areas of coal and iron ore Coal India plans to export 10 MT of coal from Mozambique to India in the next 10 years; the company is seeking more license blocks in Mozambique Adani Enterprises announced construction on its US$ 21.7 billion Carmichael mine in Australia, is expected to begin by mid 2017. In FY17 the index of mineral production was 130.04 and the total value of mineral production was estimated at US$ 38.35 billion in FY17 The index of mineral production of quarrying and mining sector for March (new Series 2011-12=100) 2017, which stood at 127.2 was 9.7% higher as compared to the levels in March 2016. The cumulative growth for AprilMarch 2016-17 over the period of previous year has been 5.3%. Players in the industry are trying to minimise cost to gain competitive advantage For ||www.constructionmirror.com||

example, SAIL is trying to reduce cost by Entering into MoU for coal bed methane and propane gas to reduce cost of energy. Optimisation of the input resources, increasing operating efficiency for handling the assets available with the company, reducing overhead costs and stabilisation of newly formed operation units. Players in the industry are focusing on optimising technology to increase process efficiency Coal India Ltd is focusing on making best use of technology. It has ambitious plans of using GPS/GPRS based vehicle tracking system to enhance productivity. It also has services such as E-Auction, EProcurement of goods and services The Ministry of Mines has put in motion the Mining Surveillance System (MSS), a pan-India surveillance network using latest satellite technology, to check illegal mining. During October 2016, MSTC Limited, one of the country’s leading e-commerce service providers launched ‘M3 Metal Mandi’, a virtual market for metal transactions. The portal primarily aims to benefit micro small and medium enterprises (MSMEs). Alliance with global and domestic players help companies to improve their operational performance through technological improvement and cost optimisation

Cr. JSW Steel is currently operating a 12-MT per annum integrated steel plant in the area. Mangal Credit and Fincorp announced plans of diversifying in iron ore mining by acquiring a mine near Goa. The 21 hectare mine consists of iron ore reserve worth US$ 223.11 million. Foreign Investments...FDI upto 100% is allowed in exploration, mining, minerals processing and metallurgy under the automatic route for all non-fuel and non-atomic minerals including diamonds and precious stones During Apr’00-Mar’17, cumulative FDI inflows into the metals and mining sector stood at US$ 13.53 billion The sector accounted for 2.79% of total cumulative FDI inflows during the period Apr’00-Mar’17.

for steel, zinc and aluminium producers In March 2017, Hindustan Zinc is planning to commission its 1st Zinc fumer plant at Chanderiya with an investment of US$ 84.78 million for extracting metals from waste. Commissioning of the plant will improve recovery of zinc from 96.8-97.5 %, adding about 3000 tonnes of zinc from 1 smelter per annum. India’s infrastructure sector is expected to grow at a CAGR of 35.65% over FY08-25 In Union Budget 2017-18, Government of India has allocated US$ 62.16 billion for infrastructure sector. Growth in the sector is set to increase in the next few years; forecasts put the CAGR for FY12-17 at 11.93% Iron and steel being a core component of the real estate sector, demand for these metals is set to continue given strong growth expectations for the residential and commercial building industry Total housing shortage in the country stood at about 18.78 million at the start of the Twelfth Five Year Plan. This provides a big investment opportunity for residential building construction in coming years.

Drivers and Developments...

Cumulative FDI inflows into the mining sector between April 2000 and June 2017 stood at US$ 2.228 billion as per DIPP. Under the Mines and Minerals (Development and Regulation) Act of 1957, FDI upto 100% under Automatic route is allowed for the mining and exploration of metal and non- metal ores including diamond, gold, silver and precious ores, while FDI upto 100% under govt. route is allowed in for mining and mineral separation of titanium bearing minerals and its ores. National Aluminium Company (NALCO), a central govt.-owned entity, is set to join the club of million-tonne producers in the metal segment by 2020. NALCO has readied about INR 25,000 Cr investments for increasing its alumina, aluminium and power production capacities. Adani Enterprises Ltd announced that it is ready to start work on the US$ 16.5 billion Carmichael mine. The project is expected to commence production in FY 2020-21 with an output of 25 MT in the first phase. Hindustan Zinc announced that it will set up its first Zinc Fumer Plant in Rajasthan by 2018 with an investment of INR 570 Cr. This plant will extract metals from waste and will have an annual production capacity of 3,000 tonnes. The GoI is taking steps boost the country’s domestic steel sector and raise its capacity to 300 MT by 2030-31. JSW Steel proposed constructing a slurry pipeline project to transport iron ore and coal at competitive prices in Karnataka with an investment of INR 2,100 ||www.constructionmirror.com||

MMDR ACT...Reservation of areas for PSUs removed State governments to set up special courts to expedite prosecution in illegal mining Statutory Coordination cum Empowered Committee at central and state levels to decide upon stringent penalties for offences. Central government to establish National Mineral Fund; respective state governments to establish State Mineral Fund(s) District Mineral Foundation will be set up by the state government which will work for the interest and benefit of persons or families affected by mining related operation in the district and will be managed by a governing council The mining tax collected will be spent within the district. The Basic Customs Duty (BCD) on - ships imported for breaking up is being reduced from 5% to 2.5% coal-tar pitch is being reduced from 10% to 5% - battery waste and battery scrap is being reduced from 10% to 5% - steel grade limestone and steel grade dolomite is being reduced from 5% to 2.5% Expanding construction sector…India is witnessing a sustained growth in infrastructure build up. The construction industry has been witness to a strong growth wave powered by large spends on housing, road, ports, water supply, rail transport and airport development Infrastructure projects continue to provide lucrative business opportunities

Increasing demand from Power & Automotive production...The power sector accounts for a large share of the consumption of coal in the country In FY17, power generation in India was 1160 TWh. Power generation in India expanded at a CAGR of 5.11% during FY08–17. In June 2017, total power generation capacity stood at 329,231 MW. In the 11th Plan, India is estimated to have added around 60,000 MW of generation capacity at an investment of US$ 11.5 billion. To meet growing power demand, the Power Ministry has targeted capacity addition of 88,537 MW in the 12th Plan (2012-17) period. With a huge reserve of coal, around 67% of total power generation was done through thermal power plants, while hydro, renewable and nuclear plants contributed 13.6%, 17.4% and 2.1% respectively in FY17. In December 2016, utilisation capacity of coal fired power plants in India rose to 60.5%, as compared 52% in August 2016.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

Cover Story

Challenges affecting growth of Indian and inadequate communication results in confusion. As a result CoS do not have a clear guideline to mining sector…

Policies...Shri Piyush Goyal, the Union Minister of State for Power, Coal, New & Renewable Energy and Mines, launched the Mining Surveillance System (MSS) in New Delhi to establish a regime of responsive mineral administration by curbing instances of illegal mining activity though automatic remote sensing detection technology. National Steel Policy has been established in 2017 with the mission to provide self- sufficiency in steel production by providing policy support and guidance to private manufacturers, MSME steel producers, CPSEs and encouraging capacity additions. The Union Cabinet approved the National Mineral Exploration Policy (NMEP) which aims at accelerating the exploration activity through enhanced participation of the private sector. This policy focuses on making baseline geoscientific data of world standards available in the public domain, special incentives for deep- seated and concealed deposits, quick aero geophysical surveys of the country, creation of a dedicated geoscience database and quality research in public- private partnership. The Odisha govt. has been granting leases for longer durations of 20-30 years due to which India has seen a significant growth in minerals. Indirect taxes such as export duty for various minerals have been significantly reduced while import duty and custom duty for some minerals have been increased. For example, export duty on iron ore lumps with Fe content below 58% has been reduced from 10% to nil and import duty on zinc has been increased from 5% to 7.5%. The govt. also provides fiscal incentives to CoS such as one-tenth of the expenditure on prospecting, extraction and production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the total income. In captive mining for coal, CoS are permitted to set up coal processing plants such as washeries that are for specified end uses, including the setting up of power plants, fertilizers and steel units. 34 CONSTRUCTION MIR ROR

India’s mining sector has traditionally been relatively small and has been growing slower than other major mining jurisdictions such as China, Brazil, Canada, the United States, Chile and Australia. The real value add of India’s mining sector to the GDP is very low at $14.4 billion against that of China ($150 billion), Australia ($38 billion) and Brazil ($21 billion). Between 2010 and 2012, India’s mining sector grew at 0.8% compared to 15% for China, 5.3% for the United States, 2.5% for Canada and 2% for Brazil. Also, India is ranked low on the composite mineral and policy potential, with a Fraser rank of 59 amongst 96 mining regions making India less attractive for investments. India lags in baseline geophysical and geochemical data generation, for e.g., only 2% area is covered for gravity and magnetic analysis, only 4% for sediment data and very little seismic data has been collected compared to countries such as Australia where 100% of the area is covered for gravity and magnetic analysis, 91% for sediment data and 100% for seismic data. Also, there has been low focus on exploration in India, with an exploration budget in 2013 of $17 per sq. km against $51 for Brazil and $67 for China. India faces unique challenges in land acquisition and executing resettlement and rehabilitation. One of the reasons is that original settlers do not always get long-term jobs and hence do not want to vacate their land. Both public and private mining CoS face delays to the tune of several years to start mining on the identified land in India. Despite enabling legislations like the Coal Bearing Areas Act (CBA), it has been difficult even for public sector players to clear land for mining. Long lead time for EC/FC, mining lease procedures. Long clearance time for different licenses and limitations like captive use also hamper mining output. For example, in India it takes 4+ years to get a mining lease, against less than a year for other major mining countries such as Brazil, Chile, the US and Canada. India lacks advanced technology to mine resources that are difficult to access. Deep seated resources (e.g., coal) or minerals located in eco-sensitive areas have not been considered for mining due to lack advanced and eco-sensitive technology. As an example, the Jharia coal block, which has large coking coal resources that can help meet steel industry coking coal demand, is un-utilised due to the ongoing fire. These resources can be accessed using advance underground mining technology and new mining techniques. Often different interpretation of laws by states and central govt.,

|| OCTOBER 2017

follow for different licences and clearances required to continue mining activity. Substantial environmental default by the industry deters the expansion of the sector. For example, low financial guarantee for mine closure in India does not sufficiently deter defaulters. Other mining jurisdictions such as Western Australia and Canada require CoS to pay large percentage of the mine closure cost upfront as financial security.

Measures to consider…

Accelerate commercial mining in coal and ramp up coal production from existing coal blocks. While it is important to ramp up production from existing assets, it is equally crucial to allot the new coal blocks in time to meet the demand. Private and commercial miners are likely to bring in more investment and advanced technology, thereby increasing the possibility of quick production ramp up. Implement a progressive resource allotment process using a transparent and competitive mechanism. For known mineralisation, revenue share bids could be the preferred approach. Whereas for end-use projects of critical national importance the bid parameter could be linked to the value of the end product. For partially known mineralised areas, exploration could be completed to establish the extent of mineralisation following which revenue share bids can be used for allotment. A non-exclusive FCFS with security of tenement and predefined mining right of sale should be preferred to allot blocks for exploration. In case multiple players are interested for the same partially mineralised or non-mineralised block, the allotment could be based on a composite bid of minimum work programme and revenue share, with the option to return the data and block in case it is found to be uneconomic, post completion of exploration. Create an integrated single window clearance process including EC, FC, mining lease, CTO, etc. This could be modelled on lines of the process in Australia, thereby increasing efficiency and effectiveness of clearance process and cutting down additional time for co-ordination and multiple application delays. The Ministry of Environment & Forests is taking steps to streamline the process but has a long road ahead. Consider reviewing the land acquisition act to facilitate faster project execution. Elements of the land acquisition act could be revisited: particularly percentage consent required for land acquisition and procedural steps needed to complete the ||www.constructionmirror.com||

acquisition. In the process, it is a must to ensure rapid job creation for displaced people and fairness to landowners. Develop the necessary logistics infrastructure, including key rail links and coastal shipping on eastern India’s seaboard, to ensure appropriate evacuation and cost effective mineral transportation. For the steel industry needs of iron ore and coking coal the govt. could accelerate two dedicated freight corridors (Delhi-Kolkata and Kolkata Mumbai), while also expanding capacity along high volume routes (Goa-Chennai). Accelerating three mining rail corridors (Tori-Shivpur-Kathuria, Jharsuguda-Barpali and East-West corridor) could help debottleneck coal production at major CIL coal mines. Expanding port capacity at major ports such as Paradip and Vizag will further facilitate sea route transport of coal and iron ore from the eastern ports of India to other coastal demand areas, as is the case in China for coal. Attract juniors to significantly ramp up exploration to grow mineral reserves ahead of consumption. India has the same geological strata as that of Africa and Australia and thus is likely to have a similarly large geological potential. It is therefore, crucial to get detailed exploration profiles for India. Exploration needs to be treated as a scientific process driven by corporations and the Geological Survey of India, who should develop baseline data and make it available to attract exploration investment. Proactively address the mining skilled labour gap by augmenting capacity in educational institutions and partnering with industry, HRD ministry or the National Skill Development Council. For example, the incremental requirement of mining engineers, geologist, diploma holders and skilled/semi-skilled labour would be 1 to 2 times the work force in 2009. Implement a progressive mining legislation and ensure stability in laws and guidelines for the industry; and avoid retrospective changes. Legal language could be framed clearly to avoid misinterpretation and provisions could be drafted

||www.constructionmirror.com||

to provide clarifications as and when required. For reinstating investor confidence, the govt. should ensure that no retrospective changes are made in the policy of allotment, taxation and general administration. The govt. should also actively intervene and provide the necessary facts that will allow India’s judicial system to dispose of cases quicker, and to interpret the law in a balanced manner. CoS need to manage sustainability pro-actively; specifically environment and scientific mining. Mining CoS need to understand the economic value of the resource and avoid any wastage of valuable minerals. It is critical to ensure that all the rules from exploration stage to mine closure stage are followed. CoS need to invest in new capabilities to ensure the licence to operate, which is becoming more critical than mining operations itself. CoS will have to take accountability for creating a conducive environment for mining; creating social parity, being responsible with the environment and creating jobs. This can potentially be a huge source of competitiveness for those that invest in these capabilities. As an example, mining CoS will need to consider setting up job creation engines (not necessarily in mining) as a means of obtaining land faster and in a humane manner.

Road Ahead and Opportunities...

Untapped market with strong growth potential: India’s per capita steel consumption was 61 kg in 2016 compared with the global average of 208 kg Rural per capita steel consumption is likely to reach around 20 kg from 13 kg currently An amount equal to US$ 25 billion to US$ 33 billion is expected to be invested in steel sector over the next 6- 7 years. Scope for new mining capacities in iron ore, bauxite and coal: India has the world’s seventh largest reserve base of bauxite and fourth largest base of iron ore respectively, and accounts for about 7% and 11% respectively, of total world production

Moreover, India has the world’s fifth largest coal reserves and accounts for 7.5% of total global production. Rapid growth of user industries to drive demand for metals and minerals: Strong long-term demand from the steel industry is expected to further boost the iron ore industry Increasing power production is likely to catapult demand for coal Booming construction, automobiles and packaging industries are expected to lend substantial support to the metals and mining sector. Expansion of product line by existing players: The iron and steel segment offers a product mix which includes hot rolled parallel flange beams and columns rails, plates, coils, wire rods, and continuously cast products such as billets, blooms, beams, blanks, rounds and slabs as well as metallics and ferro alloy. Looking at the expected growth in sector, existing manufacturers have a huge opportunity to expand their product line in new segments. There is sig. scope for new mining capacities in iron ore, bauxite and coal and considerable opportunities for future discoveries of subsurface deposits. The Ministry of Steel aims to increase the steel production capacity to 142.3 MT by the end of 2017 indicating new opportunities in the sector. In Feb’17, the country’s coal ministry allowed private CoS to engage into mining activities for commercial purposes. Infra. projects continue to provide lucrative business opp’s for steel, zinc and aluminium producers. India’s Infra. sector is expected to grow at a CAGR of 35.65% over the period FY 2008-25. In the Union Budget 2017-18, the GoI has allocated US$ 62.16 billion for Infra.. Iron and steel make up a core component of the real estate sector. Demand for these metals is set to continue given strong growth expectations for the residential and commercial building industry. Total housing shortage in the country stood at about 18.78 million at the start of the 12th FYP. This provides a big investment opportunity for residential building construction in coming years.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

pecial Feature: PEB Wings of Steel

Pre Engineered Buildings: Wings of Steel

ntroductionâ&#x20AC;Ś

Pre-engineered steel buildings have been in India since a couple decades ago. Seen mostly in the commercial, warehousing and infra space, pre-engineered steel has now also morphed from simple structures to complex steel architectural marvels, thanks to advanced design capabilities in factories, and high quality steel. The pre-engineered building (PEB) market is estimated to be around 600,000 MT per annum currently. The industry is driven by growth in infra and manufacturing sectors. Advanced nations have long discovered the advantages of PEBs. The Indian smart city plan is taking inspiration from successful models elsewhere such as Japan, US, UK, China and trying to emulate the same in our local scenario. In these countries, it is surprise to know that, the prefabricated steel construction is a preferred choice of commercial building material, with near 70% market penetration. Main advantage of using pre-engineered steel is its rapid construction, affordability, architectural versatility, environment friendly material, flexibility for expansions, low maintenance, single source responsibility and earthquake resistance properties. These are typically delivered in just a few weeks after the approval of drawings, aided by

36 CONSTRUCTION MIR ROR

|| OCTOBER 2017

advanced software. Foundation and anchor bolts are cast parallel with finished, readyfor-site bolting. PEB reduces total construction time of a project by at least 30-50%.This also allows faster occupancy and earlier realization of revenue. Due to the systems approach, there is a significant saving in design, manufacturing and on-site erection cost. The complete structure is fabricated in-house and dispatched to the site to be erected using nut and bolt connections, with highly trained technicians. Such buildings use a combination of built-up sections, hot rolled sections and cold formed elements that basically provide for the steel frame work. It is designed to provide a complete building envelope system that is air tight, energy efficient, optimum in weight and cost and, tailor-made for client requirements. Most suitable for any non-residential for any non-residential building and offers numerous benefits over conventional buildings. But still, the relatively slow Indian uptake is a fact. govtâ&#x20AC;&#x2122;s have in the past made policies to assist the industry. The policy of the GoI could also be bolstered to help the industry. For instance, the tax holiday by the united AP govt in the late 90s gave a big boost to the industry for a seven year period, and encouraged PEB industries to compete with

RCC industries across India and become viable. Later, Uttaranchal in 2005 placed PEBs in scheduled items, and made the applicable tax 5% which even today none of the states are able to do. This resulted in many PEB sales offices working out of Uttaranchal. This kind of encouragement is essential, as even after twenty years PEBs are mostly used for warehouses and industrial sheds and not enough has been done to educate builders and people in general. The market for steel construction is growing exponentially in India with consumers opting for new-age technologies as well as the need for rapid Infra development to match the economic growth of the country. The advantages of having a steel structure or building over a concrete one are far too many, and we are confident that affordable house is going to be the next big thing for pre-engineered steel building players. We, however, feel that it may take couple of years more to change the perception of people, and to convince the govtâ&#x20AC;&#x2122; officials of the benefits of using steel over RCC. Biggest advantage of using pre-engineered structural steel system is time saving, as steel is manufactured in a plant and directly shipped to site for erection. Buildings can be completed faster and upto 40% of time can be saved in overall execution.

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

pecial Feature: PEB Wings of Steel

Also, only erection of the building is done at site using nuts & bolt assembly by skilled workforce, and lesser resources are used also, there is not much dependency on labours. Even the chances of delay in project timelines due to various external factors are reduced by almost 80-90%. PEBs are not just eco-friendly, but also profitable in the long run. The structures are made of 100% steel which is recyclable upto 90%, this saves primary resources and reduces waste, and hence, saves energy. Our buildings help in reducing the carbon footprint by reducing the solid waste, improving air and waste quality and conserving natural resources by reducing the rate of consumption. We employ energy-efficient methods in steel production that help to substantially reduce greenhouse gas emissions in our state-ofthe-art manufacturing facilities. Pre-engineered steel buildings are pollution-free and further recyclable. Even after demolition, our buildings don’t accumulate wastage like asphalt shingles, concrete, brick, and dust in the environment, and steel can be recycled for other applications too. All these points help in attaining LEED rating in buildings. Nowadays, more than 95% of industrial construction for plants and warehouse buildings are done using pre-engineered steel. With many state govt’s providing a favorable environment and tax benefit to set-up new industries, we feel that Infra development is going to accelerate in the years to come. Industries like automotive, automotive ancillary, cement, manufacturing, power generating stations, ports, warehousing, etc. are ideal for pre-fabricated structures and these sectors have a huge opportunity in times to come, and we are all geared up. Prefab and precast construction techniques are seeing rising interest by the developer and the beneficiary given the substantial savings on time and cost, and superior quality of the built structure Last few years have witnessed growing interest in prefab and precast construction techniques, wherein buildings use precast (concrete) or prefabricated (steel) structural components that are standardized and factory manufactured, and then transported to the site for assembly. This is especially so in the case of large projects where the various modules of the structure are cast/fabricated off-site in factories and then assembled in situ. Factory-made construction components include steel frames for external structures, panels made of wood, wall and terrace cement blocks, plaster boards, factory-fitted doors and windows, gypsum and other materials for making floors, drywall walls, ceilings, etc. For 38 CONSTRUCTION MIR ROR

houses using steel frames for the structure, it is possible to build multiple stories without having to put up pillars, beams and concrete. Or, the main structure and outer walls of the building can be built using the conventional method of construction, and constructing the internal partitioning and interiors with factory-made components such as drywalls. Since the components are mass produced in a factory, a large number of buildings can be built in a short time and at a lower cost as compared to the conventional method of construction. Experts opine that adopting the new construction technologies for economies of scale will enable affordable housing, and the existing conventional labour-oriented and load bearing structures will soon become outdated. Factory/ assembly line produced buildings are made to stricter norms and use cutting edge technology. With such factory produced components, one can design an entire building by using architecture software. Later, components such as steel frames, wall and ceiling panels and floor tiles can be custom-made. Computer aided design & certain materials enable structures that can be easily assembled and dismantled without damage, and changes in the structure can be made on-site. Production of the various segments in a factory is mechanized/robotized, with quality checks at every stage of production, and strict adherence to assembling codes. This reduces the number of manufacturing defects, which ensures better performance of the built structure.

PEB Demand...

Demand for factory ready components for constructing buildings in India is being driven by an urgent need for commercial and residential buildings that can be delivered at a faster pace. This method of construction reduces project completion timeline by 40-50%, which, in turn, reduces overheads on men and machinery. A ready building can be leased out early and the revenue accruals on early leasing will lead to savings as compared to conventional construction methods that take a longer completion and usage time. The new construction techniques can also bring better cost efficiencies over the life of the building. Even though prefab and precast materials are 15-20% more expensive, higher efficiency, less wastage of material, and savings on time and labour bring down the overall cost of the construction significantly, especially of large buildings. Off-site fabrication can reduce delays in construction, free up the supply chain, and help projects meet their completion deadlines without incurring additional costs. As per research undertaken by JLL, bulk of the housing shortage is arising from the Economically

|| OCTOBER 2017

Weaker Section and Lower Income Group category of households. Cost of construction across major cities has been consistently on the rise, which is a deterrent to affordable housing. There is a need for developers to use more efficient construction methods to better address affordability and efficiency concerns. Land price currently forms 30-50% of the cost of project within city limits. However, RBI regulations do not allow banks to fund land purchase. Developers are therefore left with few options: either forming a joint venture with the landowners or getting funded through NBFs, which is often expensive. A majority of developers use conventional construction methods which are time consuming and the projects often face time and cost overruns. Increase in the time period increases the cost of financing. Adopting technologies like prefab and precast, and taking an industrial approach can convert this sector into housing manufacturing, and help developers avoid delays in project delivery. Prefab is the key to timely construction of affordable housing. Given that the conventional methods of construction will not be able to bridge this housing shortage gap, there is a clear need for change of construction technology in order to fasten the process. That’s where prefab technology will come to the rescue. For the prefab industry, the cumulative gap of 35 MUs is the potential demand that exists up to 2022. Engineering associations like PSI, ACCE(I) and ICI have been conducting workshops in many cities in an effort to create awareness and showcase emerging technologies such as composite construction, light gauge steel, insulated wall construction and usage of pre-cast structures, etc. They are inviting pre-cast and prefab manufacturers, construction companies, design engineers, structural engineers, material and component suppliers, entrepreneurs and developers, govt’ officials, implementing agencies, policy makers, consultants, architects, and technology providers to participate and share their knowledge and experience. As India is heralding fast track construction systems, new techniques such as precast and PEBs will create job opportunities for engineers and highly skilled workforce. In fact, these companies see an increasing number of enquiries from developers as well as beneficiaries as the concept gathers momentum. PEB Demand Trends…PEBs concept form a unique position in the construction industry in view of their being ideally suited to the needs of modern Engineering Industry. The growing scope of using PEBs ranges from industrial, commercial to residential buildings, multistories; stadiums, schools, exhibition centers to bridges, railway stations and metro applications, airport, power ||www.constructionmirror.com||

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

pecial Feature: PEB Wings of Steel

to ports and many more. Steel construction has found wide acceptance over conventional methods in industrial and commercial sector. The perception shift in the residential space has also been started now. Moreover, the Indian pre-engineered consecution market is now experiencing a demand shift to new applications due to Infra development in the country like airports, multi-story buildings, stadiums, Metro Stations etc. The country will see increased economic growth, and the removal of barriers to foreign investment will spur demand for construction over the coming few years. There is undoubtedly, a very promising future for this sector in the coming years. Steel construction offers better designs along with greater safety than that offered by conventional construction types. It proves to be relevant and beneficial to several construction verticals offering longevity of structure lifespan. So for such obvious benefits, it has made its position stronger in the industry and has gained the mind share as well. Steel offers modern solutions to all building constructions along with the given benefits of eco-friendliness, recyclability, energy efficiency, Superior quality, durability, low maintenance besides aesthetics. A steel building does not look different from any other building when finished and works very well in the tropical environment. The usage of steel and especially PEBs is growing very rapidly in the Indian construction industry. Initially, PEBs were used in warehousing and they later became the preferred choice for industrial buildings. The industry growth had been subdued in the last few years due to the economic slowdown and the then political conditions but with the formation of a stable govt’, improving investor sentiment, there has been a positive growth momentum in PEB. The industry growth is mainly dependent on the new 40 CONSTRUCTION MIR ROR

govt’s economic revival plan which did propel companies to increase their capital expenditure in turn expediting growth in PEB Industry. Today, PEBs have wider applications in the industrial, Infra and institutional segments, with quality and design matching international standards. The PEB concept is recognized to be the most versatile, fast and economical method of constructing buildings. The economy and the speed of delivery and erection of these buildings are unmatched in the construction industry. From a simple box industrial building, which was imported into India way back in 1997, to the present day mega projects that define innovation with precision and speed, PEB industry in India has indeed come a long way.

PEB Construction…

Location of site is critical for transporting the factory-made components. Since quality and pricing are achievable through the pre-cast and prefab construction techniques, there are huge opportunities to be tapped. But it is important to reduce cost and bring it to the affordable housing sector by using local materials, and make standards for size, cost, etc. It is suggested that the technology providers, builders and contractors should be given tax incentives to fully utilize the new construction techniques. The govt’ should enable approvals by a single window clearance, and also allow for an exit policy for the developer which he can do by upgrading the project of economically weaker section/ low income group projects. Though the Centre has taken a slew of measures to reform the sector with interest subsidy, income tax exemption, grants, amendments and other incentives to the housing sector, however, the state govt’s need to align their policies with the Centre’s. New construction technologies such as pre engineered structures reduce material usage by 32-40%, manpower by 50%, and make units sustainable.

|| OCTOBER 2017

Hence, to promote PPP model in the sector, tax exemptions and incentives would go a long way to strengthen both demand and supply side. Ambitious housing projects such as the Prime Minister Awas Yojna (PMAY) will give a big boost if the Centre and State govt’s can provide tax relief to pre-fabricated technologies. Prefab structures would increase house building capacity of implementing agencies of the govt’ like DDA, NBCC, MES and private sector developers, five-fold, and would bring in both quality and affordability. Presently, 300 units are being built in the country per day and with the use of prefab/precast construction it is possible to make 1500 units per day. This would enhance capacity and quality, subsequently reducing cost and saving time. GST would give a further boost to the sector as it would bring down current indirect taxes such VAT, Excise and service from 25% to 18%.

To PEB transition…

While prefab and precast are being commonly used in developed countries, in India too, the rising demand for housing will increase awareness and acceptance of these construction techniques. India too needs to adapt to changing market conditions, adopt new building materials and construction methods. Though the concept has proven to be successful with the use of factory-ready wall and ceiling panels, plasterboards and flooring systems in the interior construction of offices, commercial spaces, hospitals and industrial units in India, home buyers need to be more convinced of the viability of the techniques before they adopt them. For the home buyer, homes thus constructed, offer a slew of benefits such as ready to install concrete panels as shear walls, roof slabs assembled on site, and fully ready kitchen and bathrooms assembled as separate units. These come complete with electrical and plumbing systems that are done at the casting stage, thereby eliminating the need for plastering, ||www.constructionmirror.com||

electrical wiring and plumbing. Prefab and precast materials also bring flexibility in terms of expansion and modifications, as the modular nature of the construction uses independent blocks that can be added or removed as the need arises. Customisation is also possible for specific needs such as fire and water resistance and for sound-proofing. The panels and boards are 8 to 10 times lighter than brick-andmortar walls. This reduces the load on the structure, which in turn lowers the cost of the building.

The Challenges…

Unavailability of skilled labour such as carpenters, reinforcement fixers, and masons is impeding speed of construction and Infra development across the country, thereby forcing the industry to adopt pre-cast concrete construction or prefabricated structural steel for commercial, residential and industrial sectors. However, every new technique has its own set of problems and challenges: mass adoption has to be encouraged, the new construction methods have to be made economically viable, and there is high initial investment involved as the cost of construction is higher by almost 40%. Developers will have to adopt a higher technology, establish their credentials, deal with lack of financing for land acquisition and practicality of affordable housing from planning to implementation, ROI, and taxation, etc. State govt’s and real estate institutions must encourage the industry to imbibe the new techniques and start implementing them into their projects and help clients reap the benefits of using them. “Many precast units being set up demand increasing HFA policy by the govt’ to boost the industry. International companies are supplying the machinery, plants, equipment and technical know-how, but this is only 20% compared to the conventional ways of construction.

Engineering…Developers are also facing unavailability of trained workers to install the prefab/precast units. Also, the general perception of the end-user is that homes thus constructed are low cost and have limited choices, even though the homes are of sturdy construction and use quality building materials. Issues of transportation and assembly at site need to be addressed at the outset. Since the precast/prefab modules have to be transported from the factory to the building site, there are concerns regarding damage while in transit, transportation costs, and precision ||www.constructionmirror.com||

assembly. Associated problems relating to erection, jointing, leakages, etc, have to be pre-empted and addressed in a timely manner. All joints between the pre-cast units should be made in such a way that the completed pre-cast structure has the same monolithic concept as an in-situ one. This will include developed techniques of in-situ joints, post tensioning of joints and dry joints. To realize the full potential of pre-cast concrete, the structure should be conceived according to its specific design philosophy, considering long spans, stability, etc. Designers should, from the very outset, consider the possibilities, restrictions and advantages of pre-cast concrete, including supply, transport and erection, before completing the design. Executing solutions…The country is passing through a phase of transition. Infra development has to contend with problems of time overrun, cost overrun, abiding by green norms, pollution at site, meeting quality parameters, all of which are making the industry complicated as it faces different challenges. The total urban housing need of India is expected to increase to 44-48 million units by 2022. The Central govt’ has envisioned housing for all by 2022, when the nation completes 75 years of Independence. Precast / prefabricated / pre-engineered technologies are best suited to the Indian environment as they offer the desired solutions to the country’s preparedness to meet the expected demand. The issue that needs to be addressed is how to reduce cost without compromising on the quality of the structure. Friendly policies by the govt’ by way of tax exemptions and other incentives will encourage construction companies, technology providers, builders and contractors to fully utilize the new construction technologies, and enable them to set up plants at district levels across the country. Reduction of GST rate and other tax incentives would help the segment to bridge the demandsupply gap in the housing sector, both in rural and urban areas. Given the challenges of timely project execution, rising cost of construction, affordability, shortage of human resources, and liquidity crunch being faced by developers, it is but a matter of time before the conventional ‘brick and mortar’ system of construction gives way to prefab/precast building components, materials and structures. Steel, especially Pre-engineered Building System is emerging as a strong alternative to conventional concrete construction methods owing to its many benefits where foremost is its green attributes. Addressing almost all the parameters including durability, longevity, finishes, environment control, lifecycle, and speedy construction, PEBs

have already hit the Indian construction market in a major way. With the rising opportunities in industrial corridors, 100 smart cities, rural development etc, the market is heading for exponential growth. Studies has already validated that India has the fastest growing market in the PEB’s construction segment. Estimated to be close to Rs.5000 crore, PEB market is expected to grow by 15-20% per year. Green Attributes…In times when the crusade for green construction is on with much vigour, PEB structures come to the forefront with a high proportion of recycled content. A structure is considered as Green if the design and construction material used significantly reduces or eliminates the negative impact of buildings on the environment and its occupants. Pre-engineered construction is inherently green products and has comparatively smaller impact on the environment in comparison to conventional brick and mortar ones. The energy efficient methods used in producing the steel for Pre-engineered structures and the high recycled content help in substantially reducing GHG emission. It is indeed an environment-friendly and energy efficient construction technology. Structural steel systems are also able to carry the same amount of loads as other materials used in construction while being lighter.

Non Availability of Skilled Labour…India is always at a deficit when it comes to availability of skilled labour, agree most of the industry players as this is the major issue for any industry not just for PEBs. Availability of skilled labour is a serious problem and it is not industry specific but a national issue, which must be addressed by the govt’ as there isn’t any proper planning when it comes to skill development. There should be the provision of some vocational training programs for skill development of the people. Proper monitoring of skill development is the need of the hour in India, be

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

pecial Feature: PEB Wings of Steel

it for any industry/trade because, simple graduate irrespective of any stream is hardly of any use. Even candidates coming out of ITI are not learned as they are expected to. Despite the fact PEB is more inclined towards automation in production process, we are continuously arranging technical training programs in order to enhance the technical skills of our workers. We are conducting training for our sub-contractors, their associates and their personnel on quarterly or half yearly basis, so as to keep them updated about any new techniques in the industry. It’s an on-going process and the need. Other Concerns…In India, most PEB projects are managed by Consultants who may be architects or engineers. They drive the project and are responsible for the architectural design, structural integrity, and costs. Not all consultants are well versed in the structural design aspects of PEBs. 3 main types of PEB manufacturers are serving the Indian market - the fully integrated global players with manufacturing facilities in India, domestic integrated manufacturers, and many small scale manufacturers who either own some sort of limited manufacturing facilities or get the components manufactured by third parties. Due to the fierce competition, the Indian PEB industry is primarily driven by cost. Consultants use a rule of thumb whereby the weight of the building is multiplied by a conversion factor that accounts for the price of steel and fabrication costs to arrive at the project cost. This approach favors the small non-integrated players who have low overheads and do not consider safety as their main priority. The integrated manufacturers are forced to match the lowest quoted price which is obtained by a dangerous practice known as shaving where a PEB manufacturer reduces the building weight by reducing the steel thickness, increasing bay spacing, widths, shapes or whatever is needed to get the sale. This practice compromises the building’s design integrity, value and long term usability. The inherent risks of this practice must be understood. Essentially, shaving results in a substandard design that will not withstand the max. design loads - a once in a lifetime event - and expose the Consultant or the Engineer of Record to liability and professional misconduct. I have seen this practice for reducing the price for pre-engineered metal building employed during final negotiations of selling a building to the consultant or end user. This risky practice must be curbed. With the advancements and knowledge; PEB has come a long way in the country but we still don’t have any specific PEB design code. While there 42 CONSTRUCTION MIR ROR

is an Indian Code IS 800: 2007 for steel design, there is not a specific PEB design code. In such a scenario, he says, most organized players use the standards of AISC. More than the clients, it is the PEB manufacturers who specify the American codes in their bid which the clients accept as the quality standards. However, using codes of two different countries, it is becoming a mean to suit one’s requirement or convenience, which is not a good engineering practice. The govt’ must set the design code as a priority which will control this stiff competition and unhealthy practices. This will be the move towards making steel a green building material. Steel is the preferred material for all Prefab structures and PEB use steel which is more than 90% recyclable. With healthy governed practices, steel can be a sustainable green building material.

Opportunities in India…

The industry makers and contributors see the ever rising opportunities for PEB sector from Industrial Corridors, 100 smart cities, PM’s call for Make in India which is expected to bring in lot of multinationals to set up their manufacturing base in the country. Moreover, the other good part is that 75% of the Infra that will be in place by 2050 doesn’t exist today. This is a huge opportunity. The challenge is not for the architects, builders & the govt’ to build a new smart city but to make the existing cities smarter. Our govt’ initiative to implement 100 smart cities and Make in India can be efficiently done using pre-engineered steel construction as done in developed countries, providing an affordable and sustainable material for construction. The concept of a private smart city, which will be undertaken on ‘Make in India’ initiative, may open up gates for more private players to come forward with proposals to build similar cities across India. This would be a huge opportunity for PEB Manufacturing Units. The advantages of PEB concepts can be best utilized in the New Cities proposed by our PM, as the projects can be executed with the highest standard in Quality and speedy deliveries. Stemming from the Pre-engineered buildings industry, what is taking shape is the application of pre-engineered construction to new Heavy Engineering and larger Infra projects which is the next in line for development in the country. Projects like 100 smart cities, new no frill airports at various cities, International terminals, Industry corridors, power plants, ports etc. require heavy steel structures and a different approach in comparison to Pre-engineered buildings. PEB industry is estimated to be close to Rs.5000 crore in India. With the great potential that Make in India brings to the industry, we estimate strong double

|| OCTOBER 2017

digit growth for the industry to continue.

Competition…

On the present day cut-throat competition among PEB manufacturers, where pricing overweighs the design considerations. With the entry of many local fabricators in the PEB Manufacturing Industry, supply has exceeded demand leading to unhealthy price competition. In addition to this with the limited no. of projects under finalization, the industry is going through tough times leading to very stiff competition in the market. Local fabricators offer much lower rate as compared to established manufacturing units, because of the obvious low Capex, and quality consciousness. CoS maintain their position insisting on reasonable and healthy margins, explaining in each negotiation with building owners, that quality comes with a certain price, compromising that is compromising quality. It is now over two decades when PEB has been introduced in India. There has been progression, and challenges that are being confronted successfully. The concept has been gaining momentum and the scope of growth is guaranteed looking at India’s huge infrastructural requirements. The Increased awareness by consultants, specifiers, and building owners in understanding a uniform value for minimum structural standards is critical to the future of safe PEBs in India.

Cold Steel and Multi Storeyed PEB…

The country’s PEB industry has reached a state from where it can only grow as the only emerging alternative building construction technology/ resource. The need is to increase awareness, especially among specifiers to mark the shift. With around 600-700 PEBs (considering 25,000 sq. ft. area or more, including the multi-storeyed) each year, Pre-Engineered Building (PEB) is emerging as a strong alternative to conventional concrete construction methods. This is because PEBs are now addressing almost all the parameters including finishes, environment control, and life cycle with a panache derived from product innovation and technology advancement. As per the industry ||www.constructionmirror.com||

experts, over the next 2-3 years, the industry is optimistic about a 15 to 20% annual growth, tending to double its market, say, in the next 5 years. Interestingly, the journey of PEB industry in India has been remarkable over the decades mainly due to it being economical and facilitating faster construction besides having various other green attributes added to its name. No wonder that seemingly an underdog industry has been witnessing rapid mushrooming of the unorganized local players where a quite few are innocuously making good money by supplying subdued materials thus encouraging malpractices. In quite a few instances, it has been noted that the cost-conscious consumers get trapped due to lack of awareness. However, industry stakeholders are of the opinion that this phase will soon pass by. It is not the awareness but their consciousness has got a knock as more and more customers and companies are now realizing that low cost does not bring the quality, it promises. It’s a well known fact that better and superior quality comes at a cost. We observe, and are confident that consumers are moving ahead of the price barriers, and have started considering reputed companies to opt for better quality products. The lack of awareness is the unfortunate part of the industry that sometimes causes tragic consequences, either in the shape of loss of life when the building fails prematurely or requires costly maintenance and repairs. To overcome such situations, it is important to interact with both; the specifiers and end-users, from time to time to enhance their knowledge, which we are regularly doing. Besides this, we are continuously approaching the industry stakeholders and requesting them to follow only the standard codes prepared specifically for PEBs, be that for design or for raw materials. However, there is always another side of the coin, where there is a sort of reluctance on the part of the specifiers when it comes to adopting PEBs. The only reason for the lack of knowledge amongst the industry stakeholders – designers, architects, consultants, etc. is that they feel comfortable mostly with the conventional RCC systems, whereas the PEBs are still new to them with many challenges on the floor. This actually restricts most of them either to adopt or experiment. Even reputed consultants don’t want to admit that they are not familiar with the relatively new system.

Favouring Factors…

There is a lot of scope in India for PEBs as this is yet to become a norm like it is in developed economy where nobody goes for conventional RCC construction. India is still an exception as one out of 100 projects are steel or even less, say, one out ||www.constructionmirror.com||

of 200 projects. However, in the last five years, the industry norms have changed a bit. There is a +ve sign as quite a few top rank suppliers of PEBs have started showing interest in multi-storey and commercial projects in steel. This is only because the demand curve in the market is now changing. Earlier PEB’s application was restricted purely in the industrial and warehousing sectors. But now more people have opted to adopt it in the commercial, multi-storey, and retail sectors. Meanwhile, there is a huge change in the availability of the conventional raw materials i.e. sand, grit, brick, etc. These have become far more expensive because of their scarcity, which is further restricted by the intro of stricter mining laws, followed by labour issues and escalating interest rate. Accordingly, people are now looking for options, which are quick, comparatively cheaper, and ultimately, can be used to develop all sorts of buildings. This is also adding growth prospect to steel buildings.

Specifiers are the Key…

The growth of PEB as an industry needs a perfect correlation between the supplier and the architects. Our consultants at this point in time are not that competent as they should be. A lot of these consultants has very little or no knowledge of actual fabrication of PEBs. No doubt, that they have theoretical knowledge of design, but it is only a part of the process that has two more steps of fabrication and installation. Each of these is different phases of the PEB construction process, which if they come closer to the PEB manufacturers would be easy to understand. Unless the architects come forward and decide to move together with the PEB manufacturers, we can’t expect the total success. I is advisable to consider and feel themselves as one of the two components of PEB industry with each having their respective roles designated. In the building construction industry, architect takes responsibility for the overall design of the building, including internal layout, functional performance and external appearance. The architect usually specifies the roof and wall cladding considering project requirements, product life cycle, green benefits, standard codes and aesthetics. At times they take care of the complete project e.g. in some ‘Design and Build’ contracts. Specifiers should have in-depth understanding about the products and their respective applications. Notably, in many cases, it has been reported that design parameters and paint thicknesses have been compromised or poor quality fasteners are used in order to bag the order at the least possible rate. This finally leads to the failure of the structure. It’s fateful that some PEB suppliers dilute or bypass various design codes to make the structure more economical, but lighter,

whereas the design of PEB should be done as per the specified codes i.e. IS-800, IS-801, IS-875 etc. only. We always advise specifiers to use respective specified standard codes such as ASTM A572-SS-50, ASTM A1011-SS-50, ASTM A792 etc. for designing of building and for raw materials, and high tensile hardware with 8.8/10.9 grade, which is well-established criterion. Besides having good knowledge about products and standards, the architect/consultant should prepare a checklist so as to check some points with a PEB supplier before placing an order. These points include the company’s past performances, financial strength, its Infra i.e. plant & machinery, design & engineering center, details & specification of raw material being used by the company, etc. The process will help the architect to understand the company’s capability for handling and execution of the project and accordingly, he can decide to move ahead or look for more options. While many feel that PEB’s success in India depends on convenience and improvement in design, finish, and product range as these are some of the factors that may encourage projects like residential buildings and shopping malls to induct the PEBs solution into the Infra. However, Mr. Bedi takes it otherwise. According to him, there is hardly any improvement in design but in the design tools. The technology in PEB has been quite stable for the last two decades. It is not an evolving technology as of now, and we can’t even expect it to move up by leaps and bounds. But when it comes to technology, the only area that has improved a lot is the availability of better software, making the design process easy and fast.

Conclusion…

There are several other benefits attached to PEBs, which include innovative solutions in the form of girder slab arrangement for multi-storeyed buildings, slim floor system to help save space, steelcrete system on floor to make it very light but stronger than concrete floor, cellular beams for best service integration, composite floor system, site accommodation, site storage, and site offices with very light structural steel. Execution time is reduced by 40% over the conventional buildings. The new buildings are designed to reduce weight, but to enhance strength. What’s more, since pre-engineered building system is automated with high-end design software like Staad Pro, Tekla, Autocad, MBS to create a building for a specific purpose/use such as power plants, warehouses & industrial building, aircraft hangers, stadiums, etc, it will lead the industry to bring specific innovation in the country’s Infra sector. But the question remains the same as to who will take the onus to convince specifiers about all these benefits.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

pecial Focus: Off Highway Vehicles and Equipment

Off Highway Vehicles and Equipment

nfra sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from govt. for initiating policies that would ensure time-bound creation of world class infra in the country. infra sector includes power, bridges, dams, roads and urban infra development. In 2016, India jumped 19 places in World Bank’s Logistics Performance Index (LPI) 2016, to rank 35th amongst 160 countries. The Indian construction equipment industry’s revenues are estimated to reach US$ 22.7 billion by 2020. FDI received in Construction Development sector (townships, housing, built up infra and construction development projects) from Apr’00 to Mar’17 stood at US$ 24.3 billion, according to the DIPP.

Overview of the construction equipment...

Construction equipment covers the mobile machines for Infra, energy/industry, real estate and other construction within eight primary segments, more than 25 categories, and a total of more than 100 machine types. The machine types can, in turn, be broken down further by weight class & configuration. The eight segments are primarily based on application (e.g., earthmoving, lifting, quarrying), and the categories are based on technology. Attachments 44 CONSTRUCTION MIR ROR

|| OCTOBER 2017

are singled out as a separate segment due to their distinct technologies and manufacturers, although the tools may be carried by many of the other machine categories. The primary segments are: • Heavy earthmoving equipment, such as excavators and loaders • Compact earthmoving equipment, such as compact excavators and skid steer loaders • Road construction and compaction equipment, such as pavers and rollers • Crushing and screening equipment, such as crushers and screens • Concrete equipment, such as pumps and mixers • Civil engineering equipment, such as drill rigs and piling rigs • Lifting equipment, such as tower cranes & RTLTs • Attachments, both hydraulic, such as hammers, and non-hydraulic, such as buckets There are many possible ways to draw the line between what is included in construction equipment and not, as well as how to segment the machines. In some definitions, cranes/concrete

equipment would not be included and, likewise, other equipment types could potentially be added to this list, e.g., compressors, generators, off-road trucks, and even handheld power tools. Even blurrier are the boundaries b/w construction equipment & neighboring industries, particularly mining, agri equipment, forestry equipment, material handling (e.g., ports, warehouses), waste management equipment, and municipal equipment (e.g., tool carriers, street sweeping). however, in practice, that same machine may be used for many another purposes. The most common overlaps with other industries are: • Same machine used for a different application, e.g., dump trucks, crushers, and drill rigs used in construction/ quarrying as well as in mining, or wheel loaders used in construction and recycling. • Same or similar technology and parts used for different applications, e.g., undercarriages used by crawler excavators & harvesters (forestry), or masts and forks used by a masted RTLT and a forklift. Consequently, OEMs of machines for different industries share suppliers. • Same OEM manufacturing machines for ||www.constructionmirror.com||

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

pecial Focus: Off Highway Vehicles and Equipment

several industries, e.g., agri tractors and harvesters as well as construction equipment. • Same dealers selling and servicing multiple equipment types, e.g., municipal machines sold together with construction equipment.

46 CONSTRUCTION MIR ROR

High complexity Besides engaging in construction activities, the machines classified as construction equipment are a heterogeneous group with major differences in design, size, and components across the category. There are few commonalities in functionality, design, technology, or parts shared between the segments or even between the machines in the same category. Production of more than one machine category on the same line is possible but uncommon. Low volume A select few machine types are produced in the hundreds of thousands annually, but the majority are made in much lower volumes. The primary high-runners are crawler excavators, heavy wheel loaders, and compact excavators that jointly represent well more than 50% of the volume and revenues of the industry. On the other end are machine types produced in the hundreds or tens annually, such as trenchers, milling machines, and motor scrapers. At the far bottom is highly specialized equipment like tunnel boring machines. The industry’s higher volume machines are generally more commoditized with higher competition, including from emerging market OEMs. However, even the high-runners volumes are moderate relative to the tens of millions of cars & commercial vehicles produced annually. OEMs as ecosystem players OEMs traditionally have their core in developing and manufacturing the equipment, regardless of which automotive or machinery industry we talk about. In the construction equipment industry, however, OEMs are often active in other areas as well. Commonly, OEMs are also involved in the engineering and fabrication of key components and sub-assemblies (e.g., engines & cabs). Many have an ownership stake in dealerships and sometimes also operate rental businesses. Despite the potential overlap, McKinsey has defined a simplified 5 step construction equipment value chain and a handful of primary company types directly mapped to these steps: parts fabrication, assembly and engineering, distribution and service, machine rental, and usage.

|| OCTOBER 2017

Parts fabrication The fabrication of components and sub-assemblies is often partially done by the OEMs, as certain key components (e.g., cabs, frames, engines) are a key differentiating aspect of some OEMs versus competitors. However, the engineering can obviously be done by the OEM while actual fabrication is outsourced. The majority of parts (typically the less “strategic,” including everything from nuts and bolts to hydraulic hoses and tires, but in many cases also engines, frames, etc.) are sourced externally from a mix of small dedicated construction equipment suppliers to larger CoS that supply OEMs across automotive and machinery industries. Assembly and engineering The OEM typically assembles the equipment, although the task can be outsourced. In construction equipment it is not unheard of that OEMs cooperate on assembly for lower-volume machines to secure financially viable scale. In practice, one OEM can assemble machines for another OEM on its line, or a single OEM could source identical machines and rebrand and repaint them. Distribution and service For most of the highervolume machine types (e.g., heavy and compact earthmoving equipment, RTLTs, hoists), the equipment is sold to the users through dealer networks. For large fleet sales and for more customized machines (e.g., crushers, tunneling, batching plants), the OEM is often in direct contact with the end customer. Attachments may also be sold via the machinery OEM and then, in turn, to dealers. OEMs commonly work with several dealer groups, as those are focused on certain geographies. The ownership model and geographical structure of dealers varies greatly between OEMs. Some dealer groups are wholly owned by OEMs, and others are fully independent. Some dealer groups are narrowly focused on one region within a country, whereas other dealer groups span several countries. Some dealers have exclusivity agreements with OEMs, and others are competing. Some dealer groups are large CoS with hundreds of outlets, and others operate as local “mom and pop” businesses. Besides the sale of new equipment, dealers often have a significant business in repair and maintenance of machines (incl. supplying parts from the OEM/independent ||www.constructionmirror.com||

suppliers) and resell of used machines. Machine rental A high share of certain types of machines – particularly compact earthmoving, lifting, and parts of heavy earthmoving equipment – are owned by rental CoS. The rental market is well established in North America and india, particularly in Western india, (e.g., UK, France, and Northern india). The rental market is steadily growing as users (e.g., construction CoS) seek to benefit from higher machine utilization, offload their balance sheets, and focus on their core business. There are several larger regional rental CoS and many local ones. Several OEMs and dealers also operate their own rental business. Usage Since construction equipment is used for such a variety of applications, there is a wide range of end users. These include construction contractors (general contractors & sub-contractors), quarry operators, recycling CoS, and many more. Most end users are small CoS that own, lease, or rent machines. In rare cases, OEMs also operate the machines, e.g., as sometimes is the case for piling equipment and trenching machines. The value chain can be extended on both ends, e.g., with raw material supply and used machines. Furthermore, leasing and financing could be singled out as a separate step and is driven by the OEMs and/or separate financing providers. Aftermarket i.e., parts, services (e.g., repair and maintenance), and solutions (e.g., uptime or output contracts) to the active machine population – could possibly also have been a sixth step, although it is largely included in distribution and service. Aftermarket is an important profit generator for OEMs, with a multiple times higher EBIT margin than new equipment sales. OEMs mainly sell parts, while dealers offer services and solutions. For the average OEM in india, aftermarket only makes up 15-20% of revenues. Additional aftermarket revenues are generated by independent dealer groups and suppliers. However, for most machine types, there are also many CoS competing with OEMs and dealers in the aftermarket space, such as local and unauthorized machinery workshops offering repairs and independent spare parts manufacturers.

Opportunities for Investment…

Product and Service Segments Based on the assessment of the market size, trends and growth drivers, earthmoving equipment, road construction equipment and material handling equipment appear the most attractive product segments in terms of size and future growth potential In terms of services, nascent segments that are well established in global markets, but yet to take off in India, could offer attractive opportunities. These include areas such as engineering design services, ||www.constructionmirror.com||

construction equipment rentals and refurbishing of used equipment. Attractive States/Locations The states which would attract construction equipment sales would be those which have infra developments and have other construction development activities happening, like in SEZs. Most of the states have infra development activities. But the states in which setting up construction equipment plants would be attractive are: Andhra Pradesh The state has been performing well in engineering industry producing a range of intermediate and final goods such as foundry and forging items, machine tools, auto components, testing machines, material handling equipment and components for defence production. Huge infra projects are in place. New international airport construction is on in Hyderabad. New flyovers and other infra developments to cater to this fast growing state are in place. Many global players like Tecumseh, BPL, Electrolux, among others have established their manufacturing facilities in the state. Ranks second in the number of industrial estates in the country. The state promises good quality manpower. The state has high literacy rates which have been ensured by the presence of good education and vocational training institutions. The state is keen on encouraging private sector participation in improving R&D infra. Gujarat Engineering sector is highly attractive in this state. This sector is supported by proactive policies and is capability driven. The state is a leader in terms of labor productivity. The state offers quality manpower and infra facilities such as power, water supply, ports, and gas grid. This has encouraged many MNC to set up manufacturing operations in this state. Tamil Nadu The state has good quality manpower,

high literacy rates, presence of good education, vocational training institutions. The engineering industry in the state consists of a network of nearly 3,000 units and employs a skilled workforce of more than 250,000, making high quality inputs such as castings and forgings and a wide variety of ancillary products. The state is being looked in as manufacturing & sourcing base and an R&D hub with the presence of premium technological institutes. Huge infra projects are in place with the development of various SEZs. Investments are also likely to come in mining & minerals. The Indian construction equipment industry is a key segment of the manufacturing sector and is poised for excellent growth in the coming years, based on India’s overall manufacturing sector and infra growth. The overall industry has been growing at 30% CAGR and is projected to grow at 15-20% over the next few years. Earthmoving equipment, material handling equipment and road construction equipment are key segments expected to contribute to the bulk of the growth, driven by construction activity in the parent sectors. To leverage this opportunity, Indian construction equipment manufacturers need to focus on developing individual and pooled capabilities to develop global competitiveness across the sector. Collaborative endeavours to provide integrated services, industry bodies to promote the industry’s interests and working with the govt. to promote technology development are some of the key measures to be taken. Sweden is interested in smart cities development in India and has put forward a Common Plan of Action for developing sustainable and environment-friendly public transport solutions and solid waste management for the smart cities under development. The Ambassador of Japan to India, Mr Kenji

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

pecial Focus: Off Highway Vehicles and Equipment

Hiramatsu, has conveyed Government of Japan’s inclination to invest and offer any other feasible support for various ongoing as well as upcoming development and infrastructure projects in the North-Eastern region of India.

Success Factors for Manufacturers in India…

After Sales Services The share of revenue from service for Indian construction equipment manufacturers is estimated at around 2-8% as against 12-20% that global players enjoy. This indicates the potential for improving service revenue in the Indian market. As product technology improves across competitors, service would be the key differentiating factor to retain customers. Equipment in India are typically used for 15-20 years, indicating the significant potential for maintenance and service activities, apart from spare parts sales, across the usage cycle. Hence a clear focus on service is necessary for CoS to grow and remain competitive. This needs to translate into developing capabilities in training, supply chain management and distribution reach. Focus on R&D and Innovation Indian construction equipment manufacturers invest very little in Research and Development (R&D) compared to global majors. This is a key lacuna that can hamper growth – product innovation and new product development are key capabilities to maintain a pipeline of new products, which is critical for success in the increasingly competitive market. Customer training and education on the benefits of technology have to evolve in parallaly with product technology development so that customers perceive value for the enhanced technology and also use the 48 CONSTRUCTION MIR ROR

equipment correctly. Providing end-to-end Solutions The capability for providing end-to-end services to customers is expected to be a key differentiator for players in the construction equipment industry in future. From the evaluation of equipment prior to purchase till disposal of used equipment, customers need a variety of services and players who can provide these in an integrated manner, stand to gain multiple benefits. For this construction equipment manufacturers may need to enter into collaborative ventures with financiers, insurance CoS and rental CoS. Supporting govt. Regulations & Policy The govt. of India’s focus on Infra development is the single biggest driver for the construction equipment industry. Policies that encourage manufacturing and retail activity also have a positive impact on the equipment market. Apart from these, some of the policies that are aimed at attracting investment in the sector include -- All agencies and ministries of union and state govt. will work united with a shared vision for success. 100% FDI is allowed for manufacturing purposes. Exemption from obtaining an industrial license to manufacture. Manufacturers are free to select the location of the project. Import duties reduced to encourage imports. Encourage exports from Export Oriented Units (EOUs), Special Economic Zones and Export Processing Units (EPUs). Locations with high growth potential to be supported by govt. to bridge technology and productivity gaps. skill up-gradation, physical Infra, environmental mitigations facilities to be provided by govt. in selected areas of intervention. Schemes

|| OCTOBER 2017

similar to SEZs can be developed for export oriented units with capital investment.

Customer orientation in practice for different OEMs..

McKinsey considers this shift in mindset and priorities a critical step; however, the new attitude needs to be translated into concrete plans and actions. Several OEMs are taking active measures, and some have been focusing on these topics for years. Although most of the surveyed OEMs state that they are well prepared for the coming trends, the general perspective from experts is that many OEMs have only recently started this relative shift in focus from operations to customer – a shift that is not easy as McKinsey has observed in many other industries. There are a large number of strategic decisions to take and obstacles to overcome. Some of the primary considerations that need to be emphasized are: Targeted partnerships with dealers Truly understanding the end customers will require that OEMs get “up and close” with their customers. For many OEMs, this will have to involve the dealers. Select OEMs are actively managing and cooperating with their dealers, whereby the dealer’s function as an extended arm of the OEM. However, for many OEMs, the dealer is an intermediate layer, disconnecting the manufacturer from the user. Any strategy about better understanding the end customers will require much closer cooperation, alignment with dealers, whereby dealer steering will have to be a key area to invest in. Strategic R&D investments and partnerships Successful differentiation requires selectively ||www.constructionmirror.com||

investing R&D money in the most promising areas. Other areas may be more suitable for partnerships or outsourcing. The technology areas of the coming years e.g., powertrains, digitization, driverless machines are all massive and complex and will require high investments. Few CoS will be able to take overall leadership, whereby surgical focus combined with partnerships will be essential for most OEMs to keep up. Relevant, profit-generating business models Understanding the customers, increasing focus on aftermarket, and acting as an advisor will also require OEMs to revise business models to be relevant and generate profits. OEMs should consider and pilot performance-related offerings and contracts – e.g., selling of uptime or output (e.g., material moved) –, which will require new risk management and pricing skills. Broad experience and a large number of reference cases will be critical and early movers will have an advantage. Modular machine design Differentiating the offering to meet individual customer needs as well as succeeding both in developed and emerging markets, will still require a scalable production (even if not on the top of the list). A modular machine design that still allows for specificity will be increasingly critical to accommodate this, as well as to ensure short lead times. Customer-centric capabilities and governance The drastic shift in focus requires an equally drastic shift in capabilities and governance. OEMs will need to invest in frontline resources (directly and together with dealers) which primarily act as advisors to customers and secondarily machine salespeople. Given the often fragmented customer landscape, an OEM could optimally help customers by sharing operational best practice. This shift needs to be carried all the way through to senior management, with rebalanced skill sets and team compositions. To ensure traction, targets and KPIs need to be adjusted to refocus management attention. Agile, action-oriented organizational culture The breadth and depth of change necessary to realign the business fully towards the customer, as well as the accelerating pace of change in technology and other areas, will require OEMs to become more nimble and faster on their feet. Reaction time and the ability to quickly and firmly take informed decisions will be essential. OEMs should strengthen their business case development skills, shorten and simplify their decision making process, and be prepared to increasingly dare to take bets based on calculated risks. Since construction equipment is such a wide and diverse industry, this shift in relative focus will vary in the degree of importance depending ||www.constructionmirror.com||

on OEM type. It will also imply different actions depending on the OEM’s size, geographical focus, and machine portfolio. Each OEM has a unique set of circumstances, and every management team will need to review their specific situation and opportunities and take clear action accordingly. Nevertheless, we do see a handful of general archetypes among the OEMs.

Preparing for the expected changes, and the unexpected…

In general, indian construction equipment OEMs should probably also consider some of the trends and success factors that were not highlighted in the survey. In McKinsey’s view, there are several areas where OEMs may overlook some risks and underestimate the pace of change once the ball starts rolling. Even though OEMs generally state that they are well prepared for the coming changes, disruptive events may alter the business conditions fast and considerably. We would particularly highlight that OEMs need to test their strategy and prepare to take actions against the following plausible disruptive events: Big data solutions may become a critical differentiation factor and value creation driver already in the coming years, as data banks build up and customers get increasingly sophisticated in their demands. This can quickly spark a revolution in business models. We would urge OEMs to increasingly invest in this area to stay at the forefront when digitization takes off fully in construction equipment and, particularly, carefully review what protocols to bet on and learn from, proactively piloting new offerings. New company types may enter and capture the digitization opportunities, possibly already in the next few years. The traditional Silicon Valley giants are possibly less interested due to the complexity and relatively small size compared with automotive, but start-ups and boutique CoS can quickly move in. These new entrants could possibly provide software that leverages machine data to offer solutions which improve customer processes. They may leverage data across multiple machine brands and also go beyond the machine and optimize the full flows of the customers, including labor, logistics, etc. Without the legacy in manufacturing machines or the need to sell machines or spare parts, they may be well positioned to provide more holistic solutions. This has happened in comparable industries, and we urge OEMs to consider potential partnerships and acquisitions to stay at the front. Emerging market OEMs could more forcefully target the developed markets, especially if the Asian and Middle Eastern markets do not rebound soon. Many

are cash strained but may also make desperate moves. As pointed out by experts, several Japanese and Korean OEMs have in the past successfully entered and established themselves in india. We would urge indian OEMs to look after their home markets by optimizing sales efficiency in-house and with dealers, as well as continuously review how to stay cost effective in design and manufacturing. Consolidation and M&A do not appear to be on the near- or medium-term horizons according to the surveyed OEMs, but times of change can place CoS under pressure. CoS may want to prepare themselves for structural changes and hone their target scanning, transaction, integration skills. In sum, McKinsey sees a handful of key questions that indian construction equipment OEMs should carefully review to ensure they make the right strategic moves, push sufficient change, and act in due time: Which specific customer segments shall we focus on to be truly relevant and insightful on the end customers’ operations, as well as capable to clearly help them generate more value? How do we involve and engage our dealers in truly understanding end customer needs, defining concrete and customized offerings, and delivering those on a daily basis? What role shall the dealers have in our long-term strategy to generate value for the end customers? Which technologies shall we focus our R&D money on to secure a distinct edge, given the breadth and depth of technological change? Which technologies are appropriate for partnerships and outsourcing to keep up in a cost-effective way? What partnerships should we enter within the digital space to secure sufficient capabilities and scale in platforms? Potential partners may be software CoS, but also other OEMs, rental CoS, and end customers. How shall we change decision making processes and steering mechanisms to make the organization radically more nimble, quick on its feet, and action oriented on the right priorities? Which bold actions shall we urgently take to propel change and stay ahead? This may be actions such as launching new customer solutions, taking engineering adaptations to customers, pursuing M&A opportunities, or entering partnerships. The construction equipment industry in india is clearly about to transform in a profound way, and OEMs will need to determine which path will most likely lead to future prosperity. However, the direction in which to go is clear – with a distinct shift from operations focused to customer centric. Most critical will be taking quick and decisive action as the wheels (or rather tracks) will turn increasingly faster towards a future of great change and great opportunity.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

ndustry Focus: Commercial Vehicless

Commercial Vehicless Introduction…

After 3 years of decline, domestic commercial vehicles (CV) sales revived in FY16. During FY10-16, exports of commercial vehicles recorded strong growth of 14.5% (CAGR). The CV industry is likely to sustain the growth momentum recorded in 2015-16. Healthy outlook on economic growth, subdued interest rates, govt’s strong focus on infrastructure development, defence sector and urban infrastructure (JNNURM, Smart Cities etc), increased freight movement due to the expected increase in activity in sectors such as agriculture, e-commerce, mining etc, increasing proliferation of the hub & spoke model and greater thrust of CV manufacturers on expanding global footprint will be the key factors that will drive growth and expansion of the CV industry in the coming years. Dun & Bradstreet expects CV sales to grow by an annual average rate of 10% during FY17-19. The Indian 50 CONSTRUCTION MIR ROR

auto industry is one of the largest in the world. The industry accounts for 7.1% of the country’s GDP. The Two Wheelers segment with 81% market share is the leader of the Indian Automobile market owing to a growing middle class and a young population. Moreover, the growing interest of the companies in exploring the rural markets further aided the growth of the sector. The overall Passenger Vehicle (PV) segment has 13% market share. India is also a prominent auto exporter and has strong export growth expectations for the near future. In Apr-Mar 2016, overall automobile exports grew by 1.91%. PV, CVs (CV), and Two Wheelers (2W) registered a growth of 5.24%, 16.97%, and 0.97% respectively in April-March 2016 over April-March 2015.* In addition, several initiatives by the govt of India and the major automobile players in the Indian market are expected to make India a leader in the 2W and Four Wheeler (4W) market in the world by 2020.

|| OCTOBER 2017

Market Size The sales of PVs, CVs and 2Ws grew by 9.17%, 3.03% and 8.29% respectively, during the period April-January 2017.

India’s Automobile Industry key highlights…

• 3rd largest automobile industry by 2016 • World’s 2nd largest 2-wheeler manufacturer • Passenger vehicle production to nearly triple by 2020E • By 2020, India’s share in the global passenger vehicle market to touch 8% from 2.40% in 2015 • Two wheeler production to rise from 18.8 million in FY16 to 34 million by FY20E • Passenger vehicle production to increase from 3.4 million in FY16 to 10 million in

||www.constructionmirror.com||

wheeler sales expected to grow from 16.46 million in 2016 to 50.60 - 55.5 million by 2026 • Production of passenger vehicles, CVs, three wheelers and two wheelers grew at a CAGR of 2.74%, 0.57%, 3.16% and 7.12%, respectively, during FY11-16 • Domestic sales of two wheelers in India is expected to increase at a CAGR of 11.9% during 2016-2026 • Automobile exports to grow at a CAGR of 3.05% during 2016-2026

Indian automotive Industry… •

• •

•

FY20E Domestic sales of passenger vehicles to grow from 2.8 million in 2016 to 9.4 - 13.4 million by 2026 Domestic sales of CVs to grow from 0.7 million in 2016 to 2.0-3.9 million by 2026 Domestic sales of three wheelers will grow from 0.4 million in 2010 to 0.5 million in 2016 Domestic sales of passenger vehicles in India is expected to increase at a CAGR of 12.87% during 2016-26 Domestic sales of CVs in India is expected to increase at a CAGR of 11.07% during 2016-26 Domestic sale of three wheelers in India increased at a CAGR of 3.79% during 2010-16 Domestic sales of two wheelers is the most growing segment, with domestic two

||www.constructionmirror.com||

Emergence of large automotive clusters...

The Indian CV industry is divided into medium and heavy CVs-MHCVs (trucks and buses) and light CVs-LCVs (goods carrier and passenger vehicles). The industry is divided into light CVs, intermediate CVs, medium CVs and heavy CVs on the basis of gross vehicle weight. CVs are also categorised on the basis of engine capacity, power, rated payload, compression ratio, extent of overloading, etc. MHCVs, under the Motor Vehicles Act – 1988, are vehicles with gross vehicle weight (GVW) over 7.5 tonnes. Based on GVW, vehicles are categorised as: intermediate CVs, medium CVs and heavy CVs. MHCV goods vehicles are majorly used for carrying higher loads over longer distances. LCVs are mostly used for carrying passenger and goods within cities having shorter distances. LCVs have a GVW of below 7.5 tonnes. LCV goods vehicles are further classified as – mini trucks (<=3.5 tonnes), pick-ups (<= 3.5 tonnes) and upper-end trucks (3.5 -7.5 tonnes). The Indian CV industry is dominated by goods carriers (Approximately 88% of domestic CV sales) and hence, the domestic sales are dependent largely upon the economic activities like industrial and agricultural production. Other factors affecting domestic demand of CVs – Country’s GDP and macroeconomic growth Freight movement – changes in rates and fuel pieces Profitability of truck operators and state transport undertakings Index of Industrial Production Availability of Finance and interest rates govt policies For LCVs (mainly buses), demand is analysed by linking it with factors like competition from the railways and other modes of transport, rail-road network, rate of urbanization, GDP and per-capita GDP.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

ndustry Focus: Commercial Vehicless

CVs: Production, Sales and Exports

In 2015-16, production of CVs increased by over 12% after declining in 2012-13 and 2013-14 by about 10% and 16% respectively and remaining stable in 2014-15. Production of CVs reached 782,814 units in 2015- 16. In 2016-17 (Apr-Jan), total production increased by 4% YoY led by about 5.8% growth in production of LCVs while the production of MHCVs increased only marginally by about 1.5% during the period. However, in Decâ&#x20AC;&#x2122;16, production of CVs declined by about 20% YoY post demonetization after increasing by over 15% YoY in November 2016. In January 2017, production of CVs picked up by a sharp 34% on m-o-m basis. Tepid economic activity during 2012-15 led to weak freight demand; moreover, profitability of transport operators (TOs) was squeezed due to spiraling diesel prices post partial deregulation of

52 CONSTRUCTION MIR ROR

|| OCTOBER 2017

diesel. TOs restrained from fleet additions during 2013-15 period on account of low utilization and lower profitability. New govt was formed at Centre in May 2014 and subsequently business sentiments showed signs of revival. Sales grew by 12% in 2015-16. Although complete recovery of economy is still away, gradual revival was witnessed aided by lower inflation and higher industrial activity during the year. Consequently, transport operators went ahead with fleet additions during 2014-15 and continued in 2015-16 which led to fillip in CV demand. India exports about 10-15% of its sales of CVs. Major exports markets for CVs have been China and US. In 2015-16, sale of CVs was registered at 787,393 units, out of which 101,689 units were exported. In 2016-17, till January, countryâ&#x20AC;&#x2122;s CVs exports stood at 91,250 units, about 14% of total sales. CV sales are expected to grow, however, marginally in 2016-17.

||www.constructionmirror.com||

Margins of CVs (Trucks, buses & LCVs)

With CV manufacturers ordered to migrate to BS-IV emission norms from April 2017 by the govt, MHCV sales are expected to continue growth during 2016-17. As the BS IV vehicles are relatively more expensive, the fleet owners may rush their purchase plans in 2016-17, which will be required to replace after a decade or so. This will augur well for CV sales in 2016-17. Additionally, lower fuel costs, an expected pick-up in major load generating sectors such as coal, steel and cement due to higher spending on infrastructure and construction projects are expected to provide fillip to demand for trucks. This combined with reduced interest rates would assist demand for CV fleet additions in 2016-17. However, with demonetization taking place in Q3 FY17, demand is expected to remain under pressure for next couple of months. This effect of demonetization is not likely to last for more than a quarter or two and we expect the liquidity situation to ease. Therefore, demand for CVs is likely to rise in 2017-18 with increased demand from fleet owners after postponing purchases due to cash crunch in H2 FY17. International automakers are also ramping up their capacities (M&HCV segments) in India, which may intensify the competitive landscape for the MHCV segment- largely trucks and buses. However, sustainable recovery of CV industry would depend on successful implementation of the initiatives like “Make in India”,” GST”, “Smart City” etc. combined with easing of business environment. The demand outlook for LCVs for 2016-17 is stable, attributable to greater availability of load from the consumer goods segment- which utilises LCVs for transportation and is expected to provide traction to sales. Capacity utilization of CV manufacturers is expected to improve in 2016-17 leading to operating margins expansion during the year. However, the margin expansion is expected to be meager as the cost of raw materials is expected to be higher on a year on year basis. Besides, implementation of GST remains uncertain among the manufacturers.

Passenger Vehicles…

The Indian passenger vehicles industry includes passenger cars and utility vehicles. In 2015-16, production of passenger vehicles increased by over 6% after declining by 4.4% YoY in 2013-14 and increasing by about 4.3% YoY in 2014-15. Production of PVs reached 3,414,390 units in 2015-16. In 2016-17 (Apr-Jan), total production increased by 9.6% YoY led by sharp increase of about 32% growth in production of MUVs while the production of passenger cars increased only marginally by about 4.8% during the period. ||www.constructionmirror.com||

However, in Dec’16, production of PVs declined by about 20% YoY post demonetization after increasing by about 3.8% YoY in Nov’16. In Jan’17, production picked up and increased by about 20% on a m-o-m basis while it increased by about 15.5% on a YoY basis. The Indian PV sales grew by around 6.9% in 2015-16 attributable to growth in utility vehicle sales which increased by over 12% YoY in 2015-16. Meanwhile, sales of passenger cars & vans rose by 5.7% & 3.3%% resp., during the year. The growth in domestic sales was driven by high discounts & complimentary offerings by the manufacturers. This along with fall in fuel prices, new launches and reduction in interest rates resulted in growth in the PV sales. Close to 90% of passenger vehicles are generally purchased on finance. The availability and cost of finance is based on liquidity in the system, financing schemes and the interest rates.

economic scenario which will boost the industry demand in short to medium term. However, in the near term, demand will be affected due to liquidity crunch among the consumers. Though small cars will continue to dominate the domestic demand, the mid-size category will lead the passenger cars (PC) industry growth supported by healthy growth from mid-size and A4-A6 (i.e. executive, premium and luxury) segments. Due to changing consumer preference towards premium small cars and more powerful and spacious UVs, the segment is expected to post healthy growth in next five-year period. Post the demonetization effect; we expect the segment to witness a gradual pickup in the subsequent years starting from 2017-18 with increase in demand for utility vehicles estimated to be the sharpest. Passenger vehicles manufacturer’s profitability is sensitive to the changes in raw material cost as it forms the bulk of net sales. In 2016-17, with increase in steel and aluminum costs, overall raw material costs are expected to increase. Operating margins are expected to be range bound in 2016-17 after rising in 2015-16, while higher raw material costs and marketing costs due to stiff competition led by new model launches will restrict the margin expansion.

PV industry is characterized by reasonably low entry barriers and minimal regulatory interference from the govt. However, the industry has to comply with the vehicle pollution/ emission norms, which keep on getting stricter and involve capital costs. The industry is important to the economy by directly and indirectly providing employment opportunities and consumption of commodities like steel, aluminum, plastics and tyres. However, the industry has limited say in the prices of key inputs like steel, aluminum and rubber, though it enjoys good bargaining power with the component suppliers. The industry is very capital intensive and setting up strong distribution network is critical for garnering significant market share. India exports about 20% of its sales of passenger vehicles. USA, Western Europe, Japan and China are the major exports markets for passenger vehicles. In 2015-16, sale of PVs was registered at 3,443,901 units, out of which 654,223 units were exported. We foresee the domestic PV sales to grow during 2016-17. Although manufacturers undertook two price hikes since the start of the calendar year due to increasing input costs and the imposition of the infrastructure cess announced in the Union Budget 2016-17, several favourable factors for the segment are expected to remain conducive during the year. CARE expects the sales volumes will be buoyed by new launches, likelihood of stable crude oil prices, reduction in interest rates and improvement in the

Growth Momentum…

The recent green shoots around the CV sales in India may not live long as this could be a pre-buying because of the upcoming policy changes like the new body building norms and mandatory air conditioning for all the new buses and trucks sold. Even by 2020, the industry may not be able to touch the peak sales of 8 lakh units which it achieved in 2012, believed industry experts. Experts feel that these changing norms, impact of demonetization and slowing economy will limit the growth in CV segment. Some extension has been given to the new body building norms and mandatory air condition in cabins, which has led to advance buying of CVs by the fleet owners. Not sure if this growth trend will continue for long time. According to ICRA, the CV exports from India are likely to grow at a CAGR of 12-15% over the medium-term to touch 160,000 units by 2020. According to the research firm ICRA, the total market size for CV in India will remain at 7.5 lakh units in FY18.Medium and Heavy CV (M&HCV) is expected to grow between 1-3% and Light CV will grow by 7-8%, while the entire CV segment is expected to grow by 5-6% in FY18. The main reason behind the conservative projection is due to the low growth in the first half because of the low component availability as the industry transitioned from BS-III to BS-IV and demonetisation. The impact will be harder and the Indian CV market may not grow beyond 7.3

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

ndustry Focus: Commercial Vehicless

lakh in FY18. It is expected that the CV production to stay at 9 lakh units by 2020, which will include exports of about 1.5 lakh. As the CV segment is directly connected to the economic and commercial activity, a slowing GDP growth of 5% in the Q1 of this fiscal raises concerns. As the CV segment is directly connected to the economic and commercial activity, a slowing GDP growth of 5% in the Q1 of this fiscal raises concerns. According to ICRA, the CV exports from India are likely to grow at a CAGR of 12-15% over the medium-term to touch 160,000 units by 2020. This will be driven by expansion in the new markets like Asia, Africa and the Middle East, scaling up exports from foreign CV OEMs and growing demands from existing markets like the SAARC region. As CVs are the most cyclical in the Indian auto industry, so the post-2020, there could be a decline in sales due to pre-buying ahead of BS-VI implementation. If the scrappage programme comes, this will certainly boost the market scenario. While the implementation of GST is also going to have a massive impact on the logistic firm, especially on the prime customer, and this will have its bearing on the industry. However, after the confusion and concern over GST in the logistic sector gets settle, it may create demand in the market. The GST impact is far reaching leaving the impact on prices alone, while it will make transport business more attractive (TAT, logistics cost, etc), for a given load it shall require lesser vehicles for interstate transportations and also its impact will be across the value chain. Emerging business models would redefine how the load is managed, thereby impacting the OEM business plans such as aggregators (asset light models and new players in VC), multi-model transportation, etc. Evolving customer dynamics would require refreshed positioning and marketing-strategy with more competitors and advent of tech and digital has increased their expectations. While higher asset cost and overload restrictions; higher and fragmented payloads required. The CV segment in India is the most exposed segment to the factors involving economic and developmental activities. The CV manufacturers were mainly focusing on profitability of the fleet owner by providing a product, which is good in terms of operating cost, chiefly by way of improving fuel efficiency. India is far behind, in terms of infrastructure, and with growing focus on it, the CV has a massive growth coming up in the long term, despite a subdued market in the recent past because of demonetisation. But with the latest policy intervention and changing dynamics of the 54 CONSTRUCTION MIR ROR

market, the CV segment has kicked off an overhaul. The govt has not only made BS-IV emission compliant vehicles mandatory but also ruled for a comfortable cabin with air-conditioning must from Jan’18, and safety features such as anti-lock braking system already being compulsory. Further, due to Trailer-code, Cab-code, Bus-body-code, under which body-building activities of buses and trucks have to be done under stringent requirements laid down by the ARAI. Currently, there are few body-builders, who are certified by the ARAI, and the organised players in this space may face tough time. Though, there has been some extension given to the new bodybuilding norm and that has also contributed to the growth of the M&HCV segment in the past few months, apart from a push from infrastructure development. India is now building about 23 km of roads every day up from 16 km a year ago. According to ICRA, the CV exports from India are likely to grow at a CAGR of 12-15% over the medium-term to touch 160,000 units by 2020. According to ICRA, the CV exports from India are likely to grow at a CAGR of 12-15% over the medium-term to touch 160,000 units by 2020. Now the trend has been moving strongly towards providing value-added services in the products such as use of telematics, driver comfort, safety and other features. These changing will certainly put a dent on the historical dominance of domestic manufacturers and make a level playing field for the MNCs like Daimler, Scania, Volvo, etc. India is far behind, in terms of infrastructure, and with growing focus on it, the CV has a massive growth coming up in the long term, despite a subdued market in the recent past because of demonetisation. As the CV segment is directly connected to the economic and commercial activity, a slowing GDP growth of 5% in the Q1 of this fiscal raises concerns. Analysts believes that the GDP growth could be even lower than the projected as around two years ago, the base was changed and if we calculate in the pre-changed method the growth would be only 3.5%. The Indian industrial output has also been under pressure in the past few months and it rose marginally by 1.2% in July compared to the same month last year. It had declined by (-)0.1% during June this year. In contrast, the IIP had expanded by 4.5% during Jul’16. While the private sectors like real estate, telecom, FMCG, auto component, pharma, etc., have also witnessed a low investment. The other major challenge, according to a study conducted by IIM-Kolkata and Transport Corporation of India, is the country suffers a huge loss of $21.3 billion annually on account of delays and additional fuel consumption due to poor road conditions and frequent halts.

|| OCTOBER 2017

Trends like alternate fuel and electrification will also have a strong bearing on the manufacturers and its suppliers. With increasing electronics, new emission, safety and body building norms, they also need to be ready for the change. With new regulations, the manufacturers in CV space will need additional capital expenditure and will have strong pressure on return on investment as the cost of product is also expected to rise. Small CV may face challenges as the demand for bigger vehicles will increase in the changing market dynamics. With new body-building criteria coming up, the cost of vehicles will go up and will also create problem for the unorganised and non-ARAI complaint bodybuilders in the country. The Indian fleet owners were used to overloading while with new norms, overloading will completely go away and this will impact the fleet owners.

Growth prospects and key drivers of the Indian CV industry…

Growth in Industrial Production...The Indian economy has grown at 8.5% per annum over the last few years and has emerged as one of the fastest growing economies in the world. The manufacturing sector has grown at 8–10% per annum in the last few years. This has created the need for transportation of goods and increased demand for CVs. Increasing Access to Cheaper Finance...More than 90% of the CV purchase is on credit. Finance availability to CV buyers has grown in scope during the last few years. A host of finance companies have entered into the CV business. This has made the availability of finance much easier for the consumers. Emergence of Road as Primary Mode of Transportation...The share of roads in transportation in India has been constantly increasing with a corresponding decline in the share of railways. In the 1950s the share of road transport in the overall transportation of goods was roughly 15%, today it is almost 60%. This development is due to improved road infrastructure, reduction in differential between road and rail costs and advantages provided by road in terms of last mile connectivity. Implementation of Regulations on Overloading and other Regulations...The increased enforcement of overloading restrictions has also contributed to an increase in the number of CVs plying on Indian roads. In addition, some states have curbed the usage of old CVs, which has contributed to an increase in the demand for replacement in this segment.

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

F ocus: Tyre Industry

A Brief Review on Indian Tyre Industry

ntroduction…

Indian tyre industry has been reporting good growth figures over the past few years, spurred by the growing passenger vehicle and 2-wheeler market. It has emerged as one of the most competitive markets in the world and with the emergence of new technology, ultra-modern production facilities and availability of raw materials, the sector is poised to grow further. Major technological changes have taken place in tyre design from conventional bias or diagonal ply from the past to the current steel radial tyres, tubeless tyres, with low aspect ratio tyres, puncture resistant tyres etc. Testing standards have also evolved accordingly to ensure high performance, mileage, safety, reliability and longevity of the tyres. The Indian tyre industry has been quick in adopting the latest technology trends through foreign collaborations and tailoring these to Indian needs. Manufacturers are also investing in the development of ‘green tyres’ and in capacity expansion for radial tyres. Innovative technologies like self-inflation and run flat tyres (RFT) are also gaining popularity in the Indian market. The market for radial tyres in the CVs segment has seen rapid growth in recent times. As per Automotive Tyre Manufacturers Association (ATMA), report, in

56 CONSTRUCTION MIR ROR

|| OCTOBER 2017

the medium and heavy CV segment the current adoption levels of radial tyres is around 18%. In the light CV segment, it is estimated to be 20%. The passenger car segment switched to radial tyres earlier, and within a short period of time, penetration levels reached almost 98%. This segment will surely be the focus for Indian tyre manufactures as it is expected to grow. The Indian auto industry is expected to be the world’s 3rd largest behind China and the US and will account for >5% of global vehicle sales as per IBEF. It is also expected to become the 4th largest automobiles producer globally by 2020 after China, US and Japan (India is currently world’s 2nd largest 2-wheeler manufacturer). Indian tyre industry is ancillary to the automobile industry. Demand swings in any of the auto segments (Commercial Vehicles{CV}, cars, 2-wheelers) have an impact on the tyre demand. Indian Tyre Industry is in modernization phase and is largely driven by demand and supply conditions. The domestic industry essentially caters to 2 segments OEM and Aftermarket/Replacement. Replacement demand dominates the tyre market contributing 56% of total size while the OEM market share is 44% as of 2015-16. Indian tyre market is driven largely by two & three wheeler tyres

(53%), followed by passenger cars (28%) and CV segments (16%). Tractor segment accounted for only 3% of the tyre sales in 2015-16. There were 39 CoS (2014-15) in the domestic tyre industry as per ATMA and the industry is valued at around Rs 535 billion as of 2015-16 with the top 10 CoS accounting for 85-90% of the market share. The export revenues stood at around Rs 100 billion during the year.

Tyre manufacturing process…

The tyre is an assembly of numerous components

||www.constructionmirror.com||

that are built up on a drum and then cured in a press under heat and pressure. Heat facilitates a polymerization reaction that crosslinks rubber monomers to create long elastic. Tyre plants are traditionally divided into five departments that perform special operations. These usually act as independent factories within a factory. Large tyre makers may set up independent factories on a single site, or cluster the factories locally across a region.

a faster rate.

Industry Segmentationâ&#x20AC;Ś

The domestic tyre industry is in modernization phase and largely driven by demand and supply conditions, rather than govt regulation as it was earlier. The domestic tyre industry can be classified on the basis of its design, markets and vehicle category, which have been evolved over the years.

(industry estimates) vis- a-vis Rs. 2.4 Cr annual vehicle sales. The export category is about 18% of the total units sold in the domestic market. The industry registered sales of around 151,026 (000 units) in the domestic market while the total exports of tyres during the year was 26,699 (000 units) in 2015-16. Therefore, the total tyre sales during the year was 177,724 (000 units) registering a marginal growth of about 4% YoY.

Technical deviationâ&#x20AC;Ś

The body of a tyre can be classified into two types i.e. cross-ply tyres and radial tyre. A cross-ply tyre has a sidewall which reinforces plies running diagonally from the bead towards the tread - each layer of textile at a different angle to its adjacent layer. These angles determine the stiffness of the tyre. Radial tyre cords casing run perpendicular to the direction of travel. Viewed from the side, the cords run radially - giving the tyre its name. The weakness of this arrangement is that the cords cannot sufficiently absorb lateral forces when cornering or circumferential forces when accelerating. To compensate this, the cords must be supported or complemented by other structural elements steel belts etc. Cross-ply is an old manufacturing technology and has been almost discarded by developed economies like USA and Europe long back. However, in India it is still dominant. Some of the key attributes of cross-ply tyres which make it popular in India are its adaptability on poor road condition, suitability in case of overloading of vehicle and cheaper price. However, its penetration levels have witnessed gradual decrease in the last few years owing to increasing awareness about the inherent advantages of radial tyres. Acceptance of radial tyres, which are of superior quality and have a longer life-cycle, as compared to cross-ply tyres, has been continuously increasing in the Indian market. However because of their higher price and lower adaptability in bad road conditions, these tyres are less preferred for vehicles with commercial usage like trucks, buses, LCVs, tractors etc. However, growing awareness about the advantages of radial tyres has led increasing proportion of vehicle operators across all the vehicle categories to migrate towards radial tyres. Over the last few years, India has seen increased adoption of radial tyre technology. Despite almost 100% radialisation in the passenger car tyre segment, in the CV and 2-wheeler segments, India still has a lot of potential for growth. The increase in research and development by domestic players to make cost effective radial tyres, coupled with growing low-cost Chinese imports, the process of radialisation of CV and 2-wheeler segments in expected to happen at ||www.constructionmirror.com||

Indian tyre sales breakup

Tyre Production..

Vehicles Category wise...The domestic tyre industry can be classified in terms of types of vehicles in which it is used. The category comprises of tyres used in T&B, LCVs, tractors, OTR and ADVs. Since these tyres are used for commercial usages they are sturdier, bigger and heavier than personal tyre category. In the overall sales of tyres in unit terms, the commercial segment contributed about 19% in 2015-16 while the remaining came from sales of personal vehicles (passenger vehicles and 2 & 3-wheelers). Under personal segment, two & three wheelers constituted about 66% sales while the passenger cars made up for the balance sales. T&B dominates overall commercial usage segment with around 57% share in the units sold in FY16. This is followed by LCV segment with a share of 28% during the year. Tractor front and rear tyre segment constitute around and 9% & 7% respectively during the same period. Vehicles Market wise...Tyre demand originates from OEMs and the replacement segment. Consumption by OEMs is dependent on new automobile sales trend while the replacement segment is linked to usage patterns and replacement cycles. Demand from the replacement segment dominates the Indian tyre market contributing about 56% of demand, in terms of units. The major reason for high replacement share is due to the fact that the number of registered vehicles/annual sales remains at about 10x at close to 20 Cr registered vehicles

Indian tyre industry is highly competitive with the presence of a large number of global and Indian auto-CoS. However, top 10 CoS account for about 80% of the market share. Tyre demand is directly proportional to the automobiles demand. Therefore, demand swings in the automobiles have an impact on the demand for tyres. Indiaâ&#x20AC;&#x2122;s annual automobiles production registered a sluggish growth of 2.6% YoY in 2015-16. This led to decline in demand for tyres as well during the year. Tyres production (in volume terms) increased only marginally by about 4% in 2015-16 after increasing by about 13% in the preceding year.

Production of Tyre (Lakh units)

Category wise, 2 & 3 wheeler tyres have a share of about 53% in the overall tyre production. This is followed by passenger vehicles and CVs with a share of about 26% and 17% respectively. Tractor segment constitutes only about 4% of the total tyre produced in the country. Off-the-road and other tyres constitute minute shares of <1% of the industry production. A similar share trend is witnessed in the sales of tyres registered in the country. In 2016-17 (Apr-Dec), tyre production increased by 11.9% YoY on back of increased OEM demand as well as the replacement market. PV production grew by about 12%, Tractors by about 17%, CVs and 2&3 wheelers production by about 4% & 5.5% respectively during the same period. However, cheaper imports from China and slower

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

ocus: Tyre Industry

exports pose a threat to this growth in production of tyres.

Category wise Production of Automobiles (000 units)

Automobile industry domestic market share of …

In 2015-16, India’s annual production stood at 23,960,940 vehicles (including passenger vehicles, CVs, three wheelers, two wheelers and quadricycle) as against 23,358,047 in 2014-15, registering a sluggish growth of 2.6% YoY. 2-wheelers have dominated the production volumes of the automobile industry over the years. Over the past 4 years, 2-wheeler production share in the overall automobile production has remained constant at around 80%. This is followed by passenger vehicles having a share of 14%. Productions of CVs and three-wheelers have about 3% share each in the automobile industry. Two & Three wheelers together comprising about 83% in the overall automobile production in 2015-16, demands about 53% of the total tyre production volumes, followed by passenger vehicles segment that accounts for about 26% share of the total tyre production volumes.

in FY16 as compared to 80% in FY11. However, the price of rubber is prone to fluctuations and in 2016-17 (Apr-Feb), domestic and international rubber prices increased by about 28% after declining by 24% and 15% YoY for 2 consecutive years. The demand-supply gap in production and consumption of rubber in the country remains the reason for higher natural rubber prices in the domestic market and competitive prices in the international market leads to high imports from the international market. With high rubber prices in the domestic market on account of lower production, imports of rubber has increased over the past few years to about 45% in the 2015-16 from about 18% in 2010-11.

Industry Cost Structure (2015-16) Segment wise domestic market share (2015-16)

Raw Material…Raw material cost forms the largest cost head in the tyre industry accounting for about 65-70% of the total. The main raw materials used to manufacture tyres are natural rubber, poly butadiene rubber (PBR), styrene butadiene rubber (SBR) and nylon tyre cord fabric. All these raw materials impart different properties, which are combined to develop tyres with particular characteristics. Rubber including (natural and synthetic), nylon tyre cord fabric (NTC) and carbon black constitute a significant portion i.e. 60-65% of the overall raw material cost of the industry. Hence any change in the prices of these materials impact the overall industry’s profitability. However, since FY13 the rubber prices witnessed a correction thereby reducing the overall raw material cost as % of total expenditure to 68% on aggregate basis 58 CONSTRUCTION MIR ROR

Rubber...Rubber is a major component in manufacturing of a tyre. There are three categories of rubber used in the manufacturing process viz natural rubber (NR), styrene butadiene rubber (SBR) and poly butadiene rubber (PBR). Natural rubber is an elastic hydrocarbon polymer that is originated from milky colloidal suspension or latex found in the sap of some plant. Natural rubber forms around 70% of the total rubber content, which is a sharp contrast of its usage in the developed markets like USA, Europe and Japan, where it is est. to be around 35-40%. One primary reasons for more usage of natural rubber in India is its local availability with India being one of the largest producers in the world. In addition to this, natural rubber absorbs greater amount of heat and is more adaptable to poor road condition and overloading compared to synthetic rubber.

|| OCTOBER 2017

Production and consumption of NR

Styrene Butadiene Rubber (SBR) is a synthetic rubber which imparts abrasion and fatigue resistance in tyres and is used in blend with natural rubber and accounts for about 5-7% of the total raw materials costs. The content of SBR is higher in radial tyres than cross-ply tyres. However due to its poor tear strength especially at high temperatures its usage is observed to be comparatively lower in heavy duty truck tyres. In India, the demand for SBR has picked during past few years as penetration of radial tyres in passenger car industry has increased considerably. Non-tyre applications of SBR include footwear industry, car mats, battery containers, gaskets, toys etc. Apcotex is the only major manufacturer of SBR in India. However, the grades SBR S1712 and S1502 which are used in tyre manufacturing are not manufactured domestically. Hence total demand of SBR for the tyre industry is met through imports from Thailand, Indonesia, Vietnam. Poly Butadiene Rubber (PBR) is the other variant of synthetic rubber used in the tyre industry which accounts for about 5% of the total raw material cost of tyre manufacturers. It is used as tyre treads, sidewalls, carcass and beed fillers which gives tyres increased mileage and flex cracking properties. Reliance Industries is the sole producer of PBR in the country.

Policy Environment…

All categories of tyres can be exported freely. All categories of new tyres can be imported freely. No WTO Bound Rates for tyres and tubes. Imports of Second hand/Retreaded tyres (major categories) are restricted under EXIM Policy and can be done against an import licence. Tyres imports

||www.constructionmirror.com||

under Regional Trade Agreements (Asia Pacific Trade Agreement, Indo-Sri Lanka, SAFTA, IndiaSingapore, ASEAN, India-Malaysia etc.) allowed at preferential rates of import duty. All tyre industry related raw-materials can be imported freely (under OGL). Tyre Industry delicensed in September, 1989. Natural Rubber (NR) principal raw material of Tyre Industry, is in the ‘Negative List` (i.e. not eligible for any concession in Custom duty) under various Trade Agreements, i.e. India ASEAN Free Trade Agreement, India Sri Lanka Free Trade Agreement, South Asian Free Trade Agreement (SAFTA), India Malaysia Comprehensive Economic Cooperation Agreement (CECA), IndiaSingapore Comprehensive Economic Cooperation Agreement and India-South Korea Comprehensive Economic Partnership Agreement (CEPA).

Industry concerns…

The ATMA has asked the Ministry of Commerce for duty free import of natural rubber equivalent to deficit in domestic production. The request by the body came after the Rubber Board projected domestic natural rubber deficit of 3.4 lakh tonne during the year 2017-18. Domestic production of natural rubber continues to be far below its requirement. Lately, sharp volatility in natural rubber prices has led to further crunch in the domestic markets. In the last 2 months, natural rubber prices have zoomed a significant 30% and growers are holding back stock in the hope of a continued rally in the prices. With rise in prices and high import duty, imports have become un-viable. Tyre industry consumes 65-70% of the natural rubber produced in the country. However, import of natural rubber in India attracts 25% duty which is highest in the world. Higher import duties will hurt the margins of tyre manufacturers as they will be left with no option other than importing natural rubber in case of a deficit in production. Manufacturers are also worried about the rampant dumping of cheap Chinese radial tyres in the domestic market. There are 4 areas of strategic concerns. First is the ‘right tyre changes everything’. Core competency of a tyre manufacturer is the ability to deliver a balanced performance of tire safety, durability and fuel efficiency, higher mileage, while developing services that meet the expectations of each customer. As the only point of contact between a vehicle and the ground, tyres must support the vehicle‘s weight, transmit steering, acceleration and braking inputs, absorb surface irregularities and noise, all while using as little energy as possible. The challenge for tyre technologists and marketers is to develop tyres that efficiently perform all of these functions for as long as possible, to continuously improve ||www.constructionmirror.com||

their ability to do so and to sell them at a price that is both affordable for the customer and profitable for the company. Meanwhile, every user is concerned about protecting the environment. Meeting these expectations demands tyre solutions that are dedicated, differentiated and increasingly technology and innovation-driven. Second is a ‘source of solutions for OEM and subsequently for replacement markets’. The original equipment segment accounted a sizeable market share of total global tyre production. Leveraging expertise, it is necessary to work jointly with car makers and other original equipment manufacturers to develop innovative solutions for safer, quieter and more environmentally friendly vehicles. As the modern day tyres should have low rolling resistance, tyre manufacturers must help OEMs cost-effectively reduce their vehicles carbon footprint with tyres whose technology truly makes a difference. High performance tyres have been significantly reducing CO2 emissions. This type of performance is required to be delivered by the tyres that need to be developed especially for new generation electric vehicles. Third is ‘high value added service’. In the replacement tyre market, which accounted for largest part of total tyre consumption, tyre makers serve all types of user needs with a comprehensive brand portfolio marketed through a diversified array of channels, including specialty wholesalers, dealers, auto centers, service stations and superstores. Fourth is ‘optimize customer relation’. Automobile tyre is a high involving, high risk prone, and high monetary product. Hence, it requires high customer relationship marketing emphasizing customer service. To improve further customer service, an innovative integrated CRM application needs to be deployed with company‘s sales representatives across the marketing value chain. In addition to above four major concerns of tyre marketing with detailed study and analysis of Indian tyre industry in the light of global perspective, this study unveils one major critical aspect that the domestic tyre industry is in a structural inflection in the market from cross-ply nylon bias tyre to steel radial tyre in the mainstay truck and bus tyre segment. This market radialisation is a force which is onset of aligning with the global market from where customers (both OEMs and replacement markets) will avail full value realization from tyre in terms of greater mobility of people and goods by facilitating higher safety, efficiency, and enjoyment of travel, besides holding on their value for money expectation. Raw material cost is a very important factor of tyre manufacturing that determines ultimate price of a

tyre. Among price hike of various raw materials, natural rubber price fluctuation and its availability and maintaining inventory is a great challenge to supply chain procurement mgt. Majority of NR consumption with other synthetic rubbers (PBR, SBR, Butyl rubber, EPDM) are imported by domestic tyre majors. Within the known and unknown challenges and opportunities of Indian tyre market, the industry as whole is poised to grow at faster rate riding on India‘s economy‘s growth prospect, booming of auto sectors and hence, rising demand of OEMs, after economic recession, proven benefits of radial tyres over cross ply bias tyres, Govt. investment on Infra & highway development, overloading restriction, growth in multi-axle vehicles, strict Govt. norms on carbon emission and other pollution control measures, and overall end users +ve attitude towards radial tyres. Clearly, the structure of the industry is heading for a major transformation. Players who assess this discontinuity dispassionately and correctly will emerge as the winners. India to be among top 5 tyre making nations... The 2nd half of this fiscal would be better than last year because motorcycle & commercial segments would be witnessing an upturn in volumes. Indian tyre industry is expected to post robust growth figures over the next few years, spurred by the growing passenger vehicle, scooter and utility vehicle segments of the automotive industry. With already 12 global players churning out 140 lakh units per annum, it has emerged as one of the most competitive markets in the world and with the emergence of new technology, ultra-modern production facilities and availability of raw materials, the sector is poised to grow further. India is poised to figure among the top 5 tyre making nations in the world. Performance & projections...It is been a mixed bag as far as the performance of the tyre industry in the past fiscal is concerned. In the CV segment, the growth has been lukewarm and not up to the expected levels mainly due to the slowdown in the OE segment. The replacement market has not come up to the expected levels because of many uncertainties and policy changes (by the govt) during the course of the year. But if we see the PV segment, there the growth has been in double digits. 2-wheeler segment, especially motorcycles, has not been performing the way it is doing earlier. While Tractor segment saw a double digit, OTR segment has been on the negative side. The tyre industry is directly dependent on the state of the country’s economic growth and GDP. We hope that the second half of this fiscal would be a better than last year because motorcycle and commercial segments

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

ocus: Tyre Industry

would be witnessing an upturn in volumes. Impact on the industry post demonetisation...We are supportive of any govt policy which is progressive, forward-looking and is in the larger interest of the nation. The retail sales got impacted as the majority of sales are happening through cash transactions. What happened in our favour was that some imports from Chinese CoS by small-time traders inadvertently dropped. Moreover, the govt was also losing revenue as these unorganised traders and importers were not paying their legitimate taxes and duties. So demonetisation has its upsides and downsides. Inverted duty structure...ATMA have filed the petition and considerable progress is being made on this front. The oral hearing on the imposition of anti-dumping duty has also been completed. We are now awaiting the findings that will be announced by the Directorate General of Anti Dumping and Allied Duties at the earliest. It is being hoped that anti dumping duty is imposed on cheap Chinese tyre imports pretty soon. The tyre industry has been a classic case of inverted duty structure where the duty on the principle raw material i.e. natural rubber is 25% and the duty on the finish products i.e. tyres is 10%. Furthermore, natural rubber’s imports are imperative since it is in short supply in the domestic market. So a prudent govt policy is to encourage value addition in the country by giving access to raw material or intermediates at low rates of duty and keep the duty levels higher for the finished products. We were hoping that this is rectified in the current budget but it didn’t happen. The industry is concerned as well as disappointed that the long impending duty inversion anomaly for the tyre industry is not getting addressed on a priority basis. Size of the Indian tyre industry...The Indian tyre industry is somewhat flattish over the last three 60 CONSTRUCTION MIR ROR

years for various reasons. Overall, the industry topline has been pegged at approximately Rs. 55,000 Cr. By 2020, the topline would be worth over Rs. 60,000 Cr. Around 140 lakh tyres are produced per month out of which nearly 15% is for the export markets. As of now, at least 4 of the homegrown firms figures among the top 30 global tyre CoS. Furthermore, the axis of tyre production is shifting from developed markets to emerging ones like India, China, etc. Asia is going to be playing an increasingly dominant role as the global tyre producers in the world. Nearly Rs 36,000 Cr has been invested by various ATMA members to either set up Greenfield facilities or expand the existing ones for capacity expansion. India will also find its right place in the pecking order because we have a long and deep rooted history of tyre manufacturing dating back to the 50s era. Going forward, India will definitely be among the top 5 nations of tyre production.

The ministry advocated a $250-450 per metric tonne anti-dumping duty in its report. This would result in an anti-dumping duty rate of 10-12%, according to the Deutsche Bank note. The finance ministry will take the final decision, including the quantum. The industry gets nearly 55% of its revenue from trucks and buses radial tyres, brokerage house Macquarie said. “These CoS could potentially see a good margin improvement in the case of an anti-dumping duty is slapped on Chinese tyre leading to an earnings upgrade,” it said.

Anti-Dumping Duty…

An anti-dumping duty on Chinese truck and bus radials could boost earnings of Indian tyre makers as these account for more than half of the industry’s sales. The recommendation of an anti-dumping duty is a material positive for all tyre CoS, especially Apollo Tyres which derives close to 45% of its consolidated revenues from the Indian truck segment.” Shares of Indian tyre makers gained up to 5% this week after the Director General of Anti-Dumping and Allied Duties recommended an anti-dumping duty on truck radial tyres imported from China, according to its website. Domestic CoS have have been facing tough competition from Chinese peers, which price their tyres up to 25% lower. Investigations by the Department of Commerce concluded that the cheap imports has caused “material injury” to the domestic industry.

|| OCTOBER 2017

Imported truck and bus radials account for 40% of replacement demand in India and nearly 92% of such imported tyres come from China. Lower pricing due to overcapacity, slower demand in China has to lead to dumping of these tyres in markets like India and the

||www.constructionmirror.com||

US.

Job creation…

The Indian tyre industry is hoping the govt will extend policy support to enhance its manufacturing competitiveness and to take on the unethical Chinese competition. Given the maturity, advancements in technology and job-generating potential, this industry could be a poster boy for the govt, just like the IT industry. Our quality is world-class and our exports could be propelled to another level. Presently, exports account for 15% of the Rs 50,000-Cr industry, and this could be doubled in about three years with policy support. In the past three years, tyre manufacturers invested about Rs 40,000 Cr. We are going to meet Commerce Ministry officials to discuss the potential, while we have commissioned a study by a third party to explain to the govt the competitiveness of India compared with other countries. The tyre industry has welcomed several global players. While we welcome competition, we need a fair playing field to play to our potential. The industry has been informing the govt about what it calls the unethical ways Chinese tyres are being sold in India. They have been evading taxes; transactions happen through cash. None of the stakeholders are getting any benefits because of this. Significant drop in sales of Chinese tyres during the quarter after demonetisation is a clear example of how that trade is exploiting the Indian market, he said. Though both demonetisation and the transition to GST have given a breather of 5-6 months by way of lower Chinese tyre sales, imports have started to increase in the recent weeks. In FY’17, it accounted for 30-40% share in the replacement market.

Industry outlook…

The demonetisation drive November 2016 affected imported Chinese tyres which were being fed to the replacement segment through cash-driven unorganized channels. Despite this, overall tyre imports are still expected to grow by 10%-12% (value) in FY2017. In a major reprieve to Chinese tyre exporters, in February 2017, the United States International Trade Commission (USITC) pronounced that tyre exports from China did not impact the US tyre industry; accordingly no ADD was imposed on Chinese tyres. During the period of dumping probe, export of Chinese tyres to USA had ||www.constructionmirror.com||

significantly reduced; US imports of T&B tyres from China which was worth $1.5 billion in 2015, but fell to over $1 billion in the first 11 months of 2016. Part of this decline in US demand for Chinese tyres was re-routed by China to other countries, including India. With the USITC’s ruling, China’s tyre exports to USA is expected to revive and this will bring down imports to India; demand and margins in the USA tyre industry is relatively higher than other markets. On the pricing front too, with global NR ruling at premium to domestic NR prices, the price differential between Indian-made and imported tyres has reduced. Accordingly, import momentum into India is expected to drop in the medium term. Tyre OEM segment is expected to witness growth in 2016-17 largely driven by the buoyancy witnessed in automobile sales. Post demonetisation, growth estimation of 2-wheelers and small cars has been hit slightly. However, lower cost of ownership of auto vehicles triggered by series of interest rate cuts, push on manufacturing and Infra segment by the govt combined with lower fuel prices have resulted in recovery of auto sector. Tyre industry stands to benefit from this turnaround in OEM demand and stable replacement demand. However, tyre manufacturers supplying to CV, PV and tractors segment are expected to benefit the most in the near term as the outlook for these auto segments in the Indian market is relatively more positive than TW. Capacity utilisation levels for manufacturing TBRs have come down to 60-65% from 80-85% in couple of years ago due to increasing dumping of TBR tyres from China. Also, the tyres and tubes industry was expected to witness completion of about 5 projects worth Rs 45.9 billion in 2016-17 adding an incremental capacity of about 13.7 million units to the industry. In the next 2 years (FY 18 & 19) about

Rs 70 billion worth projects are to be completed adding another 12 million unit capacity to the industry. Going forward, significant capex will put pressure on the utilization levels and hamper the operational margins of the players. Over the past few years, the trend in tyre production and sales for OEM market has been in line with the automobile sales for the period i.e., production of tyres has been about 1.5 times that of a vehicle produced. While the demand from replacement market has comparatively been higher. Sales are expected to grow in the range of 10-11% per annum during 2017-18. Both, domestic and export demand for tyres is expected to remain robust during this period on the back of strong growth prospects for Auto OEMs as well as the stable replacement market. The outlook for the domestic tyre industry over the near to medium term is stable supported by favourable tyre demand, both domestic and exports, and likely improvement in realisation. ICRA research expects revenue growth for the industry of 12%-13% (CAGR) during FY’17-20. However the industry profit margins, which have been at elevated levels in the last two years, is expected to contract with hardening of raw material prices. Industry wide operating and net margins are expected to stabile over the next two years at 14%-16% and 7%-9% respectively, in the absence of any un-natural price disruptions for crude and NR. With the resumption of debt funded capital expenditure plans (towards capacity additions), the capitalization and coverage indicators are likely to moderate marginally. Despite this, the industry credit profile will remain strong with net gearing of 1.0-1.3x and net debt to operating profit of 0.3x-0.4x.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

G uest Article

Shriram Automall Inaugurates 70th Facility in Guntur

Shriram Automall inaugurated its 70th Automall in Guntur, Vijaywada Zone, on 22nd September 2017 to satisfy the demand of pre-owned vehicles & equipment in and around the region.

• 3rd AUTOMALL IN VIJAYWADA ZONE & 28th AUTOMALL IN SOUTH INDIA • 150+ USED VEHICLES & EQUIPMENT AVAILABLE FOR DISPOSAL

“South India comprises of 40% of our Automalls in the country. The company receives major chunk of its business from the south zone. The sole aim behind inaugurating every new Automall is to bring both buyers & sellers of pre-owned vehicles & equipment under one roof to enter into a transaction through the most fair & trusted physical bidding platforms. Guntur Automall will empower Thousands of customers to take benefit of our professional services because we know that value of an idea lies in using it and by implementing this one we aim to serve thousands of customers in Guntur and nearby areas.” said Mr. Sameer Malhotra, CEO Shriram Automall.

• 72 OUT OF 146 VEHICLES DISPOSED • WITNESSED INDUSTRY’S BEST FOOTFALL OF OVER 350 CUSTOMERS

Shriram Automall India Limited (SAMIL), India’s Largest Service Provider for Exchange of Pre-owned Vehicles & Equipment, inaugurated its 70th Automall facility in Guntur. The Automall is the 3rd facility in the Vijayawada Zone of the company and is in line with the aggressive expansion plans of the company. Sprawling across 5.3 acre of land, The Automall is strategically located near the National Highway-16, Chennai-Kolkata Highway road and promises complete solutions to the pre-owned vehicles and equipment related needs of transporters, contractors, dealerships, manufacturers and individual buyers. Guntur is a city Located 35 km away from the state capital Amaravati, It is situated on the plains at a distance of 40 miles (64 km) to north of the Bay of Bengal. It forms a part of Vishakhapatnam-Guntur Industrial Region, a major industrial corridor in the country. The city is known for chilli export and has the largest chilli market yard in Asia. The Automall facility in the region aims to fulfill demand of all types of pre-owned vehicles & equipment through its trusted and transparent platforms. People from across the locations of VIJAYAWADA, TENALI, ONGOLE, MANGALAGIRI, ELURU & NARASARAOPET region will be reaping benefits of Shriram Automall’s Holistic services and unique platforms for easily acquiring and disposing used vehicles & Equipment. In conjunction with the grand inauguration ceremony, a live bidding event was also held at the Guntur Automall where over 150+ used vehicles & construction equipment were displayed on the ramp for the customers to bid on, out which the company successfully disposed 72 vehicles & equipment by the end of the day. The event was also followed tree plantation activity at the Automall. Easy finance assistance by Shriram Transport Finance Company (STFC) was also provided.

Hemoglobin and rapid diagnostic

test. This facility was extensively used by all the customers present during the event, they were not only educated about the condition of their health but also told the effective measures & process to improve it if required.

During the event a Mobile Clinic facility was also made available for all its customers, which conducted

Tests like Urine & Suger Test

AUTOMALLS – VIJAYAWADA ZONE Ongole

Vishakhapatnam

Contact Guntur Automall:

Shriram Automall Guntur, Hanuman Nagar, Vill Etukuru, NH 16, Guntur, Andhra Pradesh-522017. Contact - 0 9849981325

62 CONSTRUCTION MIR ROR

|| OCTOBER 2017

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

P ost Event

IFAT India 2017: Top Marks on Its Fifth Anniversary

2017 was the fifth anniversary of IFAT India, and this year the show was more successful than ever before: 6,765 visitors took part in India´s leading trade fair for environmental technology between September 26 and 28. The core issue at the three-day fair was how technology can help master the high volumes of waste and the impact of extreme weather on the subcontinent. On show in Mumbai were tailored solutions for the Indian market.

Apart from industry leaders, the anniversary edition also attracted high-ranking government representatives, municipal corporations and political delegations. During his visit, Shri Vijay Shivtare, Minister for Water Resources and Water Conservation of the Indian State Maharashtra, said: “It is time for action and to put environmental protection at the top of the political agenda. We participated in IFAT India because we seek change, and this trade fair was the perfect platform for that.”

In demand: Efficient water and waste Technology and knowledge exchange management 184 exhibitors, and therefore 28 percent more than across borders the previous year, showcased their technologies and products for water, sewage, refuse and recycling on 8,100 square meters of exhibition space. According to Bhupinder Singh, CEO of the organizer Messe Muenchen India, the rise in visitor numbers – an increase of 30 percent – was due to the urgent environmental challenges that the Indian population is currently facing: “Following the serious water shortage of 2016, this year an exceptionally strong monsoon led to catastrophic flooding in large parts of India. Added to this is the problem of waste blocking water flow in the sewers. Modern solutions for efficient management of water and sewage, and also sustainable recycling technologies, were therefore in especially high demand at IFAT India 2017.”

64 CONSTRUCTION MIR ROR

Not only Indian exhibitors were represented in the Bombay Exhibition Centre. 54 percent of the companies were international brands – from 18 different countries. Among the top exhibitor countries were – after India: Germany, China, Switzerland, Austria, the US (in this order). Christian Rocke, Exhibition Group Director of IFAT at Messe München, commented: “Especially in the environmental sector international exchange and technology transfer are necessary. Precisely that was our goal when we brought IFAT, the world´s leading environmental trade fair, to Mumbai five years ago. The high international participation in IFAT India 2017 has shown us that we clearly succeeded in this.”

Satisfied exhibitors

|| OCTOBER 2017

Apart from the new exhibitors, there were also many companies that have participated since the very first IFAT India in 2013. N. D. Mundhe, Chief Manager of Excel Industries, is one of them: “We have taken part in all five editions of IFAT India so far. For us each year this fair is highly profitable, but this year most particularly so.” Philippe Anstotz, Executive Sales Director at the Aqseptence Group, was equally delighted: “It is impressive to see how strongly the show has grown in the five years since launch, and how the quality has increased. It brings together precisely the right audience under one roof. In future, too, we will not be missing out on IFAT India.” IFAT India also provided a supporting program that is a stage for politics and business. In many presentations, workshops and panel discussions, government representatives and industry experts presented current environmental programs being run by the Indian state and also market developments and technology trends. Among the highlights was the Environmental Technologies Conference. The high-level conference took place for the first time at IFAT India and was organized by the think tank TERI - The Energy and Resources Institute. The next IFAT India takes place from October 15 to 17, 2018 at the Bombay Exhibition Centre in Mumbai.

||www.constructionmirror.com||

IFAT India 2017 Addressed the Latest Environmental Issues in its 5th Edition A Unique Tradeshow for Environmental Technologies IFAT India 2017 scheduled at the Bombay Convention and Exhibition Centre, Goregaon from 26th to 28th September 2017. IFAT India is India’s leading trade fair for water, sewage, refuse and recycling. Due to its high population density and its expansive economic policy, India has immense potential for environmental technologiesand waste management. Scarce water resources, rapid industrialization, extensive agriculture and enormous waste volumes pose a great challenge to the country. IFAT India 2017 is a three- day trade show withover 180 exhibitorsfrom 18 countries. Among them aremarket leaders like L&T, Thermax, Ion Exchange, Ramky, Aqseptance Group, Endress+Hauser, Excel, Kirloskar Brothers, Kishor Pumps, Tata Projects, Wilo, Siemens, Lanxess, Astral Poly, Xylem, CRI Pumps, LG Chem, Wipro Water and many more. The 2017 edition also features country pavilions from China, Germany, Austria and Switzerland. The trade show provides an opportunity to industry experts, policy makers and business leaders to discuss regional strategies on numerous environmental challenges and seek solutions through formal interactions. Shri Vijay Shivtare, Water Minister of Maharashtra said “India continues to face multiple challenges, in the areas of the environment, water and waste management etc. Mumbai and Pune together, generate over 12,000 tonnes of waste, which could be a great opportunity for the Industry to get into a BOT (Build, Operate and Transfer) kind of an arrangement to recycle and/or transform waste to ||www.constructionmirror.com||

energy. India, being a largely agricultural economy, would also look at innovative solutions, which would also need to be sustainable and affordable. IFAT India 2017, would provide the perfect platform for the various stakeholders from the Industry and the Government to congregate and discuss possibilities”. The trade fair witnesses technical presentations, panel discussions and tutorials, where industry experts – both from India and overseas –share their knowledge with the audience at the Innovation Exchange. There is also a dedicated area for training, live demonstrations, product presentations and skills contests, running parallel to the show. On the inaugural of IFAT India 2017, Mr. Bhupinder Singh, CEO of Messe Muenchen India, said, “IFAT India offers a perfect platform to showcase and introduce various latest technologies and products especially for the Indian market. We have seen IFAT India grow exponentially in terms of the quantity and quality of people attending this trade fair and are overwhelmed by this year’s participation, national and international. IFAT India also providesa platform where innovative technologies tackling Indian environmental issues are showcased and solutions to issues related to environment, waste, and sewage recycling were discussed with industry experts and key players.” The Active Learning Center, a new platform showcasing products in action, which wassuccessfully introduced to the participants of IFAT India 2016is continued in 2017. This interactive element of the

event offers innovative approachto network with both visitors and other experts of the environmental technologies sector. The Products in Practice sessionsprovideexhibitors with a unique insight how the products are used in reality. , as the innovations arepresented in a realistic working situation and visitors can ask individual questions while having an eye-catching experience. Along with the trade exhibition IFAT INDIA with its partners concurrently organized multiple interactive sessions in the supporting program:, to name a few - Air Quality Management Workshop by SDG (Sustainable Development Goals Foundation); Workshop on entrepreneurship in waste management by ISWA (International Solid Waste Association); Biogas Panel by GIZ, German Biogas Association and Indian Biogas Association.. For the first time IFAT INDIA hosts an 1,5 day Environmental Technologies Conference in association with TERI, which focusses on issues related to Air Pollution, Solid Waste Management and Urban Water Management in the context of Sustainable Development. IFAT India 2017 also witnesses a new initiative, called Business to Government Sessionthat will provide states an ideal platform to announce new projects, to find matching solutions from the exhibitors for new tenders and to inform participants about the latest policies in the environmental sector. More information on the trade fair as well as the supporting program is available online at www. ifat-india.com.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

C ompany Profile

Gandhi Automations Pvt Ltd - India’s No.1 Entrance Automation and Loading Bay Equipment Company This widely recognized position has been achieved over years of hard work, innovation, commitment to quality and reliable customer service. The company is also proud to be certified to ISO 9001 : 2008. Since its inception in 1996 we have been manufacturing, importing, distributing and installing products that are problem free and easy to operate. The company offers complete logistics solutions by providing Dock Levelers, Dock Shelters, Sectional Overhead Doors and Dock Houses. Electro-hydraulic, mechanical and air-powered Dock Levelers offered by Gandhi Automations are not only “a bridge for connecting a vehicle”, but also facilitate fast, smooth and safe transition by compensating the difference in heights between the loading bay and the vehicle. This contributes to minimizing energy used and savings on heating and chilling costs resulting in maintaining the quality of the transported goods. Dock Levelers offered by Gandhi Automations are designed as per EN 1398 standard for the most demanding loading and unloading operations.

Efficient loading & unloading the goods:

The importance of efficient loading the goods has always been evident, and it has increased over 66 CONSTRUCTION MIR ROR

the years, essentially for two reasons: the lesser availability and the higher cost of manpower. Consequently lesser qualified manpower is being utilised which leads to damage in the goods. The cost of loading and unloading the goods can be calculated precisely and is exactly definable, which allows for a scientific approach to find out the investment that goes into the process. Gandhi Automations has always designed solutions based on such scientific approach and feedback from clients. The Dock Levelers offered by the company ensure loading and unloading with lesser effort and minimal cost. It is possible to load and unload your products in a safe way and in the process obtain remarkable energy savings. The loading bay remains with the Dock Leveler in rest position and the Sectional Overhead Door closed, until the vehicle is positioned. The driver drives back centring to the Dock Shelter and stops the vehicle the moment it gets in contact with the bumpers. The Sectional Overhead Door is then opened only when the vehicle is positioned, brakes applied and engines shut off .This eliminates the exit of hot air, intake of cold air (or the opposite in hot and inside conditioned places) and intake of exhausting gases

|| OCTOBER 2017

in the warehouse. After the Sectional Overhead Door opens, the lip of the Dock Leveler connects to the truck bed for loading / unloading to take place. At the end of the loading/unloading the Dock Leveler is put in rest position and the Sectional Overhead Door is closed, without moving the vehicle. The vehicle then departs at the end of the process. Following are the two types of Dock Levelers a) Radius Lip Dock Levelers Radius Lip Dock Levelers allow the dock to connect with the truck bed, thus making it possible to drive directly on and off with forklift trucks etc. The self-cleaning lip hinging system does not retain rubbish with automatic end-of-run, so as to keep the 25 mm security distance between the folded lip and structure as per EN 1398 & EN 349. b) Telescopic Lip Dock Levelers Telescopic Lip Dock Levelers are ideal for connecting vehicles unable to drive near dock i.e. sea containers, side loading railway wagons etc. These types can be supplied with a lip extending up to 1 m. Gandhi Automation’s Dock Levelers are equipped with the most secure safety devices and accessories.

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

E PC Scenario

EPC - Best Suitable for Infrastructure Development in India

E || Subhash Sethi || || Chairman || SPML Infra Limited ||

“

SPML Infra is executing a number of projects on EPC + O&M basis, a trend established in the industry where the developer is supposed to manage the operations & maintenance even after the execution and commissioning of an EPC project for a given number of years.

“

68 CONSTRUCTION MIR ROR

PC Industry is looking for growth as the European market, US and African continent are on rebound mode. How it is going to affect the Indian EPC market?

From a global perspective, it is looking positive as the developed economies in the world are trying to gather steady impetus. The US economy though re-gaining some footing; the pace of activity still remains irregular. The US GDP growth was at 2.6% in the second quarter of 2017 against the 3% annual growth predicted by the US President. The Eurozone economy expanded 0.6 percent on quarter ended June 2017. Among Eurozone’s largest economies, GDP growth picked up in Spain; was unchanged in France and Italy; and slowed in Germany. The UK economy rebound at 0.3% in second quarter of 2017, a slight improvement from 0.2% in the first quarter of the year. The African region is showing signs of recovery with regional growth projected to reach 2.6% this year. The largest economies of the continent; Nigeria, South Africa, and Angola are seeing a rebound from the sharp slowdown in 2016, but the recovery has been slow due to several factors including policy uncertainty. India’s economy growth slowed down to 5.7% in the first quarter of this fiscal on the GST related matters but underlying growth momentum remains strong and India may clock about 7 per cent growth this fiscal. Infrastructure growth was 4.9% in August 2017 with power sector clocking 10.3% and 15.3% of coal. The demonetisation and GST implementation temporarily

|| OCTOBER 2017

decelerate the growth, but now these two events are on our rear view mirror, we expect the economy to re-accelerate the momentum and achieve 7 per cent growth. India has the potential to perform better and with government’s focused initiatives in getting back on the saddle of infrastructure development will certainly produce good results for EPC industry. A unique weapon at the disposal of the government is its ownership of many cash-rich public sector companies, which can be persuaded to invest in infrastructure development themselves and investing in such projects. The Indian EPC sector has come up in a big way in last one decade. The opportunity for EPC sector is massive as the government is focusing on robust growth in infrastructure development. Several initiatives such as ‘Housing for All’, ‘Smart Cities,’ and ‘Atal Mission for Rejuvenation and Urban Transformation (AMRUT)’; the government has been working on reducing the bottlenecks that impede growth in the infrastructure sector. The latest budgetary outlay for infrastructure spending has been increased to INR 3.96 lakh crore for various projects including housing, railways, ports, roads, water and irrigation.

What are your views on current scenario of EPC industry in India and opportunities for EPC companies in urban infrastructure sector? EPC industry has transformed from being a handful of large and complex projects to multitude of small projects and subcontracts.EPC industry has witnessed consistent changes over the past few years with increasing project size, scale and investment. In India, it is likely to see further advancement with a number of initiatives for infrastructure development with planned investment

||www.constructionmirror.com||

running into billions of rupees by the government of India. The government targeting capacity addition and several policy interventions to remove various bottlenecks and impediments, the EPC sector is expected to be the largest beneficiary. There is no dearth of high value and multifaceted projects being executed by government. The increasing size and complexity of projects has led to a growing reliance on EPC companiesâ&#x20AC;&#x2122; capabilities and project management skills. The Indian EPC sector is rising prominently and changing its dynamics. There are more than 100 companies and many stakeholders today. The companies have carved out a sector focus niche for themselves and have developed their reputation based on their operations. The opportunities are enormous in this sector as the focus of Indian government is shifting back from PPP to EPC again. EPC industry is certainly going to witness tremendous growth with growing infrastructure activities under various schemes including Smart City Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Housing for All, Water Supply and Irrigation Projects, Roads & Highways, Metro Rail, Power Transmission, Distribution and Rural Electrification, Swachh Bharat Mission, Clean Ganga projects etc. The concept of EPC has been regaining ground for the past few years in India after the mixed results with PPP and BOOT projects. Today, government agencies and bankers choose to have a single-point responsibility, which was not a scenario before when contracts were divided. Today, large projects are being awarded to specialized companies having complete experience of handling engineering, procurement and construction. EPC contracting has very good potential considering the size and complexity of projects being set up in India in the power, water & sanitation, steel, oil and gas, and transportation sectors. It is estimated that EPC industry is likely to grow at the average of 35-40% in next five years.

How do you see the business climate in India for future investments? What steps need to be taken to accelerate the pace of project execution? The government has initiated several measures to lift the infrastructure and construction sectors from the slowdown under several sehemes now announced by the government. While the smart city and roads are expected to continue being the Governmentâ&#x20AC;&#x2122;s main investment focus areas, the urban infrastructure for water & sanitation and power distribution are expected to witness enhanced investment. Private investment seems difficult to come, public investment can be expected ||www.constructionmirror.com||

to materialize and increase. The government needs to play a vital role in improving the pace of implementation of key projects, EPC companies are required to upgrade their project management expertise and ensure that there is adequate capacity to undertake and execute large projects on time. There is no specific Ministry to safeguard the interest of the EPC companies and a large number of cases are at various stages of arbitration. A major portion of an EPC contract is spent on procurement of equipment and machineries. This sector also falls along with the capital goods under the Ministry of Heavy Industries. A separate cell in the ministry is crucial to handle issues related to the EPC contracting business. Anticipating tremendous growth in this field due to large scale urban infrastructure development planned by the government; a special EPC cell in the ministry is recommended.

Project finance and equity funding for the EPC companies have been difficult to get. The banks are cautious for lending to EPC players; disbursements from banks are delayed leading to project delays.

There is no magic wand that will revive investment activity. The investment is as much a matter of concern as hard business calculations. The global economy is not in good shape amidst disappointing developmental targets of economies across the world. In the prevailing scenario, infrastructure remains a top priority for addressing developmental gaps and lifting economies out of the financial turmoil. The governments around the world are pumping money to generate demands for goods and services by creating jobs through higher spending into physical and social infrastructure. Likewise, the Indian government on its part is not lagging behind on this score and has taken concrete steps to revive the sector to regain its past glory. The delays in payments by clients to the construction companies put tremendous pressure and results in negative cash flows from operations. The equity funding for EPC companies has become very difficult due to changing investor perceptions. As regards to debt funding, the cost of debt going up significantly has itself made it almost unviable. In the changed economic situation, the fees charged by banks for various bank guarantees would always increase due to higher risk perception.

How can the EPC companies minimize the impact of rising raw material prices, interest rates and depreciating rupee? The cost of raw materials remains the top concern among EPC companies. With the sliding down

of Indian currency, the raw materials market remains volatile. Companies have a hard time in correctly judging the risk of intensely fluctuating raw material costs. To minimize the impact, EPC companies are going for agreements for the entire supplies of a project with all major suppliers and also putting the price revision clauses in their contracts with the clients. Other measures are the optimum utilization of work hours and labor force, sourcing of machineries from local manufacturers or from less expensive countries and good financial engineering in implementation and execution.

How the EPC Project Contracting Models has evolved and have these models proven to be a beneficial?

The business environment in our country has rapidly evolved over the years. Gone are the days when the scope was restricted to engineering and procurement and the construction was done by the clients themselves as the risk perceived to be too great for the contractors. Initially, there were few contractors having adequate technical knowledge and financial strength who could take the overall responsibility of large projects. Hence, large projects used to be divided into smaller EPC packages with a specific focus on the area of execution (e.g., for a water supply project, separate packages like pipeline, treatment plant, pumping station, distribution network, metering & billing etc.). Slowly with the passage of time, the developers became financially and technically competent and they gradually expanded their presence across multiple packages and the whole work being awarded as a single LSTK (Lump Sum Turn Key) contract. SPML Infra is executing a number of projects on EPC + O&M basis, a trend established in the industry where the developer is supposed to manage the operations & maintenance even after the execution and commissioning of an EPC project for a given number of years. EPC is primarily a manpower run business; not a production but management integration. The business models are client specific, but new trends have emerged from the conventional approach. The 80s and 90s saw more of a conventional approach as clients saw merit in controlling the procurement. But as the pressure mounted on project time lines, clients started to fix total project costs at the beginning of the project thereby removing uncertainties. But recently the trend seems to be shifting to the EPC Management (EPCM) and Open Book Estimate (OBE) approach. Each mode has its own advantages and shortcomings and one has to be careful to choose the right approach. Over-TheFence (OTF) is also a new concept which is prevalent in the west, needs serious consideration in India.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

E PC Scenario

The EPC-LSTK (Lump Sum Turn Key) mode is common in the western countries and now Indian clients are also experimenting with it. The EPC-LSTK mode has its own merits as the contract for Engineering, Supplies and Construction for the complete project is signed in the initial stage itself, thereby transferring the risks for project, cost fluctuations, delays in schedule and quality issues entirely to the company. More and more clients are realizing the advantages for EPC-LSTK mode which ensures single point responsibility in the hands of the EPC contractor and are increasingly opting for EPC-LSTK mode for timely completion of projects. Other model is EPC Management (EPCM) contracts, wherein one single company having the knowledge of integration requirement of the entire project, takes the charge for the complete execution. It in turns engages separate EPC contractors to execute the projects on package basis. In such cases, EPCM companies take the obligation of the projects integration and have an overall management control of the project; though directly not responsible for the project cost and schedule, which remains with the client. The traditional contracting models of Built, Operate and Transfer (BOT), Built, Own, Operate (BOO) and Built Own, Operate and Transfer (BOOT) are still in use. In the BOOT model, the EPC contractors not only execute and commission the projects but also earn revenue by operating the same for a specified period of time before handing it over to the clients. There are a lot of projects awarded in this mode for road & highways and airports. SPML Infra has earlier executed a few BOOT projects but our focus is currently on EPC mode of projects only.

have transformed from being a flat to become 3-dimensional format, minimizing errors and improving productivity during the entire implementation period. The advanced technology for material transport focuses on intelligent logistics, infrastructure, and mobility and makes project execution more efficient. EPC tracker is another technological advancement that incorporates the use of smart phones and tablets in project execution, the real time information between work teams and the company management helps in taking swift remedial steps by improving several areas that hamper the work due to avoidable reasons. There is software available for collection and dissemination of data during the construction phase of an EPC project to help an updated planning and to determine the degree of actual progress of the project as compared with planned progress to detect deviations and to act in a timely manner. During a construction phase mistakes are more expensive that delays the project and loss of control over the progress impacts the profitability and cost overruns. The current trends suggest that the EPC sector is expected to generate better opportunities in the next few years with sound funding by government and international monetary organizations. Indian EPC companies are competent and cost-effective as compared to their foreign counterparts but we need to do some fine tuning and adopt modern construction management techniques to remain relevant in increasing competitive environment. From our own experience as a developer, good project developers are those who are creative in their thinking, innovative in their planning and execution and are daring enough to take the risks.

of managing and implementing 600 projects; in water, wastewater, power, roads, and sanitation sectors and created significant value thus touching the lives of millions of people with the provision of drinking water facilities, improved sewerage network, better municipal waste management, building roads and highways and lighting up homes. SPML Infra reported 14.5% growth in revenues and 9.95% increase in profit after tax during the last financial year. It also strengthened its business competitiveness through an increase in the pre-qualification limit for water infrastructure business by achieving revenue of Rs. 1,000 crore. Some of the important projects completed this year include the Phase 1 of Sauni Irrigation project in Gujarat, which was inaugurated by Honâ&#x20AC;&#x2122;ble Prime Minister, Shri Narendra Modi in April 2017. The Phase 1 of Bangalore Metro Project was inaugurated by Shri Pranab Mukherjee, the President of India in June 2017 where SPML Infra completed the electromechanical works. The 200 MLD Water Treatment Plant in Surajpura, Rajasthan was completed last year to augment the drinking water supply to Jaipur city; 42 MLD Sewage Treatment Plant and sewerage network was completed this year in Kanpur, Uttar Pradesh that will help in cleaning the holy river Ganga. SPML Infra also completed technologically advanced 220 kV GIS Substations in Alipurduar, West Bengal and 500 MVA Autotransformer in Mainpuri, Uttar Pradesh for quality power supply and distribution in the designated areas. SPML Infra has an order book of approximately Rs. 6000 crore which will help us in steady top line and improved bottom-line growth and we are expecting to add more new projects in our account in the remaining part of this fiscal.

What kind of technological advancements is available for EPC companies for project Can you throw light on the growth of execution and control? the company and also on the companyâ&#x20AC;&#x2122;s What is your strategy for growth in The technology has advanced in all segment of the medium to long term, in terms of order book? life and there are new technologies available for SPML Infra has a legacy of more than three decades industry segments, business models and EPC companies as well. The design engineering 70 CONSTRUCTION MIR ROR

|| OCTOBER 2017

||www.constructionmirror.com||

diversification?

SPML is focusing on completing the current projects on time and looking for about 10-15% top line growth in the coming years. We have plans to further our water, wastewater, irrigation and power business across India. SPML is also looking forward to complete the smart city development in Ujjain, Madhya Pradesh; a project under the Delhi Mumbai Industrial Corridor scheme. Considering the niche position we have created for ourselves in the water segment; we intend to use it to our advantage. In essence, our business model for success would be to maximize our strengths to achieve the overall objective.

What are the projects SPML Infra is pursuing currently?

SPML Infra is among the large EPC companies in India have successfully delivered a number of EPC projects in water and wastewater, power transmission & distribution sectors over the years. Presently, SPML Infra is executing more than 40 EPC projects for water supply and distribution management, irrigation, wastewater treatment, sewerage network, power transmission, distribution and rural electrification.

•

Some of key projects under execution are:

• Phase 2 of Saurashtra-Narmada Avtaran Irrigation (SAUNI Yojana; laying of 36.6 kms MS Pipeline of 3000 mm diameter of 17.5 mm thickness with external 3LPE coating & internal food grade epoxy coating; 14.17 Cumecs Pumping Station at 49 meter head and allied works. The project envisage to irrigate 1.8 million hectare of land in Saurashtra, Kutch and north Gujarat; benefiting millions of farmers and supplying potable water to 39 million people across 132 towns and 11,456 villages in Gujarat to address the scarcity of drinking water. • First Smart City Project at Vikram Udyogpuri, Ujjain, being developed as a global manufacturing and investment destination under the Delhi Mumbai Industrial Corridor (DMIC) scheme. This is first of its kind of a green field smart city which will have all smart utilities connected with technology for seamless services. • SPML Infra is executing urban water supply project for improvement in water distribution networks in Delhi for Mehrauli & Vasant Vihar and adjoining areas covering about 42000 house service connections, non-revenue water management, installation of AMR & Non

||www.constructionmirror.com||

• •

•

AMR water meters, 24x7 consumer care centre, metering, and billing including operations & maintenance for 10 years. SPML Infra is also executing 6 important ADB funded 24X7 urban water supply projects in Karnataka in the cities: Bellary, Raichur, Haveri, Hospet, Gadag-Betageri, and Sindhanur to serve a combined population of about 1.3 million. The work involves rehabilitation and development of water distribution network; over 2500 kms of water supply pipelines, rehabilitation and replacement of 2,50,000 house service connections with installation of advance water meters, non-revenue water management, 24x7 consumer care centre, metering, billing including operations & maintenance in all cities for 5 years. SPML Infra is executing installation of 220 kV GIS substation in Faridabad, Haryana SPML Infra is executing a World Bank funded 16 new 132 kV substations in Tripura under North East Region (NER) Power System Improvement Project. Extension of 400 kV substations with 2x500 MVA autotransformers at Malda, West Bengal and other 6 locations associated with Eastern Region Strengthening Scheme. Extension of 400/220 kV substation with 1x500 MVA autotransformer in Mainpuri, Uttar Pradesh and Sikar, Rajasthan Rural Electricity Infrastructure Development project for agricultural feeder separation in Murshidabad, West Bengal among several others.

• The power supply and distribution management project in Bhagalpur, Bihar is catering to over 2,00,000 lac consumers where SPML Infra has implemented new age technology for smart metering, asset indexing on cloud, mobile application for consumption & billing information, 24x7 consumer complaint centre and other initiatives.

Going forward, how do you view EPC as an era towards Sustainable Growth?

The long-term outlook of the industry remains optimistic due to the strong underlying industry and economy fundamentals. The economic survey also predicted the country’s economic growth at 6.75% to 7.5% in 2017-18. Even on a conservative estimate, it is likely to grow at 7% over the next few years. India’s focus on infrastructure growth, rising disposable income, lowering age of high income individuals, all point towards the fact that the long-term growth of the EPC industry in a steadily growing economy can be expected to be good. With Indian manufacturing companies producing quality equipment and raw materials, it is expected that input costs pressures could moderate which would be another positive for the sector. With the economic performance, we see the consistent policies, government investment in infrastructure is stepped up, raw materials and equipment are available locally and all the required clearances being granted on time along with land for the development, and clarity in the concession agreements. With such positivity, EPC sector will see sustainable growth in the years to come in India.

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

roduct Info

HAMM: More Than 35 Years of Oscillation Part 3: Quality Benefits in Every Detail

For more than 35 years, HAMM has included oscillation rollers in its product range and with over 35 models; it offers by far and away the widest diversity in the world. A glance at the constructive realisation of the technology reveals the decades-long experience in the manufacture of oscillation rollers. They stand out for their resistance to wear, compaction quality and ease of maintenance.

Experience shows

When building oscillation drums, HAMM – unlike its competitors, which have all entered the market with this technology in recent years only – can draw on decades of experience. And it is precisely this experience that makes the difference, as Head of Marketing Gottfried Beer explains: “You can copy technical solutions, but you can’t copy experience.” Thanks to its wealth of experience, HAMM possesses extensive know-how in application technology. This knowledge is not confined to a few specialists in the factory, but extends to the subsidiaries all around the world. Due to the large number of oscillation rollers on the market, spare parts availability is also very high. In addition, the service engineers all over the world are thoroughly familiar with the technology and trained with regard to oscillation.

Maximum wear resistance

A big advantage of the HAMM oscillation drums lies in the high-quality drum shell. It is inevitably subject to greater stresses than is the case with vibrating drums, due to the uninterrupted ground contact. Thanks to ongoing product and material development, the operating life of HAMM oscillation drums is today nearly the same as that of vibrating drums. This is made possible by using highly

72 CONSTRUCTION MIR ROR

wear-resistant fine grain steel for the drum shell. In addition, the material thickness is more than 50% greater than that of comparable competitive machines. In addition, an integral reinforcing ring ensures that the drum is extremely hard-wearing. This is why HAMM confidently provides a remarkable warranty against wear of at least 4,000 operating hours. With this warranty, the Tirschenreuth manufacturer surpasses any other serious offer on the market by a wide margin.

Quality thanks to chamfered drums

To ensure that the drums leave no impressions in the still soft asphalt, especially in curves, HAMM gives all drum edges a slight chamfer. Impressions of this nature have to be re-rolled afterwards, wasting time. Otherwise, they remain visible in the asphalt and compromise quality. Both issues are avoided from the outset thanks to HAMM’s design solution. By the way: this chamfer can also be found on all of HAMM’s vibrating drums. A small yet effective detail that ensures top quality.

Low-maintenance operation

A glance at the exciter system drive inside the oscillation drum also shows that it is based on a great deal of experience. HAMM has continuously optimised the position of the unbalance weights in the oscillation drum to enable the resulting forces to be utilised as effectively as possible. At the same time, HAMM’s oscillation drums are designed to require very little maintenance. The toothed belt, the core element of the drive, has been perfectly attuned to the overall system: its operating life corresponds to that of the entire drum. Checking the belt tension after 2,000 operating hours is all that is recommended.

|| OCTOBER 2017

HAMM_01_Oscillation

HAMM service engineers all over the world are also thoroughly familiar with the oscillation technology – all due to good regular training courses and a dense network of subsidiaries.

HAMM_02_Oscillation

The roller shell of the HAMM oscillation drums is exceptionally wear-resistant – a service life of 4,000 operating hours is guaranteed. The roller shell is made out of highly wearresistant fine grain steel and fitted with an integral reinforcing ring

HAMM_03_Oscillation

HAMM oscillation drums require remarkably little maintenance.

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

Tenders Ref. Number :

24812358

Ref. Number :

25279607

Ref. Number :

25311824

Requirement :

Construction Of Platform, Gate Lodge, Signal & Station Building, Foundation/ Fabrication /supply & Erection For F.O.B., P.P. Shelter, Deck Slab For F.O.B., Fouling Mark And Other Miscellaneous Work Between Ballia (ex)-karimuddin Pur (in) In Connection With Doubling Work Of Ballia- Gazipur City Project Of Division Of N.E.

Requirement :

Construction of Ayurvedic Health Center Bhanjraru with SDAMO Office.

Requirement :

Construction of Minor bridge at Palghar phata Sonave Darshet Road MDR-35 Km 1/500 in Taluka Dist. Palghar.

Document Fees :

INR 1,180

EMD :

INR 54,000

Construction of One No. Rain Shelter of Cafe Road. Document Fees :

INR 1,500

EMD :

INR 57,725

Tender Estimated Cost :

INR 3,348,095

Tender Estimated Cost :

INR 5,398,000

Closing Date :

28/11/2017

Closing Date :

10/11/2017

Location :

Himachal Pradesh - India

Location :

Maharashtra - India

Ref. Number :

25217724

Requirement :

Raising Of 4th Stage Tailings Dam From Existing Rl 135m To Rl 143 M (2nd Phase Of 1st Stage Tailing Dam) And Other Related Civil Jobs At Jaduguda Tailings Pond.

Document Fees :

INR 1,500

EMD :

INR 5,000,000

Tender Estimated Cost :

INR 1,774,355,960

Closing Date :

1/11/2017

Location :

Jharkhand - India

Ref. Number :

25341102

Requirement :

Construction work of Head Works of Dugni Barrage with Gates and its allied works including Civil, Mechanical, Electrical & SCADA System under SMP.

Document Fees :

INR 10,000

EMD :

INR 4,286,400

Tender Estimated Cost :

INR 428,630,700

Closing Date :

30/10/2017

Location :

Jharkhand - India

Document Fees :

INR 10,000

EMD :

INR 1,018,820

Tender Estimated Cost :

INR 173,762,849

Closing Date :

25/10/2017

Ref. Number :

21103354

Location :

Uttar Pradesh - India

Requirement :

Development of Brindaban Mullick Lane from Panchanan Ghosh Lane toSukia Street in Wd.-38, Br.-IV.

Document Fees :

INR 60

Ref. Number :

25302660

EMD :

INR 8,700

Requirement :

Construction megamarket at basavna bagewadi town of vijaypur district.

Tender Estimated Cost :

INR 434,380

EMD :

INR 2,900,000

Closing Date :

6/12/2017

Tender Estimated Cost :

INR 287,418,345

Location :

West Bengal - India

Closing Date :

14/12/2017

Ref. Number :

25308308

Requirement :

Asphalting and widening of existing road from Bhatkal circle to By-pass security check post

EMD :

INR 308,000 INR 20,468,394

Location :

Karnataka - India

Ref. Number :

21035199

Requirement :

Construction of GYM in Alawalpur.

EMD :

INR 15,000

Tender Estimated Cost :

INR 750,000

Closing Date :

1/12/2017

Closing Date :

5/12/2017

Location :

Karnataka - India

Location :

Punjab - India

Ref. Number :

25216629

Requirement :

Construction of 3 (Three) Bridges And Approach Roads At Nyaykali At The 5th Km, At Jalda Near Mandarmani at The 15th Km And At Saulat At The 29th Km Of Saikat Sarani.

Ref. Number :

25344361

Requirement :

Construction of Cement Concrete Road, Room, Varanda, Brick Soling Work, Drain. Repairing of Drain.

Tender Estimated Cost :

INR 4,899,000

Closing Date :

5/12/2017

Location :

Rajasthan - India

Ref. Number :

21847335

Requirement :

Construction of drain and widening of road, and laying work of sewer line at GNVY sector â&#x20AC;&#x201C; 5.

EMD :

INR 211,700

Closing Date :

29/12/2017

Location :

Uttar Pradesh - India

74 CONSTRUCTION MIR ROR

Tender Estimated Cost :

INR 1,484,786,170

Closing Date :

21/11/2017

Ref. Number :

25273953

Location :

West Bengal - India

Requirement :

Construction of new checkdam at various villages at taluka.

Ref. Number :

25332142

Document Fees :

INR 2,400

Requirement :

Construction of 25.00 meter span bridge over banoli khad. Construction of banoli to chachian road Km 0/0 to 3/0. Construction of sihuni to chandni road Km 0/0 to 3/500.

EMD :

INR 55,963

Tender Estimated Cost :

INR 5,596,256

Tender Estimated Cost :

INR 22,485,000

Closing Date :

30/10/2017

Closing Date :

12/11/2017

Document Sale To :

23/10/2017

Location :

Himachal Pradesh - India

Location :

Gujarat - India

|| OCTOBER 2017

||www.constructionmirror.com||

Projects Private Sector | Madhya Pradesh - India | PID: 169754 Value:Rs. 78.71 Crore | M P Housing & Infrastructure Development Board has invited bids for construction of flats in Indore, Madhya Pradesh The scope of work includes construction of 82 nos. two BHK type (A) flats, 12 nos. two BHK type (B) flats, 42 nos. three BHK type (A) flats, 56 nos. three BHK type (B) flats, 32 nos. shops (GF), 33 nos. shop (FF), 36 nos. commercial halls, and development of 3.15 acre of land for rainbow residency at Snehalata Ganj in Indore district The project is estimated to cost Rs 78.71 crore and is expected to be completed in 33 months | Updated on: 05 - Oct - 2017 | State Government | Maharashtra - India | PID: 169755 Value:Rs. 836.05Crore | National Highways Authority of India has invited bids for four laning of Ausa-Chakur section of NH-361 The four laning of Ausa-Chakur section will be from 55.835 km to 114.600 km (design length 58.756) under NH (O) in Maharashtra, on hybrid annuity mode (HAM) The estimated value of the project is Rs 836.05 crore | Updated on: 05 - Oct - 2017 | Private Sector | Punjab - India | PID: 169673 IRB Infrastructure Developers will transfer its Pathankotâ&#x20AC;&#x201C;Amritsar highway project to IRB InvIT The project will be transferred at an enterprise value of Rs 1,569.33 crore, and the company will receive Rs 544 crore The unit holders of IRB InvIT Fund has approved the acquisition of IRB Pathankot Amritsar Toll Road (an SPV) by raising debt for a value of Rs1,569.33 crore

The project has been developed by the company on build, operate, transfer BOT model under NHDP Phase-III, parts 102.42 km stretch of the NH-15 in Northwest India The concession for this project began in 2010 and is for 20 years. This is the seventh project by the company being transferred to IRB InvIT The concerned parties will enter into a share purchase agreement to complete the transfer process | Updated on: 03 - Oct - 2017| State Government | Tamil Nadu - India | PID: 169730 Value:Rs. 192.50Crore | The first section of Gandhipuram flyover, which was expected to be thrown open for vehicle movement a couple of months ago, is likely to be ready for use in another month The 192.5 crore project, including the stretch from Nanjappa Road to Sathyamangalam Road and another from 100 feet road to Avarampalayam, took off in June 2015 and was originally scheduled for completion by mid 2017 The first section was expected to be opened for use in July this year An official in the State Highways Department said that electrification and painting works were going on on the four-lane stretch for 1.75 km. The roundabout on Nanjappa Road also needs to be completed We are trying to open it in a month, the official said. The first section includes service road on either side On the second section, the official said that Government Order was awaited on extension of the flyover According to K. Kathirmathiyon, secretary of

Coimbatore Consumer Cause, land acquisition is yet to be taken up and the temples should be shifted for the service roads. All segments of a project should be completed when it is opened for use This is a major work pending for the first section and is a matter of concern | Updated on: 04 - Oct - 2017 | State Government | Multi State - India | PID: 169642 Punjab and Haryana have agreed to construct a ring road around the city The decision was taken at a joint meeting held under the chairmanship of Punjab Governor and UT Administrator VP Singh Badnore today. The chief secretaries of both states attended the meeting The UT Administration has proposed to construct a ring road around the city to decongest city roads. It will help prevent around 1.5 lakh vehicles from Punjab and Haryana from entering the city daily The cityâ&#x20AC;&#x2122;s Master Plan has already proposed this road to divert interstate traffic around the city for better traffic management At present, around 1.5 lakh vehicles enter the city from both states. The proposed ring road is likely to be linked to the expressway project by the GMADA near Mullanpur and Banur. The project required the consent of both states as the UT does not have enough land Sources said a high-power committee of officers of the Town Planning and Engineering Departments will be formed, which would plan the ring road. A discussion was also held on the deputation policy for teachers. While the Haryana Government agreed on the policy, Punjab raised certain observations. Officers from both states will again hold another meeting to finalise the policy | Updated on: 29 - Sep - 2017 |

Get access to 70 Lakh+ New Government & Private Tenders Annualy only on www.TenderTiger.com ProcureTiger helps buyers in automating his purchase & sales using tools like eRFQ, eTendering, Reverse Auction, Forward Auction, eAuction, Indent Management, Contract Management etc. Looking for Tenders Services? For more details please contact to +91-9825079334 or mail us on sales@TenderTiger.com OR register at www.TenderTiger.com

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

EVENT DIARY November 08-11 2017

November 24-27 2017

Eco Park, Kolkata

www.internationalminingexhibition.com

India has a liberalized FDI upto 100% in mining under automatic route. Mining sector is one of the core sectors of economy. It provides basic raw materials to many important industries.

November 14-17 2017

India Expo-Centre, Delhi, India www.wrm2017.org

The Conference provides an outlet for sharing cutting-edge research, practices, and experiences, from across the world and is intended to be a premier knowledge event for discussing important issues facing the road, transport and mobility sectors.

November 16-18 2017

April 19-21 2018

Punjab Agricultural University Ludhinana

Bombay Exhibition Center, Mumbai, India

INT-EXT EXPO an Interior & Exterior Expo is a meeting point where companies will present the latest trends in the world of Interiors, elaborating technology, innovations, equipment and concepts for the Architects’ & Designers’ community. Expo has been designed to help make lasting business connections. A comprehensive promotion campaign ensures to deliver potential visitors at your booth.

WorldBuild India an initiative by ITE - ABEC, the proud owners of the world’s largest portfolio of build and design shows, is positioned to witness the ever growing story towards the future of Indian construction. It offers an exhibition for the industry by the industry taking into consideration the current affairs, issues, trends and topics during the duration of the exhibition.

www.intexexpo.in

December 12-16 2017 BIEC, Bangaluru, India www.excon.in

Investments in Infrastructure is key to India’s sustained Growth and this has been the guiding principle behind all policy initiatives / interventions by the Government of India. The Planning Commission foresees India’s Infrastructure spending to be in the range of US $ 1 Trillion for the 12th plan ( 2012-17).

December 18-20 2017

www.mmmm-expo.com

June 07-09 2018

Chennai Trade Center, Chennai www.internationalliftexpo.com

India is the 2nd fastest growing major economy in the world and inspite of the global economic scenario, the Building Construction & Infrastructure industry in India continues to boom.

August 29 - 31 2018

Auto Cluster Exhibition Center, Pune

White House Event Place L.B Nagar, Hyderabad

Pragati Maidan, New Delhi, India.

The warehousing and logistics community of Western and Southern India comes together at the India Warehousing and Logistics Show to experience, compare and purchase all of the products and services needed to run a successful supply chain operation.

The International Lift expo 2017 provides an ideal platform to all the stakeholders of lift and escalator industry. The International Lift Expo - 2017 intends to bring all national as well international players to the expo and to showcase all types of escalators, elevators, components and accessories.

MMMM 2018 (Minerals, Metals, Metallurgy and Materials) is the 12th Edition in the series and is scheduled on 29 - 31 August, 2018 at Pragati Maidan, New Delhi, India.

www.indiawlshow.com

www.internationalliftexpo.com

November 22-24 2017

January 18 - 21 2018

www.maritimeexpo.in

www.constroindia.org

Mumbai

The confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes.

76 CONSTRUCTION MIR ROR

|| OCTOBER 2017

www.mmmm-expo.com

August 29-31 2018

BIEC, Bangaluru, India

Pragati Maidan New Delhi

It is estimated in the coming future, India will spend more than a, billion dollars upgrading Building constructions, housing and infrastructure developments, according to a new report.

HAND TOOLS & FASTENER EXPO series carries forward the theme of ‘TOOLS FOR INDUSTRY’ from its previous successful edition, and it focus on the need for quality, special and high-end Hand Tools, Power Tools, Fasteners, and Specilty Tools

www.iihtexpo.com

||www.constructionmirror.com||

7th IME 2017 ....................................................................................................................................................................... 45 Aggcon Equipments International Pvt. Ltd. ............................................................................................................... 25 Ammann Apollo ................................................................................................................................................................. 07,11 Case New Holland Construction Equipment (I) Pvt. Ltd. ..................................................................................... 15 ConCat India ....................................................................................................................................................................... 55 Chandra Enterprises ......................................................................................................................................................... 37 Escorts Construction Equipment ................................................................................................................................. 27 Excon India 2017 ................................................................................................................................................................ 19 Gandhi Automations Pvt. Ltd. ....................................................................................................................................... 05 Indo Farm Equipment Limited ...................................................................................................................................... 17 JSW Steel Ltd...................................................................................................................................................................................... IFC Jindal Aluminium Limited ............................................................................................................................................... 09 KYB-Conmat Pvt.Ltd ......................................................................................................................................................... 13 LED & SOLAR A Sustainable Development ............................................................................................................... 67 Mahindra Construction Equipment ............................................................................................................................... 03 Macmillan Insulations India ............................................................................................................................................ 39 Manufacturers Meet Expo Africa ................................................................................................................................. 73 Schwing Stetter ............................................................................................................................................................... BC VE Commercial Vehicles Ltd. .......................................................................................................................................... IBC

||www.constructionmirror.com||

OCTOBER 2017 ||

CONSTRUCTION MIR ROR

78 CONSTRUCTION MIR ROR

|| OCTOBER 2017

||www.constructionmirror.com||

RNI No. DELENG/2013/53728 . Postal Regd. No. DL(E)-20/5449/2014-2016. Posted at Krishna Nagar P.O. Delhi - 110051 on 14th/ 15th of every month . English . Monthly