Economy & Market

“Industry is saving considerably on storage & transportation cost”

Published

6 years ago

June 30, 2018

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Ashish K Nainan, Research Analyst – Industry Research, CARE Ratings

GST has come into existence nearly a year back. How do you review GST and changes made in GST on Cement and downstream products over the last one year?
The sector has benefited from the way GST has infused efficiency in terms of logistics and warehousing which has helped the industry save both time and costs.

The changes are yet to take place for the larger cement industry in terms of the tax-slab and incidence of GST on cement (at 28 per cent vs expectation of 18 per cent). But the industry has been buoyed by the demand from infrastructure and affordable housing. The renewed demand has seemed to ward of some of the challenges of GST. Interestingly, the Government has been instrumental in creating the renewed demand because of their focus on infrastructure and real-estate development.

What has been the impact of GST on cement and its other downstream products on the industry and users at present? Do you think GST process has stabilised by now?
Cement (Portland, slag, aluminous, etc.) falls under the highest tax bracket, i.e, 28 per cent. Other cement products used in industry like refractory cement, cement-based particle boards, etc. are taxed at 18 per cent. Cement is a majorly demand driven product coming from real estate and infrastructure segments and these two segments constitute for over 90 per cent of the total demand. Bringing all cement and its by-products under the same tax slab (at 18 per cent) would be favourable for the industry and would augur well for growth, thereby also helping in creating employment.

Real estate and infrastructure are significant in supporting growth of the economy, and are major employment generators in our economy. The present NDA government too has been focused on providing stimulus to infrastructure and real estate. Tax slab rejig would be considered a positive and enabling step from the government.

What are the benefits that have accrued to the industry – particularly intangibles like doing away with paperwork, transparency, speeding up logistics, etc.
One of the major benefits has been ease in movement or transportation of cement across States. There have been considerable cost savings w.r.t. the number of warehouses these companies have to maintain. Now, a cement manufacturer could maintain one large warehouse in one of the States, which would serve as a hub, and continue to supply the surrounding region from this hub which would include markets in the neighbouring States. Given the significance of transportation and storage costs which at times is as high as 25 per cent in the overall cost for cement manufacturers, the industry has been able to save considerably on storage and transportation cost due to GST. Paperwork too has eased and there are expectations of it easing further once the E-way bill processes get stabilised over the next six to nine months for the industry.
How GST has impacted the building materials industry, most of which has been in the unorganised sector as far as tax compliance was concerned?
It would be difficult to comment on building materials industry as a whole. Cement, steel are highly organised given the nature of the industry. On the other hand, ceramics, granite, marbles, etc. continue to have a sizable proportion of unorganised players. Paints is another industry which has a sizable number of unorganised players (approximately 35 per cent).

Tax compliance is not a choice anymore. They will have to be compliant if they want to cater to institutions like EPC companies, real-estate developers and government agency since these companies need to avail input tax credit. Interestingly, GST has brought awareness among retail consumers too. It is hence a matter of time, before majority of these industries become organised and become tax compliant.

What percentage of building material suppliers ecosystem has come under tax net after GST and its impact on prices generally?
Difficult to comment. Cement and steel like I mentioned is completely organised. Paints and glass used in construction too are majorly organised. Ceramics was about 45-50 per cent organised. This segment would witness a larger number of companies becoming formal, due to the segment they cater to. Their consumers will have to procure from GST-compliant companies in order to avail input tax credit.

Marble and granite industry too would follow trends in ceramic industry. Products with granite and marble industry are taxed at two separate tax slabs (18 per cent and 28 per cent). Bringing them under same tax slab would increase compliance and would also improve the ease-of-filing for these companies.

To what extent construction industry – building and infrastructure – is able to avail the input credit benefits and set-off their tax commitments? Is there any general estimate on the percentage of benefit claimed by them?
The modalities and incidence of inverted duty structure in some of the infrastructure segments especially in EPC contracts is still being discussed and resolved. Thus, specific data on input credits is awaited.

Broadly, the incidence of GST on infrastructure sector has been higher at 18 per cent than the previous tax regime (approximately 12-16 per cent). But input tax credit offers the much needed respite bringing down the overall tax incidence. Issues related to inverted tax structure in EPC contracts and ease in refunds need to be streamlined. These are some of the major hurdles or issues. Yet to come across any insight on input tax credits and overall tax incidence.

What is the general impact of GST on cement and building materials on their product prices and their end-products – building and infrastructure costs?
Prices of cement are driven by regional capacity utilisation and demand-supply scenario. The demand-supply has improved but are far lower from their historic highs in terms of capacity utilisation which has kept the prices subdued. GST has not had a major impact on the prices of cement. Th e prices have remained range bound post GST even though there were expectations of increase in prices.

Concrete

The RAHSTA to Innovation

Published

4 weeks ago

November 23, 2024

Roshna

As part of the 10th India Construction Festival, the RAHSTA Awards recognised outstanding contributions to the road construction industry.

On October 10, 2024, the RAHSTA Awards were held at the Jio Convention Centre in Mumbai, forming a significant part of the 10th India Construction Festival. This esteemed event serves as a pivotal platform for recognising and honouring outstanding contributions in the road construction industry, particularly those that prioritise sustainability, innovation and excellence.
RAHSTA, an acronym for ‘Roads and Highways Sustainable Technologies & Advancement’, has become synonymous with the promotion of advancements in road construction equipment and technologies. Organised by the FIRST Construction Council, the awards seek to highlight the importance of sustainable practices in infrastructure development and celebrate those organisations that lead the way in this critical area.
At the event, Pratap Padode, Founder, FIRST Construction Council, underscored the importance of skilling the workforce in the construction sector. He pointed out that construction is India’s second-largest employer, with the potential to reach 100 million jobs by 2030. However, he emphasised that a significant portion of this workforce remains unskilled, with 80 per cent of the 70 million workers lacking adequate training.
“To bridge this skill gap, we must incorporate practical orientation in engineering and management courses,” Padode urged. He highlighted the Indian Government’s initiative to onboard 1 crore interns through CSR funding over five years, encouraging construction companies to participate actively
in this programme. By doing so, he said, the industry could not only enhance skill development but also position itself for future growth and sustainability.

The RAHSTA Awards recognised seven outstanding contributions to the road construction sector, celebrating innovations that drive sustainability and efficiency:

Award for Highest Standards of Excellence in Road Engineering & Construction: Patel Infrastructure
Award for Excellence in Bridge Engineering: L&T Construction, DIAL Phase 3A Project
Best Road Financier Award: HDFC Bank
Award for Best Use of Waste Material Recycling in Road Construction: Tata Steel
Best Digital Technology Award in Road Building: Cube Highways and Transport Assets Advisors
Award for Excellence in Project Management: Haryana Rural Road Infrastructure Development Agency
Innovation Award in Project Execution:
CC Precast Solutions
Indeed, the RAHSTA Awards 2024 were more than just a ceremony; they represented a vital call to action for the road construction sector in India. By highlighting the importance of sustainability and technological advancement, the awards inspired industry stakeholders to strive for excellence
and innovation.
As the event concluded, it left attendees with a renewed sense of purpose and a collective vision for a more sustainable and efficient future in infrastructure development. The RAHSTA Awards stand as a testament to the possibilities that lie ahead when industry leaders come together to embrace change and foster growth.

Concrete

Equipment India Awards 2024!

Published

4 weeks ago

November 23, 2024

Roshna

The titans of the construction equipment industry were honoured at the 12th BKT Equipment India Awards 2024.

On October 10, 2024, Mumbai played host to the much-anticipated 12th BKT Equipment India Awards 2024, an event that recognised and celebrated the outstanding achievements within the construction equipment sector. The grand ceremony took place at Jio Convention Centre and was among the highlights of the India Construction Festival, which gathered industry leaders, manufacturers and financiers from across the nation to honour innovation and excellence in this vital sector.
The inaugural addresses set a reflective tone for the evening, emphasising the importance of collaboration and information sharing within the industry. In his opening speech, Pratap Padode, Founder, First Construction Council, remarked, “At Equipment India, we have always tried to enhance the standard of the industry. During this 17th year of our existence, we still find that companies are trying to hide behind a veil as far as the disclosure of factual data is concerned.” His emphasis on transparency resonated with the audience, highlighting the critical need for the construction equipment sector to adopt best practices for data sharing, akin to those seen in the automobile industry.
For his part, Vipin Sondhi, Chairman, RAHSTA Committee, and former MD and CEO, JCB India and Ashok Leyland, also shared optimistic insights, stating, “Today, we celebrate not just the figures but the remarkable individuals behind them – the innovators, manufacturers and teams that push the boundaries of what’s possible.” He highlighted the impressive growth of equipment sales, which saw a 26 per cent increase during FY2023-24, reflecting strong market recovery and renewed confidence.
The 12th BKT Equipment India Awards not only celebrated the achievements of key players in the construction equipment sector but also served as a reminder of the collective effort required to drive the industry forward. The event reaffirmed its commitment to supporting the industry’s ongoing evolution, ensuring that India remains a significant player in the global construction equipment market. With the industry poised to grow at a CAGR of 12 per cent, reaching $25 billion by the end of the decade, the evening left attendees inspired and motivated to continue pushing boundaries in their respective fields.
A significant highlight of the evening was the presentation of the Equipment India Person of the Year 2024 award to Jaideep Shekhar, Managing Director, Terex India. Under his astute leadership, the company has achieved remarkable growth, marked by innovation and a commitment to excellence. The jury praised his strategic vision, which has not only propelled the company’s success but also contributed positively to the broader industry landscape.
Receiving the award, Shekhar expressed heartfelt gratitude, stating, “I’m deeply grateful to the jury and Equipment India for this remarkable honour. This award reflects not only my contributions but also the dedication and hard work of my team. I have been associated with the industry for more than 25 years and this award motivates me to keep pushing boundaries and to lead the growth
with integrity.”
The award presentation was made all the more special by the presence of previous winners of the Equipment India Persons of the Year, including Vipin Sondhi, former MD and CEO, JCB India (Equipment India Person of the Year 2013); Sandeep Singh, Managing Director, Tata Hitachi Construction Machinery (Equipment India Person of the Year 2015); and Dimitrov Krishnan, Managing Director, Volvo Construction Equipment India (Equipment India Person of the Year 2013).
The event also witnessed the recognition of numerous companies across various categories, showcasing the best of the best in the construction equipment sector. Indeed, as the industry gears up for future challenges, the awards stood as a testament to resilience, creativity and the unwavering spirit of collaboration. Together, the participants are set to build a brighter tomorrow for the construction equipment industry in India, fostering innovation and sustainable practices that will serve the nation for years to come.

Winners of the 12th BKT Equipment India Awards

Equipment India Person of the Year 2024:Jaideep Shekhar, Managing Director, Terex IndiaGreen Factory of the Year: Tata Hitachi Construction Machinery
Best After-Sales Service Provider: Tata Hitachi Construction Machinery
Concrete Pumps: Schwing Stetter India
Truck Cranes: Sany Heavy Industry India
Asphalt Plants: Ammann India
Asphalt Finishers: Ammann India
Batching Plants: Schwing Stetter India
Crawler Cranes: Sany Heavy Industry India
Piling Rigs: Sany Heavy Industry India
Rigid Dump Trucks: Caterpillar India
Motor Graders: Caterpillar India
Mini Excavators: Tata Hitachi Construction Machinery
Crawler Excavators: Tata Hitachi Construction Machinery
Mobile Cranes: Action Construction Equipment
Crawler Dozers: BEML
Skid-Steer Loaders: Doosan Bobcat India
Wheel Loaders: LiuGong India
Self-Loading Concrete Mixers: AJAX Engineering
Tower Cranes: Action Construction Equipment
Compaction Equipment: Case Construction
Mobile Cranes: Action Construction Equipment

“I congratulate ASAPP Info Global on the outstanding success of the conference and award shows! It was a privilege to be part of such an insightful session with industry leaders.”
– Sanjay Koul, President- India and South East Asia and Managing Director, Timken India

Concrete

22nd CONSTRUCTION WORLD Global Awards Excellence Revisited!

Published

4 weeks ago

November 23, 2024

Roshna

At the 22nd CONSTRUCTION WORLD Global Awards, over 50 awards in 21categories were presented to industry stalwarts.

The 22nd CONSTRUCTION WORLD Global Awards, was held on October 9 and 10, 2024, at the Jio World Convention Centre, Mumbai, and hosted by infrastructure think-tank FIRST Construction Council in partnership with CONSTRUCTION WORLD (CW) and Equipment India (EI) magazines. Incidentally, the spectacular RAHSTA Expo was India’s first indoor trade fair for construction equipment technology.

Benchmarked to global standards
At the inaugural session, Sanjay Bhatia, Upa-Lokayukta, Government of Maharashtra, along with Vipin Sondhi, Chairman, RAHSTA Expo Committee, and Pratap Padode, Founder, FIRST Construction Council, inaugurated the RAHSTA Expo. Expressing delight at the huge display of construction technology, Bhatia said, “The expo has put the construction industry on an international standard. India is experiencing nation-building at a robust pace and I am truly impressed with the work now being done by our youth with their startups, many of whom are showcasing their innovation here.”

Special bytes
At the 22nd CONSTRUCTION WORLD Global Awards, over 50 awards in 21 categories were presented to over 50 companies.
“I am thrilled to accept this award on behalf of Century Ply,” said Anup Mangaserri, Chief Executive Officer – Laminates, Century Plyboards India.
“It’s an honour to be recognised and I extend my heartfelt thanks.”
“Tata Consulting Engineers has made significant strides in nation-building projects in India and
high-impact engineering efforts abroad,” said BR Parthasarathy, Senior Vice President and Head – Infrastructure Cluster, Tata Consulting Engineers (TCE), sharing his pride in receiving the ENR Award. “This recognition underscores our global capabilities and we are honoured to be part of this journey.”
For his part, Sarat Chandak, CEO, H&R Johnson, said, “We are truly delighted to receive this award as the most admired brand in the construction world. This recognition reflects the dedication and hard work of the brand over its six-year journey in India. Thank you for acknowledging our efforts.”
And Sandeep Desai, Executive Director, and Ananta Rayaprolu, Director, Afcons Infrastructure, noted, “This is a proud moment for the entire Afcons team to have this particular trophy and prestigious award. Afcons has always been at the forefront of extreme engineering, and we are really happy for this acknowledgment, which motivates us to continue pushing the boundaries of innovation.”
Joining the chorus of gratitude, Manish Kumar, Executive Vice President, ITD Cementation, stated, “It is an incredible honour to receive this award and to be here for this event, which is very well organised. Being recognised among the best of our peers in the industry is truly a privilege. I accept this on behalf of my team and company and we are deeply grateful for this recognition.”
Many winners addressed the efforts that led to their recognition. “We are extremely proud and thankful that our founder has received the CW Person of the Year (Private Sector) award,” said Hardik Agrawal, Director, Dineshchandra Agrawal (DRAIPL). “This recognition reflects the relentless efforts of the entire Dinesh Chandra Group. We are deeply motivated by this honour and we thank the CONSTRUCTION WORLD Global Awards for this acknowledgment.” And Lalit Chhabra, Managing Director, PINI India, added, “It is a tremendous honour to receive this award. We are delighted that our global efforts have been recognised. This is a testament to what we have done in the past and our hard work. We look forward to improving our ranking in the years to come.”
Sharing his excitement, Ryoya Watanabe,
Senior Manager – BD & Marketing Division, Nippon Koei India, said, “We are headquartered in Tokyo and I am excited and honoured to accept this prestigious award. Thank you very much for this recognition.”
Meanwhile, Saji Samuel, Executive Vice President (Long Products), JSW Steel, brought the conversation around to India’s bright future. “I feel elated with this award because this is going to propel India into a five trillion-dollar economy as quickly as possible,” he remarked. “I wish CONSTRUCTION WORLD all the very best and hope many new companies will participate in this event going forward. I feel very proud to hold this trophy in my hand on behalf of my company.”
This collection of leaders from different sectors was a showcase of the diversity and excellence celebrated by these prestigious awards, marking significant milestones in their respective industries.
As Rajiv Poddar, Managing Director, BKT, observed, “India Construction Festival 2024 has once again proven to be an invaluable platform for the construction equipment industry. The convergence of innovative ideas and collaborative efforts showcased here reflects our collective commitment to growth and excellence. Congratulations to ASAPP Info Global for orchestrating such a successful event and to all the award winners – your achievements are a testament to the bright future of our industry.”

An event to remember Another highlight of the event was the launch of Pratap Padode’s book, Tarmac to Towers – India’s Infrastructure Story.
Indeed, in keeping with tradition, the annual CWGA Awards ceremony was a memorable celebration of architectural achievements and a platform for dialogue on critical issues affecting the construction industry.