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Concrete: Potential to grow

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No wonder, India’s concrete industry is a vital part of our economy, directly and indirectly. India has a lot of potential for development in the infrastructure and construction sector and the concrete sector is expected to largely benefit from it.

The beauty of cement is that it is always converted into value added products, and standalone use of cement is very rare. The first major value addition of cement is concrete, which is a heterogeneous mixture of different components where cement plays role of a gum. Sand and stone chips are a few other important ingredients of concrete. Sand sources across globe are depleting fast and therefore engineering community had to find an alternative and it is manufactured sand.

Ready-mix concrete is just an extension of concrete. Globally, the ready-mix concrete market is anticipated to register a CAGR of 8 per cent during the period 2017-2023. The manufacturing of ready-mix concrete and delivering it through a transit mixer allows the integration of precise concrete in construction, thus making it strong, sturdy and long lasting.

Considering the global scenario, the Asia Pacific region is estimated to acquire the major share in the global market and is predicted to retain its dominance in the long run. It is due to the rising number of latest infrastructural projects especially in economies like Singapore, India, Thailand, and China. With the rapid urbanisation and industrialisation in these areas, the market is anticipated to flourish. Moreover, the ever-increasing population, favourable government policies, high availability of skilled workforce and cheap resources, and low labour and operational costs are contributing to the market growth.

The advent of new infrastructure construction projects is also estimated to generate an inflated demand for the ready-mix concrete market. In this region, China has accounted for the lion’s share, owing to the refurbishment and expansion of old structures like railway terminals, and airports, along with the implementation of novel infrastructural projects. India is also considered as a driving cause for the market owing to the development of smart cities.

The worldwide cement production is 4.1 billion metric tonnes (2018). Assuming 75 per cent of cement is used in concrete, we can imagine the quantum of concrete produced considering typically 300 kg of cement is consumed per cubic meter.

Concrete products are often the most sustainable and have the potential for a very long service life, but because concrete is used in large quantities, its use does have a global impact.

It is interesting to know, though ready-mix concrete was patented in the year 1903, it really took off somewhere around 1960s. It gained momentum with fast-track projects where investments done were the key issue and time to complete the projects was critical. There have been many advantages of using ready-mix concrete.

Quality of concrete produced at plant is much superior to what is produced at site. There is strict control over the testing of materials, process parameters and continuous monitoring of key practices during the manufacture. Speed in the construction practices followed in ready-mix concrete plant is followed continuously by having mechanised operations. The output obtained from a site mix concrete plant using an 8/12 mixer is 4 to 5 metric cubes per hour, which is 30-60 metric cubes per hour in a ready mix concrete plant. The other advantage, cement is saved and the dust caused is reduced as ready mix concrete makes use of bulk cement instead of bags of cement. There is saving of cement on account of use of cementious materials like fly ash and slag. The other major benefit is the engineer at site is able to concentrate on engineering jobs than paying attention to material procurement and material management. There is less dependency on human labour, which leads to less of errors.

The major disadvantage of ready mixed concrete is the traffic congestions during the movement of transit of concrete can result in setting of concrete. This will hence require addition of admixtures to delay the setting period. In our country, we have additional tax on ready-mix concrete which when produced manually at site is not levied. One of the major cost components in ready-mix concrete is the transport cost, which is close to 30-35 per cent of the realisation, which is quite significant. Today ready mix business faces many challenges. The major one is shortage of sand and aggregates. The other is fulfilment of environment regulations. The citizens becoming more aware of their rights sometimes lead to conflict of interest. All of sudden the concrete producer gets a closure notice.

Precast
Precast is corollary to ready-mix concrete (For more details on precast, read Devendra Kumar Pandey’s interview in this issue). It is difficult to imagine precast factory without using a batching plant to produce concrete. The list of products coming under precast is pretty long starting from normal covers, lamp poles, railway sleepers, ready to use fence, doors and window frames, decorative facades, stair case, water tanks, toilets etc. The number of metro railway projects undergoing are using many precast shapes in the job. Precast products are factory made shapes and then transported to the locations whereas cast in situ concrete shapes are cast at locations in one monolith piece.

Precast shapes are cast in small shapes and then bolted together. It is a technology used for producing large number of pieces repeatedly. Therefore it is often used for mass housing projects. Typically in mass housing, a factory is set up close to a site, and different sections of house are produced and then assembled at location. In case if cast shapes have to be transported to a distance then precast may not turn out to be a cost-effective option. This enhances the speed of construction. Same is the case of railway sleepers. The Department of Railways have set up sleeper factories at various locations where rail tracks are being laid. Sometime special equipment are required for erection of precast shapes at site and which may be little expensive. Joining different precast shapes is another vulnerable area in precast construction. In case if cast shapes have to be transported to a distance then precast may not turn out to be a cost effective option.

In short, concrete provides us immense opportunities and imagination to make effective use of the man-made material.

VIKAS DAMLE

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Concrete

Construction Costs Rise 11% in 2024, Driven by Labour Expenses

Cement Prices Decline 15%, But Labour Costs Surge by 25%

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The cost of construction in India increased by 11% over the past year, primarily driven by a 25% rise in labour expenses, according to Colliers India. While prices of key materials like cement dropped by 15% and steel saw a marginal 1% decrease, the surge in labour costs stretched construction budgets across sectors.

“Labour, which constitutes over a quarter of construction costs, has seen significant inflation due to the demand for skilled workers and associated training and compliance costs,” said Badal Yagnik, CEO of Colliers India.

The residential segment experienced the sharpest cost escalation due to a growing focus on quality construction and demand for gated communities. Meanwhile, commercial and industrial real estate remained resilient, with 37 million square feet of office space and 22 million square feet of warehousing space completed in the first nine months of 2024.

“Despite rising costs, investments in automation and training are helping developers address manpower challenges and streamline project timelines,” said Vimal Nadar, senior director at Colliers India.

With labour costs continuing to influence overall construction expenses, developers are exploring strategies to optimize operations and mitigate rising costs.

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Concrete

Swiss Steel to Cut 800 Jobs

Job cuts due to weak demand

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Swiss Steel has announced plans to cut 800 jobs as part of a restructuring effort, triggered by weak demand in the global steel market. The company, a major player in the European steel industry, cited an ongoing slowdown in demand as the primary reason behind the workforce reduction. These job cuts are expected to impact various departments across its operations, including production and administrative functions.

The steel industry has been facing significant challenges due to reduced demand from key sectors such as construction and automotive manufacturing. Additionally, the broader economic slowdown in Europe, coupled with rising energy costs, has further strained the profitability of steel producers like Swiss Steel. In response to these conditions, the company has decided to streamline its operations to ensure long-term sustainability.

Swiss Steel’s decision to cut jobs is part of a broader trend in the steel industry, where companies are adjusting to volatile market conditions. The move is aimed at reducing operational costs and improving efficiency, but it highlights the continuing pressures faced by the manufacturing sector amid uncertain global economic conditions.

The layoffs are expected to occur across Swiss Steel’s production facilities and corporate offices, as the company focuses on consolidating its workforce. Despite these cuts, Swiss Steel plans to continue its efforts to innovate and adapt to market demands, with an emphasis on high-value, specialty steel products.

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Concrete

UltraTech Cement to raise Rs 3,000 crore via NCDs to boost financial flexibility

UltraTech reported a 36% year-on-year (YoY) decline in net profit, dropping to Rs 825 crore

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UltraTech Cement, the Aditya Birla Group’s flagship company, has announced plans to raise up to Rs 3,000 crore through the private placement of non-convertible debentures (NCDs) in one or more tranches. The move aims to strengthen the company’s financial position amid increasing competition in the cement sector.

UltraTech’s finance committee has approved the issuance of rupee-denominated, unsecured, redeemable, and listed NCDs. The company has experienced strong stock performance, with its share price rising 22% over the past year, boosting its market capitalization to approximately Rs 3.1 lakh crore.

For Q2 FY2025, UltraTech reported a 36% year-on-year (YoY) decline in net profit, dropping to Rs 825 crore, below analyst expectations. Revenue for the quarter also fell 2% YoY to Rs 15,635 crore, and EBITDA margins contracted by 300 basis points. Despite this, the company saw a 3% increase in domestic sales volume, supported by lower energy costs.

In a strategic move, UltraTech invested Rs 3,954 crore for a 32.7% equity stake in India Cements, further solidifying its position in South India. UltraTech holds an 11% market share in the region, while competitor Adani holds 6%. UltraTech also secured $500 million through a sustainability-linked loan, underscoring its focus on sustainable growth driven by infrastructure and housing demand.

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