The facts are thus. The current production of RMC is around 15 to 20 million cu m a year as against a total concrete market of approximately 300 million cu m a year. Which means, from 20 million to 300 million cu m, there is a lot of catching up to do. INDIAN CEMENT REVIEW meets up with cement and RMC manufacturers, RMC dealers and suppliers, and concrete equipment manufacturers to find out what hampers industry growth.
The volley of questions thrown at us by a leading RMC dealer in Mumbai, Bakul, is very pertinent. ´RMC is eco-friendly, it is beneficial for infrastructure and it is cost-effective; it brings more quality to the end product. If the government is convinced of this, then why can`t they incentivise the use of RMC? Why would someone not use it if there is a monetary benefit linked to it? Why can´t the existing tax system be restructured to promote RMC?
The mood and the veiled anger are quite understandable, and pretty much justifies the capacity-demand- supply mismatch. The statistics supports the mismatch, too; on a positive note, it reflects the huge potential the RMC industry has. According to Shyam Bagri, Partner, Dwarka Agencies, the current market size of RMC is estimated to be Rs 5,000 crore to Rs 6,000 crore approximately, whereas the current production of RMC is around 15 to 20 million cu m a year, as against a total concrete market of approximately 300 million cu m a year. Bagri adds, ´The ready -mix concrete business in India is still in its infancy, unlike in developed countries, nearly 80 per cent of cement consumption is in the form of ready- mix concrete and 20 per cent in the form of precast. In India, ready- mix concrete accounts for less than nine per cent of consumption; as much as 82 per cent of cement consumption is in the form of site-mixed concrete.´
It has been proved many times over that the use of RMC brings in numerous advantages in terms of quality of the end product; its positives include the impact on the durability of the end product, environment-friendliness, the speed of construction it guarantees, cost-efficiency, and most importantly, the value addition it can bring with regard to the application and performance- based products as per the requirements of the customer. The raw materials used for ready- mix concrete like cement, sand, coarse / fine aggregates and water are mixed at a centrally located computer controlled batching plant that monitors weigh-batching, water-cement ratio, dosage of admixture, moisture content, etc, with precision to produce the ready- mix concrete; and an RMC plant is capable of programming different types of mixes for producing different grades of concrete depending on the need of the customer. Why we are still stuck with the minimum grade of concrete?
There are many success stories. The grade of concrete depends on the end application. The more challenging the structural demand, the higher the grade of concrete used. M70 concrete was used for the JJ flyover; the Bandra-Worli Sea link was made with M60 grade concrete; all metros have M60 concrete; the World One, the world´s tallest residential tower by the Lodha Group, as per reports, is using M80 concrete. Says Prabir Ray, Executive President, Ready Mix Concrete, Key Accounts and Building Products, UltraTech, ´We are presently stuck with the minimum range of grades for concrete. It is further accentuated by the existing market- based design specifications for concrete which sets prescriptions like minimum cement content, and specifications like pure OPC concrete only, or limiting supplementary cementetious material to 15 to 20 per cent only, and so on.´ Prabir adds, ´This gives serious RMC players no scope to demonstrate their understanding of making good concrete with optimum OPC contents matching the strength requirements of the grade or having a better control in terms of QC/production manpower, emphasis on training, research and development facilities. We have to consider durability-based specifications in addition to strength-based specifications, as also application oriented concrete, to harness the full potential of the material.´
Market scenario
According to Prabir Ray, RMC demand is driven primarily by the real estate sector and supported by the infrastructure and industrial sector. Ray says, ´Around 76 per cent of the concrete demand originates from housing construction. The infrastructure sector (roads, power, airport, urban infrastructure, railways, etc) accounts for 17 per cent of the total RMC demand; it will continue to be driven by these sectors and will depend on the construction opportunities presented by these sectors. Then, around 79 per cent of the RMC demand is driven by Tier I cities in 2012-13. This can be attributed to higher awareness of the benefits of RMC usage, higher concentration of large scale projects coupled with focus on quality, timely delivery and control of wastage. Also, space constraints, along with government and municipal bodies´ initiatives to control pollution, have all encouraged the use of RMC. In 2012-13, the overall economic slowdown, sluggishness in construction activity, liquidity crunch and policy hurdles resulted in the lower demand growth of concrete.´
Says Bankat Mandhania, Director, Ashtech (India), ´Though the demand is less in India, the RMC market is growing. Yes, it is true that in foreign countries today, 90 per cent of the concrete manufactured is sold in RMC form. Here, things are a bit different. If you check Indian markets, almost 70 per cent of the cement is sold in bags. That gives you a comparison between the two. Masons and builders here need to be updated and that takes time. But once a builder uses RMC, he understands the advantage. It also requires some volume of work to be done over a period of time. But those into constructing small buildings and two-storey apartments will not go for RMC. Once we start doing sizeable projects, the construction community will experience the benefits of RMC first- hand.´
Maruti Srivastava, VP Marketing, Lafarge India had this to say. ´A major part of India still comprises smaller towns where the majority of individual home builders prefer using conventional methods of construction. Overall in India, site mix is still perceived to be a cost- effective material as opposed to ready- mix concrete, though that is not really the case anymore.´
Supply chain constraints
´Effective transportation is all the more important in the RMC sector,´ avers Pratap Hegde, Managing Director, Telematics4u, which has done a thorough research on road transportation challenges faced by the cement industry and which is also delivering the comprehensive Cement Logistics Management Solution (CLMS) across more than 55 countries. According to Pratap, there are major reasons for the supply of substandard quality concrete: usage of low-quality raw materials, deviation from Standard Operating Procedures (SOP) at RMC plants, and unregulated concrete transportation. Pratap says, ´The first two challenges have been brought under control, by completely automating RMC plant operations and also by setting up sophisticated Quality Control (QC) labs. But the third challenge pertaining to transportation still remains unaddressed and has now become the weakest link in the chain. According to an estimate, as many as 59 per cent cases of supplying substandard quality concrete and 50 per cent of RMC sales returns are due to transportation issues. It is high time to address this bottleneck and pave the way for vigorous growth of the RMC sector.´
Shubhangi Tirodkar, Director, Bakul points out, ´Once the transit mixer leaves the plant there are various uncertainties on the way. It is difficult to predict traffic conditions. In RMC, once the order is placed, it is placed. It cannot be cancelled. Sometimes our clients tell us to cancel orders because some unprecedented problems have surfaced at their end. As dealers we have to manage these challenges.´
Says Amod Tirodkar, Director, Bakul ´At times, contractors do not get the result they want and then they immediately start blaming the RMC manufacturer. They start suspecting everything right from cement quantity to mixing efficiency. But the fact of the matter is that mostly it is the fault of the pouring process; whether the honey-combing process went ahead smoothly or the contractor uses the vibrator, etc. All this will impact the quality of the end product. An RMC company cannot be held responsible for this.´
So what is the remedy? Amod says ´The overall level of expertise has to improve a lot.´ According to Mandhania, Director of Ashtech (India), a leading supplier of RMC, one has ensure that the deliveries are made on time and that the material is poured on schedule, irrespective of hassles such as traffic or roadblocks. Mandhania says, ´The system must be robust enough to absorb and respond to any issue that can pop up on the fly. We have 74 transit mixers and 24 pumps. We follow a process of sending a questionnaire to our consumer that asks for all the details including the peak requirement for the material. Based on this, we design equipment. That determines if there are going to be two steps every day for one site, so a minimum of two pumps and seven transit mixers are required, and that too, if the site is close. But if the same site is far away, I will need 12 transit mixers. So having a complete understanding of the customer`s requirement and a solid contingency plan in place is key in this business.´
Plant & machinery
Says Prabir Ray, ´Today we have international vendors for batching plants, transit mixers, and concrete pumps apart from the indigenous vendors who have products that match international players; however, there is a gap in the industry for dedicated organised players working in each area of operation to enhance the delivery standard and improve the ecosystem. Going forward, we expect exclusive organised players with assets and knowledge specificity in each areas of operation to join the sector, as it has happened in the developed countries.´
Speaking about the potential in the hiring segment for the concrete equipment, Rajesh Kawoor, Vice President (Concrete Business), Universal Construction Machinery & Equipment states, ´There is huge potential especially for concrete pumps and transit mixers in the hiring segment. In matured overseas markets, the major buyers of RMC equipment is from the hiring sector, whereas in India, it´s the other way around. But now the trend is picking up because in the last couple of years, we have seen a lot of hiring companies showing interest. Even small players are also trying to invest money in the hiring sector.´
Rajesh Kawoor also points out new developments. ´Lots of entrepreneurs are entering the RMC market. The trend is on the rise because recently, we have seen many RMC players coming into Tier 2 and Tier 3 cities whereas half a decade ago, there were only big players there. These plants basically cater to local demand. But the problem for them is the existing tax structure. The government needs to come out with some incentive schemes, especially for small entrepreneurs who are willing to put up small RMC plants.´
What is noteworthy is the innovative approach some of the major cement manufacturers have taken; they has already started diversifying their product bouquet with value-added products in the form of a variety of performance and application-based concretes that further improve the quality and durability of a structure or the end product. Some have even come up with unique product offerings that enable customers to order ready mix concrete in small quantities. This innovative approach is appreciated by many a customer and will further augment the growth of the RMC industry.
Hassles in Supplying RMC
- Supply in crowded areas and No Entry zones.
- Setting up of pumps` supply line and unloading the transit mixer in narrow lanes.
- Assessing the quantity and deciding the quantity of the last transit mixer.
- Planning in advance the day and night supply plans of pumping and dumping. Delay at one site, for any reason, will change the schedule of the entire line.
- The regular repairs and maintenance of the plant, pump and transit mixer during peak season.
- The coordination and timing of dispatch of the transit mixer from the plant and pumping at the site.
- The lead / distance of the site from the plant.