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— Shiv Kumar Lamba, President, Era Buildsys Ltd

Era Buildsys Ltd, a part of the New Delhi based Era Group, is one of the largest players in the pre-engineered buildings sector. Shiv Kumar Lamba speaks to Sandeep Menezes on the growth drivers for the Indian PEB market.

There is huge demand for PEB buildings driven by the manufacturing and commercial sectors. How much growth do you anticipate in these segments?
I think the residential segment will start utilising PEB slightly slowly compared to industrial and commercial segments. But, if one looks at the industrial and commercial segments, then even these segments had earlier grown slowly. We need to consider this aspect while looking at the residential segment.

Specifically, in the industrial segment, they require long-lasting buildings. There is always a generation to generation change in mindset and now everyone has come to realise that PEB constructions are longlasting buildings.

We Indians basically are not risk takers and have a very conservative attitude. In India, the residential side demand will take longer because the mindset that people have is that houses are made of brick and mortar. It is not that change will not happen; things will change, but it will be slow.

There are already some developers who are constructing multistorey buildings in PEB and more such buildings will come up.

Steel prices have risen by around 25 per cent in the past 12 months. How does steel price volatility impact the Indian PEB market?
If one looks at the total demand for steel, it is mainly driven by industrial and automotive segments; therefore, on one side we have the consumption and on the other is the steel manufacturers lobby that governs the steel prices.

If one looks at steel prices, it goes up, stays there for some time and then comes down again. We find prices rising every year around December and then as June or July arrives, the prices start falling again.

There is no vendor who is not impacted by steel price fluctuations, it can't be substituted; one has to move forward and then take the price as it comes.

PEB developers are pushing for long-term rate contracts and price variance clause with vendors to avoid volatility in steel prices.
One has to understand that the steel industry does not accept long-term contracts. This is an industry which does not sell steel even for two months ahead. They will clearly tell you that you can't bid for later steel purchases right now.

It is the steel manufacturers who actually govern the rules and this happens not just in India; it is a global practice. The steel manufacturer will tell you whether you can quote or not quote for that particular period.

 Long-term rate contract is only possible if the steel purchaser is a very huge player. This is because the margins are higher in larger purchases with huge players, so the steel manufacturer does not mind having long-term rate contracts. On the other hand, if the margins are slim, no steel manufacturer wants to enter into longterm contracts.

Pre-engineered steel buildings are quicker to build and almost 45-50 per cent cheaper than conventional buildings. Are they an ideal solution for lowcost housing on a large scale?
Yes, PEB can be an ideal solution for low-cost housing. It is not only an ideal solution for lowcost housing but is also ideal for disaster management. PEB buildings are quicker to construct and long lasting.

The usage of PEB for low-cost housing options in India is growing but it is yet to become a huge segment.

With the commissioning of your Nagpur greenfield manufacturing facility, do you expect higher growth prospects? Tell us about your capex plans?
We are part of Era Group that is keenly working towards developing India. For example, in Nagpur, we are also into heavy fabrication for the power sector; that means we handle the structural part of the power plant.

We are also deeply involved with many large PSUs where we are involved in building their factories or components of their products.

We will be playing a significant role in metal buildings of any kind like light fabrication or PEB. This is the main vision we are working towards.

What will be the main drivers for your future business growth?
We are influential players in all segments such as residential, commercial and industrial. Market- size is large - the only question is how quickly and how much can one bite and chew.

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