Wienerberger is the largest producer of clay hollow bricks in the world and the second largest producer of clay roof tiles in Europe. The Euro 2.5-billion company of Vienna, Austria, is setting up its first manufacturing plant in Asia, outside Europe and USA - at Kunigal in Karnataka. Ingo Hofmaier spoke at length to Prashant C. Trikannad.

Many international companies have been in India for years. What made Wienerberger enter the Indian building material market now?
First of all, it may look like a lot of international companies are already here, but a lot of companies are not here yet. Far more Indian companies will also venture out. Over the last eight years I have seen tremendous progress in construction, processes etc. But, five years ago, it was a big problem for international companies to invest in small-scale sector like the brick industry. Now with the small-scale industry restrictions gone, we will see a lot of developments. Many Indian manufacturers are diversifying into brick industry, bringing in new technologies, and offering what the market actually wants.
Why not China?
We explored China. India is definitely more business friendly, creative and entrepreneurial. This is very important when it comes to architecture. India is contributing a lot to world architecture. This creativity is, from a company's perspective, much more interesting than just selling large quantity. China will produce one product in bulk and flood the market with it. There was a lot of interest from Indian architects and trade fairs.
Again, why Karnataka?
Gujarat is a very interesting state. We are closely monitoring what is happening there and what we can do there. We selected Kunigal near Bangalore for several reasons such as possibilities in clay and proximity to the cities. Also, architects in the south have become innovation friendly. Thirty years ago, probably, the best architects came from Ahmedabad. Today, if you look at the international architecture awards, more than 50 per cent of all the projects from India are from Bangalore.
Tell us about your plant in Kunigal.
We have 263 plants in 26 countries only in Europe and North America, so our plant at Kunigal will be the first in Asia. The plant is coming up some 60 km from Bangalore, which is a good distance for this kind of an industry because we don't want to get too close to residences and heavy traffic. We bought the land from the Karnataka government which in turn bought it from the farmers who took part in the groundbreaking ceremony. Construction of the plant started in November 2007 and commercial production will start by the end of 2008. The first materials will be marketed in the beginning of 2009.
The plant is spread over 30 acres of land. Our production target is 100,000 tonnes per year in phase I. This will take three to five months to stabilise at 100 per cent. If required we can create a second line for another 100,000 tonnes.
We will not produce all clay brick materials. We are concentrating on our two main products: facades and walls. We are going into niche areas like Porotherm hollow clay blocks and Terca facing bricks for commercial and residential properties. We are exploring ways of working with Indian industries in this regard. Koramic clay roof tiles and ArGeTon façade tiles will be imported. Our major competition will come from concrete blocks.
Doubling of capacity will be part of phase-II. It will cost much less than Rs 90 crore in phase-I which included investment in land, buildings, facilities etc.
You mention a long-term interest in India. Where do you position yourself in the building material market?
In the clay industry we will be pioneers in wall systems, especially large blocks, faster construction and high-thermal insulation. Over the next five years, we will definitely look at other opportunities besides the Bangalore plant. We are looking at other regions.
In an interview in London last year, Wolfgang Reithofer, CEO of Wienerberger AG, said that India's population was "brick-minded".
That is exactly why we came here. By "brick-minded" he meant India has a very long history in brick building. India is the birthplace of clay brick architecture. The oldest clay brick architecture has been found in the Indus Valley. There are structures built out of bricks which are 2,000 years old. The ancient university of Nalanda in Bihar is a prominent brick building. Several architects worked with bricks. This is what we understand by brick-mindedness. Even modern architects know that clay bricks are a sustainable concept.
India's $12 billion real estate industry is expanding by 30 per cent a year. What are the prospects for Wienerberger in the building and construction industry?
The growth potential is enormous. When you see the population and the housing shortage, there is vast potential in this industry. If the market is growing between 5 to 10 per cent, you will have to build 10 to 15 brick plants all over India every year to be able to supply the market with this material.
We hear you have plans to establish as many as 10 brick-making plants in India.
Oh, is it so? (laughs) It doesn't make sense to talk about something which I cannot be sure of. But the demand and potential is definitely there. When we talk about 10 plants in India, we would be talking about 10 plants in the subcontinent. In India, you have around 100,000 brick makers probably making 10 million bricks each. Even if you build 10 plants over 10 years, you won't feel the impact. The construction market is growing at around 10 per cent. So you are adding a demand of 10 per cent which cannot be covered by the existing units.
What has been your experience so far in interacting with government at various levels?
There is a different approach between different states. Gujarat has a business-oriented class, a forward-looking environment. The response from Tamil Nadu and Karnataka governments was also good. The only issue is that, and this is not related to our company, investors are finding it very difficult to find land to set up industries. In the beginning we lost a few months because there was no land available.
How can clay bricks keep pace with other material like glass in modern design and architecture?
Clay bricks blend very nicely with other building materials like aluminium and glass. From a green building point of view, glass is not the ideal building material for this country. India is a very hot country, so you should not have glass facades. It is only a matter of time when the long-term investor realises that glass is a big disadvantage, especially when somebody else is buying the building.
Will you export made-in-India products to other countries, say, in South Asia?
Yes, to South Asia. For instance, we are already doing a market study to produce ArGeTon in India. We would locate (the plant) in a region from where we can export it to the Middle East. Sri Lanka is also a natural place to export to. It would be interesting to set up a plant close to port area and then export to Malaysia, Thailand and Singapore.