Ewart Lazarus,
Executive Director,
Chowgule Construction and Technologies Ltd
What is the current market size and expected growth of construction chemicals in India?
Construction chemicals in India as of last year would be 3,200 crore. The construction chemicals sector has seen a very good growth trend which has increased to 18-22 per cent CAGR. This is expected to continue but the recent slowdown has had an impact which is to be felt. Larger players will still show considerable growth. It will be interesting to see what happens after September or October of the current year, but growth will continue, be it 18- 22 per cent or more. Manufacturers and contractors who provide good quality services and application will be affected much less than the others. Waterproofing is expected to grow up to 22-24 per cent of the entire market.
What are the latest trends in India’s construction chemicals sector?
The construction chemicals sector is moving towards ensuring actual construction happens much faster today. Projects are completed earlier than in the older days, maybe 10 years ago. Today, much of the emphasis is on the quality and speed of construction. But what also holds this back is the time taken for completion due to other reasons like permissions, stoppages, labour, and other indirect matters. However, the market being big and with many multinational companies coming in, the trend is moving towards growth.
Most of the construction chemical market is in the B2B segment, some in B2C segment, which in future is expected to increase its share in the overall market. So you have many new-age materials, products with more features that ensure longer durability of structures, environment protection, and anti-corrosion (protection against water). The bottom line for preserving the structure is to protect against water which causes rusting of steel and carbonation of your concrete.
What are some of the key demand drivers?
The biggest demand driver is government sector projects. The largest projects in the country today are being implemented and run by the government. Still, there is low usage of construction chemicals in this sector in India, including in the private sector, compared to that abroad-in Germany it is €6 billion, in US it is $5- 6 billion, in India right now it is only €500 million, even China much ahead of India.
The key driver in the international construction chemical market is standardisation, which is not relevant in India. Once it is standardised here also, the usage of construction chemicals will increased and the quality and durability of the structures will also improve. Today, many contractors do not use construction chemicals much to cut cost; only 2 per cent is utilised. Construction chemicals is important in all construction projects in all sectors including buildings, roads, bridges, tunnels, metros, power, irrigation, airports, ports, shipping etc.
What about the grey market?
There is a grey market in every industry. The efficacy of construction chemicals does not only depend on the quality but also how it is used. There are small players who also deliver good products. It is difficult to comment on it.
Standardisation in any construction will help the industry to grow. Specifications are laid by applicants, but it is not standard. We have to meet the requirement for construction and there is no authority to check. There is no clear policy either.
Can you discuss foreign technology in this market?
In India, we are very good at adapting ourselves to new foreign technology. Chowgule works with Germans for flooring, anti-corrosive, waterproofing, structural repairing etc. They bring innovative new products and systems for the Indian market. In fact, many of our systems are almost standalone. We prefer to use technology from abroad.
Finally, what would your SWOT analysis be?
Strengths: The construction chemicals industry in India is at a nascent stage with a huge potential to grow:
- Organised players are bringing in huge investments to set up training facilities for marketing personnel, applicators etc. which translates into quality products and projects.
- Large businesses in the industry are collaborating with foreign players to bring in advanced technologies, enhancing quality and reputation of the industry.
- The construction chemicals industry is a natural partner to the burgeoning real estate sector.
- Usage of quality chemicals improves the life of structures, decreasing abrasions and boosting strength and stability of projects
Weaknesses: The construction chemicals industry in India is marred by multiple issues that need to be addressed on a priority basis for its growth:
- There is a complete lack of awareness about the need to have standard water proofing, floor coating and other such solutions.
- As a result, consumers tend to focus on the transaction costs rather than life cycle costs
- Construction chemicals are a manpower intensive industry with an ongoing requirement for marketing professionals with technical know-how and skilled applicators.
- Lack of robust back end infrastructure to provide customer service/support is a constant problem for both, the manufacturers of construction chemicals and end users.
Opportunities: A number of opportunities wait to be explored by the construction chemicals industry to achieve its full potential and optimum growth levels:
- Very large and critical sectors of the economy including infrastructure and real estate are dependent on the construction chemicals business for longevity, hence complete success.
- With the governments focus on development of quality infrastructure across the country, construction chemicals will gain enormous importance in times ahead.
- Large number of upcoming housing and commercial projects, which gives the industry massive potential for growth Low cost of manufacturing construction chemicals in India means that there is an opportunity for exports
Threats: The biggest threat to this industry comes in the form of a lack of government regulations/ strict laws to govern the use of standardised products and procedures which not only hampers the quality and lifecycle of the project but also the reputation of the industry.
What are your future plans?
We are planning to grow to Rs.100 crore in the next three years. We are currently expanding our production facility in Goa from 8,000-9,000 tpa to 22,000-24,000 tpa by 2013. We are also proposing to set up a production facility in Gujarat. We are looking at the power sector, paper industry, repair and rehabilitation of ports and jetties, tunnelling, and oil and gas for anticorrosion.
Our challenging projects are Bombay Stock Exchange, Grand Hyatt, repairs to a jetty in Gujarat, subway, and waterproofing under a railway track. Our current business order is around Rs.20 crore.
