PEB market positive sentiment seen with new government
The pre-engineered building (PEB) technology, which entered the Indian construction arena during the late nineties has gained widespread acceptance among the end users over a period of time and is steadily making in-roads in the construction and infrastructure projects across the country.
PEB-based construction technique offers most innovative, hi-tech, and quicker methods of construction ensuring efficient, cost effectiveness and speedy completion of projects, which is perhaps the pre-requisite for the construction sector to meet tight construction schedules and demanding deadlines. Here is the detailed analysis on PEB sector; industry experts share their views on last fiscal, demand trends, challenges and outlook for current fiscal.
Current scenarioOver the years there has been a visible evolution in the PEB industry. The acceptance of PEB systems has been high in the industrial segment. Explaining the recent scenario in PEB market in India, Vikas Gaikwad, DGM – Light Building Solutions, Tata BlueScope Building Products said, “The perception towards metal buildings has been changing in the country. People are becoming more aware about the applications and the benefits of light gauge steel buildings, this has been one of the major reasons the industry is seeing a growth.”
Also with the acute space constraint, people are looking for solutions that allow effective space utilisation and expansion of their current projects without changing their existing structure.
Like many other industries, PEB industry has also faced a prolong slump during the past couple of years. Now, with the new government formed with absolute majority, a lot of positive outcomes are expected. However, P V Rao, Managing Director, PEBS Pennar feels, “It will take at least 5-6 months for improving the market sentiment and to instill confidence in investors in manufacturing segment. Going by the indications, the govt. is initiating steps to expedite the clearances or approvals for infrastructure projects, which is a good sign for PEB industry. Currently the supply is more than the demand and hence many PEB companies are not able to perform well due to underutilisation of their capacities. I am confident that the situation will improve in near future.”
Demand trendsThe Indian PEB market is experiencing a demand shift to new applications due to infrastructure development in the country. Today, the industry has evolved from its initial box type of buildings which are usually warehouses and simple supporting sheds or shelters or fuel stations prevailing a decade ago to other applications such as factories with heavy cranes, workshops, showrooms, supermarkets, aircraft hangars, schools, shopping malls, metro stations, etc. In the developed markets, PEB is already being used for low-rise structures (G+5) such as offices, hospitals, retail malls, housing and resorts.Commenting on the growth trends, D Raju, Managing Director, Kirby Building Systems said, “Currently, the industry is growing at an average of 10-15 per cent per annum with the market demand pegged at approximately 500,000 MT per annum in India.”
Mr Gaikwad opines, “In the retail sector PEBs has been embraced very well in the western world and it could be the same case in India in the near future. Apart from the boom in the urban sector a huge untapped market lies in the semi-urban and rural areas. For example there has been an increase in the use of light PEB structures in the residential sector for farmhouses.”
The size of the industry PEB industry in India is around ` 4,500 crore including the major and small players. However, Mr Rao observes, overall, it was not positive scenario for PEBs in the past five years. He said, “There was global recession in 2008 and its effect is visible in India in subsequent years also. Manufacturing segment which is the main potential for PEB is not doing well in the past five years. Construction of power plants, which is another potential for PEB, also had a serious setback in the past five years in view of issues related to coal linkage and gas linkage. No significant growth was seen in development of logistic parks.”
Scope for PEBIndian construction industry has evolved from its initial preference towards conventional and RCC structures to the PEB in low rise industrial buildings in the last decade mainly. Metal building concept has gained popularity in India for industrial sector and is also making inroads in commercial as well as residential segments. It is economical, provides good insulation effect and is suitable for construction in almost all terrains including remote and hilly areas. There are various advantages related to the PEB which can easily address India’s huge infrastructural requirements in areas of industrial, housing, commercial, etc.
Off late the scope of PEBs and metal buildings industry has widened to other applications and venturing into many unexplored territories like power plants, bridge girders, shipyards, offices, etc. These are some of the areas which are likely to be the future growth drivers. Companies are offering range of solutions and making technical improvements in their products to meet the evolving requirements of the market.
“Drawing overwhelming response from construction and infrastructure builders, due to heightened construction activities currently going on across the country, the global players in the PEB industry have not just set up their shops but also launched multi-prong brand building initiatives by holding technical seminars, exhibitions and events displaying their products to popularise the benefits of PEB brands,” says Mr Rao. “In the process, they have been able to create awareness informing people that under the PEB systems buildings are built keeping the eco-friendly environs, aesthetic value, designing, durability, energy efficiency, cost effectiveness and speedy completion of the construction projects in mind.” “The market for smaller PEBs and light gauge structural products has been increasing because of its varied applications,” informs Mr Gaikwad. Tata BlueScope Building Products manufactures a range of innovative structural products that can be used for multiple applications like terrace top buildings, warehouses, farm houses, site residences, sample flats etc.
ChallengesLike any other industry, PEB industry too faces some challenges which can slow down its growth. One of the speed breakers in the growth of the industry are policies. The government could take initiatives to facilitate easy acceptance of PEBs. With the initiatives, PEB can emerge as one of the preferred building solutions for different segments in near future.
With the economic slowdown affecting business, the past two years the market in India has been very volatile. Many projects in major sectors have been on hold. But the situation is improving and the industry is optimistic about the future. “Keeping pace with the need of the market, we are gearing up for the next group of projects. Government projects like ‘Anganwadis’, ‘Mid Day Mills’ are opening up in many states creating a demand for our light gauge solutions,” Mr Gaikwad informs.According to Mr Rao, “Once the growth initiatives of new government take shape, there would be huge demand for PEBs from manufacturing, warehousing and infrastructure segments. There was a policy paralysis in the past 3-4 years and things will start moving now. We can see a major boost in investors’ sentiment in near future. We are quite optimistic about growth in PEB industry from 2015 onwards.”
Future outlookThough prefab structures have already made waves around the globe it is still at a nascent stage in India.
With the new government swearing in, expectations are high on the growth of the industry. Many companies are coming up with innovative products and solutions which can lead to more demand for PEB.
Commenting on the future outlook for the PEB industry Mr Raju says, “Although the industry growth has remained subdued for more than a year due to economic slowdown, we expect a positive growth momentum in coming months because of formation of a stable government at the centre which is expected to initiate major economic reforms.”
“Last year (2013-14), our revenue was Rs 417 crore which is about 30 per cent increase compared to previous year. We are optimistic that we will touch ` 550 crore in the current fiscal,” Mr Rao predicts.
“We are growing our business in a sustainable manner in this current financial year and are looking forward to seeing a healthy growth. We are spreading our sales network across the country by appointing EZYBUILD Solutions providers to improve the reach and effectiveness of our operations and products,” Mr Gaikwad concludes.
Currently the supply is more than the demand and hence many PEB companies are not able to perform well due to underutilisation of their capacities.
‘Anganwadis’, ‘Mid Day Mills’ are opening up in many states creating a demand for our light gauge solutions