PEB industry: standing strong with immense scope

PEB industry: standing strong with immense scope
The Indian pre-engineered steel buildings market is experiencing robust growth fuelled by infrastructure development and the increasing popularity of PEB systems in the industrial sector
The new analysis from Frost & Sullivan Analysis of the Indian pre-engineered buildings (PEB) market finds that the market earned revenues of Rs. 52,970 million in 2012 and estimates this to reach Rs. 136,120 million in 2016, growing at a compound annual growth rate (CAGR) of 26.6 per cent.The structural steel buildings market in India was around 5.0 to 5.5 million tonnes in 2011, of which around 9.5-10 percent, i.e. 537,176 tonnes accounted for the PEB market in India. It is expected that the market in terms of volumes will reach 900,000 tonnes by 2016, growing at a CAGR of 11.1 per cent.Key challenges include increasing cost and shortage of skilled manpower, presence of alternative building structure (both steel and concrete) and fluctuating raw material (steel) prices which account for 55 to 60 per cent of the overall cost. These challenges should be directly attributed to the lower penetration of PEB in India.
“The PEB market is strongly associated with investments and growth in the industrial and commercial sectors. The new potential application areas for PEB in the next few years will include power plant structures, factory buildings, commercial buildings (offices and retail malls), warehouses, and metro stations,” noted Frost & Sullivan’s senior research analyst.
The Government of India has set a massive target for developing infrastructure in the 12th five year Plan (2012-17) at an estimated cost of Rs. 40,900,000 million of which nearly 33-34 per cent have been allocated for the power sector, with an additional target of 90,000 MW. Currently, the thermal power capacity stands at 140,976 MW, with the proposed capacity addition of 50,000 MW during the 12th Plan. It will provide huge growth opportunity for PEB in this sector.
The commercial building sector in India is estimated to reach a target of 20.44 billion square feet by 2030 from 7 billion square feet in 2010. It is expected that nearly 34 per cent of 2030 target had already been constructed and about 66 per cent of the building stock is yet to be constructed.
With manufacturing activity increasing in the last few years, logistics has gained equal importance to provide better goods at lesser cost. It is also observed that India has around 7,500 cold storage facilities with a capacity of 35.0 million tonnes. The addition in capacity to the cold store and warehousing would also trigger the PEB market in India.
With the onset and speedy progress of the metro rail system in the next 10 years, the scope of PEB is immense. Increase in technical competence plays a crucial role, and many market participants have introduced high-grade steel conforming to ASTM grade 50 steel (lightweight and recyclable) without compromising on the product quality, which attracted many customers to pay high prices for quality jobs.
The heightened emphasis on green building construction is also poised to push market expansion. For instance: to increase energy-efficiency, many PEB manufacturers have developed high-efficiency windows and insulation for roofs, walls, ceilings and floors. The use of sky lights and solar panels on rooftops will meet daylight and captive power requirements; while, at the same time, reducing emissions and gaining carbon credits under clean development mechanism (CDM).
Many leading international and domestic market participants are increasingly scouting for opportunities by adopting multiple business strategies such as venturing into engineering design, project contracting, manufacturing heavy structural steel buildings, and focusing on vertical integration whereas. Merger and acquisition strategy will support them to grow inorganically and enable them to broaden their geographic reach and product portfolios.

10