THE RISE in disposable income in India has spelled boom times for the construction chemicals market, as building contractors are realizing the importance of using these products to improve construction quality. This means opportunities for international chemical producers and the tank truck carriers and tank container operators that transport the products.
From being almost non-existent until recently, India's construction industry has been growing at 15% to 20% year-year, mainly on the strength of increased manufacturing activities, industrial growth, and heightened investments — especially by the government — in infrastructure and real estate.
A new analysis from Frost & Sullivan (http://www.chemicals.frost.com/), Indian Construction Chemicals Market, finds that the market earned revenues of Rs 12,700 million (about $271 million) in 2008 and estimates revenue will reach Rs 31,050 million (about $662.7 million) by 2015. Frost & Sullivan's analysts examine the following markets: polymer based, inorganic based, and epoxies.
Expanding construction businesses in the largely untapped rural areas also are expected to provide a huge thrust to the construction chemicals market. Moreover, the Indian government's decision to give 100% foreign direct investments in the real estate business has helped stimulate construction activities throughout the country.
Recovery signs
Although the recent economic downturn had bogged down the real estate business, this sector already is showing signs of recovery. This revival, along with foreign investors' popular perception of India as a high-growth market, has given a shot in the arm for construction chemicals companies.
Despite the inflow of funds, the market is restrained by low end-user awareness. Consumers are only gradually beginning to understand the importance of using construction chemicals for construction, infrastructural work, repair, and maintenance. The Indian consumer is realizing that while the cost of construction chemicals is only 2% of the overall construction cost, benefits are manifold.
“Effective marketing and product innovation are keys to success in the Indian market,” says Frost & Sullivan Consultant Rakhee Raja Iyer. “It is imperative to maintain long-term relations with customers and exert influence over channel partners to stay afloat in this market.”
Market participants are also frequently challenged by the absence of quality standards for the manufacture and application of construction chemicals. This inadequacy is likely to lead to price wars, which will constrict profit margins to such an extent that new companies might be reluctant to enter the market. This, in turn, could result in customer dissatisfaction, as they might only receive substandard products and services. However, participants are looking to pre-empt this situation by focusing on their offerings.
“Indian manufacturers of goods and services are emphasizing compliance with the industry best practices to successfully compete against their international counterparts,” notes Iyer. “This has improved the infrastructure and the working conditions in the plants, which has enhanced the quality of output and attracted more end users.”
This special Bulk Transporter report on construction is a joint project involving Concrete Products, and Cement Americas, both sister publications of Bulk Transporter.