February 17-23, 2014 1

Volume 3 l Issue No 7 l February17-23, 2014 l Price: Rs 100An MMR, Braj Binani Group Publication

Credit metrics of real estate firms stay slump on weak demand

Gloomy forecast for infra 2014-15

A negative to stable outlook on the real estate sector for FY15 is maintained on the back of continued weak end-user demand and adverse consumer sentiments, according to the findings by India Ratings & Research (Ind-Ra).

Real estate companies have been facing falling unit sales, flat revenue and Ebitda margins and continued deterioration in credit metrics and cash flows.

Most Ind-Ra rated real estate companies have a stable outlook, as the risks impacting the sector have been factored in to their ratings. The entities rated at investment grade are either single commercial properties with long-term lease agreements or residential companies with healthy sales and strong cash flows.

Ind-Ra believes credit metrics will continue to deteriorate in FY15, as high residential prices continue to impact sales, even while rising bank credit to the sector indicates an increase in inventory for the sector.

The sale of fresh residential units (sq ft) by listed real estate companies has seen a downward trend in 1HFY14. This is due to weak consumer sentiments and low real estate affordability due to high prices. However, bank credit to the sector saw strong double-digit y-o-y growth in 2013, which indicates build-up of inventories.

Prices continue to remain high despite the weak end-user demand, as demand from investors and speculators could have been lifted by the Central government’s efforts to curtail gold imports.

The upward movement seen in the National Housing Bank’s house price index in 2QFY14 after a fall in the previous two quarters supports this argument, as it coincides with the imposition of import duty on gold.

I n d - R a e x p e c t s s u b d u e d commercial property demand to continue in 2014, due to the continued slow economic growth which will impact fresh hiring in most sectors. Demand for retail space is also likely to remain muted in FY15, as retail

the ailing power sector, the agency believes that “it will take some time, say post-FY15, before the full benefits of these measures actually trickle down to power-generating project assets”.

The thermal power sector is simultaneously tackling (or at least trying to tackle) a bundle of problems such as lack of adequate provisions in fuel supply agreements, volatility in coal prices, high interest costs, financial health of off- takers and depreciating rupee, it added.

However, India Ratings said that there is a silver lining in the renewable energy sector due to reduced construction risk, stable operating performance and remunerative tariffs.

The airport sector has a stable out look for the coming f iscal , according to the agency, adding that it has been revised from negative due to the progress on completion of expansion plans, regulatory clarity on tariff fixation and sustained growth in international traffic. Although minor sea ports may remain largely stable, non-major private ports have a stable to negative outlook.

The expected continuance of the current situation in the near term will continue to be a drag on the project cash flows of toll road assets, it added.

On the positive side, aspects like stable and assured revenue streams from highly rated counter-parties and standard maintenance requirements are the dominant reasons for the stable outlook on annuity road projects, it further said.

Notwithstanding the measures taken by the government to improve

companies continue to optimise their store portfolios. The real estate sector has seen strong interest from private equity and foreign investors. During 2013, strong investor interest was seen in rent-yielding commercial properties with conclusion of several large transactions by leading private equity players such as Blackstone.

Ind-Ra expects the introduction of real estate investment trusts (Reits) to be positive for the sector, as it is likely to attract new investors and hence improve funding availability. As these Reits are likely to invest most of their funds into rent-yielding commercial properties, this could provide further liquidity options to commercial property developers.

The outlook for India’s infrastructure sector for the coming fiscal, 2014-15, appears negative, according to India Ratings, a Fitch group company. This is due to weak credit profiles for most project companies. A sharp movement, especially in the short term, is not expected in the fortunes of the sector following the Lok Sabha elections in first half of 2014-15, it stated.

However, policy support from the government will help somewhat the beleaguered sector recover from some of its issues elaborated in the

report, speculates the agency. The outlook for the sub-sectors

sector has a split prospect, it said, adding that forecast for power projects, barring renewables, remains negative while certain pockets in the transportation sector have a stable outlook.

“Prolonged uncertainty surrounding economic conditions, over-ambitious traff ic estimates and enhanced construction risks (to name a few) have plagued the road sector for some time now,” said the rating agency.

Road projects to be cut out into small stretches

The Road Ministry and the National Highways Authority of India (NHAI) have decided to go ahead with the alternative plan of bidding out these road projects afresh as smaller stretches, as not many developers are keen on the premium rescheduling package recommended by the Rangarajan panel.

According to sources as many as 20-30 projects would be bid out afresh, including six-laning projects like Kishangarh-Udaipur-Ahmedabad and Shivpuri-Dewas.

A senior NHAI official said, “An exercise has already begun to assess the feasibility of cutting out these projects into small stretches. Officials are preparing various proposals to decide whether the projects can be taken up on BoT or EPC.”

For example, the government is looking at breaking Kishangarh- Udaipur-Ahmedabad (from which GMR walked out citing regulatory delays) into three small stretches and the Shivpuri-Devas project into two.

The Finance Ministry needs to vet the final recommendations of the Rangarajan panel and send it back to the Road Ministry which has to notify the norms. Once it receives the Finance Ministry’s nod, the NHAI will

start contacting all developers, asking for their consent on premium recast for stuck projects. The developers will be asked if they are agreeable to the recast model, and if he is not interested, the NHAI will initiate termination of the project.

The Road Ministry and the NHAI’s stance, analysts say, is justified as many major developers have been voicing their concerns on the proposal, which, according to them, fails to lure them into staying with the projects. The cumulative premium to be rescheduled is over Rs 1.5 lakh crore.

The official, when asked which mode would the authority prefer to bid these projects again, said, “Over 60 per cent of these projects would likely be bid out on the EPC mode given poor investor interest and slipping toll projections. The government does not want to take risks by opting for BoT alone. The NHAI is quite comfortable with funds available with it and can build these projects much earlier on the EPC mode.”

The dearth of new PPPs on the BoT mode is not unknown, and it has hit highway construction badly even as the NHAI tries to revive the engineering, procurement and construction (EPC) model.

Centre gives nod to Pune

Metro rail The Union Urban Development

Ministry has given in-principle approval to Pune Metro Rail Project which aims to improve the public transport system in the metropolis. The project will cover a length of 31.51 km along two corridors. While corridor-1 will cover 16.59 km from PCMC to Swargate, corridor-2 will cover 14.92 km from Vanaz to Ramwadi.

In-principle approval of the Centre will enable the Maharashtra government to take necessary a c t i o n r e q u i r e d f o r e a r l y implementation of the project, said a senior UD Ministry official. Maharashtra has proposed to implement the project through a Special Purpose Vehicle jointly owned by the Centre and the state government.

February 17-23, 2014 2domestic

Tata Housing has offered gold vouchers worth Rs 49,000 to buyers who book f lats in the name of women in its Rs 600 crore project in Bhubaneswar. Project Ariana is spread over 12 acres and apartments are priced in the range of Rs 33-70 lakh.

“The Holcim Awards is a universal idea: everyone with good concepts has a chance of winning. The competition is independent and open to all.”

4th International Holcim Awards for sustainable construction projects. Prize money totals USD 2 million.

Francis Kéré, Principal, Kéré Architecture, Burkina Faso/Germany. Winner of the Global Holcim Awards Gold 2012.

Renowned technical universities lead

the independent juries in five regions of

the world. They evaluate projects at an

advanced stage of design against the

“target issues” for sustainable construction

and allocate additional prizes for visionary

ideas of young professionals and students.

Find out more about the competitions at

www.holcimawards.org

The Holcim Awards is an initiative of

the Swiss based Holcim Foundation for

Sustainable Construction. It is supported

by Holcim and its Group companies and

affiliates in around 70 countries, including

ACC Limited and Ambuja Cements Ltd.

Holcim Ltd is one of the world’s leading

suppliers of cement and aggregates.

“Ariana, a premium residential project, is offering gold vouchers worth Rs 49,000. The ‘Surprise her’ offer will be for all buyers who register their apartments in the name of their wives, mothers and sisters,” stated Tata Housing.

Accord ing to sources , the

company would develop 1,100 units in this project at a cost of about Rs 600 crore. By way of association, Tata Housing aims to garner its support towards women -- a key buyer and not just an influencer, said Tata Housing Head Marketing Rajeeb Dash.

Tata Value Homes launches Spanish-theme township

Tata Value Homes Ltd, a 100 per cent subsidiary of Tata Housing Development Company, has launched a Spanish-theme residential township at Sriperumbudur to the west of Chennai. The 18-acre project, named Santorini, on the Chennai-Bengaluru Highway about 40 km from Chennai, offers over 1,000 houses of one to three bedrooms ranging from 576 sq ft to over 1,500 sq ft, according

to a press release from Tata Value Homes. Prices range from Rs. 24 lakh to over Rs. 52 lakh. Work on the project is set to start soon with the delivery planned for 2016.

Sriperumbudur is an industrial suburb of Chennai that has seen i nves tmen ts by mu l t i na t i ona l au tomob i l e and componen ts manufacturers, IT and telecom h a r d w a r e m a k i n g u n i t s a n d

a wide range of manufacturing companies.

S a n t o r i n i i s d e s i g n e d b y international architects F+A to offer a distinct design of low-rise architecture, podium gardens and a lavish clubhouse. The project is IGBC pre-certified green building offer ing green landscapes and abundant open spaces.

Godrej Properties to develop project in Pune

DLF sells Aman Resorts to Indonesian hotelier

Godrej Properties Ltd will invest up to Rs 565 crore in its subsidiaries that are executing realty projects. In a filing to the BSE, it has sought shareholders’ approval of six special resolutions through postal ballots.

The investments in the subsidiaries/SPVs could be in the form of purchase of securities or debt or guarantee in connection with loan provided by some other persons or entities. The realty arm of the Godrej Group plans to develop a project at Mundhwa, Pune, through a special purpose vehicle.

It has proposed to invest up to Rs 100 crore in this SPV from internal accruals and borrowed funds. It also plans to invest up to Rs 100 crore in another project at village Khanawale, Panvel and village Talegaon, Khalapur to be developed through a special purpose vehicle.

In another proposal, the company

DLF Ltd has completed the sale of Aman Resorts to Aman Resorts Group Ltd (ARGL), a joint venture between Omar S Amanat’s Peak Resorts and Adrian Zecha, for $360 million.

ARGL will be majority owned by Peak Resorts. Amanat is a founder of Tradescape and is described as a pioneer in the electronic brokerage industry, besides having stakes in entertainment and other businesses. Adrian Zecha is an Indonesian hotelier who is best known as the co-founder of Regent International Hotels and founder of Aman Resorts.

sought the nod of shareholders to invest up to Rs 45 crore in an upcoming project at Kanchipuram District, Tamil Nadu.

That apart, it has sought approval for pumping in up to Rs 70 crore in a project to be developed near Bengaluru International Airport. Godrej Properties has also sought nod for an additional investment of up to Rs 200 crore in an ongoing project at Kolkata.

In May 2010, shareholders had approved Rs 250 crore investments in the subsidiary Happy Highrises constructing this project. The company has proposed to make an additional investment of up to Rs 50 crore in an ongoing project at Bengaluru. Shareholders had in June 2013 approved an investment of Rs 200 crore in Godrej Buildwell, which is developing this project.

The two sides have already agreed on broad financial terms and are expected to close the transaction this week. The $360 million enterprise value of the deal, equivalent to about Rs 2,250 crore, includes debt of about $70 million on the books of Silverlink Resorts Ltd, the holding company for Aman Resorts. This means the deal should generate a cash surplus of about $290 million for DLF. Zecha had agreed to buy DLF Global Hospitality Ltd’s entire holding in Silver Link Resorts Ltd for $300 million. DLF Global Hospitality is a wholly-owned subsidiary of DLF.

Gold vouchers for buying homes in women’s name

February 17-23, 2014 3

Mumbai is getting ready for yet another business district in an area that would be bigger than Bandra-Kurla Complex, which is home to a host of marquee names in business. Known as the GVK Skycity, the area surrounding the swanky new T2 terminal in Sahar and built by the GVK group’s Mumbai Airport International Ltd (Mial), will have 20 million sq ft commercial space that will be bid out.

The first phase, which will see the construction of hotels, 3 million sq ft of retail area, office blocks and conventions on 200 acres of airport-owned land, has begun and the GVK group plans to finalize the lease of 8-10 acre land parcels by March.

Accord ing to a GVK group presentation, the projected investment in GVK Sky City will be over Rs 12,000 crore. Plans have been prepared to boost infrastructure and amenities, including sidewalks, arterial roads, a metro line and a recreation area,

amongst others. The presentation talks about changing the real estate landscape of the area by creating a ‘vibrant 24x7 businesses and leisure hub and global convention and hospitality destination.” The Mial did not respond to an email query on the subject.

The f i rst phase of the realty development began recently with the Mial inviting bids for four plots measuring 8-10 acres in Sahar near the international terminal. This means a development potential of 1.8 million sq ft. These plots will be used for constructing hotels and offices.

The Mial, which has received bids for the first set of plots, is expected

ICICI-led Infradebt fund inks `50-cr loan pact

ICICI Bank-led India Infradebt Fund signed Rs 50 crore tripartite loan pact for a road project promoted by Jaypee Group. The agreement has been created in the road sector that paves the way for many more such road projects to have access funding through tripartite agreement.

The agreement was signed between the IDF, the NHAI (National Highways Authority of India) and the project company which in this case is the Himalayan Expressway Ltd (Hel). Hel, a subsidiary of Jaypee, is undertaking the construction of Zirakpur-Parwanoo Highway connecting Punjab, Haryana & Himachal Pradesh on build operate and transfer basis (BoT).

The total length of the highway would be 28.690 km.

Four financial institutions, led by ICICI Bank, had in February last year launched Infrastructure Debt Fund (IDF) -- India Infradebt Ltd. This fund can finance projects of up to $2 billion (about Rs 10,000 crore). The other sponsors of the India Infradebt Ltd are Bank of Baroda (BoB), Citi and LIC.

The ICICI group has 31 per cent, BOB 30 per cent, Citi 29 per cent and LIC 10 per cent where almost 100 road projects in the country are ready and would require about Rs 50,000 crore of bank funding. This agreement can pave the way for all such projects to access this kind of funding.

iNFRAstRUctURe

Mumbai gets ready for one more BD

to finalize the developer/manager partner by March. About 25 firms, including top global hotel chains and realty developers, have bid for the plot.

Construction for the first phase will begin by the end of this year, following which the Mial is likely to invite bids for the second round of development. According to sources familiar with the developments, the real estate development can fetch the Mial around Rs 18,000 crore. It hopes to earn about Rs 1,000 crore in deposits from developers for letting out a few of the land parcels by March 2014 and utilize the funds to finance airport construction.

NHAI inks `50-crore pact for road project

The National Highways Authority of India (NHAI) signed a tripartite agreement for a road project worth Rs 50 crore with an infrastructure debt fund and the Himalayan Expressway. The infrastructure debt fund is backed by ICICI Bank, Bank of Baroda, Citibank and LIC.

The agreement was signed in the Finance Ministry. Apart from the Finance Ministry and the NHAI officials, the signing was attended by the ICICI Bank Managing Director Chanda Kochhar, Bank of Baroda Managing Director S S Munjal and Citibank India CEO Pramit Jhaveri. The 56-km expressway is operated by Larsen & Toubro on a build-operate-transfer annuity basis.

Bids to float soon for road projects

in TN

The National Highways Authority of India (NHAI) will soon float bids for three important road projects in Tamil Nadu which will significantly cut travel time to the pilgrim island of Rameshwaram by road. The NHAI is executing several highway projects in Tamil Nadu aimed at improving connectivity to Rameshwaram, which is visited by thousands of pilgrims every day.

As part of this init iat ive, the NHAI has so far completed work in the 90 km stretch in the two-lane highway between Tiruchi and Ramanathapuram via Karaikudi. This highway with paved shoulders on NH -210 has been executed at a cost of Rs 374 crore. Soon, the NHAI will start the bidding round for three more road projects that will improve Rameswaram’s connectivity with the rest of Tamil Nadu.

The 84 km two lane Karaikudi-Ramanathapuram road (Rs 284 crore outlay ), an extension of Tiruchi Ramanathapuram stretch, Madurai-Ramanathapuram via Paramakudi (four lane, 115 km, outlay Rs 800 crore on NH 49) and Ramanathapuram-Rameswaram (two lane, 60 km Rs 145 crore) are the three road projects.

February 17-23, 2014 4coNstRUctioN

Quick to build, made to last A pre-engineered

building can cut weeks or even months off

of your construction schedule, saving time

and money

A pre-engineered building, usually, is a metal building that consists of light gauge metal standing seam roof panels on steel purlins, spanning between rigid frames with light gauge metal wall cladding. It is a relatively flexible structure when compared with a conventional steel-framed building. In other words, it has a much greater vertical and horizontal deflection.

The pre-engineered building system is one of the fastest growing building systems in the world. The advantages it offers benefit everybody involved in the project. Applications of pre-engineered buildings are several. Also, they are ideal for any non-residential low-rise building.

AdvantagesWhen compared with conventional

steel buildings, they offer a number of advantages, especially in low-rise buildings. Steel buildings are made to last. Unlike wood, steel will not crack, twist, warp, rot, settle, or harbour insects. A metal building can stand up

to natural calamities, providing ultimate protection from the elements.

Steel buildings are known for their protection against high winds, heavy rainfall, storms and other hazardous weather conditions. Also, maintenance is very minimal with a steel building, compared to other materials.

The idea of a pre-engineered bui ld ing is to provide custom engineering to each situation, while having the basic and common components already designed and engineered. This provides a custom engineered project, keeping costs to a minimal.

Pre-engineered buildings (PEBs) are the state-of-the-art steel solution to developing an efficient and cost-effective infrastructure.

“For the past five years India’s infrastructure industry has enjoyed a blast of growth with many new roads, highways, bridges, power stations and airports. The Indian economy is now on a stupendous growth track on the back of an infrastructure boom,” says H S Bharana, Chairman & Managing Director, Era Group.

Optimum use of materialsA steel building provides optimal

use of materials. Since these buildings

are pre-engineered and designed to fit together, labour costs are greatly decreased. With pre-punched connections, marked components, and detailed assembly drawings, erection is streamlined. All these characteristics help the customer save money.

There are several different options for insulating a steel building, most of which are extremely efficient for heating and cooling. Also, metal roofs, especially light coloured ones, reflect heat in warm weather, which means lower cooling costs. Another advantage of our insulation systems is their ability to reduce noise, from falling rain to loud noises.

Steel buildings can go up remarkably quick. Being pre-engineered, once they are delivered to the job site, you will see great construction progress in a short time frame. There is much to be said about safety when it comes to a steel building. Obviously its strength provides ultimate protection from weather. They are also heat and fire resistant, since steel doesn’t burn.

In fact this fire safety often leads to insurance savings versus other construction materials. The structures do not absorb water, so there is less chance of hazardous mould. Steel also doesn’t require any treatment from chemicals, like wood structures do.

No wasteSteel buildings are made of material-

efficient, all recyclable products. The impact of steel on our environment is far less than using a non-renewable resource such as wood. Also, since the buildings are pre-engineered, there is no waste.

Projects are designed to minimize the amount of steel used to meet exact specifications. Even upon the completion of the project, the amount of unusable or non-recyclable material is very minimal, as opposed to other materials.

Since steel buildings have long life expectancies, they keep the impact to our environment minimal. Unlike other construction materials, a steel building can often been re-located and used for another application. Many of such buildings incorporate ‘Green’ attributes that can earn credits for Leed certification.

Drawbacks However, the system is not without

its disadvantages. The cost of making steel is very high. While the cost of most steel frame components has become progressively comparable, the charges of building are another matter. It takes many of time to assemble a steel frame building as it takes longer to use attachments than it does to use nails.

Insulation is a large-scale difficulty with steel buildings. They require added insulation as steel on its own is not a very good insulator. Insulating your house to an agreeable benchmark will furthermore add to your construction costs.

Cost-effective, time-savingA pre-engineered building can

cut weeks or even months off of your construction schedule, saving time and money. It considerably shortens the time from design to a finished building product compared to traditional building techniques.

A pre-engineered building can be designed to meet your client’s personal needs and requirements. It can be designed so that it may be later expanded to fit your needs as your business grows.

It can easily and affordably provide you with a clear, column-free interior space.

Metal buildings are more likely to survive in harsh weather conditions

than other types of construction. They are designed to withstand the long-term effects of the elements and pests.

The buildings are produced with materials that are recyclable.

“We understand that quality, time and costs are essential components of a project the world over and we strive to minimize the cost and time without any compromise on the quality front. Our rapid construction technologies enable our clients to derive benefits,” says Navin Hegde, Chairman & Managing Director, Octamec Group.

Safe investmentA metal building will require less

maintenance than similar structures made from some other types of materials. The cost savings of choosing a pre-engineered building over conventional construction can be as much as half.

Using metal buildings along with conventional materials to achieve a certain look can save substantial amount of up-front costs. All these features make a metal building easy on your budget.

PEBs are producing only high-grade metal and premium components. Therefore your investment will be built to last for years to come.

With faster construction, unmatched durability, carefree maintenance and affordable customization, these buildings meet your needs and exceed your expectations.

Shrikant Nivasarkar, President, the Pune Construction Engineering Research Foundation (PCERF), during the recent Constro 2014 (the bi-annual exhibition of construction materials and technology), said, “The concept of pre-engineering and mass manufacturing of construction components is not new in the international context, where it began several decades ago in Western countries, due to shortage of human labour.

“The application and increasing growth of pre-engineered construction in India, however, needs to be looked at in a different perspective. Owing to our large population, human labour has always been our strength, and our construction industry has generated employment and livelihood for millions of families.

“This industry in India is second only to the agriculture sector, and employs more than 35 million people. Despite this large manpower, however, our productivity has been relatively low and our construction quality has been relatively poor. This needs to be improved.

“The adoption of pre-engineered construction technology in India, therefore, needs to be ski l ful ly integrated with the overall socio-economic development of our human workforce. This can be achieved by initiating new education programmes and training facilities in the emerging new construction technologies for our existing labourers.

“We need to adopt a unique model of pre-engineering and mechanization of the construction industry which will improve the skills and capabilities of our labourers, and consequently, enhance their productivity, improve their economic status and their quality of life.”

Dilip Phansalkar

scaffolding & form work - ad -10 02 14 .indd 2 2/10/2014 9:37:00 PM

Shrikant Nivasarkar, President, PCERF

February 17-23, 2014 5coNstRUctioN

The concept of pre-engineered buildings (PEBs) in India emerged in the early 2000s, and in the past decade it has been transformed into a $600 million market.

The growth rates in terms of revenues have been averaging around 15 per cent for the past few years and the industry is expected to grow at a compounded annual growth rate of 11-12 per cent until 2016 in terms of volumes.

The rise of this building technology is attributed to the need for quick turnaround time and scalability of buildings in the Indian construction

PEBs: Another building option or strong alternative

The rise of this building technology is attributed

to the need for quick turnaround time and

scalability of buildings in the Indian construction

sector

sector. PEB construction is 30-40 per cent quicker as compared to brick and mortar construction and this method is the ‘go-to’ choice for buyers who require setting up their facility in the shortest possible time.

Some of the key funct ional advantages of using PEB technology over conventional construction are:

Rising application of PEBs The major facilities that utilize

pre-engineered building technology are warehouses, industrial sheds and buildings. The latest requirement of PEB is in the area of earthquake-resistant building structures across remote and hilly regions in India.

Another sector which is new to

cells into their trademark roof panels, use of special grade non-combustible and water Repellant Grade Rockwool Slab with roof panels.

Contractors presently use design software like STAAD, ASFAD, MBS, Precision Plus and contractors have begun endorsing end-to-end design software like Tekla structures which covers complete analysis and design to the production/despatch/erection planning.

Grey areas in PEB industry The awareness and application of

PEB in the industrial and commercial sector has grown profusely, but the residential sector being a B2C market requires higher levels of aesthetics and customization in buildings which is less feasible presently. Developed markets have adopted PEB for low-rise structures (G+5) such as hospitals, resorts, malls, etc, but India still relies on brick and mortar for construction in this space.

A common issue in the design, fabrication and erection of PEB structures is the non-harmonization of building codes used by PEB vendors. For example, load calculations for a pre-engineered structure in India utilize IS 875 codes, but designing of structure is done using AISC or AISI or MBMA and welding is performed as per AWS.

PEB players do not ent i rely adhere to the latest revisions of Indian Standard codes but follow a mix of Indian and American codes, thereby increasing the pricing of their services.

Also, the Government of India

could be more supportive to the PEB manufacturers by taking measures like terminating or reducing the excise duty in the wake of the recent hike from 10.3 per cent to 12.36 per cent for components in PEB manufacturing.

The ongoing efforts for research and development in the PEB space in India is commendable, with the introduction of new technologies like Light Gauge framing systems, green buildings, eco-friendly construction materials, but buyer sentiment is still dubious on certain technical issues related to PEB.

Pre-Engineered BuildingsMarket Size Comparison 2012

Factor Conventional Construction Pre-engineered Buildings

Structure stiffness Separate members for building structure is required

Tapered building sections, cold formed sections, high strength sheeting – leads to overall weight, cost and time savings.

Wastage & fabrication quality

Performed on-site under non controlled environment

Fabrication in factory controlled environment – wastage is avoided and adherence to safety standards.

Construction limitations

Occurrence of deviation from actual client plan

Built to suit client requirements irrespective of facility type – manufacturing plants, warehouses, hangars, schools, etc.

Fire Resistance

Compared to conventional materials like bricks and concrete, steel structures are still vulnerable to fire and present PEB technology does not permit structure safety at extreme temperatures during a fire.

Buckling and micro-cracks

Small steel membranes lead to higher stress levels which may result in phenomenon like buckling and micro cracks and this becomes a serious concern in seismic zones.

Corrosion and welding

Wi thout regular main tenance, structural steel when exposed to harsh environments tend to corrode and selection of highly galvanized or coated steel increases overall fabrication costs.

Ductility Welding generally weakens seismic performance of buildings and new welding methods to improve the inelastic properties of structures needs to be developed.

PEB contractorsSome of the leaders in this

market are Interarch Buildings, Tata BlueScope Building Solutions, Jindal Buildsys, Tiger Steel Engineering India, Everest, Lloyd Insulations India, etc and a few of the global majors prominent in India are Zamil Steel, Kirby Building solutions, etc.

the application of PEB is rural and urban mass housing projects, slum reorganization and rehabilitation projects. The Delhi airport and the metro projects in Delhi, Bengaluru and Mumbai are prime examples of PEB applications in the infrastructure sector in India.

Certain companies like Interarch and Kirby Building Solutions have been specializing in airport roofing and ceilings and these structures are fabricated in the factory and bolted to perfection at the site.

Kirby Building solutions was awarded for constructing the world’s biggest PEB manufacturing facility for Renault Nissan India at Chennai and this facility spans across 300,000 m2 of space, with the utilization of 20,000 mt of steel.

P E B c o n t r a c t o r s l i k e Ta t a BlueScope, Lloyd Insulations are upping the game by providing Leed compliant solutions like integrating PV

Another challenge faced by the PEB industry is ensuring continuity of workmanship during the erection phase of projects.

With shortage of labour personnel in the areas of welding, metalworker, etc in India, the situation is very delicate as end-to-end services can be provided only by the industry leaders like Interarch, Zamil Steel, Kirby, Tata BlueScope, etc, and engaging individual builders for erection work is risky on the grounds of schedule adherence issues. Moreover, labour costs also increase at times of labour shortage and result in increased total project costs.

(contd. on pg 10)

7

6

5

4

3

2

1

0

$Bill

ion

Global

6.04

India

0.57 0.51

China

Out of the total structural steel market of around 6 million tons, around 10-11

per cent is contributed by PEBs

February 17-23, 2014 6iN PeRsoN

‘Kirby India’s ability to handle any size project remains unmatched’

As a leader in design and manufacture of PE steel buildings, what have been your accomplishments?

In 1999, Kirby recognized the need of customers in the Indian market and has widely pioneered the Pre-Engineered Steel Buildings (PEB) concept. Since then, Kirby has executed projects for over 4,500 customers supplying more than 15,000 buildings in the country.

Kirby India has over 25 sales offices across the country equipped with experienced resources. Kirby India prides its strong execution team ably supported by a network of over 100 certified builders. The company has built more than 20 million sq m of PEBs, and its ability to handle any size of project remains unmatched.

How wide is your range of PE steel solutions?

Kirby Building Systems India Ltd (Kirby India) offers a wide range of products such as PEB, structural steel, storage solutions, sandwich panels, component sales – roof & wall sheeting, Green buildings, erection and technical advisory services, etc.

What elements led to the expansion of the company in India?

Kirby commissioned India’s first PEB manufacturing facility with a capacity of 60,000 mt per annum in Hyderabad in 1999. As a result of its success in the market and increase in demand, the capacity was upgraded to reach 100,000 mt.

Additionally, a greenfield plant with a capacity of 75,000 mt per annum followed in 2005 at Haridwar, which was further expanded to 100,000 mt in 2011.

This facility was set up to cater to the northern, eastern and part of western India as these regions witnessed an unexpected increase in demand for these types of structures. Today, at 200,000 mt capacity per annum in India, Kirby is the undisputed leader in the steel building industry.

What has been the company’s contribution to sectors such as infrastructure and real estate ?

The Indian construction industry has evolved from its initial preference towards conventional and RCC structures to the PEB in low-rise industr ia l bui ldings in the last decade.

There are many advantages with pre-engineered structures. They offer more flexibility for plant layouts for future expansions, savings in construction time leading to faster realization of the project, large clear spans, superior quality and conformance to international standards, low maintenance, earthquake- and cyclone-resistant, environmental-f r iendly and susta inable , and architectural versatility with buildings being supplied with special fascias, canopies, curved eaves and many other features.

If we compare with the developed markets, PEB has already made inroads not only in the industrial segment but is also very popular for low-rise structures (G+5) such as offices, hospitals, retail malls, housing, resorts, etc.

As far as the commercial building segment is considered, PEB has still not yet ventured into that area with its presence being very miniscule, but Kirby has supplied some buildings to this sector.

The commercial building sector

Development & Growth (INSDAG). The company has also been

awarded with the Brit ish Safety Council membership after meeting their stringent qualifying criteria. The company internal processes and operations are well integrated through SAP, thereby ensuring the best customer service.

KSS-600 (Kirby Standing Seam

Panel) roofing system which is having double lock standing seam ends and is 100 per cent leak-proof is company’s one of the most popular products. Kirby India is the first PEB company in the country to achieve FM Global approval for its KSS-600 roofing system.

What kind of network have you built to cater erection procedures to international standards?

Kirby has a panel of over 100 certified builders across India. As the erection process is highly technical and needs ski l led and trained manpower to effectively execute the works and handle heavy construction equipment, the builders are selected after a very rigorous evaluation process.

Once selected for empanelment, they go through a training process to understand ‘Kirby’ systems and details, expected work methodology and safety norms to be followed, etc.

Kirby offers supervision and safety audits at site. The Kirby site managers who are experts in installation monitor the entire activity to ensure that the work is executed as per the committed time lines according to the established procedures and the required quality level is maintained for the entire installation activity.

Kirby’s huge network of certified bui lders caters to the erect ion procedures as per the international standards and is capable to handle any type of complexity under adverse site conditions.

Why steel is the most preferred material for prefab structures?

Steel is the most preferred material for all prefab structures and PEBs use steel which is more than 90 per cent recyclable. These buildings are cost-effective, energy-efficient and provide better quality environment as

in India is estimated to reach a target of 20.44 billion sq ft by 2030 from 7 billion sq ft 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.

Kirby is planning to venture into this segment in near future as it is expected to provide very high volume of business in coming years owing to the shortage of homes which is expected to grow at rapid pace due to increasing urbanization with more than 40 per cent of Indian population expected to live in cities by 2030. Thus, PEB will emerge as one of the preferred building solutions for both residential and commercial segments in near future.

What are the qualities that make your products matchless?

Kirby has changed the face of the construction industry with its superior product and cost-effective solutions that are of the highest quality. The company’s facilities follow stringent ISO standards and are certified with ISO 9001:2008 certification by Bureau Veritas. The company also gets the quality vetted by third party agencies as per customer’s requirements.

The entire Kirby process is followed as per ISO 9001:2008 policies and procedures. Kirby India uses high quality input materials as per global standards of the organization.

The raw materials are procured only from primary sources which are India’s leading steel suppliers and are authenticated by test certificates. Nevertheless, as a part of the quality plan, all incoming raw materials are subjected to screening to ensure compliance to prescribed quality.

All the staff and managers are made aware and are constantly educated on the various quality systems and procedures confirming to national and international standards. Further,

at each stage of the conversion process the various components are subject to quality compliance as per the established standards.

How have you implemented environment and safety policy when undertaking building projects?

K i r b y I n d i a h a s s t a n d a r d environment and safety policy to be implemented through an effective environment, health and safety management system at all the stages of project execution both in the plant and at the site.

Each and every employee of the company along with the builders and contractors is responsible for implementation of all policies relating to environment and safety.

Regular trainings are conducted at plant and at project sites providing benefits of maintaining a safe working environment and ensuring safety of ourselves and all other people through presentations, banners, postures, mock-ups, acts, etc.

What are some of the milestones the company has crossed since its foundation in 1999 till date (2014)?

Kirby India started the revolution in the construction industry and since then it is leading this revolution with its constant innovation in products and applications thereby setting new benchmarks for the PEB industry. The company is a leading player in the Indian PEB market with a market share of over 30 per cent.

Kirby India has the privilege of partnering who’s who of corporates both from national and international front operating across all industry segments by setting up their facilities in India and across the globe.

Kirby’s Hyderabad and Haridwar factories are ISO 9001:2008 certified. Kirby India is also a member of the Indian Green Building Council (IGBC) and the Institute for Steel

they are cooler in hot conditions due to favourable roofing material and natural ventilation. These buildings also help in energy saving due to more amount of natural sunlight through skylights used on the roof of the building, thereby reducing the overall power consumption.

The effective usage of insulation material, louvers and other materials also help in making PEB one of the most preferred Green buildings. Kirby India supplies its buildings with materials which are easily recyclable and do not use materials that are harmful for the environment. The company is always looking forward to be a part of green buildings and eco-friendly products.

Why is PEB technology a game changer; what are its advantages over conventional structures?

PEB design is based on the synergy existing between various elements and every element is assumed to brace the other element thereby providing the overall stiffness.

In a conventional system, separate members are provided for this purpose. Thus, PEB uses tapered bui lding sections, cold formed sections and high strength sheeting to optimize the steel consumption with a nut and bolt configuration yielding overall weight, cost and time savings compared to conventional buildings.

Also, as the entire PEB system components are getting fabricated in factory controlled conditions, i t is possible to del iver qual i ty tested materials on time in erectable sequence to project location without requiring any site welding compared to convent iona l cons t ruc t ion . Superior fabrication quality and ease in site handling with lesser wastage are other major advantages over conventional construction.

What is your outlook for the PEB market in India during 2014?

The Indian economy witnessed GDP growth of 4.8 per cent during Q2, FY13-14 when compared to market expectations of 4.5 per cent growth as is going through a chal lenging macro-economic environment.

Some of the recent initiatives of the government of putting various infrastructure projects on fast track basis have also given a hope to the sagging economy and various industries.

With the country gearing up for national elections during the second quarter of 2014, the Indian industry is expected to remain cautious with any major capex investments.

The country also received foreign investments to the tune of $20 billion in the stocks in 2013 which is the third highest in history in the past 10 years. This itself justifies that India’s appetite for growth is still strong and it has the potential to grow @ 8-9 per cent per annum, provided various parameters such as interest rates, inflation, current account deficit, policy parameters, other initiatives, etc are in the right place and that too at the right time. Also, the global economy is showing signs of positive growth which will further give a boost to the India GDP.

The PEB industry growth also was affected in recent times due to current economic slowdown, but we expect a positive growth momentum in the PEB market in future, given the improving investor sentiment and reforms announced by the government.

All the above factors will have a direct impact on the PEB industry and are strongly related to the growth of the industry. Despite the prevailing conditions, we are very optimistic about the growth of the PEB industry in 2014 with a certain amount of cautiousness.

“Kirby India started the revolution in the construction industry and since then it is leading this revolution with constant innovation in products and applications, setting new benchmarks for the PEB industry with its superior products and cost-effective solutions that are of the highest quality,” states Deepesh Nagar, Manager-Marketing, Kirby Building Systems India Ltd, in this interaction with Dilip Phansalkar. Excerpts:

February 17-23, 2014 7

(contd. on pg 10)

iNFRAstRUctURe

The gap between available funding and infrastructure needs should not impinge on effective prioritizing of projects based on economic, social, and environmental benefits. In fact, fiscal exigencies can help put the focus on top priorities, including maintaining existing assets. National and regional schemes, which affect the greater good, take precedence over local one-off projects.

PPPs are properly understood as an infrastructure delivery mechanism, best implemented after the hard work of planning is done. For PPPs to work, governments should fine-tune procurement models and make the process more efficient, encouraging the adoption of best practices.

As an example, ‘the infrastructure sector is moving toward performance contracting, where payment is linked to results and milestones achieved against fixed deadlines.’ Successes should engender greater public acceptance and willingness among the public to pay for investments.

More nat ions a re adapt ing infrastructure policies to recognize the negative effects of climate change.

The European Union (EU) has been a leader in seeking to decrease carbon emissions and engaging renewable-energy solutions, while more recently Australia, Canada, and Japan are making commitments to tackle these issues in the planning and execution of new projects.

China and the United States notably continue to lag, although the Obama administration shows signs of taking more forceful action in its second term and cities across the country are forging ahead with visionary green building and investment plans.

Now well into the new century’s second decade, the world is rethinking how infrastructure should work in a rapidly transforming global order.

Below is a summary of how various countries are coping with the daunting infrastructure obstacles they face.

Emerging market demand Concerned about maintaining

i ts economic growth, China is

pouring money into an already unprecedented infrastructure building spree — constructing high-speed rail and urban mass transit systems throughout the country.

The high-speed rail programme, which faced serious safety and corruption issues in 2012, appears to be getting back on track. These investments have supported dramatic economic expansion, but are adding to the country’s large debt burdens and creating long-term liabilities for operating subsidies and ongoing maintenance.

The country has yet to get a handle on serious air pol lut ion and water quality challenges. India also recognizes that modernizing its infrastructure should be a top priority. The country is striving to keep up with aspirations to become a g lobal market heavyweight .

E v e n w i t h o u t w i d e s p r e a d corruption, a swelling population and severe income inequality would make this job even harder. Brazil, Mexico, Indonesia, the Philippines, Vietnam, South Africa, and even

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Now well into the new century’s second decade, the world is rethinking how

infrastructure should work in the changing social and economic

backdrop. Various countries are coping

with the daunting infrastructure obstacles

they face (Part 2)

Mongolia, among other rapidly growing economies, try to entice foreign investors interested in profiting from emerging market demand and ‘possibly igniting a more robust worldwide recovery’ in the process.

These emerging-market forays are ‘not for the fainthearted—investors must worry about sovereign risk’ and seek premium returns, which government partners f ind hard to muster in order to nail down commitments.

‘Operators want assurance that agreements will be adhered to’—a high hurdle in places that have real or perceived political and regulatory issues. Flush with cash, the Middle

East Gulf states have the luxury to spend freely in order to diversify their energy-based economies into trading hubs.

The sustainability of the huge asset bases being built remains an open question. And other regional players caught up in the Arab Spring face problematic outlooks for executing needed projects.

Infra in changing world order

APM Terminals, Mumbai PARIS Paris airport

ADELAIDE Adelaide, Australia

February 17-23, 2014 8coNstRUctioN

The use of steel in construction is no longer limited to reinforcement for concrete. Steel construction is evolving from boxlike steel structures to aesthetically pleasing designs. As more and more people are experiencing the advantages of metal buildings, and skill sets across the value chain are improving, this shift is increasingly gaining momentum.

Ta ta B lueScope S tee l was established to offer value added steel products and solutions to its customers across South Asia. The Building Solutions Business division brings the desired focus to delivering the best-in-class metal building solutions.

Tata BlueScope Building Solutions currently offers design, manufacture, supply and erection of complete metal building solutions, under its premium BUTLER® Building Systems and contemporary ECOBUILD™ Building Systems brands.

The ‘FM Approved’ MR-24 ® Standing Seam Roof System, offered exclusively with BUTLER® buildings, has a one-of-a-kind 360 deg Pittsburg Double Lock Seam. This seaming process is similar to what is adopted for beverage cans. We offer a 10 year leak proof warranty on MR-24®.

Tata BlueScope Building Solutions also offers the factory punched BR-II™ Roof System. With ECOBUILD™ buildings, roof options include TRIMDEK® and CUSTOM ORB® profiles. Liner panels, Decking options, and several optional accessories are also offered.

Primary structural frames are manufactured by Tata BlueScope

TATA BLUESCOPE

Exceptional PEB solutions

RSB’s new products in JV with overseas partners at AUTOEXPO 2014

Building Solut ions with careful considerat ion to mater ia l and workmanship. Secondary and cladding elements are roll-formed with strict compliance to process and quality. For optimum performance across the life of the building, all accessories and components are sourced from the best.

Key customer benefitsFor an industry where the potential

to supply exceeds market demand, capacity is a bit of a misnomer. It is ‘capability’ that has a far more significant role to play. Our capability to meet customer expectations of on-time, leak-proof and safe erection of their metal buildings is what sets us apart from the competition.

On-time deliveryThe most important need of a

project perhaps is: to be completed on-time. Over the last few years, Tata BlueScope Building Solutions has adopted ‘Critical Chain Project Management’ approaches to facilitate on-time completion of projects. We follow full kit rules, avoid frequent shifting of priorities, maintain waiting buckets and constantly monitor project progress across all stages of project execution. Our delivery performance has improved significantly, and we are able to provide accurate updates on project status.

Leak-proof roofThe next priority for metal buildings

is leak-proof performance. Typical sources for leakages in metal buildings are laps, ends, piercings and roof openings. Early leakages can be attributed to a combination of

poor workmanship, tools and even materials. However, leakages can develop over a period of time, due to thermal expansion and contraction caused by changes in ambient temperature.

A dedicated group within Tata BlueScope Building Solutions has extensively analysed reasons for leakages, and has developed check lists & methods, acquired special tools and conducted extensive

Coupling for RSB pan India and overseas with use of latest state-of-art-technology from Fontaine”.

Fonta ine F i f th Wheel is the European div is ion of Fontaine International Inc, the largest Fifth Wheel Coupling manufacturer in the world. Fontaine Fifth Wheel has its corporate headquarters in Birmingham and Alabama in the United States.

It is a member of the Marmon Highway Technologies Company which supports the transportation industry the world over with a wide range of high quality products and services.

Fo n t a i n e F i f t h W h e e l i s a Marmon Highway Technologies/Berkshire Hathaway company. As the European arm of the largest Fifth Wheel Coupling manufacturer in the world, Fontaine Fifth Wheel provide a wide range of specialist fifth wheel and trailer coupling solutions that are produced to the highest standards.

With the launch of these new products at Autoexpo, RSB will be expanding its global foot print across international arena significantly.

RSB Transmissions (I) Ltd has unveiled a range of new products in joint venture with overseas partners at Autoexpo 2014 Components Show at Pragati Maidan, New Delhi.

Speaking on the occasion, S K Behera, Vice Chairman & Managing Director, said that they have launched ful ly assembled manual/power steering gears and also the auto components, viz steering rack & pinion, tie rod, hydraulic pump and aluminium pump in ultra-modern tech facilities in partnering with DHB Automotivos, Brazil, a 150-million US$ global enterprise, who are the largest manufacturer of passenger car steering system in Latin America.

He further added, “These new products with overseas venture will enable RSB to make entry into Latin American market, besides other global market segment. It will also

then suggest optimised solutions. The objective is to create aesthetically pleasing buildings that match the functional, as well as aspirational requirements.

Tata BlueScope Building Solutions gets access to the latest developments in technology through our principals, Butler Manufacturing USA. Several listening posts have been established to gain an understanding of emerging customer needs. We have even created one for addressing customer complaints in a formal and structured manner.

Latest safety techniquesTata BlueScope Building Solutions

is continuously investing in building internal capabil it ies, as well as developing logistics and builder partners. This is critical for meeting another key customer requirement, safe and incident- f ree project completion.

Our erection practices today leverage the most modern equipment and practices. For example, we have made use of boom-lifts, instead of scaffolding, mandatory for all our projects. This not only prevents accidents, but also helps in faster erection.

Operating philosophyTata BlueScope Building Solutions

has already completed in excess of 1,000 projects for industrial, warehousing, commercia l and infrastructure applications, across various locations in India. Our list of clients includes several prominent Indian and overseas organizations.

Our operat ing phi losophy is strongly anchored to serving markets which are looking for the highest standards of engineering excellence, superior quality of products and workmanship, and timely completion of buildings.

MR-24® Roof SystemMR-24® is probably the only ‘truly’ floating roof system currently

available in the market! MR-24® roof sheets are seamed continuously, along the entire length of the sheet, using a Roof Runner®. The 180deg field formed seam of MR-24® is least susceptible to malfunction.

Purlins and sheets for MR-24® installation are supplied pre-punched. MR-24® sheets are fixed to the purlins below using a specially designed clip assembly. High strength SCRUBOLT™ fasteners are used to secure the clips to the purlins. The clips are then seamed along with the MR-24® roof sheets. The clips are installed such that they allow smooth movement along both directions.

All accessories for the MR-24® Roof System are fixed to the roof sheets, and not the purlins below. The roof sheets are fixed at the eaves only. The gable trims and ridge are designed to allow for free movement. As a result, when thermal expansion and contraction takes place, the entire roof moves, alongwith the roof vents and skylights.

MR-24® end laps are always staggered, and the splices are always placed just above a purlin. This prevents potential leakages due to foot traffic on the roof and wind uplift phenomenon. Specially developed sealants of MR-24® have a high butyl content, for better leak-proof performance and longevity.

Another advantage of MR-24® roof sheets is that they are easily stacked. This makes bundles of sheets suitable for handling and transportation, unlike long lengths of field roll-formed sheets which are susceptible to handling damages. Since MR-24® roof panels are roll formed in the factory, our clients are assured of the best quality of materials and workmanship.

EQUIPMENT

S K Behera, Vice Chairman & Managing Director, at RSB Autoexpo Stall, Delhi, with the backdrop of new products launched

be catering to existing OEMS, viz. GM, Renault, Volkswagen, Ford, Fiat and PSA Peugeot Citroen and host of other clients besides after-sales market.

“The new venture g ives an opportunity for RSB to diversify

its product and market segment predominantly volume constrained commercial vehicle dependence to the growing passenger car segment. Besides, it will also make in-roads in Russian market”.

RSB, on the occasion, has also

launched technologically advanced 5th Wheel Coupling for domestic market under the brand name RSB-Fontaine and export to Fontaine, UK. Speaking on this product, Behera, said, “This joint venture with Fontaine UK will boost growth of Fifth Wheel

Tata

blu

esco

pe s

teel

training of personnel, at our in-house training center. We monitor leakage instances in our buildings, and have seen significant reductions since.

Fully engineered solutionsEach metal building is unique, like

a signature or a thumb impression! Our teams get involved early, with project architects, consultants and owners, to understand the specific requirements of each building and

February 17-23, 2014 9

February 17-23, 2014 10

(Contd. from pg. 5)

Editor : Bina VermaEditorial Team: Dilip Phansalkar, Paresh Parmar, Remona Divekar Designer: Rajen Mistry

Business Team: Milind Joglekar (9833357005), Shantanu Baraskar (9820904795), Seema Kohli (9820904931)Email: contact@konstructionreview.com, editor@mmronline.com

No part of the contents of Construction Industry Review, in abridged or unabridged form, can be reproduced without the written permission of the Editor. CIR does not accept any

responsibility for statements and opinions expressed by the authors.

coNstRUctioN

Satec Envir EngineeringSatec is a brand name in the pre-

fabricated structure market, growing at a phenomenal speed in national and international markets. Satec’s pre-fabricated structure stand out as we never compromise on quality

of the products which can withstand high winds and seismic zone.

We manufacture everything in-house and have invested in building a state-of-the-art production unit 1,40,000 sq ft in Bhuj, Gujarat. We

internal partitions are unique. These structures can be made in a short time span and are far more economical than conventional buildings.

We have recently acquired contract of to supply per fabricated residential colonies in Bhutan and also completed work in Africa and Australia for low-cost residential colonies. We are also part of a prestigious coal power project in Jharkhand for supplying conveyor gallery and trestle and also commissioned for 30 mw solar power project in Surendernagar, Gujarat.

Satec is one of the leading names in the portable cabins industry with its promise of trust and quality. These fully modular and mobile cabins are cost-effective and efficient solutions to site offices and residences.

The reason these cabins have become a popular choice in the infrastructure sector is due to their resilient nature and ability to withstand harsh weather conditions. The polyurethane material which is used for building these panels has insulating qualities. Satec has been providing turnkey solutions to many leading companies like GPCL, Essar, Sun Edision, and many more.

Constrained by austerity Over the past two decades,

Europe has made significant strides in bui lding out motorways and laying track for impressive high-speed passenger rai l systems, as the European Union prioritized connectivity projects and funnelled funds into poorer eastern countries to boost their prospects.

Now, the unsettling aftershocks of the European credit debacle have short-circuited many initiatives, as countries rein in spending and deal with paying down debt. In the United Kingdom, public support for infrastructure grows behind a nat ional plan.

The government sets an ambitious agenda to advance railroad, airport, and energy agendas, but finding enough money stands in the way of full execution. Reassessments of prior transactions have led to a stronger public finance role in ‘private’ undertakings.

Despite fiscal constraints, France continues to expand its high-speed rail system, improving connectivity across the country, and makes investments in roads and canals. The infrastructure picture in Spain is more troubling, with most major plans grinding to a halt, a spate of bankruptcy declarations in toll roads, and rethinking of subsidies provided for alternative energy.

Only Germany can afford to hold back on infrastructure investments. Sitting at Europe’s crossroads, the European mainstay’s modernized transport networks have benefited from steady investment in maintaining and improving new and expanded airports and ports.

In Asia, Japan — bogged down by 20 years of stagnation and debt — takes the opposite tack. The new government doubles down on more infrastructure stimulus to try to pump up the moribund economy and deal with the damage wrought by the tsunami.

Underfunded budgetsDue to fiscal constraints at the

federal level and fractured jurisdiction over rail and other key infrastructure assets, the United States lacks a national infrastructure investment plan.

State, regional, and local agencies are filling the void, addressing mounting issues to stretch underfunded budgets for fix-it-first initiatives and find ways to build big-ticket projects like new roads, light-rail lines, transport terminals, and levees. Increasingly, public leaders at

all levels are embracing PPPs while advocating various tax and user fee hikes.

Australia and Canada, similarly sized countries (both in population and territory) with resource-based economies, managed to weather the global recession while developing and implementing modest national infrastructure plans using well-thought-out PPP procurement approaches to help finance projects.

Aging highway systems and urban congestion pose ongoing challenges, but both countries make progress in addressing their substantial needs, buoyed by relative fiscal calm. Paced by China, many Asian nations continue to make infrastructure development a high priority, building out some of the most advanced and integrated systems in the world.

Infra innovationFrom Tokyo to Beijing to Seoul and

Singapore, efficient new international airport terminals connect by high-speed rail to centre-city commercial districts and state-of-the-art mass transi t l ines l ink to resident ia l neighbourhoods.

Some observers question whether China has overextended itself by constructing far-flung intercity high-speed rail lines and expressways, while still lacking basic water and sewage treatment systems in many regions.

But China’s infrastructure push is not over, and continues both inside the country and outside of it. India plays catch-up, needing more foreign investment not only to meet the demands of an exploding population, but also to realize the potential for expanding its manufacturing and service sector industries, which cope with daily power brownouts and transportation chaos.

Indonesia faces similar emerging-market growing pains — remedying Jakarta’s traffic gridlock takes on particular urgency. Japan, a perennial leader in infrastructure innovation, is adding to its prodigious government debt in rebu i ld ing the reg ion devastated by the 2011 earthquake and tsunami, and aims to use fiscal stimulus to jump-start an ail ing economy.

And Australia faces challenges more similar to those faced by Europe and North America in dealing with how to revamp once-advanced systems that no longer support its heavily export-dependent economy.

China’s dilemma Rising labour costs and tepid

demand f rom China’s pr imary

export markets slacken the ‘Middle Kingdom’s’ once-torrid economic growth track from a fairly consistent, government-reported 10 per cent or more annually to under 8 per cent at year-end 2012 — still solid, but a 13-year low.

In response, the central government of the Asian manufacturing behemoth returns to its familiar stimulus playbook, fast-tracking 60 infrastructure projects with cumulative price tags of $158 bil l ion and signaling that more allocations may follow during the year.

In fact, infrastructure may be one of the country’s key growth drivers in 2013, employing hundreds of thousands of labourers who might otherwise be out of work, supporting myriad manufacturers, including steel companies and machine makers, and sustaining regional and local governments in the expansion of various road, rail, and subway projects.

As a result, ‘China will continue to outpace everywhere else’ in infrastructure spending and building. Indeed, over the past 20 years, trillions of dollars’ worth of infrastructure investment has transformed China into an exemplar of modern urban transit, expansive highways, vanguard high-speed intercity rail, and highly efficient ocean ports.

Late in 2012, the longest high-speed rail route in the world — covering 1,200 miles in an eight-hour ride — opened between Beijing and Guangzhou. The country’s ‘clustering strategy’— building factories near terminals served by major transport lines — has proved ‘hard to beat’ for many industries.

Despite the breakneck pace of construction, many major Chinese cities still lack adequate housing, with China’s evolving housing policy struggling to keep pace with demand and cool pricing in the real estate market.

This has led to an undersupply of affordably priced housing units in urban markets. Agricultural logistics chains have also proved inadequate in many rural areas. According to McKinsey, China has only 452 airports with paved runways compared with more than 5,000 in the United States and 700 in Brazil, its smaller competitor. Also, the country does not have a unified electrical grid.

Credit risk Government leaders are pushing to

complete more projects to maintain the world’s second-largest economy and satisfy expectations of an increasingly

Patrick PhillipsCEO, Urban Land Institute,Washington

Howard Roth Global Real Estate Leader, Ernst & Young

consumer-oriented population, which will live primarily in urban areas — forecasts indicate that by 2025 China will have 200 cities with populations exceeding 1 million.

But this ongoing infrastructure boom remains mostly credit-fuelled, adding to the country’s debt load and heightening worr ies about whether municipalities and regional governments — not to mention the central treasury — could become ‘overextended.’

The credit risk may be exacerbated by Chinese banks’ underwriting standards, which are seen as less stringent than those used in international practice. Interviewees based in the region suggest that Chinese financial institutions are ‘relationship driven,’ while other bankers appear more str ingent —‘looking at projected revenue streams, insurance, and proper credit.’

For Chinese projects, ‘there’s also a sense that the debt burdens are greater than the revenues from toll roads, power stations, and train lines,’ but it is hard to tell given limited

and often inscrutable government information.

These concerns mount just as some neighbours, including Vietnam and Indonesia, begin to compete against China at cheaper manufacturing price points, and even US factories regain some favour due to a combination of lower energy and shipping bills. How long can China maintain its infrastructure spending spree in the face of debt burdens and competitive realities?

(Continued in next issue)

(Courtesy: Ernst & Young)

have top line PUF, continuous panel production machine, roll forming machine, CNC plasma cutt ing machine, galvanizing and power coating unit. We offer all kinds of portable cabins at a rate of 250-300

per sq feet onward. Satec offers multi-storey fabricated

bu i ld ings wh ich a re made o f combination of cement cladding and steel. These are attractive and extremely strong. The walls and

changing world(Contd. from pg. 7)

Raj manohar Lead Analyst, Beroe Consulting (I) Pvt Ltd

Path ahead for PEB industry The growth of this market has

remained passive, in tandem with the construction industry, in the recent past owing to the economic slowdown but the market is poised to swing back to the projected rate of 15-20 per cent yearly growth.

This will be driven by improving investor sentiment and government investments in the Indian infrastructure sector. PEB suppliers will specialize in areas of heavy engineering and large infrastructure projects and will carve a niche for themselves by creating separate divisions for this type of buildings. Airports, international terminals, power plants and ports, etc will be potential end-users of huge steel structures and PEB suppliers are targeting to specialize in building such facilities.

Presently, the fabrication approach for PEB is workshop fabrication, but

certain portions of fabrication are undertaken on the site and the next decade will witness a complete shift of the fabrication approach to be within the workshop so as to adhere to best-in-class working standards and regulations.

In spite of the challenges faced by the industry, the PEB industry leaders are driving the efforts for R&D on new technologies which will help reduce the impact of limitations.

Research and development on products like High Performance Steels (HPS), Fire-Resistant Steels, Steels with increased durability, Corrosion-Resistant Steels and Concrete-Filled Steel Tubes (CFT) are key to the future success of the market.

PEBs

February 17-23, 2014 11

February 17-23, 2014 12

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ACREX India 2014 for eco-friendly building services

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eVeNtsFebruary 21-23, 2014

PlumbexIndiaBombay Convention & Exhibition Centre, Mumbai This show will be an ideal platform for participants to showcase their latest products and services related to the building and construction sector.

Contact: AIM Expositions Pvt. Ltd. AIM House, 78 Pankaj Society, Near Anjali Cross Roads, Bhatta Ahmedabad

Tel: +(91)-(79)-40269999

Fax: +(91)-(79)-26620020

Contact person: Pooja Patel

Tel: +91-79-26620020

February 26-28, 2014iBART EXPOGujarat University Exhibition Hall, AhmedabadOne of the leading trade fairs for the building construction industry in India, which will showcase the latest products and equipment in brick, roof and tile category.

Contact: Gattaca Communications Communications House, 26 York Street, London, United Kingdom

Tel: 044-2032-395572

Fax: 044-1538-398987

February 28–March 2, 2014 The Economics Times ACETECH Chennai Trade Centre, ChennaiExhibiting participants present an impressive range of marbles, tiles, ceramic products, bath and kitchen fittings, paints and other associated products at this three day show. The latest trends, innovations and updates from the construction and infrastructure industry are also deliberated upon here.

Contact: Asian Business Exhibitions & Conferences Ltd, 530 Laxmi Plaza, Laxmi Industrial Estate, New Link Road, Andheri (West) Mumbai

March 13-15, 2014Concrete Show – 2014Concrete Material & Machinery, Mumbai Contact: UBM India, Unit No. 1&2, B-Wing 5th floor, Times Square, Andheri-Kurla Rd, Marol, Andheri (E), Mumbai - 59.

Phone: +91-22-61727272

Fax: +91-22-61727273

info.india@ubm.com

www.ubmindia.in

March 20-22, 2014International Elevator & Escalator ExpoBombay Convention & Exhibition Centre, Mumbai The event provides an exclusive platform to get an insight into the market, trends and technologies that drive the elevator and escalator industry. The forum, apart from fostering thought leading insights from the stalwarts of the industry, also dwells extensively on leading edge technological advancements to the most contemporary design trends, safety standards, environment compliance codes and regulations.

Contact: Virgo Communications & Exhibitions Pvt Ltd Virgo House, 250 Amarjyoti Layout,

Domlur Extension, Bengaluru

Tel: +(91)-(80)-25357028/41493996/41493997

Fax: +(91)-(80)-25357028

Contact person : G. Raghu

Mob: +91-9845095803

April 19, 201418th One-day Workshop on Jirnoddhara of RCC BuildingsThe Institution of Engineers (India), Mahalaxmi, MumbaiThe workshop contains structural audit, upgrading (housekeeping, regular maintenance, repairs, rehabilitation, fixing leakage, waterproofing of RCC buildings and a new concept to construct durable RCC structures without leakage

Contact: Jayakumar Jivraj Shah Tel: 28483541 Mobile: 9819242649

May 16-18, 2014Roof India 2014 Chennai Trade Centre, Chennai The 13th edition of Asia’s largest roofing and allied products event provides the ideal platform for the building construction and infrastructure industry fraternity to converge, network and strike lucrative business deals and establish business partnerships and joint ventures.

Contact: International Trade & Exhibitions India Pvt Ltd 4th Floor, Sekaran Complex, Plot 172-173

IT Expressway OMR , Thoraipakkam

Chennai 600097

Mobile: +91 98400 43691

Email : sudeep@itei.in

URL : www.itei.in

In line with ACREX India’s traditional focus on energy-efficient technologies, its organizer ISHRAE will set an example for responsible use of natural resources. The 10,000 trees to be planted will result in a huge reduction of the trade show’s carbon footprint. The trees will be planted by the Indian NGO Sankalp Taru.

ISHRAE is subsidizing the costs for most trees, supplemented by contributions from the exhibitors. The trees can be located via GPRS supported tags and their growth can be monitored over time. The names of those contributing will be tagged on the trees which will be looked after by local farmers, who will in the end also harvest the yield.

By planting a tree, exhibitors therefore not only reduce the carbon emissions of the trade fair, but also contribute to the environment on a long-term basis, while supporting local farmers and their families.

“With this initiative we want to set an example not only for our show, but for the whole industry. At ACREX India 2014, we are taking a great step towards the future,” explains Ashish Rakheja, Chairman of ACREX India 2014.

In addition to reducing its carbon footprint, the exhibition also focuses on renewable energies, such as photovoltaic, tidal and wind energy, and their use and application fields in

the HVAC&R industry. To visualize this endeavour, the organizers of ACREX India will establish an Innovation Gallery – a pavilion constructed from reusable bamboo poles and jute rope, showcasing India’s first (self-) sustainable township of its kind.

The pavilion will highlight both passive and active design strategies to be used on an architectural as well as on an urban design scale. Furniture made from waste material will decorate the pavilion along its axis, transforming the passage into a comfortable stay.

Interplay of corridor space and niches on both sides, created by varying the width of the structure, will provide zones where one can rest and enjoy the local scenery and exhibition. Ashish Rakheja says, “It is our aim to encourage the industry to follow the principle of three Rs in their business as much as possible: Reduce, Recycle and Reuse.”

The exhibition not only provides an internationally renowned setting to showcase products and developments; concurrent to ACREX, India ISHRAE also organizes a rich workshop and conference programme.

One of the key conferences is on ‘Green Buildings’, supported by the Indian Ministry of New & Renewable Energy. Its aim is to raise interest among engineers, students and industry experts towards energy-efficient buildings.

Conditioning Engineers (ISHRAE) and NürnbergMesse India.

The construction industry is India’s second largest after agriculture, which has traditionally been the country’s largest economic factor. With its expanding economy and high urbanization rate, India is in need of extended infrastructure, a requirement strongly supported by government funding. Today, 32 million people in India are employed by the construction industry, whose growth is expected to stay strong over the coming years.

ACREX India 2014 offers the construction industry the perfect platform to link its various sectors with international partners. The exhibition, which has grown rapidly over the past few years, will host country pavilions from the US, Germany, Italy, Korea and China.

Addit ional ly, exhibi tors from Czech Republic, France, Malaysia, Netherlands, Saudi Arabia, Switzerland, Thailand, UAE, UK and Ukraine have already signed up for participation. “With ACREX India, we provide a platform for our local products and services while also exchanging expertise and information in the building services sector internationally,” says Sonia Prashar, Managing Director of NürnbergMesse India.

ACREX India 2014 not only s h o w c a s e s p r o d u c t s a n d developments from the HVAC&R industry but also from allied building services including plumbing and fire safety, and window and facade products. These are at the centre of the concurrent exhibition fensterbau/frontale india, which ACREX India participants can visit free of charge.

When South Asia’s leading exhibition on air-conditioning, refrigeration & building services, ACREX India 2014, will open its doors from February 27 to March 1, 2014, and will set an example for moving towards a carbon-neutral HVAC&R industry.

ACREX India is going to reduce

its carbon footprint with the help of its exhibitors from Asia, Europe and North America. 10,000 trees will be planted all over India to compensate CO2 emissions created in the course of the event.

The show is organized by the Indian Society of Heating, Refrigeration & Air