‘PEB industry has bright future in coming years’

Pennar Engineered Building Systems (PEBS Pennar) is a subsidiary of Hyderabad-based Pennar Industries Ltd, a leading engineering organisation in India with diverse product offerings. PEBS Pennar is engaged in the design, manufacture, supply and installation of pre-engineered steel buildings and building components for industries, warehouses, commercial centres, multi-storeyed buildings, aircraft hangars etc.

P V Rao, Managing Director – PEBS Pennar told Sandeep Menezes that the company is planning to set up another manufacturing facility in North India with plans in advanced stage and it being executed this year.
Excerpts from the interview:

What is the current industry size for PEBs in India? Tell us about the recent trends in the industry?
For the past two years, PEB industry in India is not growing as new projects are not coming up in significant numbers both in private and in Government sector and currently the PEB market value is approximately Rs 6000 crores. The general market sentiment has to improve and I am expecting that it will happen after the general elections.

Going forward, how much growth do you foresee in the PEB industry? Tell us about the main growth drivers?
I am confident that PEB industry has bright future in the coming years as there would be huge demand for PEB’s in various segments such as industrial, logistics, defense, metro rail projects, retail stores etc. Pre-Engineered buildings are economical, faster in construction, aesthetically appealing, less foundation cost, re-locatable etc. PEB’s are not confined to industrial buildings and warehouses but have gained diverse applications such as power generation buildings, aviation hangers, boiler support structures, bridges, cold storage facilities, multi-storied commercial complexes, stadiums etc.

With FDI in retail and expected investments into improving warehousing infrastructure nationwide, do you feel that warehousing can emerge as a huge demand driver for PEB industry?
FDI in retail will create lot of warehousing & logistics infrastructure. This warehouse infrastructure needs PEB for distribution centres, warehouses, cold storages etc. This would be a catalyst for the PEB growth.

PEB industry is highly dependent on taking-off of stalled infrastructure and construction projects. Do you have any suggestions for the new government to ensure quicker revival of PEB industry?
Currently the demand has come down because of current setbacks in manufacturing, infrastructure, automobile and logistics segments. FDI’s are not coming in big numbers. Government of India has to take immediate steps to instill confidence in investors. There is general feeling in the market that the situation will improve with the new government. Raw material prices are spiraling due to ban on mining in some areas. Power situation in many states is in bad shape and hence the industrialists are not showing interest to expand existing units or to start new units. Many infrastructure projects are on hold waiting for clearances from Government. Government of India has to consider tax concessions to PEB industry as we are playing significant role in nation’s infrastructure building.

There were recent reports about PEB supply being in excess of demand thereby hitting margins. Tell us about its impact on the industry?
Due to slowdown in the investments & expansions in manufacturing sector, the demand came down in last FY and at the same time capacities remained same to utilize the existing capacity, all the players are trying for major market share by hitting the margins

Residential sector continues to witness lower PEB demand vis-à-vis manufacturing and industrial segments. Going forward, do you foresee any change in this scenario?
The main problem in residential and multi-storied towers is the column spacing and clear spacing restriction between floors. The floor beams are to be covered with false ceiling and the columns have to be encased with light weight concrete or gypsum board or fire proofed with special coatings as per norms. These issues are making it highly uneconomical compared to traditional RCC construction.

There is huge shortage of skilled construction workers in India and also there are project execution challenges in case of civil traditional construction of houses. Availability of sand is an issue nowadays due to ban on mining in many states. Prefab structures are the best alternative for housing units in view of these constraints. Government of India is funding for Indira Awas Yojana, which is meant for rural houses and Rajiv Awas Yojana, which is meant for urban poor. Under both schemes, Government of India is funding around Rs 75,000 for each house and the funding from State Government is ranging from Rs 25,000 to Rs 50,000 per each house. We are working with a leading educational institution in India for an affordable housing unit in prefab technology.

What is the future business strategy of PEBS Pennar in India?
PEBS Pennar is planning to expand its production capacity (currently 90,000MT) by setting up another manufacturing facility in North part of India to meet the requirement of the Northern region. The plans are in the advanced stage and will be executed this year. The company reached a turnover of above Rs. 400 crore this year and is poised to achieve Rs. 600 crore by 2015.

Tell us about the green, eco-friendly initiatives of PEBS Pennar?
The level of awareness about the benefits of new eco-friendly material in the construction industry is growing and the industry is moving forward from traditional methods of construction to the environmentally friendly methods. In order to ensure that development and environment conservation go hand in hand, major corporations around the world are going for “Green Buildings” concept which will slow down the depletion of natural resources. Steel is re-cyclable and the skylights we use in buildings will reduce the need to electric power during day time. Rain water conservation pits can be connected to the down take pipes. Steel construction is far superior to achieve the required LEED points to get certified under Green category. Indian Green Buildings Congress (IGBC) has audited our plant and our plant if the first in India to be certified under “Gold Category” by IGBC.

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