‘Zamil Steel provides sustainable solutions in PEB sector’

Zamil Steel Buildings India Pvt. Ltd entered the Indian PEB market in 2008 and has been manufacturing fabricated steel at its world-class plant in Pune, which is capable of producing complete pre-engineered buildings for various sectors.

Alakesh Roy, Managing Director, is a Mechanical Engineer from IIT (BHU) Varanasi and a Post-graduate in Management with specialisation in Marketing and Finance from XLRI, Jamshedpur, spoke to Sandeep Menezes on the PEB sector.

Alakesh Roy

Alakesh Roy

Excerpts from the interview:

 

What is the future strategy of Zamil Steel India in the PEB segment?

When PEB started out in India earlier, it was only pre-engineered buildings which were not prevalent till then; we tried to market that in India as a single entity. PEB no longer continues in the older form; it is a mix of all technologies put together, whether making the structure, choosing the right section or even going vertical. At Zamil Steel, we are trying to put together all the technologies to provide a single-point solution to the customers.

 

Can you discuss your efforts towards sustainable technology in PEB?

Zamil Steel is a member of IGBC. We are a green company and already have ISO 9001 and certifying ourselves for ISO 14001 OSHAS 1801. These are steps towards being more sustainable.

We provide our customers with sustainable solutions that are way ahead of current times or even those offered by the competition. Like we offer them a type of painting system that no other PEB company offers; this type of painting system is only offered by a few leading automobile companies in India.

We are slowly graduating towards technology wherein we have been offering as part of our standard product epoxy painted structures; this means the structure is rust proof and has longer life.

We also offer products wherein the structural stability of the building is minimum 20 years and up to 50 years. All these are through sustainable technologies that we have been trying to inculcate as an organisation.

Zamil Steel has got a strong R&D team wherein all our product lifecycle testing is done for 15 to 20 years. We are trying to extrapolate that and provide conditional warranty for all our buildings up to 50 years depending on the requirement and usage.

Zamil Steel India was launched in 2008 and set up its plant at Ranjangaon in Maharashtra. What have been your main achievements since then?

If you look at Zamil Steel as an entity then we were one of the last entrants into the Indian PEB market. We are the world’s number one on terms of our capacity globally. When we entered India there were many players and the market was already matured.

In the initial years, we struggled because 2008 was a slowdown year across the industry. In spite of this, today, our market share within the total Indian PEB market is nearly 10 per cent. This is a stupendous achievement considering our late entry into the Indian market. Also, the capacity utilisation of the PEB industry vis-à-vis installed capacity utilization is only 40 per cent.

Our future strategy is to gain market share and add up new technologies. Going forward, we intend to grow around three to four fold of our current volumes. I mean, by 2016, Zamil Steel aims to grow four times the size it was in 2013.

 

How do you see the PEB sector evolving after the general elections?

It is not that there is no money in the market but currently sentiments are down and therefore people are not willing to spend; this is what is affecting the market. Post-elections, if a stable government emerges then people will feel the confidence coming back. If you look at the market, then you will understand that the market has grown beyond the requirement. Like the automobile sector which was growing at 18 to 20 per cent year-on-year; it is not sustainable growth, the correction had to happen. Therefore, once the correction happens, the future years of 2015 to 2017 will be much better.

 

PEB has multiple advantages vis-à-vis traditional construction technologies but it has still not reached its true market potential in India.

In terms of usage of steel, India ranks amongst the lowest globally. Even countries like China, Brazil and Russia have a higher usage of steel. Traditionally, steel in India has only been utilised in the industrial segment. Only a little steel has been utilised in housing or retail segments. Therefore, there is not much usage of steel but slowly the concept is changing. Nowadays most of the labour colonies or temporary housing and retail malls are switching over to steel structures.

Today, the cost of bricks is nearly four times what it was two years ago. As sand, cement, bricks and water become scarce, steel will emerge as the preferred type of construction material. Today, we are getting enquiries for even residential accommodation being built out of steel. With environmental and pollution control embargoes coming in, the prices of traditional products will rise and steel will emerge as the flavour of the market.

 

Pre-engineered steel buildings are quicker to build and almost 45-50 per cent cheaper than conventional buildings. Would you, therefore, consider PEB as the ideal solution for affordable housing on a large scale?

Yes, 100 per cent. If you look at low-cost housing, the major cost is the land cost apart from the superstructure cost and substructure cost. Our rough calculation is that the substructure cost is around Rs 300 per sq. ft while superstructure cost is Rs 500 per sq. ft.

If you take out the substructure cost and go high-rise then you can actually save more. Therefore, below Rs 800 per sq. ft none of the builders can provide you with a house. Whether you term it as low cost or high cost, it is a cost. The main costs comprise land costs and project delays. Efficiency will make housing affordable.

 

There have been reports that PEB supply is in excess of demand thereby hitting margins. What is the impact on the industry?

There are people who have come and joined the bandwagon. This has totally changed the expectation of the customers. Customers now dictate prices and ask PEB companies to accept or leave it.

Now PEB companies are trying to ensure cost revalidation and achieve efficiencies through internal realignment of technologies as well as resources.

 

Residential sector continues to witness lower PEB demand vis-à-vis manufacturing and industrial segments. Going forward, do you see a change in this scenario?

Not in the near future. If you look at the point of view of residential units then there are alternate technologies available such as precast. Speed is not a main criterion in the residential segment since none of the projects are completed within timelines. If speed of construction was the only criteria then PEB would grow in the residential segment.

 

Some experts feel that warehousing is going to create fresh PEB business opportunities due to shortage of storage facilities.

Warehousing is something that already exists. Going forward, PEB has to grow vertical. PEB has always played on the horizontal plane like ground floor structures. The recent Land Acquisition Act will make landowners think vertical if they want to earn more money.

Therefore, even the PEB industry should think vertically. Zamil Steel is the only PEB company which has done above 50-metre high building in India. Commercial malls and retail shops that were traditionally ground floor structures will now grow vertically. This is one of the growth areas that Zamil Steel is looking towards.

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