Kirby Building Systems is a global leader in the design and manufacturing of pre-engineered steel buildings and structures, offering customers a wide range of customized, cost-effective pre-engineered steel solutions.
D Raju, MD – Kirby Building Systems India Ltd told Sandeep Menezes that the industry growth is mainly dependent on the new government’s economic revival plan which will propel companies to increase their capital expenditure.
Excerpts from the interview:
What is the current industry size for PEBs in India? Tell us about the recent trends in the industry?
The usage of steel and especially Pre-Engineered Steel Buildings (PEB) is growing very rapidly in the Indian construction industry. In the year 2000, when Kirby started its operations in India, PEB concept was not well known in the country. In the past decade, the industry has grown rapidly at an average of 15-20 percent per annum. Though the industry growth has been subdued in the recent times due to current economic slowdown, we expect a positive growth momentum in PEB market in future given improving investor sentiment & formation of stable government at the center which is expected to expedite the necessary steps to be taken to bring back the economy on growth curve. The industry is currently estimated to have reached market size of over 500,000 MT per annum.
Kirby India has always been in the forefront of innovation by investing in new production technologies and evaluating the performance through continuous product development. This is well evident from the company’s entry into unexplored areas like power plant structures, bridge girders, metro stations, shipyard structures, etc. Integrating the company’s strength and expertise along with innovation has helped the company lead the Indian PEB market. Apart from the functional requirements, the company has incorporated curved roof panels, wall claddings, flashings, aluco-bond panels or other such features to improve the aesthetics of the building as the industry is witnessing a new trend with demand for structures that are different in nature and appealing enough from various aspects.
Going forward, how much growth do you foresee in the PEB industry? Tell us about the main growth drivers?
We are very optimistic about the growth of PEB industry in 2014 and coming years, and confident that Kirby India will also achieve a strong growth both in terms of bagging orders and sales when compared to 2013. The industry growth is mainly dependent on the new government’s economic revival plan which will propel companies to increase their capital expenditure that has slowed down considerably over the past 15 months thereby leading to the growth of PEB industry. These buildings are light weight structures and more or less restricted to the manufacturing sector. But Kirby India has already constructed many low rise structures and has also successfully ventured into many unexplored territories like power plants, bridge girders, shipyards, offices / commercial buildings / residential buildings, multiplexes, multi level car parking structures, airport terminal buildings, etc. These are some of the areas which are likely to be some of the growth drivers apart from other macro economic factors.
Do you feel that warehousing can emerge as a huge demand driver for PEB industry?
Warehousing is already a huge demand driver for PEB industry as more than 80 per cent of warehouses are currently being built with this technology. Though the previous government announced some policies to open the route for FDI in the retail sector but there were many points which are not clear to the foreign investors or major retail giants or other single brand stores who are ready to invest in the Indian retail sector and believe in the India growth story.
Lack of modern warehouses and inefficient infrastructure and supply chain management have led to heavy losses in billions due to tonnes of food grains lying in rotten condition over many decades. But the scenario has changed with the demand for modern warehouses has witnessed an tremendous increase over the last decade or so because of influx of multinational companies or manufacturers which has attracted many private equity firms to invest in the warehouse infrastructure. Also, the trends in technology along with innovations are further giving impetus to the PEB technology in the warehousing segment and will continue in the coming years.
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?
PEB industry is not highly dependent on the stalled infrastructure and construction projects as the industry is growing even without any movement in the projects that are on hold. The industry is dependent on the new capex investments which has slowed down considerably when compared to last 2-3 years but has not hit the road block as there are still new investments being announced and the industry is execute those projects. Also the industry has diversified into other areas because of the slowdown in the manufacturing sector growth due to weak market demand and other factors. The new government has a tough job in their hands with the road laid with full of challenges to revive the economy and create positive environment among both investors and the consumers. They need to take various micro and macro economic factors such as current account deficit, fiscal deficit, inflation, interest rates, etc. into consideration to tackle the current economic scenario and I am hopeful that this government will bring back the economy on the growth track in coming years.
There were recent reports about PEB supply being in excess of demand thereby hitting margins. Tell us about its impact on the industry?
PEB supply exceeds that of demand by more than 50 per cent because of entry of more than 15 players in the market over the past 5-6 years and many local fabricators. In addition to this with limited number of projects under finalization, the industry is going through tough times leading to very stiff competition in the market. Though the industry is impacted by the current economic slowdown and various other factors, Kirby India is able to maintain its leadership position with healthy margins by overcoming the tough challenges that exist in the market with its innovative strategies.
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?
Indian construction industry has evolved from its initial preference towards conventional and RCC structures to the PEB in low rise industrial buildings in the last decade mainly because of rapid economic growth, rising middle class, increasing disposable incomes and many such factors. PEB concept which is well established in North America and European countries is gaining popularity in India also and making inroads in commercial, industrial as well as residential segment across rural and urban areas. It is 30 to 40% faster than masonry construction, provides good insulation effect and is suitable for construction in remote and hilly areas. There are various advantages related to the PEB which can easily address India’s huge infrastructural requirements in areas of housing, commercial, industrial, etc. 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 friendly and sustainable, and architectural versatility with buildings being supplied in combination with many other components.
In the developed markets, PEB is already being used for low rise structures (G+5) such as offices, hospitals, retail malls, housing and resorts whereas in India, PEB is yet to venture in these areas. For instance, over the past five years, Kirby India has made technical improvements in its product, construction time, aesthetic efficiency, etc. Apart from the functional requirements, the company has incorporated curved roof panels, wall claddings, flashings, aluco-bond panels and many such features to improve the aesthetics of the building as the industry is witnessing a new trend with demand for structures that are different in nature in all aspects.
The commercial building sector in India is estimated to reach a target of 20.44 billion square feet by 2030 from 7 billion square feet in 2010. It is expected that nearly 34 percent of 2030 target had already been constructed and about 66 percent of the building stock is yet to be constructed. Kirby is already catering to this sector and has supplied many buildings with some of them already under completion stage as this sector is expected to provide very high volume of business in coming years. This is because of shortage of homes which is expected to grow at rapid pace due to increasing urbanization with more than 40% 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.
Tell us about the green, eco-friendly initiatives of Kirby Building Systems?
Pre-Engineered Steel Buildings (PEB) is one of the first choices when it comes to sustainable and green buildings. Kirby Building Systems India Ltd (Kirby India) is in the forefront of this innovation and is leading the revolution of green construction in the country through its PEB technology. Steel is the preferred material for all Prefab structures and PEB use steel which is more than 90% recyclable. These buildings are cost effective, energy efficient and provide better quality environment as they are cooler in hot conditions due to the favorable roofing material and natural ventilation. The use of sky lights and solar panels on rooftops will meet daylight and captive power requirements and at the same time reduce emissions and gain carbon credits under clean development mechanism. Effective usage of insulation material, louvers and other materials also help in making PEB one of the most preferred green & sustainable buildings.
Kirby India designs all the buildings as per national and international standards like AISC, AISI, MBMA, IS, etc. through its proprietary software and other standard packages. The company takes all the norms of green buildings into consideration during its design stage itself so that the end user will reap the benefits leading to saving on raw material and natural resources. Kirby India is also a member of Indian Green Building Council (IGBC) and all the structures supplied by the company are environmental friendly which produce very less gas emissions and contribute towards country’s green initiatives and works towards greener future.