BASF - Strengthening India's Structures
How is the Chemical & Waterproofing industry growing in India in view of increased infra development and construction activities?
According to a report published by Transparency Market Research (TMR), the global Waterproofing Chemicals market valued at $7,669 million in 2015, is expected to reach $ 12,335.2 million by 2024, growing at a CAGR of 5.1% between 2016 and 2024.
India’s construction industry too, shows tremendous potential. We see multiple opportunities with the current government’s focus on developing the manufacturing sector and infrastructure. Accordingly, our solutions will address the need for long-lasting infrastructure (concrete admixtures, waterproofing, repair & protection solutions, refurbishing concrete cracks, prevention and repair of corrosion, special grouts for installation of heavy machinery like power turbines etc).
Increasing urbanization, focus on environmental regulations, consumer preference for green buildings, along with strict safety regulations and compliance with them, energy utilization, need for fast-setting construction chemicals and solutions that enhance the long-term durability of structures, are also driving growth of the Chemical & Waterproofing industry.
Simultaneously, opportunities for the construction industry in emerging markets like Vietnam and Indonesia are rising due to their government’s focus on improving infrastructure, and expansion of the real estate sector. Overall, we believe that the growth and development in South Asia in the construction, public infrastructure and automotive industry are likely to boost the waterproofing chemicals market in the region.
How have Demonetization, GST, and RERA impacted the market for waterproofing and chemicals in 2017?
Indeed, the Indian market saw an immediate impact of moves like Demonetization and GST implementation. Demonetization aimed at promoting a cashless economy, impacted the overall construction industry, which witnessed a slowdown, especially in the tier 2 and 3 cities due to the cash crunch.
We, however, saw demonetization as a good opportunity to shift to digital payment systems, encouraging our distributors and applicators to move from cheque-based to e-payment mode. The “me too” products, such as the cementitious waterproofing and SBR-based products have taken a hit, which is more of a distribution/retail sales challenge.
With the implementation of GST, many dealers/distributors/applicators and even smaller contractors, who were not a part of the tax paying group, will now come under the tax bracket. With GST, we would now have access to more trustworthy parties whether it is a supplier/vendor or our customers. From a product perspective, this enables us to open our high-end product portfolio to all customers, which will increase our market penetration even further.
Low occupancy levels and incomplete projects have led to a reduction of the industry’s market size in waterproofing and repair (WPR) by 15–20% in metros and tier 1 cities. With implementation of the Real Estate Regulatory Authority (RERA) Act, the industry hopes to see more streamlining and controlling of non-serious builders/developers. In the long-term, this could be a boon, where developers will begin to adopt long-term, durable solutions, which would help the market to re-grow.
How important is the Indian market for the BASF Group and which application area/industry is your major business contributor?
Developing nations in Asia Pacific and South American markets have seen tremendous growth potential in the last few years. According to the Global Construction 2025 report by PricewaterhouseCoopers, 2015, India is expected to record the maximum growth rate in the forecast period, compared to other nations in the Asia Pacific. With the current government at the helm, there are a lot of expectations from the Indian economy. Many infrastructural and housing developmental plans have been put in motion by the government, and this is a positive signal.
Metro projects, road project, railways, nuclear projects and affordable housing are some of the areas where we see potential partnerships and opportunities. We also see a surge in the number of international construction companies approaching India as joint venture partners or directly. We see this as a unique advantage for BASF, as after launching Master Builders Solution category brand, we have a common branding across the globe, and are a brand of repute for all such international players.
How do you correlate sustainability with your products? How many points with the application of your products, help a building in earning a LEED rating?
Sustainability is a driving force for our activities in the construction sector. We support partners in sustainable construction by offering our expertise and solutions along the entire value chain (from raw materials to construction products to buildings and housing over the whole life cycle). Moreover, we have one of the broadest product ranges in raw materials, formulations, end-products and systems for construction chemicals.
Green building rating and certification systems have gained more and more importance in the construction market in recent years: These include LEED (USA, International), BREEAM (UK), CASBEE (Japan), HQE (France) and DGNB (Germany). Depending on the scheme, they combine different environmental criteria like energy efficiency, indoor air quality, resource use and waste as well as economic and social aspects. Our products contribute to gaining LEED points for increased energy efficiency, help to enhance indoor air quality, facilitate water management, enhance user comfort, reduce embodied carbon or contribute to enhance life cycle assessment amongst others. For example, our insulation materials increase heating or cooling efficiency, reduce use of fossil fuels, and increase design flexibility; our dispersions help to lower indoor air emissions; and our admixtures enable use of recycled material in concrete mixes and enhance durability. Furthermore, we provide EPDs (Environmental Product Declaration) for our products, and list ingredients for product transparency and safety.
How is the company innovating through R&D to find specific solutions for emerging markets of South Asia and Asia Pacific?
In 2016, BASF SE’s research pipeline encompassed around 3,000 projects, and spending on R&D was €1.863 billion. Around 10,000 employees work in our R&D worldwide, and we’ve invested around €300 million in India over the last four years.
How does BASF meet the challenge of offering cost-competitive but high-quality products in a highly price-sensitive market like India?
We believe that competition enhances innovation and is good for customers. At BASF, we constantly look at areas of differentiating ourselves in terms of the quality of products, services, product portfolio, customer engagement, training & knowledge sharing etc. This gives our customers an overall portfolio of services and ensures that we can command a premium over our competitors. We ensure that there is no scope of any play with quality in our organization for any product, which helps us to win over competition sooner or later.
Waterproofing is still not given due importance in the country and contractors use whatever cheap products they get, resulting in leakage/seepage in structure soon after application. What initiatives is BASF taking to promote sound application practices to create awareness among consultants, architects, and end-users?
We continuously strive to update influencers and end-users on the most advanced technologies that are fast-setting and easy to apply. Additionally, we organize periodical training, which include certification to offer sound application practices. We work closely with equipment manufacturers to help their installers use the right equipment and tools necessary for sound application of our products, thereby, furthering product stewardship and leadership in the community. Our Master Builder brand assists us in this brand recall.
The Indian market is seeing huge opportunities coming from infrastructure development across the country. What are BASF’s plans for introducing new products and expanding distribution network to meet the upcoming market demand?
We plan to be a part of India’s growth story driven by investments in construction and infrastructure, and have the capacity to meet future demand. Our strategy is to work with key stakeholders to keep an eye on material and machinery technology. By remaining agile and quickly adapting to changes in the market, we will be able to take on opportunities. Through the combined power of our people, processes and products we expect to maintain and grow our presence across various segments.
We inaugurated our 6th construction chemicals plant in 2016 in Kharagpur, and now with our six plants spread across India, we can easily meet the requirement from the construction industry for our products. We are working to ensure optimum capacity utilization for all our plants. We would now like to ensure that these plants are able to run at complete capacity before planning any further investments. Moreover, with GST in place, we have streamlined our warehousing facilities to efficiently serve the market. We are also developing products that can help constructors to complete jobs faster while maintaining quality and safety.
NBM&CW February 2018
