Manufacturers to look beyond private construction sector for sustainability by end of 2020
By Milan Thakkar, CEO, Walplast With the ongoing lockdown across the country, manufacturing of non-essential products has been brought to its knees as India tackles the COVID-19 pandemic. The real estate, especially the residential segment, has come to a grinding halt and is expected to face a further slowdown by the end of 2020. As per a CRISIL Ratings analysis, five sectors, with around Rs 92,000 crore in rated debt, have the least resilience due to lock-down imposed by the government which includes the real estate market. As per an ANAROCK report, housing sales are expected to decline 25-35% in 2020. Keeping these factors in mind, manufacturers of construction materials are exploring alternative routes that can be explored in order to sustain profitability. Affordable Housing The Central government had recently announced approval of Rs 6.16 lakh crore investment for the Pradhan Mantri Awas Yojana (PMAY) – Urban (U). It seeks to provide all weather pucca houses to beneficiaries in the economically weaker sections in urban areas. This includes a committed central assistance of Rs 1.65 lakh crore. This in turn will lead to manufacturers in the private sector participating in these projects that are directly aimed at providing the Economically Weaker Section (EWS) and Lower Income Groups (LIG) segments housing at an affordable price. Refurbishment Market As the government as well as RERA bodies across states have extended the deadline period for completion, real estate projects are expected to take off in full steam as the builders have been given a grace period and shown faith in meeting their deadlines. The Indian ceramics tile market is worth Rs 250 billion and is expected to grow to Rs 507 billion by 2023. This in turn will ensure the supply and demand for adhesives and plaster needed for the refurbishment of the tiles across the country. Monument Restoration The Indian government is also actively investing in the refurbishment and restoration of historical monuments across the country. Recently, the Qutub Minar was opened with revamped parking space and various other new facilities which was developed by the National Building Construction Corporation. Last year, the Archaeological Survey of India (ASI) had taken out tenders for a major restoration of the Taj Mahal. The ASI is also working in the restoration and conservation of the Ta Prohm temple in Cambodia. Thus, the government is partnering with several public as well as private sector companies to continue restoring heritage and cultural sites in India as well as South-East Asian countries like Vietnam, Myanmar, Indonesia, etc. This effort is expected to continue post the lockdown and thereby manufacturers should look at diversifying its demand and supply towards this effort.
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