The concept of ready-to-use cut and bent rebars is gathering momentum and will be the norm in future for the construction industry.
In civil construction, producing steel TMT reinforcement bars (rebars) to required size, shape and quantities and fixing them at site is a major time-consuming activity in fact, a bottleneck and challenge in achieving the targeted construction cycle time. As a result, the concept of ready-to-use cut and bent rebars is gathering momentum and will be the norm, in future, for the construction industry.
At present, the entire construction industry is reeling under immense pressure for timely delivery of projects and minimum costs. In high-rise construction, floor-to-floor slab cycles are being monitored by developers or project owners. Upcoming Greenfield, cross-country and renewable energy projects are being established at new or remote locations. Add to the woes the acute scarcity of skilled and trained manpower.
Led by Tata Steel, JSW Steel, Larsen & Toubro and other such renowned industry players, India is witnessing the emergence of automatic rebar processing (ARP) at various locations in the country. However, to date, these are at a nascent stage and process only 2 per cent of the annual production of nearly 21 metric tonne (mt) of TMT bars. Let´s take a closer look at the technology, methods and equipments used in these ventures, which have unlimited growth potential.
Most rebar processing contractors deploy a huge number of separate, manual cutting and bending machines for the purpose. The operation is laid out in large open yards. The raw material is supplied in 12-m-long bars and loose coils for diameters 6 mm to 12 mm. The same is converted to usable size and shape by a manual cutting and bending process one bar at a time. Obviously, gross inefficiency, low productivity, poor quality, 5 to 8 per cent wastage and delayed deliveries are inherent, thereby contributing to construction delays and costs. Stirrups are a major challenge as complex shapes and large quantities are required. Large or mega high-rise building projects, for instance, need 25,000 to 40,000 per day.
Progressive suppliers and construction companies have commenced using ARP in their operations. To implement this technology-driven method, it is necessary to set up either a completely automatic or semi-automatic rebar processing facility. For Indian conditions, the latter version is advisable for reasons of minimising investment in imported equipment and the fact that employing a few extra workers doesn´t hurt much when compared to highly developed countries. Typically, the equipment required includes shear lines with input and output conveyors along with finished product storage racks, automatic single or double benders and automatic stirrup benders with de-coilers. The quantity of each type of equipment depends on the production capacity planned by the end user.
The equipment is set up to ensure smooth material flow.
´In ARP, one man´s output is equal to 10 men in the traditional method,´ points out Vipin Sanghani, Proprietor, Orient Agency, Mumbai. ´The cost of C&B in ARP plants is only 25 per cent of the cost in traditional methods.
In ARP, cost per tonne is only Rs 1,000.´
The use of optimising software is essential to achieve the desired level of accuracy and productivity and minimise wastage. The same is either available in-house from some suppliers while others integrate software solutions like Ariadis Armaor, aSa Reinforcement Steel Software and others. All these solutions have immense capabilities encompassing generating bar bending schedule (BBS) with 2D or 3D drawings, bar coding, uploading the same in all the equipment, managing production cycles, tracking materials, inventory control, minimising wastage, and even printing the delivery tags for dispatch. The facility of web access to the plant from a remote location is also possible.
Start up struggle
Paresh Kapashi, Managing Director, Indu Corporation Pvt Ltd, Mumbai, draws an analogy to the RMC business to explain his struggle in gaining customer acceptance to ready-to-use rebars. ´Initially there was a struggle to establish the ARP business as such an offering was way ahead of its time for the Indian markets,´ he says. ´It has been similar to the case of ready-mix concrete (RMC) in its first two-to-three years.´ RMC, initially unheard of, was gradually accepted by the industry and is thriving. Kapashi highlights the challenge:´Customers have been reluctant to pay extra for ready-to-use rebars. We start with Rs 3,500 per tonne and settle in the range of Rs 2,500 to 3,000 per tonne.
But this struggle should get resolved in another one to two years as labour availability gets more scarce, requirements grow and quality consciousness improves; this business is set to grow.´
Opportunities in store
´Once the government´s planned projects take off, India will add 40 to 50 new plants every year,´ says Sanghani. ´At least 50 per cent of the rebars sold will be processed in these plants. For example, the Mumbai area consumes 1 lakh tonne of rebars every month, but the five to six ARP around Mumbai can supply only about 10,000 tonne per month. So the potential is huge. People do not realise that ARP is a better business model than RMC. The ARP business has low operating costs and high output, less manpower, only one raw material, working in a fixed location in controlled environment, less machine wear and tear, and no pollution.´
Evidently, there is an opportunity for RMC suppliers and other businesses involved in providing construction materials to diversify to ARP. They will have the advantages of common clients, logistics and better manpower utilisation by investing in this type of business.
The way forward
Most leading brands like Schnell Italy, KRB Machinery USA and MEP Italy are present in India, through their authorised distributors. These agencies provide onground support to both new and existing customers for equipment selection, procurement, installation and commissioning, warrantee administration, after-sales service and spare parts.
Their strong presence in the country
has instilled and boosted customer confidence to use this value proposition and derive rich benefits.
Although this is an emerging market, adopting the ARP technology and method will undoubtedly be a boon to all stakeholders of the rebar industry in times to come.
Simple work process
"For a 100 tonne-per-day capacity, the investment in equipment is `5 to 6 crore.¨
PARESH S KAPASHI, Managing Director, Indu Corporation, elaborates on investments and returns in ARP plants.
Industry growth: One of the technical reasons for this industry not growing fast is that 8 or 10 or 12 mm diameter coils are required for making stirrups rather than straight bars. Of the 21 million tonne, 15 million tonne is produced by re-rollers who only produce in straight bars. As such there is a resistance from them to supply cut and bent. By feeding them in stirrup machines, the productivity is only 20 per cent. Growth in this industry will happen as the main producers increase their production. Six million tonne is produced by integrated steel producers. When that goes up to 10 to 15 million tonne, we will see additional growth of 25 per cent in the near future. Today, we sell 3,000 tonne per month. By 2018, we are expected to sell at least 4,000 tonne per month.
Investment to set-up ARP plants: For a 100 tonne-per-day capacity, the investment in equipment is Rs 5 to 6 crore. The larger investment is in the land and shed, depending on location. In metro cities, the land cost is high but in Tier II cities like Nasik, Aurangabad, etc, the land cost will be 10 per cent and the total investment will be within Rs 10 crore.
BEP and ROI: The break-even point (BEP) is at 800 tonne per month. Beyond that the contribution margin is 25 per cent. Fixed cost is only for skilled labour, while software engineers are needed for feeding the BBS. Running at 3,000 tonne capacity, our payback period will be two years. At present, we are at 50 per cent capacity and expect to reach 100 per cent capacity utilisation by next year. The upcoming Navi Mumbai Airport will be a huge opportunity as we are only at a stone´s throw away from the site.
Is ARP a worthwhile business? Yes; while my other business lines deliver 4 to 5 per cent margins, C&B margin is 25 per cent. Stirrups are still better as we get Rs 5,000 per tonne.
Expansion plans: We are planning to set up another facility in Taloja for which land has been purchased. We have added two ring benders for diameters up to 14 m with investment of only Rs 25 lakh. Payback will be in six months. Otherwise for every 1 m there is a kink. The application is for windmills, a big focus of the government. We can expect a demand for 1 million tonne this year only from windmills. INOX requires 900 tonne per month from one site at Ratlam and has given guaranteed projection for the next nine years for rebars.
Major customers: Customers from windmills, solar power and power distribution (power grid contractor) have been early adaptors. At present, we will cater to 38 customers in building construction projects ranging from 12 to 60 floors.
´India needs at least 200 to 300 rebar plants against the present 50 to 60 operational plants.´
VIPIN SANGHANI, Proprietor, Orient Agency, shares more on his ARP business and an industry perspective.
Why ARP: We were already selling small C&B machines and ARP was the progressive extension of this business. In 1997, we had an enquiry from L&T for ARP machines for the first phase of the RIL Jamnagar refinery project and this started the business. Current potential for ARP industry: India needs at least 200 to 300 rebar plants compared to about 50 to 60 plants now in operation. There will soon be a shortage of skilled bar-benders when more projects take off. Principals and major customers: Our principals are Schnell Spa of Italy. Our customers include Tata Steel dealers across India, L&T, RIL, Shapoorji, steel producers (rolling mills), large contractors, and real estate developers like Jaypee, Marathon, Indiabulls, etc.
Reasons for low acceptance: The best machines come from Europe, the exchange rate is not favourable, and has high import duty. Also, resistance to change of existing methods, availability of labour (though not cheap and less productive) is one reason. Last, the reluctance of contractors to use new technology unless made mandatory in the tender or insisted by the consultant. There is huge ignorance and lack of awareness of the concept by industry professionals.
- SHANKAR SRIVASTAVA
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