The Indian plumbing industry is down. The implementation of the Real Estate Regulation & Development Act (RERA), Goods & Services Tax (GST) and demonetisation majorly impacted business across all sectors including plumbing during 2017, opines Gajanan S Dikondawar, General Manager, Innovation & Technology, The Supreme Industries.
'Demand for plumbing has contracted about 15 per cent this last year, the cumulative effect of demonetisation, and the implementation of RERA and GST,' estimates Gurmit Singh, National President, Indian Plumbing Association. Essentially,'both commercial and residential construction has slowed as a result of unsold stock with builders.'
So, whereas the industry typically grows at 15-18 per cent annually, with these new introductions, new residential real estate launches slowed, in turn, dropping expansion to around 10-12 per cent, reckons Guru Raja Rao Gangaprasad, Vice President, Sales (Building Services), Grundfos Pumps India.
Affordable housing is still in demand across India, observes Chintan Daiya, Partner & Director, D'Plumbing Consultants.'What has slumped to the detriment of the plumbing industry are sales of mid-level and premium residences and/or commercial premises especially in the metros because of a correction in their (unreal) pricing.'
'Many projects have been shelved, put in cold storage, or are being restructured to meet the budgetary demand, thus curtailing the opportunities and also creating a fiscal delay in the planning and management of all types of projects,' says Daiya.
As a result, Dikondawar estimates the overall plumbing industry growth at about 10-12 per cent last year against its natural 20 per cent growth.
Some drivers of the plumbing industry are performing well. The hospitality and tourism sector has been growing consistently across the country at around 16 per cent, and medical tourism is also seeing 22-25 per cent YoY growth.
Also, piping alone (excluding sanitaryware and chrome-plated fittings) fortunately continued to grow at about 20 per cent last year,' says Dikondawar.
'Growth has not slowed at all in the last one year; we are enjoying 20-30 per cent annual growth,' says Ravi Shinde, General Manager, Marketing, Paras Group.
With the impact of the regulatory changes now settling, Dikondawar expects the overall plumbing business to revive in 2018.
Also, with the overall economy showing signs of recovery, Singh is hopeful of the plumbing industry returning to a growth mode in the next six months or so.'Another positive development is the number of realtors launching affordable housing projects as plumbing demand from this segment will help revive the industry,' he says.
The Indian polyvinyl chloride (PVC) pipes and fittings market is currently worth around Rs 20,000 crore, reckons Rajesh Pajnoo, President, Pipes Division, HSIL.
Within this, the segment composed of PVC products for agriculture, irrigation and potable water transportation, enjoys the bigger share and is growing steadily at ~10 per cent, says Pajnoo. However, the fast growing segments are chlorinated PVC (CPVC), un-plasticised PVC (UPVC) and soil, waste and rain (SWR) plumbing and sanitation products used in the building construction industry, which he says are driving the overall industry growth. While UPVC and SWR are growing at ~14 per cent, CPVC is growing at 25 per cent. At this rate, he expects the market to touch Rs 36,000 crore by FY2023.
'UPVC piping for cold water applications, CPVC piping for hot water applications and PVC piping for sewage systems are the preferred solutions,' says Shinde.
Believing that PVC pipe variants will gradually replace conventional galvanised iron (GI) piping systems due to their relative advantages, and considering that this shift will boost the demand for quality CPVC and UPVC products, HSIL has entered the piping sector. With this move, HSIL becomes a comprehensive bathroom solution provider,'something that large buyers are sure to value,' says Pajnoo.
Based on the existing trend, Pajnoo expects the market for the fastest growing high-quality CPVC category to double in the next four years.'Demand will especially increase for branded products, and the organised players will also drive growth in the sanitation segments.'
Organised players offer piping that meets specified standards, which developers look for.
'For potable hot and cold water distribution systems, we prefer CPVC pipes that meet the IS: 15778:2007 and ASTM D2846 specifications, while for rigid PVC pipes, we use products meeting the ASTM D1784 standard,' says Bhasin.'We are equally conscious about the solvent cements we use for CPVC pipes and fittings; we buy products meeting the ASTM F493 standard specification.'
Why CPVC and UPVC pipes score?
'CPVC systems enjoy 70 per cent of the plumbing piping for the potable drinking water market across the residential and commercial segments, and have been growing at 30 per cent in the last three years, says Dinesh Jain, Senior Area Sales Manager, Shand Pipe Industries (Raksha Pipes). According to him, UPVC is finding fewer buyers as its application is limited to cold water distribution, while the current market trend is to install a piping solution that can distribute hot as well as cold water, and deliver a better result.
'CPVC and UPVC are better than metal pipes for being less expensive, easily available and replaceable, more resistant to rusting and scaling and easier to lift transport and work with,' says Vikas Bhasin, Chairman & Managing Director, Saya Group.
'We prefer CPVC pipes over metal pipes for being rustproof, longer-lasting and not reacting chemically,' says Deepak Kapoor, Director, Gulshan Homz.
Prospects for metal pipes
Although plastic piping systems have gained wide spread acceptance, GI piping still has its own share, notes Dikondawar.
Mild steel is more suited to uses such as dry gas and air transport around buildings, also for hot steam wastes, says Ashwani Sharma, President, Business Development, Swastik Pipes. In buildings, steel pipes find use in heating and plumbing systems, tubular poles and street lamps, water treatment construction and other facilities.
According to Sharma, steel pipes are more durable due to their protective technique (hot dip galvanising), also stronger than PVC pipes and more resilient. Steel pipes can be installed in hot weather area as well as low temperature area. Aluminium products in comparison are less strong and durable.
At Gulshan Homz, we prefer metal pipes for vertical positions that are associated with lower chances of rust, and which require piping of high tensile strength, says Kapoor.
Hydro pneumatic systems
Plumbing and fittings are typically seen as related but independent market segments. However, one key development in the fittings segment that has impacted the market for hydro pneumatic systems is the increasing adoption of high-end fittings by 90 per cent hotels and all premium residences, observes Gangaprasad.
'High-end fittings optimally require a pressure of 3-4 bar whereas overhead tanks situated 10-15 ft above the terrace level can only achieve a maximum pressure of 1.5-2 bars for the top floors (say the top three of 10 floors) of a high-rise,' says Gangaprasad.
'So, the popular trend is for developers to mix overhead tanks for the lower floors with a hydro pneumatic booster system for the top floors, to ensure the fittings work optimally in the top floors.'
With hydro pneumatic systems being accepted and widely used in residential and commercial projects, questions arise on its economic sense. A hydro pneumatic system can save 10-15 per cent of capital cost as it eliminates the use of the overhead tank, one run of piping from the sump to the overhead tank and allied structural strengthening of the building. On the operational cost, a hydro pneumatic system saves around 3-5 per cent of energy consumption as the pumps run only when it is needed. Over and above this, Gangaprasad says hydro pneumatic systems deliver a star hotel experience at home.
Shift to New Geographies
The wave of smart cities has opened up new avenues in Tier-II and Tier-III cities, according to Chintan Daiya, Partner & Director, D'Plumbing Consultants.'Newer residential townships and commercial business districts in smaller cities like Pune, Nashik, Raipur, Surat, Mohali, etc, are poised to change the geographical focus of the industry.'
- CHARU BAHRI
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