Things are looking up for roofing sheets manufacturers

Things are looking up for roofing sheets manufacturers

Comments Off on Things are looking up for roofing sheets manufacturers
The government has also launched an ambitious program “Housing for All” scheme under Pradhan Mantri Awas Yojana. Under this scheme the government aims to provide affordable housing for the poor. Under this scheme, the Government is aiming to build almost 20 million homes by the year 2022

Recent turn of events have made roofing industry, especially Asbestos cement sheets (ACS) makers happier, as they feel demand curve may move upwards and little steeper too. First of all, this year’s Monsoon  seems to be normal, though it is little too early to arrive at a conclusion. But the trend so far and the prediction of IMD both give positive feelers for the industry. Added to it is the recent central government decision to increase minimum support price for some of the farm products which is likely to increase the disposable income of the rural masses. 

Further, GST has been kind to this industry and therefore, was not impacted much, in terms of demand, upon the introduction of indirect tax regime last year. Asbestos cement sheets makers and other similar products were paying duties of around 28% before GST was introduced. However, once the GST was introduced, new rate of tax applicable has come down to 18%. “This 10%reduction has brought us now at par with the steel and I think that definitely is supporting the drive for this business and we definitely see that going forward as well,” said the Managing Director of a leading roofing sheets manufacturer in the country. It is also true that while steel price is going up, cement price has almost stayed stable thus giving these manufacturers additional comfort in terms of raw material cost. 

Apart from favourable raw material and taxation environment, roofing sheets also face friendly atmosphere on many other fronts. For example, Census 2011 has pointed out that people are migrating from kuccha (temporary) roofing of thatch and tiles to more durable pucca (permanent) roofing products and RCC structures. During the ten year period from 2001 to 2011, total share of kuccha roofing has reduced from 52% to 38% while pucca roofing and RCC has increased from 48% to 62%. It is also mentioned in the Census 2011 that more than 33 million households have a kuccha roof, indicating the potential for migration to pucca roofing. It should be noted that the pucca houses have either RCC structures or fibre cement sheets & related products.

Both these alternative have almost equal market share.  Affordability of fibre cement sheets over RCC (cost being almost one third of RCC based roofing) is likely to drive the demand for fibre cement sheets. Improvement in farm incomes, thanks to better Monsoon and hiked MSP will speed up the process of migration from kuchha roofing to pucca ones.

The government has also launched an ambitious program “Housing for All” scheme under Pradhan Mantri Awas Yojana. Under this scheme the government aims to provide affordable housing for the poor. Under this scheme, the Government is aiming to build almost 20 million homes by the year 2022. Though the houses will be built by the respective state governments, the Central government will provide central assistance to the tune of Rs2 trillion. Government has identified 500 more cities and towns in 9 states under this plan to be covered in the first 3 phases. With an increase in allocation to Rs23000 crore in budget 2018 for the Pradhan Mantri Awas Yojana – Gramin and proposal to complete 10 million houses by 2019 for the homeless people living in ‘kuchha’ houses, now wonder then roofing sheets (especially ACS ) manufacturers are all at smiles.

It should be noted that roofing sheets, especially ACS industry, is rural centric and is heavily dependent on rural demand for its survival and growth. Period from 2015-17 was bad for this industry as the rural economy was hit hard by poor Monsoon and resultant fall in farm income. Then prevailing lower steel prices too didn’t help the cause of this industry as customers found prices of metal roofing sheets very competitive. However, things are changing favourably for ACS industry as rural economy is looking up and two consecutive good Monsoons have changed the rural scenario. Further, unlike in 2015-17, steel prices have started moving upwards making them less attractive vis-a-vis other roofing products. Steel prices have gone up in the later part of 2017 and as a result of the same, price difference between ACS and its competing product like colour coated steel sheets and normal steel sheets have increased by 30-40%. Whatever benefits they enjoyed in terms of tax/duties, they no longer remain after the intorduction of GST. 

Also general elections are fast approaching and the government wants to improve its report card. So there will speedy implementation of several government programs including hosuing projects which should enhance the demand for roofing products in the near future. Also, the government is epxected to increase its rural spending in the coming months to appease the rural elctorate. This also a good new for the industry. 

At the same time ACS manufacturers are aware that in the long run they have to innovate alternative products as the people are becoming more and more environment conscious. For exampl, HIL has started production of Green Roofing Solution, Non Asbestos corrugated Roofing Sheets at Kondapalli Plant, Andhra Pradesh. This  new range of cement based asbestos-free sheet, branded as “Charminar Fortune”, has been introduced post an in-depth analysis of the market and its requirements in the roofing segment. With this product, HIL is offering an alternate option to the institutional customers for durable roofing solution which is superior to other roofing products available in the market. Similarly, Visaka Industries has launched a new roofing product – ‘ATUM’, a solar roofing product, which is eco-friendly, energy efficient and energy generating roof. In the years to come, this will reduce Visaka’s dependence on ACS which is presently the second largest producer of ACS in the country. Thus, fear of becoming extinct making way for newer and innovative products which is also a good news for the industry.