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Building Strong Foundations

India Ratings has projected a notable increase in steel demand for the financial year 2024-25, estimating a robust growth rate of 9 to 12 per cent. This optimistic forecast reflects a significant expansion in the steel sector, largely driven by ongoing and upcoming infrastructure projects nationwide. The government's emphasis on infrastructure development, including roads, bridges, and housing, has significantly boosted steel demand, a vital material in construction activities.

Green hydrogen to change steel industry

Green hydrogen is a process produced by splitting water by electrolysis. This will produce and separate hydrogen and oxygen. Hydrogen can be used and oxygen will be ventured into the atmosphere without any negative effects. Moreover, the steel industry is responsible for around 240 million tonnes of carbon emissions annually, which is expected to double at an exponential rate by 2030. So Green hydrogen, in particular, is one of the cleanest sources of energy, with close to zero emissions for steel production.

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The road ahead

The Indian TMT bar and steel industry is poised for growth driven by infrastructure development, urbanisation, and economic expansion. Government initiatives and technological advancements present significant opportunities, while challenges such as fluctuating raw material prices, stringent environmental regulations, and global competition must be navigated. Emphasising quality, sustainability, and strategic partnerships will be crucial for maintaining competitiveness and capitalising on emerging market demands.

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ACCELERATING THE CAPACITY

The Indian steel industry is witnessing a revival with the demand for the construction of new buildings, factories, and mills rising at a steady pace. The economic resurgence has boosted the demand for iron ore, hot rolled coated steel, TMT bars, carbon steel, and structural steel in India. The increasing domestic demand and stricter norms on pollution control have also forced many small and medium-sized steel mills to upgrade their technology.

The Big Push

The Indian government will spend INR 10 trillion on longer term capital expenditure in 2023- 24, extending a strategy adopted to revive growth in the aftermath of the COVID crisis. The allocation is higher than the INR 7.5 trillion budgeted for in the previous year and the highest on record. The year-on-year increase of 33% is only marginally lower than last year’s 35% jump.

A capital outlay of INR 2.4 trillion is provided for Railways which is highest-ever allocation since 2013-14. Only for the Mumbai-Ahmedabad Bullet train project an estimated 70,000 tonnes of steel would be required only for the 28 bridges being built for the journey.

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The Growing Future

According to the Indian iron and steel industry, the TMT steel rebar market has been increasing at a faster rate with a significant growth rate over the years, and it is likely to increase significantly in the projected period of 2022 to 2030. TMT steel rebar market share is predicted to expand by 153.02 million tonnes between 2021 and 2026, at a CAGR of 3.50%.

India is ninth among the world crude steel producers and produces around 32.8 million tonnes of steel. Although India is the largest producer of sponge iron, but its per capita consumption of steel is about 32 kg per annum. India’s finished steel consumption is anticipated to increase to 230 MT by 2030-31 from 133.596 MT in FY22.

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Focus on infrastructure

The current market size of the TMT rebar industry stands between Rs 1,30,000 crore and Rs 1,40,000 crore while the overall construction depending on TMT is worth over Rs 14 lakh crore. Further, the Budget has provided a lot of growth opportunities for the sector as a whole, reflecting a firm commitment to boost economic growth by investing in infrastructure development.

This is substantiated by an increase in capital expenditure by 35.4 per cent to Rs. 7.5 lakh crore for FY23 – 2.9 per cent of GDP. The ‘effective capital expenditure’ of the Central Government is estimated at Rs 10.68 lakh crore for FY23, which will be about 4.1 per cent of GDP. The private spend is also likely to pick up as the pandemic endgame begins and higher private capital spending may fuel a virtuous capex cycle going ahead. The Central Government’s budgetary allocation for FY22 and FY23 is estimated at Rs 5.5 trillion (excluding Air India) and Rs 7.5 trillion respectively (implying 36 per cent year on year/YoY), while including Internal and External Budgetary Resources (IEBR) capital spending is likely to grow at 16 per cent YoY in FY23. Also, the implied Q4FY22 growth rate for central capital expenditure is 36 per cent YoY, which may help revive growth in near term.

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As part of the Budget, projects that would spur demand for TMT rebars include the PM Gati Shakti, driven by seven engines – roads, railways, airports, ports, mass transport, waterways and logistics infrastructure. Other growth drivers include the National Highways network that will be expanded by 25,000 km in FY23 with Rs 20,000 crore being mobilised through innovative ways of financing and the housing sector spurred on by rapid urbanisation. The Budget has allocated Rs 48,000 crore under the PM Awas Yojana for housing in FY23 and aims to complete 80 lakh houses in both rural and urban regions. While there is no direct connection to ‘Har Ghar, Nal Se Jal Yojana’, it has had an indirect impact on the sector with the availability of tap water increasing demand for housing in semiurban and rural areas. The FY23 allocation of Rs 60,000 crore to cover 3.8 crore households would lead to further growth in housing.

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All over the globe, dynamics have changed not only socially but on the business front. Stringent lockdowns helped restrict the spread of deadly virus but their impact on industries and business was severe. While the business environment in general was becoming difficult, for the infrastructure structure it was a double whammy.

During tough times, people make a lot of compromises. These compromises can cost a house or an infrastructure project dearly in the long run. Quality control is one of the largest contributors to a robust brand. Those brands that do not make compromises are the ones consumers should stick with to ensure the quality of their project. The brands tested here have shown in tough times that their quality control remains a top priority for them.

Those brands that could maintain their high quality standards have prospered through this tough year as trust became an important issue for buyers.

The overall infrastructure sector (including construction contracting, realty and roads) were already battling a liquidity crunch, debt burden and shrinking margins. Hence, it was critical to see how the infrastructure sector in India manages to overcome this challenge. If the current scenario is anything to go by, one must acknowledge that the sector as a whole has managed to face the scenario very well. While the Union Government has played its role in terms of focus on infrastructure and creating financial viability, credit must be given to infrastructure players who have managed to hold their nerve during these testing times.

This report hopes to bring clarity on the growth of the infrastructure sector and credible TMT providers who's products have been tested by a government approved testing center. Buyers of TMT should use this report as a guide for how to evaluate TMT rebars and make informed business decisions through the knowledge shared within this report

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The infrastructure sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. And when we are speaking about Infrastructure sector, it includes power, bridges, dams, roads, houses and urban infrastructure development. As Infrastructure improves the economic growth automatically enters the fast lane.

No wonder, the Indian Infrastructure story has been told and re-told with a great vigour every time. However, not much is spoken about the component that provides inherent strength to infrastructure. TMT Bars are still the most neglected segment where more research and analysis is required. With less awareness about the same, unorganised and poor quality secondary players enjoy larger market share.

Infrastructure provides strength to a Country and hence it is important to provide inherent strength to the infrastructure. In simple terms, if the base of any product is low quality, even the derivatives of those products will be low quality. What happens if you make exotic food decorated well with a one rotten ingredient? Will you buy a car which is painted beautifully but has a low quality material used for its body structure? The answer will be a Clear No!

As eventually one rotten ingredient will affect whole dish and even in the case of low quality materials structure would break down, damaging the beautified parts as well.

Just because something is not visible, doesn’t mean we can ignore that ingredient. In infrastructure as well, while a lot has been researched, written and spoken about raw materials like Cement, paints, stones, other accessories etc. (All materials visible to eye after completion of project), there is hardly any research available on Reinforcement Bars (ReBars) also known as thermo-mechanically-treated (TMT) bars.

Rebars form the backbone of any construction, be it the foundation, column, beam or the slab in any RCC structure. The quality of ReBar used in any structure is critical to the overall quality of the structure. Here we would like to ask a simple question, are we really caring about the quality of RE- bar in infrastructure. We have seen awareness being created for pesticides found in various aerated drinks and ill effects of the same. Even Government has taken due care about mentioning a few warnings being printed on the products causing health hazards. We are much more cautious about the kind of food we have. Campaigns are carried to create awareness about organic food and making everyone understand how the higher Chemical contents in fertilizers used for agriculture produce. Even in case of menace of spurious or counterfeit drugs stringent norms are being set by Indian legislation.

Building an own house is a dream of almost everyone. However, when we build a house or in case of purchasing an apartment, how many of us actually enquire about the quality of TMT Rebar is being used for building? If we are that careless about our own house, not many would be interested in knowing what kind of TMT Rebar is being used to build the public infrastructure. In the recent past we have seen many natural calamities in India like floods and earthquakes. Amid such events, the quality of TMT Bars gains more prominence in an era where built infrastructure has to be created in a short span of time, with the ability to sustain loads much higher than originally intended.

With not much research available regarding how to evaluate the TMT Bar, (Especially in a Scenario where secondary players with low quality enjoy majority market share in India) - We at First Construction Council after a detailed analysis, have listed down the best of the candidates that would help end users take an informed decision.

As we stated we have done an extensive analysis of various grades and different diameter samples, even the parameters selected for testing are extensive. The samples have to pass the Chemical Test (4 parameters), Physical Test (4 parameters) and also 3 other parameters under other tests.

• While in the Chemical test – the Rebar is analysed to find out if compulsory evils like Carbon, Sulphur and Phosphorous should not be higher than the prescribed levels in the BIS 1786 Standards. Further even the Sulphur + Phosphorous content together should be under the prescribed standard levels. Unless and until it passes the above four parameters in Chemicals analysis – the sample is not found fit for usage.
• In case of Physical test –the Strength, ductility and bending capacity of bar is analysed on four parameters. The TS/YS Ratio, Yield Stress, Elongation and finally the bend & re-bend test of Physical parameters is analysed. Again the products need to pass the minimum requirement under the BS 1786 standards. These test provide answers towards inherent strength of product. And lastly the Mass per Meter Run (Kg), Mean Ribs Area and Transverse Ribs are measured.

Unless all the parameters are not found according to the BIS 1786 standards – The Product sample cannot qualify for our list of – suitable grade products.

Having gauged the relevance and importance of the TMT Report, released in 2018, FIRST Construction Council has decided to follow up on the report and release a fresh Research Report. The Report will be as extensive and hard-hitting as the first report.

Do you wish to access the report when it launches? Submit Enquiry and get notified when the report is launched!

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Is India's Rs. 5.7 trillion infrastructure investments at risk?

First Construction Council released a sensational and hard-hitting report on the quality of TMT bars, analyzing the samples of 26 TMT bar brands in the country, out of which record 18 brands failed the test!

The infrastructure sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world-class infrastructure in the country. This year Rs 5.7 trillion has been allocated towards infrastructure in the Union Budget.

For instance, the government is planning to build 50,000 km of roads worth USD 250 billion by 2022, of which Rs 1 trillion will be spend during 2018-20. For ports, government has envisioned a total of 189 port modernisation projects involving an investment of USD 22 billion by the year 2035. Housing seems to be a major opportunity in terms of growth. The Indian real estate market is expected to touch USD 180 billion by 2020.To put it in numbers, only affordable housing is an opportunity worth Rs 6.25 trillion by 2022. There will be a requirement of additional 25 million units by 2022 and considering the Rs 25 lakh average cost of such houses the opportunity is worth Rs 6.25 trillion.

That said use of raw materials in the infrastructure project is paramount, which provides inherent strength to any infrastructure project. However, recent accidents, whether it is Kolkata bridge fall, a foot over bridge collapse and caving-in of a car parking wall in Mumbai indicates that there is a dire need for the better quality raw material to enhance the life of concrete. In fact, these incidents shows lack of technical intelligence in the procurement department which do not pay heed for quality raw material and emphasise more on cost-cutting methods.

While a lot has been researched, written and spoken about raw materials, there is hardly any research available on Reinforcement Bars (ReBars) also known as thermo-mechanically-treated (TMT) bars. Rebars form the backbone of any construction, be it the foundation, column, beam or the slab in any RCC structure. The quality of rebars used in any structure is critical to the overall quality of the structure.

One must understand that, considering the average steel intensity of about 10 percent by value in an RCC construction in India, the total construction industry can be valued at 10 times the valuation of the rebar industry which works out to an astronomical figure of Rs 12 trillion per annum. With such a large construction industry being critically dependent on the quality of steel rebars used, it is therefore imperative that all efforts are made to produce and promote the usage of good quality rebars in India.

Construction World decided to probe further and look into the factors deciding the quality of Rebar what it would eventually be. We realised that it is more important to make a practical analysis rather than a theoretical one. When we started our research preparations with the support of FIRST Construction Council, we analysed few leading players from the primary as well as secondary list of companies.

However, we eventually realised the gravity of the subject and decided to undertake the analysis of pan-India based TMT manufacturers. We analysed 66 TMT bars samples manufactured by 26 brands. And as the results are now out, of 26 brands, 18 brands have failed as Phosphorous and combinations of sulphur + phosphorous were higher than required quantity.

This clearly indicates, how even renowned players spending plenty on advertising have failed to clear basic research test. To become a quality Rebar, all the chemical and physical parameters are to be according to standards. Failure even on a single parameter means we are compromising on our safety standards.