Construction Industry Profile

Topics: Construction, Building, Industry Pages: 6 (1584 words) Published: April 23, 2013





|Indian Construction Industry is highly fragmented. There are mostly |[pic] | |unorganized players in the industry which work on the subcontracting basis. As| | |the construction activity being labour intensive, construction companies have | | |been mainly focusing on mechanization over the past few years. Consequently, | | |growth in quantum of laborers required has declined from 1.6% in FY 04 to 0.9%| | |in FY 08. Projects in the construction industry are mostly working capital | | |intensive. | |

The Indian construction industry forms an integral part of the economy and a conduit for a substantial part of its development investment, is poised for growth on account of industrialization, urbanization, economic development and people's rising expectations for improved quality of living. Construction constitutes 40% to 50% of India's capital expenditure on projects in various sectors such as highways, roads, railways, energy, airports, irrigation, etc and is the second largest industry in India after agriculture. It accounts for about 11% of India's GDP. For the first five-year plan, construction of civil works was allotted nearly 50 % of the total capital outlay. In 1954 National Industrial Development Corporation (NIDC), was set up in the public sector which is the first professional consultancy company. Then later many architectural, design engineering and construction companies were set up in the public sector (Indian Railways Construction Limited (IRCON), National Buildings Construction Corporation (NBCC), Rail India Transportation and Engineering Services (RITES), Engineers India Limited (EIL), etc. and private sector (M N Dastur and Co., Hindustan Construction Company (HCC), Ansals, etc.). Brief Introduction

Construction usually is done or coordinated by general contractors, who specialize in one type of construction such as residential or commercial building. Cost structure of the construction industry is dominated by raw material cost and subcontracting cost. Raw material cost which is the major cost accounts for 30-50% of the total cost and subcontracting cost accounts for about 20-40%. The raw materials consumed by Construction Industry in any country mainly include cement and steel. The consumption of steel by construction industry has grown of 16.1% over past 5 years whereas cement consumption has registered of 9.6%. Unprecedented rise in prices of these two raw materials has a direct impact on the cost of the project and in turn margins of construction companies. Profitability also depends upon the diversity of the projects a company can execute. Companies having strong presence in segments like power and industrial segment which are complex to execute, tend to enjoy higher margins. Today, Indian sub continent is the second fastest-growing economy in the world. The Indian construction industry has been playing a vital role in overall economic development of the country, growing at over 20% Compound Annual Growth Rate over the past 5 years and contributing ~8% to GDP. LARSEN & TOUBRO ECC - the Engineering Construction & Contracts Division of L&T is India's largest construction organization. Many of the country's prized landmarks - its exquisite buildings, tallest structures, largest industrial projects, longest flyovers, highest viaducts - have been built by ECC. HINDUSTAN CONSTRUCTION COMPANY HCC is distinguished by its boldness of vision and the...
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