Skip to content

Menu
 
 

Contact us

Precast concrete element producer rides building boom to India

09/09/2009

Valkeakosken Betoni is a partner in a Finnish-Indian joint venture making products with promising prospects in the world’s fastest growing construction market.

The Indian economy, like China’s, has suffered less than others from the global economic recession. With brisk ongoing economic growth, construction is one of India’s sectors that is expected to continue expanding rapidly.VME-India-11.jpg

The promising outlook for construction was what attracted Valkeakosken Betoni Oy to the subcontinent. The Finnish company is one of the partners in VME Precast Pvt. Ltd. which makes prefabricated concrete elements and products. Other partners are India’s VME Group and Zwirn Pragati CapFin Ltd., a venture capital company.

Production starting in October

The joint enterprise is currently constructing a production plant at Oragadam, close to India’s fourth largest metropolis, Chennai. The plant will produce concrete columns and beams, hollow core slabs and wall panels.

Plant construction is budgeted at about 10 million euros. VME Precast is purchasing the production equipment required from Elematic Oy, a company from Toijala, central Finland.

“The first production hall will start operating in October,” predicts Markku Lehtinen, chairman of the board of Valkeakosken Betoni. “In the second hall, production will get under way in the beginning of next year.”

India’s first element factory

Markku Lehtinen says that element construction has been an unfamiliar method of building in India and there is apparently no other element production plant in the country. The concrete structures of Indian buildings are still created by casting them on site.

VME Precast’s market entry has aroused considerable interest, even at this early stage.

“Element building methods create a greatly accelerated construction timetable, which lowers the cost, because capital isn’t tied up for years in buildings that are not yet ready,” Lehtinen explains.

Element technology also improves construction quality and extends the life cycle of buildings. Environmentally, too, it is superior to casting on-site.

Elements are created from high-strength reinforced concrete, which requires less concrete. There is less construction waste, with further reduces the environmental impact. For one thing, elements can be erected without the wooden moulds used for on-site casting.

Element-made structures survive possible earthquakes better than buildings cast on site.

Close to growing markets

VME Precast seems unlikely to have to market its products beyond Chennai itself. This metropolitan area, previously known as Madras, is one of the fastest centres of Indian economic growth.

In the past few years, the region has attracted considerable investment in manufacturing, especially by automotive and electronics companies. Building housing for the workers recruited to manufacturing plants is one of the region’s greatest challenges.

Because it is inexpensive, element construction is ideal for building accommodation for people on low and medium incomes. Rising income levels are boosting the demand for housing.

There are also several ongoing projects for rehousing slum residents of major cities. In addition, the continuing brisk movement of population from the countryside to the towns means extra demand for new homes.

Partner with long market experience

Element marketing is receiving support from VME Group, with its long experience of construction in the Chennai region. VME is owned by the Manickam family. It specialises in element-built bridges and is now expanding into house building.

Lemcon, part of Finland’s Lemminkäinen Group, is also cooperating with the partners. Lemcon has been operating in project construction in the Chennai region and has built plants for several Finnish companies.

VME-India-2.jpgLehtinen believes that the advantages of the new construction method will soon become widely known in India. At the same time, however, competition can be expected to increase and before long VME Precast will have rivals.

“We welcome market competitors,” he says. “Greater supply will create even more interest in element building and reinforce confidence in the advantages of this form of construction.”

Initially VME Precast is providing work for about 20 people but, as production gets up to speed, the number of workers is expected to rise to 100-150. To obtain a competent workforce, the company has arranged for joint training courses at local institutes of education.

Investment loan from Finnfund

Finnfund is providing an investment loan for the plant investment. Juha-Pekka Tuomipuu, senior investment manager at Finnfund, says that the project is well-suited to Finnfund’s objectives of cooperating more closely with SMEs. Both Valkeakosken Betoni and the equipment supplier Elematic are medium-sized Finnish companies, with which Finnfund can function cost-effectively.

“The project is probably not big enough for large international development finance companies, but this sort of size is fine for Finnfund. We can also make sure that the project’s environmental and social issues are handled in a responsible way.”

The plant is designed to meet Finnish production standards and safety norms.

Markku Lehtinen regards the partnership with Finnfund as a very important matter.

“Without Finnfund’s participation, it would probably have been hard for us to arrange financing for the project. Moreover it gives us access to Finnfund’s expertise in the Indian market.”


For more information, please contact Mr Juha-Pekka Tuomipuu, Senior Investment Manager, tel. +358 9 3484 3321, email firstname.lastname@finnfund.fi