BUILDING MATERIAL INDUSTRY POST LOCKDOWN

Building material industry which has been struggling over the past 3-4 years would possibly witness further deceleration with construction and renovation demand likely to shrink in the near term and would now need to cope with the COVID-19 impact.

CONSTRAINTS POST LOCKDOWN

• Like many others, the construction sector, too, is reeling under the impact of coronavirus pandemic. There has been a   complete halt in construction activities during lockdown and will take some time to resume work.
• There has been severe working capital pressure.
• Projects in cities have come to a complete standstill although some activities have started in far-flung areas.
• Damage to order inflows-short term or extended bearing is a question mark.
• Covid-19 followed by rains may lead to a sluggish market in Building Material Industry which may extend to another 6 months.
• Labour supply remains a big challenge for the sector.
• Commercial vehicle movement and availability decline is also deepening.
• The next two quarters shall be very challenging. Recovery in FY 21 will be slow. Demand (short term & long term) shall go down.
• Demand will also get affected as Customer’s income will go down.
• Customer would hesitate to go to the market due to hygiene issues or social distancing.

OPPORTUNITIES

Hope for the ‘BEST’; prepare for the ‘WORST’- start beginning to look beyond the crisis seems to be the mantra.

• Every big crisis is a test of leadership. The different type of traits will have to be demonstrated:
  • keep calm, retain your confidence
  • relentlessly communicate with your people, make them       comfortable, actively collaborate with your partners, reach out to the fraternity, be compassionate.
• Be focussed on ‘CASH FLOW’. Liquidity and Cash would be the determinants as to who survives and who doesn’t- “TOP LINE IS VANITY, BOTTOM LINE IS SANITY, BUT CASH FLOW IS REALITY”.
• Government has postponed all collectables including paying GST upfront when you raise an invoice and even loan repayments.
• Routine and mono-skilled roles will be replaced with specialists and multi-disciplined roles.
• Skills like creativity, empathy, collaboration will be in prominence.
• Demand will be divided into “MUST HAVE” & “GOOD TO HAVE”. Luxury buying will take a back seat.
• This crisis has pushed the mankind from the comfort zone to a zone of discomfort. Fear of unknown is changing us and fear is a very good attribute. It’s a driver for us to deploy the best that we have.
• Market will move towards digitalization and e-commerce.
• The crisis has accelerated adaptation of technology at work. Faster computing power, connected devices, cloud, zoom, are redefining the man-machine interface. Digitisation at work place has changed the work culture.

WAYS OF GETTING BACK TO NORMALCY

1. Re-emphasize on consultative selling. Do not sell a product- sell solutions, sell services.
2. Product innovation (germ-free tiles & sanitaryware), Partnership & Collaboration will be a key to be successful. Companies are evolving more towards a one-stop shop solution.
3. Cost cutting.  
4. Reducing wasteful inventories leading to increased liquidity.
5. Less Credits.
6. Dealers to reduce brands and avoid over trading.
7.  Dealers to focus on weekly purchasing and not on month-end sale.
8.  Focus on cash-flow.
9. Tier 3, 4 & 5 towns will bounce back rapidly.
10. Sectors to focus upon in the following order:
11. residential/ Government residential
    1. small projects are already on and would be the first one in the list to pick up.
    2. large projects would pick up slowly.
    3. hospitality should be the last to focus upon.

12. Apart from learning new skills, stay with your core     strengths.
13. Reduce risks & liabilities. 
14. Hygiene would be an important factor.

GOVERNMENT INITIATIVES

Following Government initiatives would go a long way to help building material industry arrest the decline: 

1. Housing for all
2. Swachh Bharat Mission
3. Smart cities
4. Pradhan Mantri Awas Yojana
5. Atal Mission for rejuvenation and Urbanisation
6. RERA

Regardless of whether the building material industry moves into a new normal or reverts to the old normal, companies must act now and take the crisis as an opportunity to actively shape the future of the industry.

COVID 19 and the resultant lockdown is not an end of the world. It’s just a crisis, a setback. It is just a halt in the march of the human being, and the mankind. This crisis would differentiate mankind into winners and losers.