Roofing Industry: An Overview

Roofing refers to covering the top of a building, serving to protect against rain, snow, sunlight, wind, and extremes of temperature. Roofs have been constructed in a wide variety of forms—flat, pitched, vaulted, domed, or in combinations—as dictated by technical, economic, or aesthetic considerations.

Sharing a snapshot below:

In recent years, there has been a noticeable surge in the need for polycarbonate roofing, particularly driven by the escalating demand from e-commerce fulfillment centers. Concurrently, there has been a notable uptick in the prices of raw materials such as steel, metal, and aluminum. However, manufacturers have found it challenging to transfer these cost increases to consumers due to the fierce competition within the industry.

Furthermore, the rapid expansion of the e-commerce sector over the past couple of years has substantially heightened the demand for warehouse construction, significantly impacting the commercial roofing market. This surge in demand for polycarbonate roofing sheets can be attributed to various factors, including their lightweight nature, excellent thermal insulation properties, remarkable durability, minimal maintenance requirements, ease of installation, and effective UV protection. These advantages have made polycarbonate roofing a preferred choice over traditional options such as glass and metal roofing materials.

Before the 2000s, roofing materials primarily consisted of mud, bamboo, and stone. In rural areas, local grass reeds were cleaned, dried, bound together, and woven to create roofing materials for villages, while urban areas typically used clay tiles. However, the clay tile market faced a decline in the early 2000s due to restrictions on clay mining, leading to the emergence of metal roofs. These metal roofs gained popularity among consumers in warehouses, factories, and large manufacturing plants.

Between 2010 and 2020, there was a significant development in the roofing industry with the introduction of pre-coloured cement roofs. This period also witnessed a surge in demand for steel and aluminum roofing sheets, while polycarbonate sheets found application in roofing systems for shopping malls and large infrastructure projects.

Post-2020, the roofing market underwent further evolution. Colored metal sheets were introduced, and there was a growing market for tensile fabric roofing sheets. Additionally, TATA introduced solar roofing solutions, marking a noteworthy advancement in the industry.

The demand for roofing materials has been primarily fuelled by the growth of the manufacturing and infrastructure sectors. A significant factor contributing to this demand is the convenience of on-site handling, where materials like metal deck sheets are transported to construction sites in pre-cut lengths and packaged bundles. These materials can be easily lifted into specific work areas using cranes, and individual sheets can be laid down by hand.

The Indian government's substantial investments in the construction of hospitals, schools, and airports have played a crucial role in boosting the demand for roofing materials. Additionally, the increasing income levels of consumers have led to a shift away from traditional roofing solutions like concrete slabs and clay tiles towards more reliable options such as steel, metal, and polycarbonate.

Remarkably, the manufacturing sector experienced a remarkable increase of approximately 460% in 2021 compared to 2019. This growth has been especially notable in factories, manufacturing plants, and warehouses, which are among the major consumers of roofing materials. Many customers are now transitioning to innovative roofing solutions like tensile fabric roofing, which not only offer creative shapes but also come in attractive colors.

The roofing market is poised for disruption due to technological advancements, particularly in the realm of solar roofing solutions. These innovations encompass features such as color-coated green roofing, which not only provides an aesthetically pleasing landscape but also offers benefits like rainwater absorption and insulation.

There is a growing fascination with solar roofing, driven by the integration of photovoltaic shingles that harness solar energy for residential or commercial buildings. India's ambitious goal of achieving 450 GW of renewable energy by 2030 includes the installation of a substantial 280 GW of solar power capacity.

Contract manufacturing offers a convenient means of market entry, enabling businesses to concentrate on their core strengths while mitigating logistics expenses. This approach is particularly advantageous for smaller or medium-sized enterprises, given the considerable obstacles associated with entry, such as licensing prerequisites and challenges in procuring raw materials. Contract manufacturing empowers companies to channel their efforts into marketing and the establishment of robust distribution networks. In terms of cost considerations, the transportation expenses for fibre cement roofing constitute a substantial portion, approximately 20% of production costs, while for polycarbonate sheets, it represents around 2% of the overall production expenditure.

In contrast, opting for in-house manufacturing provides several advantages, including greater stability in cost control, enhanced quality management, and the potential for increased profits. When relying on contract manufacturers, there may be instances where they demand higher prices or margins based on market conditions, leading to price volatility. In contrast, in-house manufacturing offers more predictable raw material costs. This is particularly valuable when dealing with non-standardized raw materials like cement, where maintaining consistent quality standards can be challenging. Achieving a high level of production control is feasible through in-house manufacturing.

Two types of cement play a pivotal role in this context. PPC cement, characterized by lower strength, is employed in the production of fiber cement, commonly used in building houses. OPG cement, on the other hand, is a blend of concrete and gypsum. Manufacturers operating in the fiber cement industry typically achieve profitability levels when operating at 70-75% capacity utilization, with peak seasons allowing for full capacity utilization at 100%. Notably, there is a significant seasonal demand surge from March to June, amounting to approximately 30% more than the usual demand during this period.

Contract manufacturing guarantees strict adherence to high-quality standards, enabling companies to concentrate on their core strengths and reduce overhead expenses. It simplifies the raw material aspect by relying on a single crucial material, namely PP balls, which are priced at approximately INR 110 per kilogram.

To ensure equitable compensation, manufacturers must treat both haul managers for polycarbonate roofing and other roofing product managers fairly. Typically, manufacturers opt to outsource their production operations to specialized polycarbonate manufacturers, primarily to streamline overhead costs. This strategic choice also empowers companies to prioritize their marketing efforts and construct a robust supply chain and distribution network.

When considering in-house manufacturing, there are notable advantages such as minimal capital demands and opportunities for automation investment. Establishing one's manufacturing facility is a relatively straightforward process, requiring less land, approximately 1.5 acres, in contrast to fiber roofing plants, which necessitate a significantly larger 15-18-acre footprint. To set up a polycarbonate plant with an annual capacity of 600 metric tons per annum (MTPA), an investment of INR 3 crore is required.

This approach is favored because it involves a less capital-intensive process, primarily centered on the extrusion of PPE (polyphenylene ether) balls into sheets. Additionally, investing in automation facilitates the reduction of manpower within manufacturing units, leading to decreased overhead expenses.

The roofing industry follows a traditional value chain involving manufacturers, distributors, retailers, and customers.

11 Jan 2024

Roofing Industry: An Overview

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