By B McGee/Bloomberg
London: Wienerberger AG, the world’s biggest brickmaker, plans to open its first factory in India next year as the country’s economic expansion and population growth boosts construction of new homes.
The Vienna-based company aims to open as many as 10 Indian sites close to major cities or towns within five years, chief executive officer, Wolfgang Reithofer said in an interview in London on 28 March.
India’s $12 billion (Rs51,504 crore) real-estate industry is expanding by 30% a year, according to Ernst & Young. By contrast, U.S. realtors expect new home sales to fall 10% this year. Rising incomes and urbanization have fueled demand for housing in Indian cities such as New Delhi and Bangalore, where prices have tripled since 2004. Brick use is more widespread than in other Asian countries because of India’s colonial past, Reithofer said.
“India seems to be a most interesting place because it has a large population that’s brick-minded,” CEO said. “We have a lot of sites and ideas and we are investigating how we should do it.”
Shares of Wienerberger, named after the Vienna hill where the company opened its first plant in 1819, have advanced 29% in the past six months.
Wienerberger last year set up an office in the south Indian city of Bangalore to investigate brick demand in the world’s second-most populous nation after China.
The Austrian company is targeting 100 million euros in Indian sales within five years as homebuilders tap demand for better-quality housing. DLF Ltd, an Indian developer controlled by billionaire Kushal Pal Singh, and Dubai’s state-owned Nakheel PJSC said last week they will form a venture to build houses, shops and offices in two “cities” of about 20,000-acres each near Delhi and Mumbai.
“The potential is huge,” said Reinhard Ebenauer, an analyst at Raiffeisen Centrobank in Vienna with a “buy” rating on Wienerberger. “Still, a rollout in a new country takes time and India is not the nearest market.”
Wienerberger will offer both facing bricks used for facades and hollow bricks for load-bearing walls, transporting them by truck rather than rail from new production sites.