India is developing infrastructure
countrywide in many different areas, definitely
providing a great opportunity for building and
construction industry. Housing activity in the
last few years has picked up mainly due to easy
availability of low cost finance. Both these
sectors open up opportunities for the plastics
industry. Development of cultivation and increased
acreage for agriculture requires plastic pipes
for water distribution. Among plastics, PVC
is the polymer that has many applications in
agriculture, building and other infrastructure
activities. PVC, therefore has good growth opportunities.
In fact, after reaching consumption levels of
950 KT in 2004, PVC demand is expected to cross
1 million tons in 2005. This will make PVC the
second polymer to cross the 1 million ton mark
after the 1.23 million tons achieved by PP.
PVC requires compounding for all
is applications, hence PVC end products are
always greater in tonnage as compared to the
polymer consumption. For 2004, PVC products
will weigh at least 1.3 million tons against
consumption of 950 KT. (See exhibit 1). With
this in mind, it is clear that PVC products
in India constitute a higher volume compared
to PP or all other polymers.
Compounding activity is an integral part of
PVC. It is therefore not surprising that several
independent compounders spread all around the
country meet requirements of the PVC industry.
However, closer analysis of applications of
PVC reveal that almost 57% demand for the compound
actually does not exist as they are manufactured
for captive consumption by the processors. Barely
43-45% (550 KT) of the compounds can be offered
by independent compounding units, and this is
an opportunity larger than the combined activity
of thermoplastic compounding requirement. Large
processors from the wire/cable industry are
increasingly manufacturing the compounds in
house, leaving only about 200 KT of volume of
the compounds for independent compounders. In
other words only about 20% of the total demand
is open to the independent compounder. This
business emanates from mainly plasticized PVC
applications such as wire/cable, footwear, hose,
profile etc. Rigid PVC applications offer only
about 30 KT of business opportunity.
Independent compounding units
cater to the demand from most of the small processors.
The business of independent compounding units
requires huge amount of working capital because
they are involved in the plasticized PVC application
business, where additive costs are higher. In
fact, they essentially market additives more
than PVC. The growth of this business is also
limited because the plasticized PVC applications
are growing at lower rate compared to the rigid
PVC applications.
PVC
POLYMER CONSUMPTION BY APPLICATION -
2004 |
Application/Segment |
PVC polymer |
Comp/MT of polymer |
Total Compound |
Own
compounding |
Merchant
compounding |
Merchant
compounding |
|
(KT) |
(%) |
|
(KT) |
(%) |
(%) |
(%) |
RIGID
|
Pipe |
500 |
53 |
1.10 |
550
|
100 |
0 |
0 |
Fitting |
50 |
5 |
1.10 |
55 |
100 |
0 |
0 |
Profile |
28 |
3 |
1.20 |
33.6 |
75 |
25 |
8.4 |
Film/Sheet |
60 |
6 |
1.10 |
66 |
75 |
100 |
16.5 |
Bottle |
2 |
0 |
1.20 |
2.4 |
0 |
|
2.4 |
Toy,Compounding/Inj. Moulding
|
0 |
0 |
|
0 |
|
|
0 |
Casing,Inj. Moulding
|
0 |
0 |
|
0 |
|
|
0 |
IC tube compound |
0 |
0 |
|
0 |
|
|
0 |
Battery Separator |
5 |
1 |
1.00 |
5 |
100 |
0 |
0 |
Other |
5 |
1 |
1.20 |
6 |
30 |
70 |
4.2 |
Total Rigid |
650 |
68 |
|
718 |
|
|
32 |
|
Wire & Cable |
85 |
9 |
2.00 |
170 |
60 |
40 |
68 |
Flooring |
5 |
1 |
3.00 |
15 |
100 |
0 |
0 |
Cal. Film/Sheet |
80 |
9 |
1.75 |
140 |
100 |
0 |
0 |
Coated Film/Sheet(Leathercloth)
|
25 |
3 |
1.75 |
43.75 |
100 |
0 |
0 |
Footwear |
65 |
7 |
2.00 |
130 |
50 |
50 |
65 |
Toys- Compound,Inj. Moulding
|
5 |
1 |
1.75 |
8.75 |
50 |
50 |
4.4 |
Toys- Rotational Moulding
|
3 |
0 |
1.75 |
5.25 |
50 |
50 |
2.6 |
Glove |
2 |
0 |
1.50 |
3 |
50 |
50 |
1.5 |
Medical Products |
5 |
1 |
1.50 |
7.5 |
50 |
50 |
3.8 |
Hoses, Tubes& Profiles
|
15 |
2 |
1.75 |
26.25 |
50 |
50 |
13.1 |
Other |
10 |
1 |
1.50 |
15 |
50 |
50 |
7.5 |
Total Flexible
|
300 |
32 |
|
565 |
|
|
165.9 |
Total |
950 |
100 |
|
1283 |
|
|
197 |
There are several compounding
units to cater to this business. It therefore
does not offer a great opportunity to new entrants.
|