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PVC Pipe Industry Scenario in India -2000

PVC pipes after peaking in 1998 have either remained stagnant or have shown negative growth in the last two years. While the industry experts plastemart.com spoke to, differ in their opinions on actual consumption in 2000 it is estimated that the consumption could be in the region of 275-300 kt. All of them however, agree that this important sector with an estimated business value of Rs.1500 crore has indeed shown negative growth in the range of 2-6% in 2000 compared to 1999.

The business has been badly affected mainly due to absence of the Government purchases possibly due to changed priority or lack of adequate funds. A change in the Government in some important states has been responsible for the change in priority. The higher incidence of Government taxes in some states like Maharashtra from the end of 1998 until the end of 2000 has also exerted additional resistance in the market place. The excess capacity of about 1000 players in the PVC pipe sector and very low value additions have also caused problems of quality and business of non-standard products. Some of the States have therefore initiated an action of demanding purchases from only those players who have acquired ISO 9000 certification.

On the other hand, plastemart.com foseveral small sized players spread all over the country having almost 40% share of the business are aggressively pushing products purely based on cost without adherence strictly to the quality norms. The preferential tax incidence system has resulted in having several small players spread all over the country. In fact, there are only about ten large players with the sales volume beyond 5-10 kt of pipes. The major players are: Finolex, Jain Group, Kisan Group, Mowilex, Nandi Plastics, Orissaplast, Sudhakar and Supreme Industries. These major players possibly have almost 55- 60% share of the business. Interestingly 5 of these having almost 35-40% share of the business are located in the Western region. Finolex, the largest player has an advantage of backward integration with in-house availability of PVC resin.

PVC pipes are predominantly used in agriculture, potable water supply and telephone ducting. It is estimated that these applications have almost 80-85% of the total business. Sewerage application although increasing, is yet not developed on account of very few players having capability of manufacturing very large diameter pipes required for the application. The higher cost of larger diameter PVC pipes compared to Cast Iron and Cement Concrete pipes also restrict their use. The drainage application of PVC pipe however is becoming more popular. The plumbing pipes market for housing is not very significant on account of non-suitability for hot water due to their limited temperature resistance. CPVC pipes more suitable for plumbing application have not made in-roads on account of their higher cost compared to GI pipes. The resistance from plumbers/residents of using combination system of GI and PVC pipes is also one of the reasons for having limited market for PVC plumbing pipes. The market on account of their predominant applications in agriculture, water and electrical/telephone ducting is in the sizes of 63, 75, 90 and 110 mm sizes with lower pressure ratings of 2.5 kg and 4 kg.

The PVC pipe sector has almost 40% share of the total PVC business. The growth of PVC resin therefore is strongly linked to the growth of PVC pipes. The major driver of PVC resin therefore is directly governed by the capability of the Government to spend money on infrastructure development. The future of PVC pipes in 2001 if viewed from the first quarter of this financial year and what has happened in the last two years does not seem very encouraging. No wonder PVC resin, a shining star of the Indian polymer industry until the mid-nineties has been outshined by PP and even HDPE, which have reached consumption beyond 700 kt, a level at which PVC has remained practically stagnant for the last two years.

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