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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