ISAdvisors

PLASTICINDUSTRYIN
INDIA(201115)
EmpoweringTomorrow

February,2012

The Indian pla

astic processsing industtry is highly
y fragmentted
and comprisess 30,000 firm
ms. Barring 10% - 15%
% of the firm
ms,
whic
ch can be classified as
a medium scale operrations, all the
t
unitss operate on a sm
mall-scale basis.
b
The top play
yers
account for jusst 20% of th
he industry turnover. The sector has
h
a significant presence
p
of
o the uno
organized sector,
s
whiich
accounts for more
m
than 70% of the industry tu
urnover. Mo
ore
than
n 95% of the firms in the industry are
e partnersh
hip,
prop
prietorship or
o private limited companies.

Figurre 2

MarketSSize(USDB
Billion)

Deespite the in
ndustrys higgh growth
spanningoveraperiodofoverr2decades
nd crossing several mileston
nes, Indian
an
plaastics industryy is yet to realize its full
po
otential.

Sourc
ce Industry Re
eports, IS Estim
mates

Ove
erall turnove
er of the plastic
p
proc
cessing industry whiich
curre
ently stand
ds at USD 17
7.5 Billion, is expected to touch USD
U
20.3 Billion in 20
012 and furtther USD 27
7 Billion by 2015.
2

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2. INDUSTRY
Y GROWTH DRIVER
RS

2.1

Burgeon
ning Investm
ments

Figurre 3

Add
ditionalInvvestmentss(INRCrorre)

2332

CAG
GR22%

193
39

1466

1148
974
4

921
773

596

200203 20030
04 200405

200
0506 200607 200708 2008009 200910

Sourc
ce Industry Re
eports

Figurre 4

A
Additional
lCapacity(InKTA)
3
3000
2
2500
2
2000
1
1500
1
1000
500
0
200203 200304
2
200405 200506 200607
7 200708 20080
09 200910

Sourc
ce Industry Re
eports

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Ind
dustryexpertssbelievethatinvestment
ofnearly$10billlionwouldberequiredin
thee plastic processing industrry to meet
thee future demands. Such
S
big
invvestments in the plastic processing
ind
dustry will be a key growth
h driver for
sectorandsoforrthecompany.


Figurre 9 Imports and Exports of Polymer
Im
mports

Expo
orts

1766

1109

1050

870

876
722 695

705

60
00

413

368

221

200001

200506

200607

200708

200809

200910

Sourc
ce Industry Re
eports

onal Machines & capaciity in Plastic processing

Figurre 10 Additio
secto
or
Capacity(KTA)

Noo
ofMachines

6482

5110
08
450

4277

3927
3
3096

3092

2597

617

200203

2592

872
2

2003
304

1234
1

1350

200506
2

200607
7

1740

1776
6

200708

200
0809

762

200405

200910

Sourc
ce Industry Re
eports

13

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No
otwithstandinggplasticbeing oneofthe
im
mportant foreiggn exchange earner for
thee country (Exp
ports US$ 3.512 Billion
du
uring200708aand3.603Billio
onin2008
09
9),theshareoffplasticsexporrtsremains
at an abysmal 1.2%
1
in the glo
obal export
maarket.Theaveeragegrowth ofimports
inccreased from 15% between 200102
an
nd 200506, to
o 36% betweeen 200607
an
nd 200910. In
n fact, polymeer imports
haave been on an upward trrend since
20
00607.

4. EMERGIN
E
G TREND
DS IN THE INDUSTRY
Y

4.1

Plasticullture a win
n-win situattion!

Plastticulture is the use of plastics in agriculture

e, horticultu
ure,
wate
er-manage
ement, food
d grains sto
orage and related
r
areas.
A variety
v
of plastics materials
m
a
and
end products
p
a
are
dep
ployed in plasticultture appliications - for wa
ater
conservation, irrigation efficiency,
e
crop and environme
ent
prottection, as
a
well as
a
end product
p
s
storage
a
and
transportation.

Figurre 12

Po
olymerDe
emandbyA
Application
Develo
opedNations

Aggriculture is an
a important economic
sector which covers 15.7% of Indias
GD
DP. One signifficant way for improving
aggricultural pro
oductivity is to reduce
cro
op losses, and plastics can
n certainly
heelp in this aspect. It is estim
mated that
theegrowinguse ofplasticsin agriculture
contributed to nearly halff of the
dustrys GDP
P growth
aggricultural ind
(4..1%)inthelasttsevenyears.

India

44%
%
35%
25%
20
0%

18% 17%
7%
%

Packaging

Infrastructu
ure

Automobiles&
mer
Consum
Durabes

1%

Agricu
ulture

Sourc
ce Industry Re
eports

App
plications off plastics in
n Indian agriculture arre remarkably
less than those
e in the developed
d
countries. Globally the
t
average usage
e rate of plastics in ag
griculture is 7%, but Ind
dia
is la
agging be
ehind at 1%.
The countrys water
w
usage
effic
ciency is only
o
38%, far lower than the internation
nal
average of 65%
%. In the next
n
three years,
y
India
as agricultu
ure
ministry plans to introdu
uce micro irrigation system in 17
millio
on hectare
es of land
d. Plastics will certa
ainly play an
impo
ortant role and demand will incre
ease conse
equently.

15

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6.3

Opportu
unities

1
6.3.1

Booming
g Automotiv
ve sector

Grow
wth of the auto industry in hold
ds great sig
gnificance for
the plastic consumptio
c
on in india. Autom
mobiles ha
ave
assu
umed a pla
ace of prom
minence in Indian indu
ustry, which
h is
curre
ently produ
ucing 2.2 million
m
passe
enger cars.. That figure
e is
expe
ected to re
each 10 million vehicle
es by 2020.. Indian OE
EMs
(Orig
ginal Euipm
ment Manu
ufactures) currently
c
usse about 155
1
pounds of plasstic per carr, and thatt amount is expected to
climb significan
ntly, and po
ossibly double, by 2016. China and
the U.S. use 286 and 330 pound
ds of plasstic per car,
c
resp
pectively, which
w
showss the huge
e opportunity in India for
plastic consum
mption in the rapidly growing
g automob
bile
secttor. Indian automobile manufac
cturers are
e focusing on
inno
ovations suc
ch as inline
e painting to match internation
nal
stan
ndards. Ce
ertain tec
chniques liike thermo
oforming for
exte
eriors and
d long-fibe
er-reinforce
ed thermo
oplastics for
repla
acement of
o metals arre yet to take off in Ind
dia and ha
ave
phenomenal potential.
p
Figurre 16 Use of plastics in automotive se
ector
Plastticpercar(InP
Pounds)

C
Carper1000P
People
5
500

330
286
155
53

12
India

China

US

Sourc
ce Industry Re
eports

28

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With the rising raw material cost and

inccreasingpressu
ureonOEMsttokeepthe
car prices in
n check to
o remain
competitive, the carmakers [will use
mo
ore]plasticcom
mponentsinth
heyearsto
come.

Suppliers in thee western Indiia state of

Gu
ujaratwillstarttmanufacturin
ng1million
carsannuallyin thenextfiveyyears,with
obalOEMslikeeFord,MarutiSuzukiand
glo
Peeugeotalreadyyannouncingp
planstoset
up
pproductionfaacilitiesinthesstate.