Summer Internship project report on OPPORTUNITY IN CHEMICAL SECTOR FOR MMTC LTD.

Under the guidance of: Mr. C Unnikrishnan

(DGM- Fertilizers & chemical Department)

Submitted in partial fulfillment of

POST GRADUATE DIPLOMA MANAGEMENT (Affiliated to AICTE)

Academic Session : ( 2010 2012 )

Submitted By-

RAVI KUMAR VERMA

EBS ID: 0101PG001

Plot No. HAF-1, Sector-9, Dwarka, New Delhi 110077

ACKNOWLEDGEMENT
I sincerely wish to acknowledge a deep gratitude for valuable guidance suggestions and generous help extended to me by Mr. C Unnikrishnan (DGM- Fertilizers & Chemical Department). I thank them for being the source both of helpful criticism and of encouragement. I take this opportunity to thank all the members of MMTC Ltd. and my family and friends who directly and indirectly helped me in completing my report and a special thank to: MS.BAWNA KABRA (Sen. Manager) MR. PANKAJ KUMAR (Dy. Manager) Their encouragement during the difficult stages of this project, constructive discussions and useful interaction has proved to be core moral support behind this achievement.

RAVI KUMAR VERMA

DECARLATION
I, Ravi Kumar Verma, a student of PGDM of ERA BUSINESS SCHOOL New Delhi, here by solemnly declare that the project titled MMTC Ltd. In Chemical Sector with special reference to MMTC Ltd. is my original work as all the information and fact & figure produced in this report is based on my own experience & study during my summer training under the department of MARKETING and has not been published previously any where in Magazine, Trade journal or any other University or elsewhere for the award of degree or Diploma. Further I also declare that I have tried to my best to complete this project with almost sincerity, honesty and accuracy. Even then if, any mistake or error has crept in I shall most humbly request to reader to point out those error. Any suggestion regarding this Project Report will be most welcome.

Ravi Kumar Verma

DATED: PLACE:

TABLE OF CONTENTS
S.No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. CHAPTERS EXECUTIVE SUMMARY/INTRODUCTION RESERCH METHOLOGY OBJECTIVE OF THE STUDY CORPORATE PROFILE INTROTUCTION TO CHEMICAL INDUSTRY BUSINESS STRATEGY FOR MMTC SWOT ANALYSIS FOR MMTC MARKET ANALYSIS OF CHEMICAL SECTOR PRODUCT ANALYSIS KEY SEGMENT & PLAYER CONCLUSION REFERNCES ANNEXURE PAGE No.

EXECUTIVE SUMMARY

sold directly to large customers and through distribution channels. Distribution channels mostly consist of stockiest and dealers spread all over India addressing small segments and retail market Chemical industry is an important constituent of the Indian economy. Its size is estimated to be around US$ 35 billion approx, which is equivalent to about 7% of Indian GDP. With the growth of Indias GDP pegged at around 9-10%, chemical industry is expected to reach a turnover of US$ 60 billion by 2010, with the growth at 7.7%. The India chemical sector accounts for 13-14% of the total exports and 8-9% of total imports of the country. In terms of volume, it is 12th largest in the world 3rd largest in Asia. Currently, per capita consumption of products of chemical industry in India is about 1/10th of the world average, which shows considerable opportunity of growth in the future to come. Segment wise chemical industry is divided in three constituents namely: Basic chemical (US$ 20 billion) Specialty chemical (US$ 9 billion) and High end/ Knowledge segment (US$ 6 billion). Global chemical industry is at around 1.7 trillion in which Indian chemical sector contribution is at 2%. MMTC, being the largest trade house of India, cannot overlook the vast opportunities, lying in the chemical industry, there is immense and substantial can create its niche in this field. MMTC has already proven and created a mark in the field of import, as being the largest importer of fertilizers in India, it can leverage upon its relations with the international fertilizers suppliers and manufactures which can also happens to be the top manufacture of chemicals worldwide, making a mark in the chemical business. This report studies and evaluates the opportunities for MMTC to oray into the business of chemicals. This report examines the various facts of the chemical business and the possibility for MMTC to add value in these areas as well.

Chemicals

RESERCH METHOLOGY

RESEARCH METHODOLOGY
Research is the search for and retrieval of existing, discovery or creation of new information or knowledge for a specific purpose. Market research is broader in scope and examines all aspects of a business environment. It asks questions about competitors, market structure, government regulations, economic trends, technological advances, and numerous other factors that make up the business environment. In Research Methodology following are the heads which are defined clearly and logically

RESEARCH DESIGN
A Research Design is a framework or blueprint of conducting the marketing research project. It details the procedure for obtaining the information needed to structure or solve the marketing research problems. The Research Design which I have chosen for my project is Exploratory Research Design. The major emphasis in exploratory research is on the discovery of ideas and insights. Exploratory research is conducted to explore a problem to get some basic idea about the solution at the preliminary stages of research. It may serve as the input to conclusive research. Exploratory research information is collected by reviewing literature or books, discussing with experts, etc.

SAMPLE SIZE
For sample size the number of companies which I have chosen was 10 and traders I visited were 10.

SOURCES OF INFORMATION
The sources of information for proper conducting my research were Primary and Secondary sources.

For collecting data about various chemicals I used secondary sources in the internet and for chemical business value chain and business model I used primary data by visiting companies.

CORPORATE PROFILE

MMTC LTD.
International Trading Company of India. Largest exporter of Minerals from India, bagging CAPEXIL award consecutively for the last 18 years. Single largest importer/ supplier of Bullion and Non-ferrous Metals in the country. Leading international trader o f Agro, Fertilizers, Coal & Hydrocarbons. Present at 56 locations in India through offices, warehouses, port offices and retail outlets. Subsidiary in Singapore (MTPL) holds prestigious "Global Trader Programmed" (GTP) status. Enhanced product offerings through its promoted project, Neelachal Ispat Nigam Ltd. (NINL), a 1.10 million ton Iron & Steel Plant in Orissa. Established in 1963, MMTC, one of the two highest foreign exchange earner for India, is a leading international trading company with a turnover of around US$ 10 billion. First Public Sector Enterprise to be accorded the status of "FIVE STAR EXPORT HOUSE" by Govt. of India for long standing contribution to exports. MMTC is the largest non-oil importer in India. MMTC's diverse trade activities encompass Third Country Trade, Joint Ventures, Link Deals - all modern day tools of international trading. Its vast international trade network, which includes a wholly owned international subsidiary in Singapore, spans almost in all countries in Asia, Europe, Africa, Oceania and Americas, giving MMTC a global market coverage. MMTC is major global player in the minerals trade and is the single largest exporter of minerals from India. With its comprehensive infrastructural expertise to handle minerals, the company provides full logistic support from procurement, quality control to guaranteed timely deliveries of minerals from different ports, through a wide network of regional and port offices in India, as well as international subsidiary. MMTC is India's largest seller of imported non-ferrous metals viz. copper, aluminium, zinc, lead, tin and nickel. It also sells imported minor metals like magnesium, antimony, silicon and mercury, as also industrial raw materials like asbestos and also steel and its products. MMTC imports quality products conforming to international specifications like ASTM or BSS or LME approved brands. MMTC has won the top export award from Chemicals and Allied Products Export Promotion Council (CAPEXIL) as the largest exporter of minerals from India for the nineteenth year in a row.

Largest

MMTC Business
MINERLS
MMTC Limited, Indias first Super Star Trading House, continues to be the country's leader in mineral exports for four decades now. During the last decade, MMTC could withstand the stiff competition in the world market by its continuous and persistent efforts in diversifying its markets, enlarging its product range, expanding extensively its infrastructure facilities and expertise in mineral operations, and by attaching utmost care and importance to its trade commitments as also the quality of service and products. MMTC has been consistently striving to enhance its competitiveness in the area of value addition. It has set up a crushing and screening plant at Banehatti in Bellary Hospet Sector not only to source higher value realization in the international market but also to compete with the international suppliers like Australia and Brazil in the markets like Japan and South Korea. has provided further fillip to value addition to minerals. The 1.1 million ton Steel Plant consumes about 2 million tons of various types of minerals annually being supplied by MMTC. The company has also taken an initiative to link import of capital equipments required for modernizing mining activities in the country to promote export of minerals. The import of the earthmoving equipments was linked to export of Iron Ore under EPCG scheme.

METALS
MMTC (A Govt. of India Enterprise) - India's Single Largest Trader of metals. It's metals division imports and exports Non-Ferrous metals, Industrial raw materials, Steel items, Pig Iron, Non Ferrous metals scrap and Iron and Steel scrap etc. MMTC's share of import in India's import of refined base non-ferrous metals in terms of value is about 20%.MMTC imports following metals as per LME deliverable specifications and also

Non LME grade material according to the requirements of our customers:

y

y y

Base Non-Ferrous Metals: Copper (min. 99.90% purity) in the form of Wire bars, Cathodes, CC rods Aluminum (min. 99.70%) Zinc Ingots High grade (min. 99.95%) Zinc Ingots Spl. HG (min. 99.995%) Lead Ingots (min. 99.97%) Tin (min. 99.85% purity) Nickel (min. 99.80% purity ) (Squares 4''x4'' ,uncut, Briquettes, Ferro Nickel etc.) Minor Metals : Antimony (min. 99.65% purity) Silicon (Grade 4-4-1 and 5-5-3) Magnesium (min. 99.9% purity) Mercury (min. 99.9% purity) Industrial Raw Materials, Noble metals and Ferro alloys Pig Iron, Slag, Steel scrap, HR Coils, CRGO and Steel items

MMTC imports quality material conforming to international specification viz. ASTM or BSS or LME approved brands. Most Customers of MMTC are institutional buyers who have stringent quality norms for accepting the raw materials. Quality Certificate from Producer/ LME approved assayer is essentially a part of MMTC's purchase contract.

FERTILIZERS
MMTC Limited is one of the largest importers of Fertilizers in India. It imports both finished fertilizers, fertilizer intermediaries and fertilizer raw materials. The volume of trade in fertilizers today stands over one million tonnes. MMTC has established itself as a trusted and reliable supplier of fertilizers with major consumers in India. This is result of a very high level of reliability and the resultant reputation that MMTC has so assiduously built over the last four decades. MMTC has remained one of the largest institutional buyers of fertilizers across the globe. MMTC has built this unique position through its continued presence for about four decades in the fertilizer arena internationally. MMTC has been successful in building confidence both amongst its suppliers as well as its buyers in India and abroad through its unstinted transparency in dealings and commitments to contractual terms of international trade. MMTC, through these four decades of buying, selling and net-working, has created a strong leverage for itself, benefiting both the suppliers as well as the buyers. It thereby adds value in the supply chain with its reliable sourcing ability.

Thus, MMTC remains the single unique window for buying and selling of all fertilizer products globally. We re-assure all our valued business associates the most transparent, efficient and effective trading experience in fertilizers.

AGRO PRODUCT
MMTC Limited (A Govt. of India Enterprise) is a global player in the Agro trade, with its comprehensive infrastructural expertise to handle agro products. MMTC Limited provides full logistic support from procurement, quality control to guaranteed timely deliveries of agro products from different parts of India through a wide network of regional and port offices in India and its contacts abroad. Reliable established supplier/buyer having over 3 decades of experience in the trade. Exporting/Importing in bulk. Sourcing from established suppliers. Securing competitive prices through bulk buying. Strong links with government & state marketing agencies. Recognized as the best quality supplier of Agro products. Large warehousing facilities having proximity to rail-heads and ports. Well controlled logistics for movement of goods.

ITEM OF TRADE 1) Wheat 2) Rice 3) Maize 4) Soybeans Meal 5) Sugar 6) Edible Oil 7) Pulses

Coal and Hydrocarbon

Coal and Hydrocarbon is identified as one of the core areas of business for MMTC and Steam coal is identified as a thrust product for import. The coal and hydrocarbons business has achieved a turnover of Rs 18390 million in 2004-05. The above turn over is comprised of mainly LAM COKE, Coking Coal and steam coal. MMTC withstood the stiff competition due to its continuous and persistent efforts in diversifying its markets, offering value added products and services to its existing customers, enlarging its product range and customer base, expanding extensively its infrastructure facilities, using its expertise in trading by attaching utmost care and importance to its trade commitments as also the quality service and product. Certain specific strengths of MMTC, which make it a strong player in this sector are :
y

y y

Strong business relationship with the leading coal mines and reputed suppliers of various coal and hydrocarbon products. A list of suppliers whose credentials are established are also updated from time to time. They are retained by MMTC for sourcing. Elaborate infrastructure facilities for bulk handling with arrangements for rail and road transport, warehousing, port and shipping operations, which gives MMTC complete control over trade logistics. One of the biggest International traders in bulk in the country. Importing non-coking steam coal continuously for the power plants under longterm contracts.

GENRAL TRADING
The MMTC Limited is equipped and dedicated to delivering International Trade solutions to suppliers and buyers. Our solutions are designed to meet specific requirements of our associates. At MMTC Limited, Business Development Group provides package of services to the exporters and importers to help them in making most of the business opportunities. For many organizations, selling products and services by exporting them to waiting markets and procuring raw materials at competitive rates from established markets is a valuable way of growing the business.

Whatever support your business needs, MMTC Limited has both the expertise and the resources. At last supplier can compete abroad without risk and on equal terms with local business. For many organizations selling and procuring goods can bring problems as well as rewards. At MMTC we specialize in identifying prospective importers or buyers to facilitate promotion of trade and business in SAARC, LAC and CIS countries. We generate export enquiries by participating in Buyer-Sellers Meet, Trade Shows and through MMTC contacts. Business Development Group collects and disseminates information on the international trade environment and helps trading companies better understand changes in global business conditions. We also conduct research and surveys on domestic and overseas economic conditions to help Commodity Divisions at MMTC to adapt to the changing economic environment. Associates approach us with their problems in international trade and we offer optimum solution to satisfy and in turn develop MMTCs business a truly mutually rewarding deal. MMTC offers a wide range of chemicals produced in India in the most modern plants confirming to international standards. MMTC deals in 1. 2. 3. 4. Inorganic chemicals Organic chemicals Dyes and intermediates Drugs & Pharmaceuticals.

MMTC meets the requirements of local associates by way of imports of chemicals through overseas associates, as required by the local industries for sale on high seas basis as well as ex-go down basis.

THE SINGLE LARGEST BULLION TRADER IN THE INDIAN SUBCONTINENT

MMTC is the largest importer of gold and silver in the Indian sub continent, handling about 100 MT of gold and 500 MT of silver annually. MMTC has opened a retail jewellery showroom at Maker Bhawan in Mumbai. MMTC supplies branded hallmarked gold and studded jewellery. MMTC has also opened a DUTY FREE jewellery store in the Departure Lounge at Sahar International Airport, Mumbai, India. An assay and hallmarking unit has been set up at New Delhi for testing the purity of gold and gold articles in accordance with the internationally accepted fire assay method. Besides organizing major jewellery exhibitions abroad, exclusively, MMTC is keen to set up manufacturing & joint ventures for modern jewellery in association with leading names in the international jewellery trade as well as marketing. MMTC supplies gold on loan basis to the bullion traders and jewellers in India at international rate of interest to help jewellers and artisans to overcome their working capital requirement. MMTC's retailing network extends from a jewellery showroom at Maker Bhawan, 4 duty free shops at Mumbai (2), Chennai (1), Thiruvananthapuram (1), International airports and sales counter at its Jhandewalan office in New Delhi.

GROUP COMPANIES
1.MTPL 2.NINL

1.MMTC TRANSNATIONAL PTE LIMITED (MTPL)

MMTC TRANSNATIONAL PTE LIMITED (MTPL) Singapore is wholly owned subsidiary of MMTC Limited, New Delhi, India, a Govt. of India Undertaking under the

Ministry of Commerce. MMTC Limited is Indias largest international trading corporation, and has Five Star Export House Status awarded by the Government of India. MTPL was incorporated in Singapore under Singapore laws in 1994 and in April 2000 MTPL received the prestigious Approved International Trader (AIT) status now called as Global Trader Status by the Government of Singapore. This status is granted to companies fulfilling strict criteria and enable such companies to join the top league of leading trading companies in Singapore. The status endorsed MTPL performance as international trader as well as its contribution to Singapores economy, and serve to enhance its stature and competitiveness in the global trading arena. Over the years MTPL has successfully consolidated and diversified in various business activities which now encompass Minerals, Metals, Steel and Pig Iron, Fertiliser and Fertilizers Raw materials, Coal and Coke, Building Materials like Cement and Clinker, Ferro Alloys, Industrial Raw Materials, Chemicals, Agri Products, Edible oil, Engineering Products, Bullion etc. Third country trading is another area where MTPL is able to generate new business opportunities. MTPL has been ranked 18th out of 51 Companies listed under the category of General Whole Sale Trade by DP Information Group (A long term investor and leader in variable business information and services in the region. It builds and manages quality data, information, research, start up and credit management services to support the growth of Singapore and Asian economies) and supporting Organizations, Earnest & Young Singapore, International Enterprise, Singapore (under Ministry of Trade, Govt. of Singapore) in their survey Singapore 1000 Companies for the year 2005. MTPL was also ranked 389 out of 1000 Companies on the basis of Sales/Turn-over for the year 2003-04 all over Singapore. The strategic initiative MMTC took a decade back to set up MTPL as a window to the South East has paid rich dividends. As a global trader, the prestigious status awarded to it by Singapore Trade Development Board, MTPL has truly emerged as a dynamic and vibrant organization achieving year on year growth.

MTPL has been steadily marching forward and increasing business volume from a level of S$2.36 million in 1994-95 to S$31 million in 1997-98. MTPL crossed S$50 million in 1998-99 and S$100 million the very next year. S$ 200 million level was achieved in 2002-03 when business volume reached close to S$250 million followed by business turnover of USD 187 million (S$ 325 million) during 2003-04. The performance in 2003-04 reflects a business growth of 30% over the last fiscal year. Building further on this growth during 2004-05 MTPL has doubled turnover to achieve 100% growth in US Dollar terms in fiscal 2004-05 to USD 388 million (SD 635 million). On financial parameters, MTPL has done equally well in increasing its net worth; by almost SIX times since inception (from SD 1.46 million, in 94-95 to approx. SD 8.84 million in 2004-05) and plugging back rich dividends to MMTC. Dividends paid so far by MTPL have exceeded total equity contributed by MMTC into the subsidiary. In a fast changing dynamic business environment, MTPL is well equipped to propel growth to attain business of S$1 billion very soon.

2.Neelachal Ispat Nigam Limited (NINL)

Neelachal Ispat Nigam Limited (NINL), a Company promoted by MMTC Limited, Industrial Promotion and Investment Corporation of Orissa Limited (IPICOL) has set up an Integrated 1.1 Million ton capacity Iron and Steel Plant at Kalinga Nagar Industrial complex, Duburi, District Jajpur, Orissa. Presently the main products are pig iron and BF coke along with nut coke, coke breeze, crude tar, ammonium sulphate and granulated slag. Steel making facility having Basic Oxygen Furnace (BOF) and Continuous Casting machine along with Oxygen Plant, Lime and Dolomite Calcinations Plant is in advance stage of construction and will be producing steel billets in 2011. Other Products including bars and rods will be produced subsequently NINL, has become India's largest producer and exporter of saleable pig iron. Due to super quality and rigorous marketing efforts of MMTC pig iron produced by NINL has established its acceptance in domestic as well as in international markets. Company is widely catering to demands of eastern, central and northern regions of India for Pig iron apart from exports. Similarly the BF coke produced by NINL is of high quality and is being supplied to almost all units of Steel Authority of India Ltd. and Vishakhapatnam Steel Plant. The "KAMDHENU" fertilizer (Ammonium Sulphate) produced is in high demand in nearby areas. Crude tar is being dispatched to down stream industries for

further processing. BF Slag is being supplied to cement plants for further processing to manufacture cement. NINL is having 62.5 MW captive power plant to meet the power requirements. Apart from meeting own requirement NINL is presently exporting substantial quantity of power to GRIDCO, Orissa. The equipment ordering for Phase II, which will produce billets, of different grades and sizes, is already complete and most of equipments have been received and erected. NINL is having own captive iron ore mines, which is under development. Over the years MMTC has become the acknowledged market leader in facilitating export of Indian Iron Ore. Today, MMTC Limited is Indias largest exporter of minerals and ores, handling about one third of Indias total exports of around 15 million tons per annum. Neelachal Ispat Nigam Limited (NINL) form part of MMTCs strategic initiative of creating synergy between its minerals and metal trading activities. Neelachal Ispat Nigam Limited represents a major investment by MMTC for enhancing exports and increasing domestic trading activities and at the same time realizing greater value addition for Orissas vast mineral wealth. Besides, MMTC will, as the exclusive marketing agent, use its strength and presence in global markets to market all of NINLs products in India and abroad. MMTCs contribution as the main promoter starts with procurement of raw materials like iron ore and coal, to closely monitor the eventual manufacture and supply of finished products that meet the diverse requirements of end users for quality products. It will be our Endeavour to work in tandem with consumer industries to provide them with a market savvy, innovative and flexible product mix and be in virtual control of the entire value addition chain.

AWARDS AND RANKING



Gold Trophy for being top Exporter for the Year 2006-07 in Merchant Exporter category by EEPC CAPEXIL highest award for highest export in Minerals and Ores sector for the year 2007-08, (17th time in a row).

 

Niryat Shree Bronze Trophy for the year 2005-06 presented by the Hon'ble President of India, in January 2009 in the Highest Foreign Exchange Earner category by Federation of Indian Exporters Organization (FIEO). Top Indian Company in the Trading Sector by Dun & Bradstreet in their rankings 'India's Top 500 companies 2008'. In the same publication ranked 13th based on total income for the year 2007-08. Ranked as the Highest Wealth Creator PSU by Dalal Street Journal. Top ranking in the list of India's top 100 wealth creation companies published by the Times Group and the Economic Times in their publication 'ET500' released in Oct 2008. In the same publication MMTC has been ranked 17th amongst India's biggest companies. Ranked 4th amongst India's most valuable Public Sector Companies by 'Business Today' in its publication 'BT500' released in November 2008. In the same publication, ranked at 6th place amongst 10 most valuable companies. Ranked 12th in the list of India's Top PSUs 2009 released by Dun & Bradstreet.  Ranked 5th by CAPITAL MARKET in their 2009 Compendium of TOP 500 Companies in India.  Top Indian Company in the Trading Sector by Dun & Bradstreet in their rankings Indias Top 500 companies 2009. In the same publication your Company was ranked based on total income for the year 2008-09.  Amity Excellence Award in the category Wealth Creator of the Year for 200910th.  Ranked 14 amongst Indias top Companies by Business Standard in its publication BS1000 released in February 2010.  Ranked 10th in the list of Indias Top PSUs 2010 released by Dun & Bradstreet

MMTC has won the top export award from Chemicals and Allied Products Export Promotion Council (CAPEXIL) as the largest exporter of minerals from India for the nineteenth year in a row.

SOCIAL AND WELFARE ACTIVITES

MMTC's social and welfare activities promote welfare of the employees through various schemes like sports activities, liberal loan facilities like house building advance, conveyance loan, house hold loan, marriage advance, etc. MMTC also provides subsidized canteen facilities, medical treatment, residential accommodation in some of the major cities for its employees. MMTC also takes care of employees' families through merit scholarship, tuition fee reimbursement, etc. MMTC is committed towards environmental upkeepment through a forestation in the mining areas, development of tribal areas and infrastructure development through rail links, port facilities, etc.

NETWORKS OF OFFICES
Its vast international trade network, includes. One wholly owned international subsidiary in Singapore- MMTC Transnational Pte. Ltd. (MTPL) 13 Regional offices East Zone : Kolkata, Bhubaneswar West Zone : Mumbai, Goa, Ahmadabad North Zone : Delhi, Jhandewalan (Delhi), Jaipur South Zone : Bangalore, Bellary, Chennai, Hyderabad, Vizag

INTROTUCTION TO CHEMICAL INDUSTRY

industry comprises the companies that produce industrial chemicals. Central to the modern world economy, it converts raw materials (oil, natural gas, air, water, metals, and minerals) into more than 70,000 different products. The chemical industry is a key contributor to the world economy. It is a knowledge-based industry with significant investments in R&D. The industry supplies to virtually all sectors of the economy and produces more than 80,000 products. In terms of consumption, the chemical industry is its own largest customer and accounts for approximately 33 per cent of the consumption. In most cases, Basic chemicals undergo several processing stages to be converted into downstream chemicals. These in turn are used for industrial applications, agriculture, or directly for consumer markets. Industrial and agricultural uses of chemicals include auxiliary materials such as adhesives, unprocessed plastics, dyes and fertilizers, while uses within the consumer sector include pharmaceuticals, cosmetics, household products, paints, etc. Western Europe is the largest chemical-producing region followed by North America and Asia. Growth in revenues within the chemical industry depends largely on the overall growth of the economy and industrial production, and is often measured as a multiple of GDP growth.

The chemical

Global scenario
The size of the global chemical industry is estimated at approximately USD 1.5 trillion in 2002. The industry is currently under-performing and is in the trough of the business cycle. Some of the emerging trends of the global chemical industry that can be leveraged for growth are increasing globalization as growth in mature markets drives leading players to explore new developing markets consolidation to leverage economies of scale in the Basic and Knowledge segments increasing focus on core businesses, resulting in diversified chemical and multi-product companies divesting businesses or exiting non-core product lines cost optimization assuming critical importance in the face of slow growth coupled with a pressure on prices due to competition increasing investments in R&D (especially in the Specialty and Knowledge segments) to gain competitive advantage increasing use of IT to transact business intra-company and across the extended supply chain.

Indian scenario
The USD 28 billion Indian chemical industry is a marginal player in the international market accounting for 1.9 per cent of the global chemicals market, while Indian trade (exports plus imports) accounts for just 1.3 per cent of the world chemical trade of USD 545 billion. Although certain sectors such as petrochemicals and pharmaceuticals have a trade surplus, the industry remains a net importer with a trade deficit of around USD 1.3-1.8 billion annually. At the industry level, the Indian chemical industry is characterized by: high domestic demand potential, as the Indian markets develop and per capita consumption levels increase high degree of fragmentation and small scale of operations limited emphasis on exports due to domestic market focus and smaller scale of operation.

Industry characteristics
The Indian industry is faced with multiple challenges. It is emerging from a protected environment into a highly competitive global market at the same time the domestic market is on a path to maturity with a high demand potential for chemical end-products.

Segments of the Indian chemical industry

The Indian chemical industry manufactures a wide spectrum of products spanning the Basic, Specialty and Knowledge segments. At 57 per cent, Basic chemicals comprise the largest segment of the Indian chemical Industry.

Basic chemicals industry

The industry expects Basic chemicals to grow in pace with the GDP of the country. This segment comprises old legacy capacities from the pre-liberalization era and hence is faced with the biggest challenge in the current liberalized economy. The following sections detail the characteristics of a few key sub-segments of the industry.

Petrochemicals
The petrochemical industry is seen to hold good growth potential in the medium-term as domestic per capita consumption of petrochemical derivatives is a fraction of world

levels, indicating significant potential for future growth in India. Demand growth in India is fuelled by several factors higher GDP growth than global rates higher presence of traditional materials leading to greater opportunities for substitution and increased application development carried out by large players to fuel downstream demand.

Protectionist policies in the fertilizer industry

Urea producing companies are given a 12 per cent post tax return on net worth. The farm gate price has been consistently lower than the retention price offered to players, resulting in high outflows to the exchequer. The current retention price varies between INR 5,000 and INR 13,000 per tonne while the cost, insurance and freight (CI.) price of urea is around INR 5,500 per tonne. Decontrolled urea prices would threaten the competitiveness of Indian industry. The competitiveness of this sector has been significantly compromised as a consequence of the protection given to the sector in the past.

Specialty chemicals industry

The industry sees Specialty chemicals as a high growth potential industry in India. Growth is expected to come largely in the organic specialty area. The agro-oriented Specialty chemicals are expected to register higher growth rates than what is expected globally, as they are driven by the domestic demand potential. India had a slow start in Specialty chemicals. In the 1980s, a shift to a market-oriented approach led to impressive growth. With liberalization in the 1990s, the industry took advantage of the lower production costs prevalent in the country and shifted to value-added products. The Specialty chemicals industry has since witnessed a high growth rate. Low capital intensity of the industry, the availability of technical manpower and high profit margins have helped promote a large number of small manufacturing units. Most of these units exist in the small-scale unorganized sector where their cost advantage has deterred the entry of organized players.

BUSINESS MODEL OF MMTC LTD.

A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, or other forms of value). The process of business model design is part of business strategy.


Direct sales model Direct selling is marketing and selling products, direct to consumers away from a fixed retail location. Sales are typically made through party plan, one to one demonstrations, and other personal contact arrangements. A text book definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs."

As core competency of the MMTC is that it deals in bulk because it is a PSU firm so there is no question of financing problem , so they can easily deal in bulk. MMTC should focus on the large firms who can easily buy or sell in bulk.

Strategy: MMTC will buy the product on behalf of the single or group of buyers
raising L/C on its own name for the international suppliers. The product will be sold to the buyers at high sea, after that the sole responsibility of the product lies with the buyers which include handling, storage and inland transport liabilities. The payment to MMTC will be made as per the contracting terms, which will include raising of the payment credit to the buyers at the LIBOR plus rate.

Benefit: Hassle free transaction of the product for MMTC as responsibility is

transferred to the buyer.

Potential Buyer: Paints & varnishing industry like Asian Paint etc., which need
methanol for the manufacture of paints in large amount. Formaldehyde resin manufacturer for its use in Plywood industries. Big pharmaceutical companies like Jubilant Organosys, matrix labs etc. for using methanol as chemical solvents or any combination of all above.

Threat: There are chances of buyer backing out of the trade, which can be negated
by suitably drafting the contracting terms. Ernest Money Deposit, Bank Guarantee and Advance payment and legal action could prove as an instrument in thwarting any possibilities of backing out. But in spite of all, material immediate disbursement possibility is to be looked at, where the company could incur additional cost or in there is a slight possibility of loss due to writing off the material. MMTC Ltd. to its direct competitors and find out its position in the Wholesale and Distribution Industry, as well as detect company's strengths, weaknesses, opportunities and threats.

STRENGTHS
Certain specific strengths of MMTC, which make it a strong player in this sector are :


    

Strong business relationship with the leading coal mines and reputed suppliers of various coal and hydrocarbon products. A list of suppliers whose credentials are established are also updated from time to time. They are retained by MMTC for sourcing. Elaborate infrastructure facilities for bulk handling with arrangements for rail and road transport, warehousing, port and shipping operations, which gives MMTC complete control over trade logistics. One of the biggest International traders in bulk in the country. Importing non-coking steam coal continuously for the power plants under longterm contracts. MMTC is the largest non-oil importer in India. The Single largest bullion traders in India One of the worlds largest buyers of fertilizers.

MARKET ANALYSIS OF CHEMICAL INDUSTRY

Basic chemicals
Basic chemicals comprised a USD 705 billion industry forming 47 per cent of the global chemical industry in 2002. This segment includes organic and inorganic chemicals, chlor-alkalis, aromatics, thermoplastics, thermo sets, petrochemical intermediates and derivatives, and fertilizers. Raw material and energy costs form the largest cost components. There is therefore a strong emphasis on reducing feedstock usage and costs, energy requirements and labour costs, through engineering process improvements. Volumes drive growth, as products are standard and there is very little product differentiation across manufacturers. This segment is characterized by high capital intensity and high entry barriers such as, stringent regulations on health, safety and environment because of the large volumes involved. R&D spends are limited and largely application oriented. Basic chemicals are used by other industries as raw material and converted to end-products. Hence their demand depends on the market dynamics of the end-use industries, which is often cyclical. Logistics play a key role in this industry since raw materials and finished products are voluminous and require special transport and material handling equipment. Manufacturing locations are therefore located either close to the raw material source or close to the consuming markets.

Specialty chemicals
Specialty chemicals is a USD 375 billion industry, accounting for 25 per cent of the global chemical industry in 2002. This segment includes paints and coatings, adhesives and sealants, additives for pharmaceuticals, lubricants and additives, catalysts, water treatment chemicals and plastic additives. Specialty chemicals are characterized by vastly differentiated products with a high degree of value addition. Production units are typically smaller than Basic chemical units and have a greater degree of flexibility in terms of switch capacities as well as fewer imbalances between supply and demand. While capital investment requirements are relatively low, investment in R&D to develop new products and applications is high. Western Europe is the largest regional market. Amongst end-use industries, the pharmaceutical industry accounts for a significant portion of the global demand (with consumption by end-use segment at 45 per cent of the output). The Specialty segment has also witnessed a pressure on earnings as Specialty products mature and transition into commodity chemicals, though to a lesser extent.

Knowledge chemicals
Knowledge chemicals constituted a USD 420 billion industry, accounting for 28 per cent of the global chemical industry in 2002. The Knowledge chemicals segment consists of highly differentiated chemical and biological substances used to induce specific outcomes in humans, animals, plants and other life forms. The segment is characterized by a high degree of research, intellectual capital and skilled manpower. The segment comprises agrochemicals, pharmaceuticals and biotechnology subsegments, with pharmaceuticals being the largest. However in the future, biotechnology is expected to be the most dominant segment as product applications are being developed to either substitute or to provide improved manufacturing processes for each of the chemical segments viz. Basic, Specialty as well as Knowledge. This segment relies extensively on R&D for new products. Most of the R&D is capital intensive and the scale of operations is important to provide the financial strength and access to global markets. Patents and the presence of appropriate regulations to protect intellectual capital is a key consideration for players wishing to enter new markets.

A strong domestic market and a weak export focus

The historical focus on a growing domestic market has prevented a large part of the industry from focusing on exports. Barring a few niche players with a strong focus on global markets, most manufacturers have looked at exports as a hedge to the cyclical Indian demand or as a means to obtain export incentives. Excess capacity after servicing the domestic market was routed to export markets. The Indian chemical industry is a marginal player in the international market accounting for 1.9 per cent of the global chemicals market, while Indian trade (exports plus imports) accounts for just 1.3 per cent of the world chemical trade of USD 545 billion. Although certain sectors (such as petrochemicals and pharmaceuticals) enjoy a trade surplus, the industry remains a net importer with an annual trade deficit of USD 1.3-1.8 billion. Since 1991, export markets constitute an integral part of the players' strategies with annual export targets being set. This increase has been aided by developed nations looking at India as a manufacturing base. Low cost manpower, strong technical skills and relatively less stringent environmental norms have contributed to this newly placed confidence.

Inorganic Chemicals and fertilizers

The USD 2.5 billion Indian inorganic chemicals industry is small, accounting for less than 4.5 per cent of the global market. The industry is characterized by a high degree of fragmentation even across high volume product areas. High energy costs, low import tariffs and infrastructural impediments affect its competitiveness. The fertilizer industry continues to be a price-regulated industry in India. It is expected to grow faster than the global fertilizer industry, largely due to high, unrealized domestic demand. Fertilizer consumption in India is amongst the lowest in the world even when compared to other developing countries. India is also a net consumer of fertilizers. The industry is polarized with six players producing 64 per cent of nitrogenous fertilizers and two companies producing 44 per cent of phosphatic fertilizers, with a large number of smaller companies accounting for the balance

Pharmaceuticals
The pharmaceutical sector in India is perceived to have a significant growth potential. It is ranked highest in being prepared to compete in global markets. The pharmaceutical sub-segment was estimated to be around USD 4.75 billion for 2001. its growth is driven by exports of formulations, bulk drugs and generics. The industry is broadly divided into formulations (57 per cent), exports (28 per cent) and bulk drug sales (15 per cent). Antidiabetics and cardiovascular medicines provide the highest growth rates across categories in India.

Agrochemicals
India is the second largest manufacturer of agrochemicals with 145 pesticides registered in the country. Stringent environmental norms in the West are causing production capacities in the agrochemical segment to shift to developing countries, such as India and China. The agrochemical industry in India is different from the developed world for a number of reasons. Globally, herbicides constitute a larger proportion of the demand. On the other hand in India, insecticides comprise 76 per cent of the market while herbicides constitute only around 10 per cent of the market. The

demand for herbicides is likely to grow with a growing shortage in agricultural labour due to increasing migration of labour to cities for manufacturing and services-based economic activities. This has already been witnessed in a couple of Indian states. The Indian agrochemical industry is marked by a high degree of fragmentation compared to the global industry. Net profit margins in the industry are quite low at 4 per cent to 5 percent due to the diseconomies of small scale operations and fierce competition amongst players. India is a global sourcing base for generic agrochemicals. Most of the sales are to traders and not to end-users. This is because, barring a few, most Indian players have refrained from obtaining product registrations from relevant regulatory authorities permitting them to make direct sales. Most players also lack the necessary sales and distribution infrastructure to access consumers directly. Players in the Indian industry have made limited investments in R&D due to prohibitive investment levels and long gestation periods. Global companies operating in India have merged with local companies and set up R&D laboratories to improve the process in formulation technology and assist in introducing selected products from their global portfolio.

PRODUCT ANALYSIS

The global chemical market is estimated at approximately USD 1.7 trillion. Western
Europe is the largest chemical-producing region followed by North America and Asia. The Indian Chemical Industry ranks 12 by volume in the world production of chemicals. The industrys current turnover is about USD 30.8 billion which is 14 per cent of the total manufacturing output of the country. In terms of consumption, the chemical industry is its own largest customer and accounts for approximately 33 per cent of the consumption. In most cases, basic chemicals undergo several processing stages to be converted into downstream chemicals. These in turn are used for industrial applications, agriculture, or directly for consumer markets. Industrial and agricultural uses of chemicals include auxiliary materials such as adhesives, unprocessed plastics, dyes and fertilizers, while uses within the consumer sector include pharmaceuticals, cosmetics, household products, paints, etc. India also produces a large number of fine and specialty chemicals, which have very specific uses and are essential for increasing industrial production. These find wide usage as food additives, pigments, polymer additives, anti-oxidants in the rubber industry, etc. Some of the important manufacturers of specialty chemicals include NOCIL, Bayer (India), ICI (India), Hico Products and Colourchem. The Dyestuff sector is one of the important segments of the chemicals industry in India, having forward and backward linkages with a variety of sectors like textiles, leather, paper, plastics, printing ink and foodstuffs. The textile industry accounts for the largest consumption of dyestuffs at nearly 80 per cent. From being importers and distributors in the 1950s, it has now emerged as a very strong industry and a major foreign exchange earner. India has emerged as a global supplier of dyestuff and dyes intermediates, particularly for reactive, acid, vat and direct dyes. India accounts for 6 per cent of the world production of dyes.

CURRENT STATUS
Industry Segments The wide and diverse spectrum of products can be broken down into a number of categories, including inorganic and organic (commodity) chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals, and fertilizers.

Basic Inorganic and Organic Chemical Industry

The Basic inorganic chemical and organic chemical industry constitutes a major segment of the country's economy. Important chemicals in this category are Soda Ash, Caustic Soda, Liquid Chlorine, Calcium Carbide, Acetic Acid. Methanol, Formaldehyde, Phenol, Acetone. These are raw materials for industries like detergents, toothpaste, plastics, drugs, petroleum refining, etc. 10 per cent of the Chlor-Caustic Plants use Membrane Cell Technology, which will find higher usage, as no new capacities are allowed for the mercury cell process

Drugs & Pharmaceuticals

The Indian Pharmaceutical Industry is the largest in the developing world. The industry currently produces a wide range of bulk drugs. In fact, India is currently a world leader in manufacture and export of basic drugs such as ethambutol and ibuprofen. India is emerging as one of the largest and cheapest producers of pharmaceuticals in the world, accounting for nearly 8.5per cent of the world's drug requirements in terms of volume, and ranks amongst the top 15 drug manufacturing countries in the world.

Pesticides & Agrochemicals

India is currently the largest manufacturer of Pesticides in Asia, second only to Japan. In agrochemical, we manufacture significant quantities of synthetic pyrethroids, such as fenvalerate and cypermethrin, endosulphane, and organophosphate range of agrochemicals, including monocrotophos. India is also a dominant producer of isoproturon, a weedicide accounting for nearly 25 per cent of the world-wide production.

Petrochemicals
The petrochemical industry of India is less than 40 years old. Petrochemicals cover basic chemicals like Ethylene, Propylene, Benzene and Xylene. The other major components are the intermediates like MEG, PAN and LAB etc, Synthetic fibres like

Nylon, PSF and PFY, Polymers like LDPE/HDPE, PVC, Polyester and PET etc and Synthetic rubber like SBR, PBR. The sector has a significant growth potential. Although the current per capita consumption of petrochemicals products is low, the demand for the same is growing: The major players in this field include Reliance, Indian Petrochemicals Limited (IPCL), National Organic Chemical Industry Ltd (NOCIL) and Gas Authority of India Ltd (GAIL) etc.

Dyes & Pigments

Nearly 80 per cent of the dyes manufactured is utilised by the textile industry, with the balance going to into paints, printing inks, rubber & leather. Just like Agrochemicals, per capita consumption of dyes too is very low (400 gms) as compared to developed countries like USA (15kgs). However India is a major exporter of dyes, mostly due to ban of production of some of the dyes and intermediates in the developed countries due to pollution Major Players Paints - Asian Paints, Good lass Nerolac, ICI, Courtlands, Jenson & Nicholson Dyes & Intermediates - Color Chem (Hoechst), Clariant, IDI, Atul, Mardia etc. Inks - Coates, Hindustan Inks, Sakata

Fine & Specialty Chemicals

70 per cent of the Fine Chemicals produced in India find their way into the Pharmaceutical and Agrochemical sectors. Performance chemicals geared to customer need are being developed locally particularly since there is growing demand for Specialty chemicals like Sunscreens, Antioxidants, Biocides, etc. Manufacturers of Fine Chemicals and specialties have major strengths in basic research facilities available with CSIR laboratories such as NCL, IICT & RRls as also corporate R & D centres. This ensures that development of process know-how; plant process design and engineers, detailed engineering design, commissioning assistance and even consultancy for re-engineering are available at low cost. This segment is also highly segmented with large

number of players. Major Indian players are ION Exchange, Balmer Lawrie, Dai Ichi Karkaria. etc. The multinationals like Ciba, Hoechst, Foseco, Nalco Chemicals, Clariant, ICI etc too have significant share in the fast growing market.

Fertilizers
The Indian fertilizer industry has emerged as the fourth largest producer of fertilizers in the world after China, USA, Russia. Nitrogenous and phosphatic fertilizers are produced indigenously, while requests for potassic fertilizers are met through imports. India has achieved near self-sufficiency in the inputs for the production of nitrogenous fertilizers, but for the production of phosphatic fertilizers, the country continues to rely on imports of raw materials (rock phosphate and sulphur and for intermediates such as phosphoric acid).

KEY SEGEMENT AND PLAYERS

GLOBAL SOURCING OF CHEMICALS

PROFILE OF THE CHEMICAL EXPORTING NATIONS TO INDIA
The global chemical industry is diverse and heterogeneous comprising several segments that are largely unrelated to one another. The key segments that make up the industry are: Commodity chemicals Specialty and fine chemicals Fertilizer and agrochemicals Industrial gas

IRAN
Iran has a diversified basket with more than 70 products. The main exports are polyethylene, methanol, benzene, ammonia, sulphur, PVCand propylene.[7] Iran exported $8.613 billion worth of different types of petrochemical products in Iranian year 2010-2011. Methanol: Iran is a key player in supplying the worlds methanol demand. Currently, Iran has the capacity to produce more than 5 million tonnes of methanol, which constitutes 10% of the worlds methanol production. Of this amount, approximately 90% is exported.[4] Ethane: In addition, Iran has a competitive advantage in the gas consuming stream of the petrochemical industry due to its vast reserves ofnatural gas. In the Assalouyeh region near the South Pars gas field in the Persian Gulf, Iran is able to convert raw gas to ethane (a raw material for the petrochemical industry) and then to petrochemical products at a gross margin of up to 88%. In 2009, Iran consumed domestically over 95% of the natural gas that was produced. As at end of 2009, Irans total annual petrochemical production capacity stood at 34 million tonnes. In 2010, Iran produced 26% of the total petrochemical output in the Middle East, second behind Saudi Arabia.

SAUDI ARABIA
The Saudi Arabian Basic Industries Corporation SABIC was established by a royal decree in 1976 to produce chemicals, polymers and fertilizers. In 2008, SABIC was Asia's largest (in terms of market capitalization) and most profitable publicly listed nonoil company, the world's 4th largest petrochemical company, ranked 186th as world's largest corporation on the Fortune Global 500 for 2009, the second largest producer of ethylene glycol and methanol in the world, the third largest producer of polyethylene and overall the fourth largest producer of polypropylene and polyolefin.

MALAYSIA
Malaysia is important to world energy markets because of its 68 trillion cubic feet of natural gas reserves the worlds 14th largest. methanol, acetic acid, formaldehyde, caustic soda are being produced by the plants operated by PETRONAS and traded worldwide by MITCO.

CHINA
China Great vista Chemicals is a chemical and pharmaceutical supplier and manufacturer of high quality biochemicals, amino acids, pharmaceutical intermediates, herb extracts, oleo chemicals, agrochemicals, dyes and pigments, industrial and specialty chemicals, surfactants and cleaning chemicals, for the applications in scientific and industrial sectors.

QATAR
QAFCO total annual production capacity now is 2.0 MMT of ammonia and 2.8 MMT of urea, making QAFCO the worlds largest single site producer of urea. A new plant expansion is scheduled to be completed in early 2011 (QAFCO 5), using Snamprogetti and Haldor Topsoe design. The increase in ammonia production will be 4600 metric ton/day.

MAJOR MANUFACTURING COMPANIES

The players worldwide manufacturing these key chemicals are:BASE, DOW CHEMICAL, PETRONS, BAYER, INEOS, DUPONT, LYONDELL CHEMICAL, SAUDI BASIC INDUSTRIES CORPORATION, METHANEX CORPORATION, AKZO NOBEL, EVONIK DEGUSSA, SUMITOMO CHEMICAL, ASAHI KASEI, MITSUI CHEMICALS, TORAY INDUSTRIES, HUNSMAN CORP. Etc.

BASE
BASF originally stood for Badische Anilin- und Soda-Fabrik (English: Baden Aniline and Soda Factory). The BASF Group comprises subsidiaries and joint ventures in more than 80 countries and operates six integrated production sites and 390 other production sites in Europe, Asia, Australia, Americas and Africa.[3] Its headquarters is located in Ludwigshafen am Rheine (Rhineland-Palatinate, Germany). BASF has customers in over 200 countries and supplies products to a wide variety of industries. Despite its size and global presence BASF receives little public attention as it abandoned consumer product lines in the 90s. At the end of 2010, the company employed more than 109,000 people, with over 50,800 in Germany alone. In 2010, BASF posted sales of 63.87 billion and income from operations before special items of about 8.1 billion. The company is currently expanding its international activities with a particular focus on Asia. Between 1990 and 2005, the company invested 5.6 billion in Asia, for example in sites near Nanjing and Shanghai, China and Katipalla in India.

Dow Chemical Company

Dow Chemical Company (NYSE: DOW) is a corporation headquartered in Midland, Michigan, United States. As of 2007, it is the second largest chemical manufacturer in the world by revenue (after BASF)[2] and as of February 2009, the third-largest chemical company in the world by market capitalization (after BASF and DuPont). Dow Chemical is a provider of plastics, chemicals, and agricultural products with a presence in more than 175 countries and employing 46,000 people worldwide. Major products include ethylene glycol, caustic soda, chlorine, and vinyl chloride monomer (VCM, for making PVC). Ethylene oxide (EO) and propylene oxide and the derived

alcohols ethylene glycol and propylene glycol are major manufacture of plastics such as polyurethane and PET.

feedstocks

for

the

Saudi Basic Industries Corporation

SABIC (Saudi Basic Industries Corporation) is a diversified manufacturing company, active in chemicals and intermediates, industrial polymers, fertilizers and metals. It is the largest public company in Saudi Arabia as listed in Tadawul, but the Saudi government still owns 70% of its shares. SABIC employs above 30,000 people globally and has 60 manufacturing and compounding plants in more than 40 countries. SABIC is the third largest polyethylene manufacturer, the fourth largest polyolefins manufacturer and the fourth largest polypropylene manufacturer. SABIC is also the worlds largest producer of monoethylene glycol, MTBE, granular urea, polyphenylene and polyether imide.

BAYER
Bayer AG was founded in Barmen (today a part of Wuppertal), Germany in 1863 by Friedrich Bayer and his partner, Johann Friedrich Weskott. Bayer's first major product was acetylsalicylic acid (originally discovered by French chemist Charles Frederic Gerhardt in 1853), a modification of salicylic acid or slicing, a folk remedy found in the bark of the willow plant.

Asahi Kasei Corporation

Asahi Kasei Corporation, Asahi Kasei Kabushiki Kaisha is a Japanese company. The main products are chemicals and materials science. The company has around 25,000 employees and had consolidated sales of 1.7 trillion in 2008[1]. It was founded in May 1931, using the paid in capital of Nobeoka Ammonia Fiber Co., Ltd, a Nobeoka, Miyazakibased producer of ammonia, nitric acid, and other chemicals. Now headquartered in Tokyo, with offices and plants across Japan, as well as China, Singapore, Thailand, U.S.A. and Germany. It is listed on the Tokyo Stock Exchange and is part of the Nikkei 225 index.

INEOS
Ineos AG is a privately-owned chemicals company with its head office in Hampshire, United and its registered office in Lausanne, Switzerland. It is the third-largest chemicals company in the world measured by revenues (after BASF and Dow Chemical) and the largest privately-owned company in the United Kingdom.

Indian chemical market

The Indian chemical industry comprises basic chemicals including petrochemicals, fertilizers, inorganic chemicals and other industrial chemicals; specialty chemicals; and agrochemicals. The chemical industry is highly fragmented in India and widely dispersed with western India accounting for 45-50%. Bulk chemicals are dominated by large players and both large and small players are involved in fine and specialty chemicals. India has a large chemical industry with a sizeable presence in a number of sub-sectors comprising dyes and pigments, organic chemicals, inorganic chemicals, agrochemicals, and specialty and performance chemicals. The chemical industry accounts for 12.5% of Indias total industrial production and 16.2% of the total exports from the Indian manufacturing sector.

CAUSTIC SODA
INDUSTRY ANALYSIS y Nearly 45% of the chemicals industry depends on soda as an essential input. y Demand for caustic soda for asia/ndia is expected to increase from 2.18 million MT in 2005 to 26.9 million in 2010, Highest growth rate only to the Middle East. y 40 plants in India operating at 84% capacity. y Paper & puil. Manmade Fibers ,fibers, soaps, & alumina and major users contribute to around 80% of the total domestic production.

Demand Drivers:
y Papers industry with an expected growth of 6% per annum y Chlorine will also see its usage through water treatment, both municipal and industrial.

SODA ASH
INDUSTRY ANALYSIS  Sodium carbonate is domestically well known for its everyday use as a water softener.  6 plants of soda ash with an aggregate installed capacity of 3.1 million tones operating at 74% capacity utilization.  The domestic consumption is expectd to reach 2.986 MT by 2012 with a CAGR of 5.4%.  The maximum demand for soda ash is from china (expexted 7-8 growth ) followed by America and asia.

Demand Drivers
 Glass and detergents industry a major source of the demand for soda ash is expected to grow three fold in the period 2005-2010

METHANOL
INDUSTRY ANALYSIS  During last 5 yrs demand on methanol had steady growth. It is expected that by 2008-09 average annual growth of demand will be about 2% and world methanol consumption will reach 36 million Mt.

 The leader in world methanol consumption is Asian pacific region. it s expected that this region will create about 37% of world demand by 2008-09.  USA is a great importer of methanol .In 2003 it imported 4384000 MT and it is expected that by 2012 it will import 7819000 MT of methanol.

Demand Drivers
 Most producers started manufacturing methanol as a secondary product ,after switching over to low cost gas route for producing fertilizers.

ACETIC ACID
INDUSTRY ANALYSIS  There has been a significant growth in capacities as the technology is easily accessible and capital costs are low.  The demand is expected to be increase around 8-10% every year.  There are 23 units engaged in the manufacture of acetic acid. All but one of the units is based on industrial alcohol and is much smaller in size. Excess capacity is being tapped for exports.

Demand Drivers
 This is a commodity product with volumes and low margins. The is an intermediate product used for the production of vinyl acetate monomer, purified tetraphthalic acid acetic anhydride. These are in turn used as intermediate products for manufacturing of polyester ,plastic, paints and pharmaceuticals.

FORMALDEHYDE

Industry Analysis:
y The main downstream demand for formaldehyde around the world is in production of thermosetting resins. The largest group is the amino resins produced by condensing either urea or melamine with formaldehyde. y Urea formaldehyde (UF) resins are the largest sector, accounting for some 46% of global demand, according to the formaldehyde producer Hexion Specialty Chemicals. y Another use for formaldehyde is in production of polyacetal or polyoxymethylene (POM). This accounts for around 7 or 8% of formaldehyde demand.

Demand Drivers:
y The three largest markets are Europe, North America and China. In Western Europe, markets are mature with GDP growth typically 2%/year and manufacturing costs high. By contrast in the eastern part of Europe, economies are growing at typically around 5%/year. In Russia the growth rate is even higher with GDP growth of around 7% year.

SHARE OF STATES PETROCHEMICALS

IN

PRODUCTION

OF

MAJOR

Petrochemical industrial units are maily located in 30-35 districts in 18 states. Of the total production of basic petrochemical products of basic petrochemical products during 2006-07, about 62% was accounted for by Gujarat in the districts of Baroda, Bharuch, Surat, Jamnagar and Ahmedabad, followed by Maharashtra (about 15%, mainly in the districts of Raigad, Thane, Navi Mumbai, Mumbai, Pune, Nagpur, Goregaon and Aurangabad), West Bengal (10.6%, mainly in the districts of Haldia, Durgapur, Bardhwan, and Midnapore). The remaining 12.6% of the production was contributed by the states of Andhra Pradesh, Assam, Chattisgarh, D&N Haveli,

Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and Uttrakhand).

Petrochemical Industry in India

The petrochemical industry has been one of the of the fastest growing industries in the Indian economy; it provides the foundation for manufacturing industries such as pharmaceuticals, construction, agriculture, packaging industry, textiles, automotive, etc. The petrochemical industry in India is oligopolistic with four main players dominating the market, namely Reliance Industries Ltd. (RIL) along with Indian Petrochemical Ltd. (IPCL), Gas Authority of India Ltd (GAIL), and Haldia Petrochemicals Ltd. (HPL).

SHARE OF STATES IN PRODUCTION OF MAJOR CHEMICALS

The major basic chemicals comprise of alkalis, organic and inorganic chemicals, major pesticides, dyes and dyestuffs. Chemicals industry is concentrated mainly in Gujarat and Maharashtra due to factors such as availability of raw materials, infrastructure etc. In 2009-10, Gujarat accounted for 60% of the production of major basic chemicals, followed by Maharashtra (15%), Uttar Pradesh (15%) and Tamil Nadu (10%) as exhibited in graph

PROFILE OF KEY PLAYERS

 SODA ASH & CAUSTIC SODA

TATA CHEMICALS LTD. (TCL)

TCL is Indias leading manufacturer of inorganic chemicals. Incorporated in 1939, the company has an annual turnover of over US$ 665 million. TCL operates the largest and most integrated inorganic chemicals complex in India at Mithapur in Gujarat. It is a market leader in the branded, iodized salt segment. It is amongst the largest producers of synthetic soda ash in the world. TCL operates in 2 segments: Fertilizers and Inorganic Chemicals. The Inorganic Chemicals segment products include soda ash, salt, marine chemicals, caustic soda, cement and bulk chemicals. Chemicals segment margins improved from 17.5% to 22.6% primarily on low base. The company is diversifying its business by entering into manufacturing of bio-fuels and distribution of fresh fruits and vegetables

NIRMA LTD.
It started off as a one man army of Dr. Karsanbhai Patel in 1969. It has invested in latest technologies for multi-locational manufacturing facilities. There has been an investment of US$ 250 million in the soda ash plant. This plant has a capacity of 650,000 tonnes per annum. It has a 40 MW captive power plant. Some of the industrial products manufactured by Nirma Limited are linear alkyl benzene, alfa olefin sulphonate, sulphuric acid, glycerin, soda ash, pure salt, vacuum evaporated iodized salt, single super phosphate, and sodium silicate. The turnover of soda ash production had increased to US$ 73.15 million in 2005-2006 from US$ 60.35 million in 2004-2005.

TRAVANCORE ALKALI & CHEMICALS LTD.

The company is into manufacturing caustic soda and chlorine. It has plans of setting up a captive hydel project in the state of Kerala. It intends to produce chlorinated latex, which would increase the demand of chlorine. The company also intends setting up a latex chlorination unit. The company is presently looking out for technology tie-ups to improve chlorine utilization. The company had a turnover of US$ 32 million in FY 07, which is higher compared to US$ 28.5 million in the previous fiscal year.

DCW LTD.

DCW is a diversified manufacturer of basic chemicals. The products manufactured by the company are caustic soda, liquid chlorine, soda ash and others. The company has a successful record in developing downstream and related products. DCW was started in 1925 but was taken over in 1939 and run under the name of Dhrangadhra Chemical Works. DCW commissioned a plant for the production of caustic soda in 1959. The output of caustic soda has been increased in stages from 28,000 TPA to 80,000 TPA, making DCW one of the leading producers of this basic chemical in India. The company had gross sales of US$ 173.25 million and the earnings before tax were around US$ 7.21 million.

TANFAC INDUSTRIES LTD.

This company was incorporated in 1972, as a part of the Aditya Birla Group.The company manufactures inorganic chemicals like aluminium fluoride, hydrofluoric acid, ammonium bifluoride, soda ash, caustic soda etc. The company diversified by manufacturing value added products called organic fluorine chemicals such as dichloro fluoro-benzene, acetophenone in 1999. The plant is located at Cuddalore in Tamil Nadu. The company had sales income of around US$ 30.2 million.

TRIVENI CHEMICALS

The company is over 15 years old in the chemical Industry. It has been successfully producing and exporting aluminum fluoride, soda ash, caustic soda, calcium carbide. The company has its manufacturing unit in Gujarat. It has been able to cut down on transportation costs because of the location. The company has state-ofthe-art equipment and is a leader in producing aluminum fluoride. The total area covered by factories is 5,200 sq. meters. It can cater to a bulk requirement of 1,000 MT per month and has a total production capacity of 500 MT per month.

VAIGAI CHEMICAL INDUSTRIES LTD.

The Vaigai Group was established in 1981. It is located in the city of Madurai. The company is in the fields of chemicals, edible oils, textiles, construction, etc. Chemicals have been the core area of operation for Vaigai since its inception. The chemical division is located at Karaikal, about 250 kilometers from Madurai The 6000 MT capacity complex is Indias 2nd largest potassium chlorate manufacturing plant The company is a major supplier of potassium chlorate to the fireworks and safety match industries and has a 40% market share in India. It is a major producer of soda ash, caustic soda etc. organic chemicals.

 METHANOL
GNFC, BHARUCH
Gujarat Narmada Valley Fertilizers Company Ltd. (GNFC), is a joint sector enterprise promoted by the Government of Gujarat and the Gujarat State Fertilizer Company Ltd.(GSFC). It was set up in Bharuch, Gujarat in 1976. Located at Bharuch in an extremely prosperous industrial belt, GNFC draws on the resources of the natural wealth of the land as well as the industrially rich reserves of the area.

GNFC started its manufacturing and marketing operations by setting up in 1982, one of the world's largest single-stream ammonia-urea fertilizer complexes. Over the next few years, GNFC successfully commissioned different projects - in fields as diverse as chemicals, fertilizers and electronics. GNFC today has extended its profile much beyond fertilizers through a process of horizontal integration. Chemicals (imported urea & DAP, murate of potash, methanol, formic acid), Energy Sector, Electronics/Telecommunications and Information Technology form ambitious and challenging additions to its corporate portfolio. The company has two major plants, namely Aniline Plant Capacity 20,000MTPA and Toluene DI-Isocynate (TDI) plant capacity 10,000MTPA.Aniline plant is in operation since Feb 95 and TDI Plant is in operation since July 97.

NATIONAL FERTILIZERS LIMITED

NFL, a Schedule A and Mini Ratna Company.NFL was incorporated on 23rd August 1974 with two manufacturing Units at Bathinda and Panipat. Subsequently, on the reorganization of Fertilizer group of Companies in 1978, the Nangal Unit of Fertilizer Corporation of India came under the NFL fold. The Company expanded its installed capacity in 1984 by installing and commissioning of its Vijaipur gas based Plant in Madhya Pradesh. NFL, a profitable public sector undertaking operates under the administrative control of Department of Fertilizers in the Ministry of Chemicals & Fertilizers. The Company also manufactures and markets Biofertilizers and a wide range of industrial products like Methanol, Nitric Acid, Sulfur, Liquid Oxygen, and Liquid Nitrogen etc.

FORMALDEHYDE

HINDUSTAN ORGANIC CHEMICALS LIMITED (HOCL)

Hindustan Organic Chemicals Limited (HOCL) was set up by the Government of India in 1960 with the objective of attaining self-reliance in basic organic chemicals needs. In fact this was the first endeavor to indigenise manufacture of basic chemicals

and to reduce countrys dependence on import of vital organic chemicals. HOC, started as small chemical unit, has today acquired the status of a multiunit company with two fast growing units and one subsidiary unit. It was expected that indigenous manufacture of these chemical intermediates will give impetus to downstream industries resulting in setting up of chemical units and achieving self-sufficiency for the country in this area. This objective of setting up HOC has been achieved and at present more than 500 units based on HOCs products have been set up all over the country which have not only succeeded in meeting the goal of self-sufficiency but also entered the international markets earning precious foreign exchange by exporting chemicals, dyes and drugs.

NUCHEM LIMITED
Nuchem Limited is an environmental friendly diversified Company having its registered head office at Faridabad, Haryana. One of the ISO 9001:2000 certified Companies, Nuchem nearly 1000 employees, over 45,000 shareholders and 800 trade associates. The Chemical Division of NUCHEM was established in 1955 for the manufacture of Urea & Melamine Formaldehyde Moulding Powders for the first time in India. Today the division also manufactures UF Resins & Formaldehyde. The excellent reputation NUCHEM enjoys nationwide is not only due to its diverse, high quality product mix, but also largely due to a constant effort to build up a strong technological base of well integrated product lines on the formaldehyde base. A large capacity of Formaldehyde production has given NUCHEM the ability to cater to bulk requirements even in an emergency. Not only does the division make a variety of chemicals, it also provides know-how to other entrepreneurs. Committed to entrepreneurial development as an objective, the division has assisted entrepreneurs to set up successful projects. The division also undertakes turnkey projects for setting up Formaldehyde and Hexamine plant and has set up three such successful operative plants in India and one abroad.

CIBATUL LTD.
Atul Ltd is a member of Lalbhai Group, one of the oldest business houses of India, with interests mainly in textiles and chemicals. Incorporated in 1947, Atul Ltd (formerly Atul Products Ltd) was founded by Kasturbhai Lalbhai with a dream to make India self reliant in chemicals, generate employment on a large-scale and create wealth for the society. For translating his dream into reality, Kasturbhai Lalbhai brought his confidant, Ballubhai Muzumdar, an economist- and his son, Siddharth Kasturbhai Lalbhai, a chemical engineer, to lead Atul Ltd and establish a large chemical conglomerate. Over the years, Atul Ltd joined hands with American Cyanamid Corp (1952), Imperial Chemical Industries plc (1955) and Ciba-Geigy Ltd (1960) to form respectively 3 joint venture companies, namely, Cyanamid India Ltd, Atic Industries Ltd and Cibatul Ltd respectively. Atul Ltd operates through six business divisions, namely, Agrochemicals, Aromatics, Bulk Chemicals & Intermediates, Colors, Pharmaceuticals & Intermediates and Polymers.Atul's registered office is in Ahmedabad whereas its corporate headquarters are located in Atul, Gujarat. The Company is listed on the NSE in India and has over 35, 000 shareholders. Atul also has offices in the USA, the UK, Germany, China and Vietnam that service its international customers.

KANORIA CHEMICAL & IND. LTD.

Kanoria Chemicals & Industries Limited (KCI) is an ISO 9001, ISO 14001 and OHSAS 18001 certified leading manufacturer of chemical intermediates in India. KCI has two manufacturing facilities, one at Renukoot in Uttar Pradesh, which manufactures Chlor-Alkalis, Chlorine derivatives and water treatment chemicals; and the second at Ankleshwar in Gujarat, which manufactures Alcohol based intermediates. KCI operates two 25MW thermal power plants in Renukoot, and enjoys cost advantage as a result of backward and forward integration. The companys portfolio comprises of over twenty products, with a market leadership in six and substantial shares in all others. Chloro Chemical Division (Located at Renukoot in the state of Uttar Pradesh): This division manufactures Caustic Soda as the main product; and Liquid Chlorine, Hydrochloric Acid, and Hydrogen as by-products; and Stable Bleaching Powder, Lindane and its formulations, Aluminium Chloride,

Trichlorobenzene and Chlorinated Paraffin wax as forward integrated products. The division also has the company's 25 MW captive thermal power plant at Renukoot and its Salt Works at Gandhidham (Gujarat), which supplies part of the industrial salt required for the manufacture of Caustic Soda. KCI's Renukoot facility is situated in a township spread over 335 acres, which also accommodates a school, hospital, temple, guesthouse, staff quarters and clubhouseAlco Chemical Division (Located at Ankleshwar in the state of Gujarat): This division comprises of an integrated organic chemical complex set up with the finest technology that was on offer, and is producing chemicals such as Pentaerythritol and its by-product Sodium Formate, Acetaldehyde, Formaldehyde, Hexamine, Industrial Alcohol, Acetic Acid, Ethyl Acetate and Carbon Dioxide. The Alco Chemicals division also has a biogas power plant, a dual fuel (natural gas and biogas) power plant, a wind farm and a bio-compost manufacturing complex.

ACETIC ACID

J. R. ORGANICS LIMITED (FORMERLY SOMAIYA ORGANICS (INDIA) LIMITED)

J. R. Organics Ltd. is having head quarter in Lucknow, India. J. R. Organics is the India's one of the largest manufacturer of Ethyl Acetate (Export and ISI) and Acetic Acid (Glacial and LR). They are involved in the manufacture and trading of Industrial Chemicals for industrial use and as intermediates. They are also wholesale supplier of organic chemicals from India. They are one of the pioneers in making alcohol based chemicals such as Acetaldehyde, Acetic Acid, Paraldehyde, Ethyl Acetate meeting international specifications and standards. For making these chemicals they are using Alcohol which is made from Molasses. They also have their own Captive Distillery at Captainganj, district Kushinagar, state Uttar Pradesh (U.P.), producing 100 KL Alcohol per day from Molasses which is a waste product from sugarcane. In fact their chemical plant is situated near Lucknow in district Barrabanki (U.P.), first Alcohol based plant put up in U. P. The entire plant was designed and commissioned by French Engineers based on latest French Technology. At present they are one of the biggest manufacturer and suppliers of Acetic Acid Glacial (Foodgrade), Ethyl Acetate, Paraldehyde. The company is managed and controlled by

highly qualified experienced and professional Directors and executives who have diversified experience in dealing with the chemicals, alcohol and other associated products.

POLYCHEM LTD.
Polychem Limited. The Company's principal activities are to manufacture and market organic chemicals like acetic acid, acetone, citric acid etc. The chemicals include polyvinyl alcohol and other specialty chemicals. The Company operates in two segments, namely, Property Development and Chemicals. The operational facilities of the Company are located at Pune and Mumbai.

CONCLUTION

The strong and demand of chemical in the country pave the way to the quantum business opportunity in the fields of chemical. With the growth of economy of the country, the demand is projected to rise further as, chemical find their applications in the manufacture of variances of items used in the day to day life of human activities. The domestic production of chemicals is not sufficient to support the local demand, and only way left for Indian companies to increase the production is through the heavy investment .India already dependent on others countries for its natural gas requirement, gas recourses ,hence making a Indian companies uncompetitive on international price structure. MMTC being already in the field of import and export since last four years decades should use this core competencies in making chemical import and export business successful. As of now there are only few companies dealing with the import and export of these key chemicals, which will not impose any major restrictions on MMTC to enter into field.

ANNEXURE

PRODUCT SPECIFICATION
SODA ASH

Soda Ash Other names Identifiers CAS number RTECS number Properties Molecular formula Molar mass Appearance Density Melting point Boiling point Solubility in water Basicity (pKb) c 105.99 g/mol White solid 2.5 g/cm, solid 851 C decomposes 30 g/100 ml (20 C) 3.67 pKa1 = 6.35 pKa2 = 10.33 Hazards [ 497-19-8] VZ4050000 Sodium carbonate ; washing soda

Safety Data Sheet External MSDS Irritant (Xi) EU classification Flash point non flammable Related compounds Other anions Other cations Sodium bicarbonate Lithium carbonate; potassium carbonate

MSDS

CAUSTIC SODA

Caustic Soda Other names Lye, Sodium hydroxide Identifiers [1310-73-2] Properties Molecular formula Molar mass Density Melting point Solubility in water Basicity (pKb) Hazards MSDS External MSDS Irritant (Xi) EU classification Flash point Non- flammable Related compounds Related alkali hydroxides Lithium hydroxide Potassium hydroxide Rubidium hydroxide Caesium hydroxide NaOH 39.9971 g/mol 2.1 g/cm, solid 318C (591 K) 111 g/100 ml (20C) -2.43

CAS number

METHANOL

Methanol IUPAC name Other names Methanol hydroxymethane methyl alcohol methyl hydrate wood alcohol carbinol Identifiers CAS number RTECS number Properties Molecular formula Molar mass Appearance Density Melting point Boiling point Solubility in water Acidity (pKa) Hazards MSDS EU classification External MSDS Flammable (F) Toxic (T) Flash point 11 C Related compounds ethanol butanol chloromethane CH3OH 32.04 g/mol colorless liquid 0.7918 g/cm, liquid 97 C (176 K) 64.7 C (337.8 K) Fully miscible ~ 15.5 [67-56-1] PC1400000

Related alkanols Related compounds

methoxymethane

FORMALDEHYDE

Formaldehyde IUPAC name Other names Methanal formol, methyl aldehyde, methylene oxide Identifiers [50-00-0] LP8925000 Properties Molecular formula Molar mass Appearance Density Melting point Boiling point Solubility in water CH2O 30.03 g/mol colorless gas 1 kgm3, gas -117 C (156 K) -19.3 C (253.9 K) > 100 g/100 ml (20 C) Structure trigonal planar 2.33168(1) D Hazards Main hazards toxic, flammable Flash point -53 C Related compounds Related aldehydes acetaldehyde benzaldehyde

CAS number RTECS number

Molecular shape Dipole moment

Related compounds

ketones carboxylic acids

ACETIC ACID

Acetic acid IUPAC name Other names Acetic acid, Ethanoic acid Acetyl hydroxide (AcOH), Hydrogen acetate (HAc), Ethylic acid, Methanecarboxylic acid Identifiers CAS number PubChem Properties CH3COOH 60.05 g/mol colorless liquid or crystals 1.049 gcm3 (l) 1.266 gcm3 (s) Melting point 16.5 C (289.6 K, 61.6 F) Boiling point 118.1 C (391.2 K, 244.5 F)) Solubility in water Fully miscible Acidity (pKa) 4.76 at 25 C Viscosity 1.22 mPas at 25 C Structure Dipole moment 1.74 D (gas) Hazards MSDS External MSDS Flammable (F) EU classification Toxic (T) Flash point 43 C Related compounds Related carboxylic acid formic acid, propionic acid, butyric acid Related compounds acetamide, ethyl acetate, acetyl chloride, acetic Molecular formula Molar mass Appearance Density [67-19-7] 176

anhydride, acetonitrile, acetaldehyde, ethanol, thioacetic acid, acetylcholine, acetylcholinesterase

LIST OF INDIAN TRADERS

 ASIAN PAINTS  ARATI INDUSTRIES  ATUL LIMITED  EVEREADY INDIA INDUSTRIES  TATA CHEMICALS  RAJASTHAN STATE MINE & MINERALS LTD.  SHALIMAR PAINTS  SHEM CHEM PRODUTS  AADITYA MARKETERS

 ADARSH CHEMICAL  SHIRDI INDUSTRIES LTD.  MAREENA TRADING & EXPORT

REFERENCES

WEB SITE

 www.google.com  www.mmtclimited.com  www.wikipedia.org  www.checkonamics.com  www.monyecontrol.com  www.scribd.com  www.chemicalinfo.com  www.kpmg.com  www.serchengine.com  www.chemicalindustry.com

Reports

 KPMG India report on The Indian Chemical Industry (New directions, new hope).  Annual Report 2007-08, 2009-10 of Ministry of Chemicals & Fertilizers.

RAVI KUMAR VERMA

POST GRADUATE DIPLOMA MANAGEMENT

EBS ID: 0101PG001 ACADEMIC SESSION ( 2010-2012 )

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