IFAS Indian Pipe Industry

Presented by:
Sidhartha Sarma Baruah(454)
Sorabh Sachar(455)
Sreedev Nair(456)
Sreenandan Nambiar P.(457)
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Agenda

Introduction
Industry Overview
APL Apollo Tubes Ltd. Overview
Welspun Corp Ltd. Overview
IFAS: Introduction
VRIO Framework
Company-wise Strengths & Weaknesses
IFAS Table

Pipe Industry in India

The Indian Pipe Industry is among the top three manufacturing hubs
after Japan and Europe.

The penetration level of pipelines in oil & gas transportation is low at

32% in India as compared to 59% in USA and 79% globally. However
lower penetration levels represent the huge scope for growth for the
pipe industry.

The industry is highly Raw Material (RM) intensive with the RM cost
accounting for more than 70% of the total cost for steel and PVC

pipe companies.
These companies depend heavily on imports and hence many
companies have integrated backward to reduce dependency on
imports and price volatility.
Freight cost is another key cost component due to higher imports
and exports. With the fall in commodity prices and Baltic Dry Index
pipe companies will be benefited in the coming quarters.
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Pipe Industry in India

Indian companies produce a wide range of steel, cement and PVC

pipes which are used in various critical and non-critical applications.

With the low cost quality products and various certifications, Indian
companies have augmented their export sales over the last three to
four years.

A positive trend is expected in the Indian pipe industry to continue

in the next 3-5 years on the back of high oil and gas discoveries
worldwide, increased efforts by the Government of India (GoI) on
infrastructure development for laying pipelines for oil & gas
transport, replacement demand from US and European countries,
water & sewage transport and irrigation facilities.

Key Players: Jain irrigation systems, Reliance, Finolex, Supreme,

Jindal SAW, DCW, Chemplast, Prince

Industry Overview: Structure

Pipe Penetration
Level

Schemes in pipeline
Rajiv Gandhi Drinking Water
Mission
Addition to irrigation facilities
National Gas grid
City Gas Distribution

Total

Rs Bn
73
1,580
210
100-150

~2,00
0

Industry Overview Products Summary

APL Apollo Overview

Group installed capacity of 490,000 TPA with high speed

technology supplied by Kusakabe, Japan

Vision of US$ 1 Bn revenue and installed capacity of 1 Mn TPA by

2015

Manufactures 250+ variants of tubes

Product portfolio - ERW Black Pipes, Galvanised Pipes, PreGalvanised Pipes and Hollow Section Pipes

Expected sales growth with a CAGR of 71.6 %

Exponential growth in user industries such as real estate,

infrastructure, telecom, commercial vehicle, etc.

Strong distribution network with direct marketing teams and

10,000+ retail outlets

Overseas distribution centres in USA, UK, France, Germany,

Ireland, UAE and Sri Lanka to support exports to 35+ countries

APL Apollo - Snapshot

Welspun Pipes Overview

(Welspun Corp Limited)

Largest Pipe manufacturer in the World

Ranked as the 2nd Largest (Large Diameter) Line Pipe Manufacturer in

the World Financial Times UK - 2008

Approved by almost every Oil & Gas major including Transcanada,

Shell, Gazprom, Total & Elpaso

Facilities at Dahej & Anjar, (Gujarat), Mandya (Karnataka), Little

Rock, (Arkansas, USA) and Damam, (Saudi Arabia)

Total Pipe capacity of 2.2 mn MTPA

State-of-art Plate-cum-Coil mill at Anjar, Gujarat India - Plate cum

Coil Capacity of 1.5 mn MTPA

Welspun Middle East LLC, a pipe manufacturing and pipe coating

facility in Saudi Arabia is one of the largest Spiral Pipe
manufacturing facilities in the region - It can produce up to 300,000

MTPA of Spiral Pipes

Welspun Group Overview

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Internal Factor Analysis Summary

(IFAS)

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Internal Factor Analysis summaryis a breakdown of the

weaknesses and strengths of factors within an organization
that contribute in accomplishing the set targets of the
organization.

Strengths: characteristics of the business that give it an

advantage over others

Weaknesses: characteristics that place the business at a

disadvantage relative to others

The VRIO Framework: An

Overview

The VRIO framework is a good tool to examine the internal

environment of a firm.
VRIO stands for four questions one must ask about a resource or
capability to determine its competitive potential:
1. The Question of Value: Does a resource enable a firm to exploit
an environmental opportunity, and/or neutralize an
environmental threat?
2. The Question of Rarity: Are the resources used to make the
products/services rare?
3. The Question of Imitability: Is what a firm is doing difficult to
imitate?
4. The Question of Organization: Are a firms other policies and
procedures organized to support the exploitation of its valuable,
rare, and costly-to-imitate resources?

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The VRIO Framework: An

Overview

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If there are high costs of imitation, the firm may enjoy a period
of sustained competitive advantage.

Organized properly deals with the firms structure and control

(governance mechanismscompensation, reporting
structures, management controls, relationships, etc).

The VRIO Framework: An

Overview

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APL - Internal Factor Analysis Strengths

APL Apollo accredited with ISO 9001:2000 ISO 14001:2004,

OHSAS 18001:2007 and UL, CE and SGF France certifications

Only steel tube manufacturer with units located in north, south

and west India, proximate to customers

Possesses a range of more than 300 products

Installed cutting-edge manufacturing technology (Kusakabe,

Japan) at all plants

International footprint across +35 countries

Direct reach to retail consumers through own distribution

network

Distinct business model with capacity to inroad into adjacent

business space

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APL - Internal Factor Analysis Weakness

Products are commoditized.

Non-significant presence in exports so far, though the company has

acquired Lloyds line Pipes Limited to fortify its export turnover.

Industry is fragmented amongst small regional players and is highly

competitive.

Volatility in raw material prices requires pro-active handling.

Effective management of conflict of interest that may arise between

dealer network and own distribution network.

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Management of affairs at multiple locations.

Welspun - Internal Factor Analysis Strengths

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Strategic vendor status with top global retailers

Pricing power

Strong Supply Chain

Good Financial Leverage

Unique Product

Customer focus through marketing research and data analysis

Global footprint & Product Innovation

Customer Loyalty

Brand Name

Welspun - Internal Factor Analysis Weakness

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Inability to control certain costs like labour, etc.

Changing policies and rising inflation in India

Inadequate control over the entire value chain

Lack of Online Presence

IFAS Table
APL Apollo Tubes Ltd.

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IFAS Table
Welspun Corp Ltd.

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THANK YOU

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