RUBBER INDUSTRY by SUKESH

RUBBER INDUSTRY






Submitted by

Sukesh.U.S
1st semester MBA, ICM










Indian Rubber Industry

Indian rubber industry developed post 1922 onwards. Growth accelerated post 1947. By 1980 India had built up a well diversified rubber industry. Currently India is the fourth largest producer and consumer of rubber in the world .Per capita consumption of rubber in India is around 900 gms as against 13 to 15 kgs in Japan, USA & Canada. India now has a well developed rubber product manufacturing sector.

Present Status in India

With around 6000 unit comprising 30 large scale, 300 medium scale and around 5600 SSI/tiny sector nits, manufacturing 35000 rubber products, employing 400 hundred thousand people, including around 22000 technically qualified support personnel, with a turnover of Rs.200 billions and contributing Rs.40 billions to the National Exchequer through taxes, duties and other levies, the Indian Rubber Industry plays a core sector role in the Indian national economy. The industry has certain distinct advantages like:
• An extensive plantation sector
• Indigenous availability of the basic raw materials, like natural rubber, synthetic rubber, reclaim rubber, carbon black, rubber chemicals, fatty acids, rayon and nylon yarn and so on.
• A large domestic market.
• Availability of cheap labor.
• Training facility in various technical institutes.
• On-going economic reforms.
• Improved living standards of the masses.


India and the world

India is the world's largest manufacturer of reclaim rubber. In fact, India and China are the only two countries in the world which have the capacity to consume the entire indigenous production of natural rubber and thereby obviate the compulsion and over dependence on exports of surplus quantity of natural rubber. The plantation sector with an estimated production of over 630 hundred thousand tonnes of natural rubber and a projected production of more than one million tonnes in near future, helps radical and rapid growth of the Indian rubber industry. The growth prospect is further enlarged by a boom in the vehicle industry, improved living standards of the masses and rapid over-all industrialization.

The per capita consumption of rubber in India is around 900 gms as against 13 to 15 kgs in Japan, USA & Europe. This envisages tremendous growth prospects of the industry in the years to come as India is far from attaining any saturation level, so far as consumption of rubber products is concerned.

Main Sectors

The rubber industry in India is basically divided in two sectors - tyre and non-tyre sector produces all types of auto tyres, conventional as well as radial tyres and exports to advance countries like USA.

The non-tyre sector comprises the medium scale, small scale and tiny units. It produces high technology and sophisticated industrial products. The small scale sector accounts for over 50% of production of rubber goods in the non-tyre sector. Going by share of rubber consumption, automotive tyre sector is the single largest sector accounting for about 50% consumption of all kinds of rubbers, followed by bicycles tyres and tubes 15% footwear12%, belts and hoses 6%, camelback and latex products 7%. All other remaining rubber products put together account for 10%.




Range of Products

The wide range of rubber products manufactured by the Indian rubber industry are -
• Auto tyres
• Auto tubes
• automobile parts
• footwear
• belting
• hoses
• cycle tyres and tubes
• cables and wires
• camelback
• battery boxes
• latex products
• pharmaceutical goods

The products manufactured also cover hi-tech industrial items.

The important areas which the industry caters to include are -
All the three wings of defence
• Civil
• Aviation
• Aeronautics
• Railways and agriculture transport
• Textile engineering industries
• Pharmaceuticals, mines, steel plants

VARIETIES OF RUBBER
• Natural latex - This is a white fluid obtained from the rubber tree. It contains small particles of rubber dispersed in an aqueous medium. The aqueous medium also contains plant proteins which are thought to be responsible for triggering the allergy.
• Natural rubber - This includes all material made from or containing latex. Natural rubber is made by two processes, the natural rubber latex process (NRL) and the dry natural rubber process (DNR)
DNR process

This involves compressing the rubber at a high temperature and pressure. The plant proteins, responsible for the allergy, are denatured at these temperatures and pressures and therefore pose a lower risk than rubber made by the NRL process.

NRL process

This involves the use of natural latex in a concentrated colloidal suspension. This type of latex contains a much greater proportion of plant proteins than latex produced by the DNR process. Most immediate type reactions result from exposure to NRL products.

Rubber Producing Areas in India
This is divided into two zones – traditional and non-traditional.
Traditional zone Non-traditional zone
Kanyakumari in Tamil Nadu Coastal regions of Karnataka
Districts of Kerala Goa
Andhra Pradesh
Orissa
Some areas of Maharashtra
Northeastern states (mainly Tripura)
Andaman and Nicobar Islands

Kerala contributes 90% of India’s total production of natural rubber. Also, Kerala and Tamil Nadu together occupies 86% of the growing area of natural rubber.

Rubber Production: India and world
• India is the third largest producer of rubber in the world.
• It is the fourth largest consumer of natural rubber.
• It is the fifth largest consumer of natural rubber and synthetic rubber together in the world.
• India is the world's largest manufacturer of reclaim rubber.
• India and China are the only two countries in the world which have the capacity to consume the entire indigenous production of natural rubber.
Rubber Consumption in India
• Automotive tyre sector: 50% consumption of all kinds of rubbers
• Bicycles tyres and tubes: 15%
• Footwear: 12%
• Belts and hoses: 6%
• Camelback and latex products: 7%
• Other products: 10%


Indian rubber market
India’s production varies between 6 and 7 lakh tons annually which amounts to Rs. 3000 crores. Seventy percent of the total rubber production in India is in the form of Ribbed Smoked Sheets (RSS). This is also imported by India accounting for 45% of the total import of rubber. The Indian rubber industry has a turnover of Rs 12000 crores. Most of the rubber production is consumed by the tyre industry which is almost 50% of the total production of India. Among the states, Kerala is the leading consumer of rubber, followed by Punjab and Maharashtra. The exports of Indian natural rubber have increased tremendously over the years and have reached 76000 tons in 2003-04.

Though, India is one of the leading producers of rubber but it still imports rubber from other countries. At present, India is importing around 50000 tons of rubber annually.

Present Status in India Rubber Industry

There are about 6000 unit comprising 30 large scale, 300 medium scale and around 5600 small scale and tiny sector units. These units are manufacturing more than 35000 rubber products, employing 400 hundred thousand people, which also includes 22000 technically qualified support personnel, contributing Rs. 40 billions to the National Exchequer through taxes, duties and other levies. The Indian Rubber Industry plays a vital role in the Indian national economy. The rubber plantation sector in India produces over 630 hundred thousand tones of natural rubber and there is a projected production of more than one million tones in near future. This has helped in the radical and rapid growth of the Indian rubber industry. This prospect of growth is further enhanced by a boom in the vehicle industry, improved living standards of the people and rapid over-all industrialization. The per capita consumption of rubber in India is only 800 grams compared to 12 to 14 kilos in Japan, USA and Europe. So far as consumption of rubber products is concerned, India is far from attaining any saturation level. This is another factor leading to tremendous growth prospects of the industry in the years to come.

India is one of the leading producers of rubber in the world. The rubber industry is one of the most important contributors to the growth of the Indian economy. The growth in the rubber industry of India is set to follow an upward spiral considering the improved standard of living, a boom in the automobile industry and the support provided by the government to the rubber manufacturing companies of India. The rubber directory provides vast information related to the leading manufacturers, suppliers and exporters of rubber and rubber based products in india. Also get information on the websites of major rubber manufacturing companies of India.

Natural Rubber : Industry Overview
 Natural rubber is the tesprene hydrocarbon polymer obtained from rubber tree.
 In 1873 the first rubber plantation came up in India
 The first rubber processing unit commenced operations in 1921
 Currently rubber plantation covers an area of 553,000 ha.
 Current yield is around 1563 kgs. - the highest in the world
 Malaysian rubber is popular among plantations in India

Industry
 95% of these plantations are in Kerala
 Plantation in India is small holding oriented. 90% is fragmented and held by small & marginal cultivators. Also owned by few co-operatives and corporates
 Major corporates - AV Thomas Group, Harrison Malayalam, Malay group
 Area under rubber plantation - 475 holdings and 70 estates (>= 40 ha.)
 Main route of sales through well established number of dealers
 Small growers sell through Rubber Marketing Co-operatives & dealers numbering 10,760
 Also sell directly to large consumers through contracts.
 Unlicensed dealers are also active - illegal practice


Synthetic Rubber
Industry
Besides natural rubber India also manufactures Synthetic rubber. Current installed capacity is around 0.14 mn. tonnes while consumption is 0.16 mn. Tonnes. Imports around 78,175 tonnes and production around 156395 tonnes .

Rubber variants
Over 200 different types of rubber available in the world market. Major general purpose rubbers are
 Styrenebutadiene rubber (SBR)
 Cis-poly butadiene rubber (CBR),
 Cispolyisoprene rubber - manufactured in India .

Other important rubbers are –
 Ethylenpropylene (EP, EPM, EPDM), isobutylene isoprene or butyl (112),
 Polychloroprene or neoprene (CR) and
 Acrylo nitrile butadiene or nitrile (NBR).

Speciality rubbers are consumed in small quantities and are used because of their highly desirable properties, favourable processing characteristics.
Some important categories are: Acrylic rubber and lattices (ACM); Polyester / polyether elastomers; Epichlorohydrin polymers (CO, ECO); Prophylene oxide copolymers (PO, GPO); Butadiene rubber, Butadiene copolymers; Ethylene copolymers.

Synthetic Rubber : Usage

SBR
The most widely used rubber - better wear resistance, aging resistance, faster curing
properties. Used in casings, car treads conveyor belting, hose coverings, etc. Can’t be
used as carcas of any tyre

PBR
Highly resistant, low heat build up and treadwear. However, has lower tensile
strength, poorer processing quality and antiskid road adhesion. Used in combination
with natural rubber




EPDM
Cheap raw material, superior ozone and ageing resistance. Useful for wire and cable
insulation. Cannot be blended with other rubber or cured by conventional methods. Offer
poor oil resistance .

Butyl rubber
Well known for its impermeability to air and resistance to oxidation. Used for automobile
conveyor belting, steam hose, diaphragms and gaskets.

Neoprene
First SBR commercially produced and is similar to natural rubber
Offers high tensile strength resistance to ageing, oils, solvents and fire.
Used for hose coverings belting

Nitrile
Excellent resistance to oil and fuels.
Used for oil hoses, oil seals. However it is expensive.


NATURAL RUBBER : BUSINESS CONCERNS

 Weakness in the marketing system to be corrected - along international markets
 Future market on the lines of Singapore & Kobe will help in making forward contracts with international agencies and ensure reasonable prices to grower
 Cultivation and harvesting costs should be brought down with regular upgradation of technology
 Need to make presence felt in world markets -export and stay in the world market
 Focus on upgrading natural rubber through chemical modification
 Need to treat natural rubber as an industrial product
 Business Concerns

Plantation sector affected by:
 General economic slowdown
 SE Asian crises which resulted in lower international prices
 India not the least cost producer, even though productivity is high
 High input cost (labour 50 to 60%)
 Labour productivity low. Number of trees tapped 200 to 300 compared to 600 to 800 trees in other countries
 Natural rubber becoming a small growers crop - large plantations unable to compete on costs
 Corporate sector worst affected - unable to retrench employees
 Affected by trade union problems, political interference
 Pricing system not the best
 Substitution from synthetic rubber - lower duties, reducing cost of inputs
 Plantation sector not recognised as an industrial sector, affected by seasonality.



Synthetic Rubber : Business Concerns

Key Success Factors
 Ensure ready market for products
 Develop wide customers base, reduce dependence on any one sector
 Need to establish a symbiotic relationship between natural rubber & synthetic rubber so both can co-exist
 Increase presence in export markets, need to be price competitive




Business Concerns

 Affected by slowdown in the industry
 Domestic industry also affected by imports - antidumping duty imposed on NBR / SBR / EPDM from Japan
 Setting up a plant capital intensive, need foreign know-how, imported machinery and equipment. Input costs also high.
 Environment pollution also a concern area
 Generates less employment opportunities than the natural rubber industry
 Domestic synthetic rubber prices higher than international prices.







Rubber in Kerala

More than 90 percent of the Rubber produced in India is from Kerala. More than 80 percent of the area Under rubber in Kerala is accounted by small holdings. The present Rubber Board of India statistics are based mainly on the details available from the registered growers which contribute 4 only less than 50 percent of the production. Hence an attempt was made to map out the extent of area under rubber in Kerala using Remote Sensing Data.

Natural rubber can be extracted from the latex of over 895 species of plants, among which Have a brasiliensis is the most important commercial source of natural rubber. This is a quick k growing and a tall plant which is a native of Brazil and was introduced to tropical Asia in 1876. Recently rubber is attaining more and more importance in the world market. as a result India, especially Kerala State, is showing an increasing trend in area under rubber during the recent years.

According to Rubber Board of India at present 88 percent of the total area under rubber belongs to Kerala State and 90 percent of India's production is also from this state. It is also worth mentioning that in Kerala convention of area under other crops to rubber is attacking place with a high pace, probably due to high returns, the attractive incentives offered by the rubber Board of India and socio0economic reasons,. as per Rubber Board of India estimate in Kerala nearly 20,000 hectares are being converted to robber crop annually since 1980.

In Kerala rubber is generally grown in the midlands and high lands and major portion of small holdings are adjacent area. The small holdings under rubber in Kerala are mainly homestead planting. This will include buildings other crops etc. These homestead plantations are lying adjacent to each other. But they may not have uniformity in age and management. Mapping of major portion of these individual holding was possible from the aerial photographs. Mapping of these individual units was not possible with TM data due to the limitation of scale and resolution. Here the scale of TM used was 1:50,000 and so the smallest map able unit was above5 hectares. Mapping of well maintained pure plantation was very easy from TM data. They showed bright reddish pink tone with smooth texture in the imagery. This is due to the uniformity in age, management etc. of the plants. Mapping of small holdings was not so easy compared to pure plantations. Due to the variation in age, management etc.

Kerala State Cooperative Rubber Marketing Federation (RubberMark) was established in 1971 to act as an apex body for the cooperative societies marketing rubber. The commited efforts of its leadership and top quality management services offered by professionals has enabled RubberMark to position itself at the top level in the country for supply and distribution of this vital industrial raw material.

Their customers include major gaints such as :
• Apollo Tyres Ltd.
• Ceat Tyres
• J.K. Industries
• TVS Srichakra
• Bata India Ltd.
• Lakshmi Group of Comapnies
• Banik Goup of Companies
• Paragon Rubbers
• Nirlon
• Poddar Tyres
• Midas Tyres
• Metro Tyres
• Ralson Tyres
• Phoneix Yule and more...

They have set up new standards in the sector of rubber marketing with our extensive coverage for sourcing and supply of rubber.

Rubber Mark has taken special care to cater the needs of all customers alike irrespective of the sales volume. They make it a point to meet their customers across the country to identify areas where there is scope for improvement. This has helped them to rise to the expectations and to meet the requirements of customers.

Kerala is the leader in rubber production among the states of India. The rubber plantations are also opening their doors to tourists on Kerala tours who would like to see, a traditional way of life and experience a stay in a rural retreat. The quiet, green, environment of the rubber plantations of Kerala are a fascinating eco tourism option among Kerala tours with Kerala Backwater.
Stay at a traditional farmhouse in a rubber plantation in Kerala on eco tourism vacations and tours of Kerala with Kerala Backwater. Enjoy the hospitality of the plantations, go for nature walks and observe the birds, butterflies and squirrels amidst the plants in the rubber plantations in Kerala.

Export
Rubbermark has established itself as the largest exporter of natural rubber in the country. Customers across the globe are happy with the quality of rubber supplied by Rubber Mark as well as the professional approach displayed by the organisation in ensuring supplies on time

Sales and Distribution

RubberMark has set up a wide net work of sales branches at centers where major rubber consuming industries are located. The Officers working at these centers help the customers in ensuring prompt supply of the right material and provide impeccable service. This has also opened a window to receive direct orders from the customers and acts as part of the unique Agency system. Here again world class services are rendered irrespective of the quantities involved.

Quality Measures Quality is the buzzword in industrial circles in this era. To enable the customers to produce top quality articles, we have set up stringent quality standards to ensure that the quality of material supplied always remains high. The importance of quality is transmitted down the line upto the first stage of procurement. This has helped them in meeting not only the demand of domestic industry but also in successfully tackling the strict quality parameters of overseas buyers.


BLOCK RUBBER
Rubbermark and the member cooperatives own six block rubber factories aided by World Bank. These factories are designed to produce various grades of ISNR (Indian Standard Natural Rubber) as per international standards and also any type of tailor made rubber as required by consumers.

Latex Concentrates

a) Centrifuged Latex (60 percent)
There are four latex factories processing cenex owned by member societies whose products are widely accepted throughout India. Rubbermark produce ISI marked quality Cenex. Our products are being used by all major latex-based industries manufacturing Foam products Pharmaceutical items and all types of dipped goods (balloons, condoms, gloves etc.)
b) Cream Latex
Cream latex of the required DRC (50-55%) are processed by member societies and marketed by Rubbermark in bulk quantities.

CREPE RUBBER

a) Pale Latex Crepe (PLC)
Pale Latex Crepe with superfine quality parameters are processed in two of our member society factories under extreme rigid quality conditions as this product goes mainly in the manufacturing of high-tech products mainly in the Pharmaceutical applications.

b) Estate Brown Crepe (EBC)
Various grades of EBC (Estate Brown Crepe)procured by us are produced in various factories that adopt latest techniques and supply to our customers.


SHEET RUBBER

a) RSS 1X to RSS III:
The sheet rubber grades from RSS 1X to RSS III are collected from selected plantations sorted and graded under the strict supervision of qualified graders. Each and every sheets are inspected separately for rigid quality specifications and packed in 50 kg bales and despatched to customers as per their request, with rubbermark identify.

b) RSS IV and V:
The sheets collected from various cooperatives and Rubbermark purchase depots are graded under expert supervision as per Green book specifications. These are packed in bales of 50 kgs. and marketed with rubbermark identify.

INTERMIX FACTORY
rubber compound-mixing factory with a capacity to produce 5400 MT of rubber compounds per annum is fully functional under Rubbermark. A part of this capacity is utilized for mixing compounds for the tyre sector on job work basis. The rest of the capacity is utilised to manufacture our own products.

TREAD RUBBER FACTORY

Rubbermark has entered in product manufacturing with its first product of conventional Procured Tread Rubber. We are fully equipped to manufacture treads in all sizes suitable for tyres of different sizes. These are made from the finest natural rubber and synthetic rubber to withstand the hardest road conditions. Produced under strict quality controls, consistence of quality is tested in a well equipped laboratory attached to the factory. The product is one of the best in the country well accepted throughout India.







Natural Rubber : Product Applications


Type Specifications Applications
RSS RSS 1X, 1, 2, 3, 4,5 Most popular form currently used for various application
PLC PLC 1X, 1, 2, 3, 4 Band-Aids, Bottle caps, Water resistant paints
White walling of tyres, Shoe uppers, Speciality
gloves, tubes, sports goods
Sole Crepe 1/20 “, 1/4 “, 1/8” Superior quality footwear
EBC EBC 1X,2X, 3X,
Flat back crepes Automotive and other tyres, Mass footwear,
Retreading tyre mfrs
ISNR 3L, ,5, 10, 2O, 50 3L - Extruded and Callendered items, Beadings, Washers, Gaskets, Bushes, etc
5 - Engine mountings, Tyre patches, etc
10 - Tyre patches, Micro cellular sheets of upholstery , etc
20 -Auto tyres, Cycle tyres, Microcellular sheets, Belts ...
Centrifuged latex High Ammonia
& Low Ammonia Foam Mattresses, Rubberised coir mattresses, Adhesives
Examination gloves, Latex thread, Dipped goods, Balloons, etc.
Skim Rubber Bicycle tyres, Footwear, Tyre retreading,, Low quality footwear


Rubber tapping in Kerala:
The rubber plant is not a native plant of India. Dutch colonialists who also cultivated rubber in their plantations in Indonesia introduced the rubber plant to Kerala, India, because of its similar tropical climate. The Rubber plant (its botanical name is Havea brasiliensis) produces sticky, white latex that is collected and processed to produce natural rubber. A rubber plant has to grow for about seven years before it can be tapped on a regular basis. A rubber tree can be productive for over 20 years. Rubber trees are characterized by their straight trunks and smooth green leaves. The rubber is harvested by rubber tappers who make a long curving cut on the outer bark of the trunk of the rubber tree. The latex from within the tree seeps to the surface of the cut and trickles down the cut into a container, tied to the tree by the rubber tapper. Every morning the rubber tapper empties the cup tied to each tree, in the area of the plantation that he works in. After a few days he will make another cut just above or below the first cut, thus extracting more latex from the rubber tree. Eventually after about 20 years the rubber tree will stop producing latex, upon which a new tree is planted in its place.
Apart from rubber trees other plants grown alongside include spices, areca nut and cashew. You can see the local farmers and plantation workers tending and harvesting the crops on rubber plantations in Kerala, while on nature tours in Kerala with Kerala Backwater.

Market Influencing Factors
• The rubber production fluctuates between months and it is normally low during the rainy season.
• Growth in industrial production: automobile industry.
• The ratio of utilization of domestic production and imported rubber by tyre manufacturers.
• Government policies have a profound influence on rubber prices. These include subsidies, restrictions on ports etc.
• International rubber price movements, have a slow influence.
• Stockists and speculators also play a significant role in influencing prices.




These products are exported to over 85 countries, including
• USA
• Germany
• France
• U.K.
• Italy
• UAE
• Saudi Arabia
• Africa
• Afghanistan
• Bangladesh




Future Outlook

Surplus in natural rubber likely with growing yield & production
Production expected to be more than 1118000 tonnes by 2010
Synthetic rubber usage set to increase. Newer grades for various applications likely
New industries in the automobile sector likely to drive demand further
Large corporates might consider changing crops where returns are better which could affect supply of natural rubber
Rubber industry likely to focus on export markets
4 synthetic rubber projects planned with an investment of Rs. 830 crs. (US $ 193 mn)

Demand Drivers
Dependent on the performance of the rubber processing industry - end use sectors like tyre, footwear, etc.
General economic scenario
Industrial & infrastructure growth would drive demand for rubber products and therefore rubber
Dependent on the growth of tyre and non tyre sector
Substitution of natural rubber in various applications will boost demand for synthetic rubber










Future Scope

With the saturation in rubber consumption in Western countries and the shift in consumption of rubber to the Asia Pacific region, the focal points for this decade for development will be India. The industry is expected to grow at over 8% p.a. in the coming decade. Taking into account the above prospects, the industry envisaged annual growth rate of 8% and the per capita consumption of rubber at 0.8 kg. against 14 kg. There exists tremendous scope for expansion and development in coming years provided basic raw materials, particularly natural and synthetic rubber, are made available in adequate quantity and at reasonable prices. Consumption of 1.25 million tones of rubber with per capita usage of 1.2 kgs. And exports of rubber goods worth Rs.30 billion.

Asia is now the focus of growth in the rubber industry. All the world's natural rubber is grown in this region namely Thailand, Indonesia, India, Malaysia, Sri Lanka etc.

The fastest growing economies in the world are here namely China, India, Korea, Malaysia etc,

World's powerhouse Japan is here. The largest investments in new synthetic rubber plants are coming up in Asia. Production of all auto majors is shifting to Asia, even as consumption-wise Asia's share in the worlds auto market grows.

Highest growth and availability of technically trained manpower for the rubber industry is in this region. While EU and US have now become a saturated market for the rubber industry all the action is shifting to Asia.

Low demand growth for end products, high labour costs, very strict environmental norms, non availability of NR in the backyard are all propelling the worlds major input suppliers for the rubber industry to look towards Asia.