Plastic Industry
Indian Plastic Industry Review & Outlook
Contents:-
History Of Plastics
The Indian plastics industry in general.
Examples of the international companies that have set up projects in India.
Plastic Assosiations
Different types of plastics
References
History of plastics
The first human-made plastic was invented by Alexander Parkes in 1862; he called this plastic Parkesine. The development of plastics has come from the use of natural plastic materials (e.g., chewing gum, shellac) to the use of chemically modified natural materials (e.g., rubber, nitrocellulose, collagen, galalite) and finally to completely synthetic molecules (e.g., bakelite, epoxy, polyvinyl chloride, polyethylene).
INDIA- one of the fastest growing economies of the world, is all set to attain the premier status along with China. India is a favoured destination for overseas investors and offers the advantages of an open economy, increasing liberalization, a stable democratic political scenario, highly skilled work force with fluency in English. Various overseas players wish to explore the Indian market and invest in opportunities thrown open by the country, projected to be world number 3 in plastics consumption by 2010. This seems a very achievable position as since the past decade, the Indian plastics industry continues to grow at double digit figures. A plethora of queries plague the investor who wishes to tap the Indian market. Few of these queries from overseas include :
The raw material scenario: demand and supply
Plastics machinery sector : present technology levels and demand
Finished products : Export potential
The major overseas players with base in India
Current consumption, projected growth of the Indian plastics industry
Role of the Indian Government in promoting :
Overseas investments
The Indian plastics industry in general.
The Indian plastics industry functions with its unique market dynamics, of which, www.plastemart.com has been a successful part. www.plastemart.com has attempted to address these queries in "Synopsis of the Indian Plastics Industry : 1992-2010" ; the past 18 years and what the future holds for the overseas investors.
After liberalization of the economy in 1992, the Government of India has been quite supportive of industry in general, taking many steps over the years for the conducive growth of business. These measures favouring economic growth, are being continuously taken by the Indian Government, irrespective of the change in power. The Government of India is endeavouring to achieve GDP growth of more than 7% in the next 10 years. It is quite possible that plastics could grow at 14%, based on historical performance.
The Petrochemical Department of the Government of India is in the process of setting up a development council to promote the development of downstream sectors in India. This clearly illustrates that the Government of India is quite positive and supportive to new investments in India. In fact, many foreign entrepreneurs have been able to set up 100% owned companies in India in the plastics processing and machinery industry sectors. Foreign equity participation in the petrochemical industry has been increased to a 51% stake (a majority stake). However, the polymer manufacturers and other downstream industries are free to set up projects 100% on their own equity.
Some examples of the international companies that have set up projects in India on their own are:
Polymer Manufacturing
BASF Styrenics
Bayer ABS
LG Polymers
Compounding
Clariant
DSM
Dupont
GE Plastics
Multibase- Dow Corning
Converting Industry
3 M
Baxter
Delphi (Automotive parts)
Huhtamaki (Plastic film converter)
Moser Baer
Visteon (Automotive parts)
Terumo Penpol
Machinery
Cincinnati Milacron
Nissei
Sidel
The above list is only indicative and not comprehensive. Some of these initially started as joint ventures but later, when the Government of India granted permission, they acquired remaining equity stake from the Indian partners. Additionally, quite a many joint ventures have been formed in India. Some notable joint ventures are: MachinoBasell (compounding),
Mamta Brampton (Machinery).
The Indian plastics industry, with more than 4 million tons consumption in 2003 is well spread all over India. While it is estimated to be fragmented across more than 20,000 processors, the large processors are less than 100. These 100 have about 35% share of the plastics processing industry. The major sectors in which large processors are present are:
PVC pipes - the largest producer is Finolex Industries with capacity of 60,000 MT/year.
BOPP film - the largest producer is Cosmo Films with the capacity reaching almost 60,000 MT in 2004.
BOPET film - the largest producer is Polyplex with the capacity of 80,000 MT out of which 40,000 MT is constructed in Thailand.
Wire & Cable - the largest producer is Finolex Cable with estimated consumption of PVC at 35000 MT/Year and PE at about 5,000 MT/year.
PE/PP raffia (film fiber) generally has larger processors with average capacity of about 10,000 MT/year. Some notable processors are: Jai Corp & Big Bag.
Cast PP film sector has about 7 processors with the total capacity of about 35,000 MT/year
PP spun fiber has about 10 processors with the total capacity of about 50,000 MT/year
Calendered PVC film segment is spread among 20 processors with the total capacity of about 150,000 MT/year.
Plastiblends India is the largest masterbatch manufacturer with the capacity of about 20,000 MT/year
However the most diversified processor, Supreme Industries is expected to process about 100,000 MT/Year in 2004. Supreme Industries processes in various sectors including PVC pipes, PE film, PVC film, PP furniture etc.
Moser Baer is the largest processor of CD, DVD etc and consumes about 25,000 MT/year of polymers.
The historical growth of the plastics industry over the last few decades is at an impressive 12-14%, which is twice the GDP growth. The major driver of this growth is the increased standard of living of people in India (housing the second largest population in the world). It is estimated that almost 35% of the 1 billion population has a purchasing power equivalent to that in European countries. The GDP in 2004 is expected to reach a level of about US$ 3 trillion at the Purchase Power Parity. The GDP could increase further with support from the Indian Government in the form of increased investments in infrastructure.
The Indian plastics industry is quite upbeat about the future potential of plastics in India, believing that the Plastics industry will grow between 10% to 12%, if not higher, in this decade. The present per capita consumption is 4 Kgs, likely to reach beyond 7 Kgs by 2010. Consumption level, which is expected to reach 8 million tons by 2010, could touch 10 million tons, if some of the constraints such as infrastructure etc are eliminated. The department of petrochemicals of the Government of India has projected a level of 12 million tons by 2011/2012.
Polymer producers like Reliance Industries and IPCL take the lead in developing the markets in India aided by the major processors. The present raw material capacity in India is more than adequate to meet the present consumption level of 4 million tons. In fact, 2003 saw an export of about 700,000 MT of polymer material. Some debottlenecking is being effected in the areas of PE, PP, PVC and Polystyrene, resulting in India being a net exporter of raw material up to 2006. Two major petrochemical projects, with a capacity of 1.5-2 million tons of polymers are likely to materialized earliest by 2007. If the execution is in time, India may be self-sufficient up to at least 2010. Raw material supply is no longer a constraint because very large capacities are available either in the Middle East or Far East Asian countries such as Singapore, Korea, Thailand etc. These destinations are close to India, and polymer cost is affected only by a surcharge in the form of about US$ 20-25/ton on account of additional freight.
Imports of specialty materials or the grades not manufactured by the Indian raw material manufacturers continue. It is estimated that almost 250,000 MT of polymers was imported in 2003. The tariff barrier is systematically reducing. The present custom duty is 20%. It is expected that it may come down to about 5-6% with in next 3-5 years, if not earlier.
The plastics machinery sector has achieved a sales turnover of more than US$ 200 million in 2003. In fact the positive trends of the overall economy in 2003 had given an impetus to the plastic machinery sector, which grew at 25% in 2003. However, being a cyclical business, such spectacular growth may not be witnessed consistently. The major advantages that India could offer is availability of low cost and higher educated people with knowledge of English language. It is therefore not very surprising that W &P sources the parts of their extrusion machinery from an Indian machinery manufacturer.
Quality of finished goods is definitely very good. Production costs in India are estimated to be 20-25% lower than in USA. Plastics products such as BOPP film, BOPET film, moulded products have a good growth potential for exports from India. There is also a good export potential of CD, DVD etc. K2004 (Plastics Industry’s largest exhibition) to be held in Dusseldorf, will have over 20 exhibitors from India, of which almost half will be machinery manufacturers, and the others would comprise of additive manufacturers, mould manufacturers along with India’s leading petrochemical manufacturers.
While there was some anxiety among the common mass about the pace of reforms with the change in power, it seems that the present Government cannot stop the pace significantly. The major coalition partner Congress was in power when the economic reforms were initiated. Interestingly the present President and Prime Minister are very highly educated and revered for their contribution to India’s growth. The present Prime Minister was in fact, the writer of the first reforms in 1991. However, it is too early to predict whether the present Government would be as buoyant about reforms as the previous NDA Govt. mainly because the communist party is supporting the present coalition Govt. However, we strongly believe that the growth of plastics would continue at least at 10% if not at 14% despite some deceleration of the reform process.
There is no reason for the foreign investors interested in Indian market at all. While conducting of detailed investment analysis would be of assistance, it should be feasible to achieve at least 10% return on investment (the earning power) if not higher. The return could be higher in the downstream sectors such as processing and machinery. Perhaps the earning power could be lower for the petrochemical sector. It would be a good idea for a new entrepreneur to study the companies listed in the question 1 for developing more confidence.
(www.plastemart.com has a pool of consultants for the plastics industry. )
In our opinion, the following are outstanding features of Indian economy that would have positive impact in 2004.
The reforms may slow down but will not stop despite the change in the Government.
Higher convertibility of Indian currency
An increasing level of foreign exchange (at present it is US$125 billion) mainly due to influx of foreign money into India.
Major emphasis on the investment in irrigation and other areas to boost the rural economy (consisting of about 70% of population and 35% of the overall economy)
Emphasis on the power generation with the support of the private sector.
An increase in the growth of cement, steel, automobile, etc industries
Optimism in the industry as can be seen in the stock exchange as well as the first quarterly (April-June 2004) financial results of the Indian industry.
An impressive growth of about 15 % in the total trade expecting to reach a level of about US $130 billion in 2004.
Similar growth of export of plastics and is expected to reach a level of about US $1.25 billion.
Plastic Association
Plastic association comprises of various associations formed by members who are associated with plastic industry in one way or another. Together they are working for the growth of plastic industry. They could be anyone ranging from plastic retailers, traders, manufacturers, wholesalers, exporters, die / mold makers, engineers and so on. Enumerated below are some of the leading plastic associations who have emerged within India :-
All Indian Association of Plastic Industries :-
All Indian association of plastic industries got established in year 1982. This is paramount association of Ssi and medium slace processing firms. This association consists of 515 life members actively involved in providing and seeking solutions for all the issues and concerns pertaining to plastic industry. They strive to seek the solution regarding high government duties, pollution protection, plastic recycling and so on. This association believes in taking rigorous actions for the growth of plastic industry because plastic industry is one of the major employment generating industry in India. The main mission of this association is removal of customs duty and additional duty on polymer imports.
All India Plastics Manufacturers Association :-
All India Plastics Manufacturers Association was formed in 1945. This association comprised of 2500 members. Its members includes plastic wholesalers, raw material manufacturers, die and moult makers, traders of finished products, engineers etc. It have its representatives at various levels in government and corporate sector. They believe in putting effort in activities such as publishing plastics news, holding seminars and exhibition on pros and cons of Indian plastics industry.
Indian Plastics Institute :-
Indian plastics institute is a sophisticated society registered in April 1985. This Plastics Association deals with the latest projections in plastic industry. This Association is well versed with techniques required for processing, manufacturing, tooling etc. Members of Indian plastics institute aims at achieving the excellence in plastic industry through seminars,work shops and learning sessions.
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Organization of Plastics Processors of India :-
Organization of Plastics Processors of India was formed in the year 1984 with the core motive of promoting Indian plastic industry. This organization acts as a mediator between its members and government. They always try to upgrade the techniques of plastic industry which could heighten the technology, quality and productivity of Indian plastics. OPP Members contribute 40% to the overall processing of the polymers in India.
Plastindia Foundation :-
Plastindia Foundation is the vertex body of all leading associations, organizations, and institutions attached with plastics. There mission is to promote Indian plastic industry. There vision is to give international recognition to to all the bodies connected to the field of plastics. There aim is to make India a perfect source for plastic products for the whole world.
Environmental issues
Further information: Marine debris
Plastics are durable and degrade very slowly; the molecular bonds that make plastic so durable make it equally resistant to natural processes of degradation. Since the 1950s, one billion tons of plastic has been discarded and may persist for hundreds or even thousands of years.[12] In some cases, burning plastic can release toxic fumes. Burning the plastic polyvinyl chloride (PVC) may create dioxin.[13] Also, the manufacturing of plastics often creates large quantities of chemical pollutants.
Prior to the ban on the use of CFCs in extrusion of polystyrene (and general use, except in life-critical fire suppression systems; see Montreal Protocol), the production of polystyrene contributed to the depletion of the ozone layer; however, non-CFCs are currently used in the extrusion process.
By 1995, plastic recycling programs were common in the United States and elsewhere. Thermoplastics can be remelted and reused, and thermoset plastics can be ground up and used as filler, though the purity of the material tends to degrade with each reuse cycle. There are methods by which plastics can be broken back down to a feedstock state.
To assist recycling of disposable items, the Plastic Bottle Institute of the Society of the Plastics Industry devised a now-familiar scheme to mark plastic bottles by plastic type. A plastic container using this scheme is marked with a triangle of three cyclic arrows, which encloses a number giving the plastic type:
1-PETE 2-HDPE 3-PVC 4-LDPE 5-PP 6-PS 7-Other
Plastics type marks: the resin identification code
1. PET (PETE), polyethylene terephthalate: Commonly found on 2-liter soft drink bottles, water bottles, cooking oil bottles, peanut butter jars.
2. HDPE, high-density polyethylene: Commonly found on detergent bottles, milk jugs.
3. PVC, polyvinyl chloride: Commonly found on plastic pipes, outdoor furniture, siding, floor tiles, shower curtains, clamshell packaging.
4. LDPE, low-density polyethylene: Commonly found on dry-cleaning bags, produce bags, trash can liners, and food storage containers.
5. PP, polypropylene: Commonly found on bottle caps, drinking straws, yogurt containers, Lego building blocks.
6. PS, polystyrene: Commonly found on "packing peanuts", cups, plastic tableware, meat trays, take-away food clamshell containers
7. OTHER, other: This plastic category, as its name of "other" implies, is any plastic other than the named #1–#6, Commonly found on certain kinds of food containers, Tupperware, and Nalgene bottles.
Unfortunately, recycling plastics has proven difficult. The biggest problem with plastic recycling is that it is difficult to automate the sorting of plastic waste, and so it is labor intensive. Typically, workers sort the plastic by looking at the resin identification code, though common containers like soda bottles can be sorted from memory. Other recyclable materials, such as metals, are easier to process mechanically. However, new mechanical sorting processes are being utilized to increase plastic recycling capacity and efficiency.
While containers are usually made from a single type and color of plastic, making them relatively easy to sort out, a consumer product like a cellular phone may have many small parts consisting of over a dozen different types and colors of plastics. In a case like this, the resources it would take to separate the plastics far exceed their value and the item is discarded. However, developments are taking place in the field of Active Disassembly, which may result in more consumer product components being re-used or recycled. Recycling certain types of plastics can be unprofitable, as well. For example, polystyrene is rarely recycled because it is usually not cost effective. These unrecycled wastes are typically disposed of in landfills, incinerated or used to produce electricity at waste-to-energy plants.
Biodegradable (Compostable) plastics
Research has been done on biodegradable plastics that break down with exposure to sunlight (e.g., ultra-violet radiation), water or dampness, bacteria, enzymes, wind abrasion and some instances rodent pest or insect attack are also included as forms of biodegradation or environmental degradation. It is clear some of these modes of degradation will only work if the plastic is exposed at the surface, while other modes will only be effective if certain conditions exist in landfill or composting systems. Starch powder has been mixed with plastic as a filler to allow it to degrade more easily, but it still does not lead to complete breakdown of the plastic. Some researchers have actually genetically engineered bacteria that synthesize a completely biodegradable plastic, but this material, such as Biopol, is expensive at present.[14] The German chemical company BASF makes Ecoflex, a fully biodegradable polyester for food packaging applications.
References:-
1.Wikipedia
2.Google
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