chemical sector 1

7/28/2019 Chemical Sector 1

1/28

1

Assignment # 2

STRATEGIC MARKETING

SITARA CHEMICALS

DATED : 14.4.2013


2/28

Presentation Agenda

Industry Overview

Company Overview

Scope of Industry Structure of Industry

Interview Findings

PESTNC Analysis SWOT Analysis

Porters 5 forces

TOWS matrix2


3/28

3

Ayesha Khalid12121002

Iqra Kausar

12121001HASSAN TARIQ

12121003

Khalil ur rehman12121010

Haider Dar

12121014


4/28

4

Industry OverviewThe chemical sector is one of the five highest growthand globally traded sectorsKey contributor in the economic development of anycountry

It is Basic chemicals producing industry thus producing

raw materials for other industries. Annual Production of Caustic Soda in the year 2010was 137 MT.

Annual production of Soda Ash was 300.7 MT.

Annual Production for Chlorine Gas was 11.5 MTAnnual Production of Sulphuric Acid is 61.7 MT


5/28

5

Industry Overview (Cont..)

2.5% GDP growth in fiscal year 2010-

2011 out of which 18.4% share is

contributed by Chemicals.

close approximation of investment in

chemical sector ranges between Rs. 550 -600 billion.


6/28

6

Sub- Division(Chlor Alkali

Industry) Major Products Caustic Soda Liquid,( Flakes & Solid)

Liquid Chlorine,

Hydrochloric Acid,

Sodium Hypo Chlorite,

Ammonium Chloride,

Bleaching Powder etc.

PVC

Urea

Sulphuric Acid

Lime


7/28

Company Overview Sitara chemicals incorporated in 1981

Founded y Haji bashir Ahmed

Produce basic chlor-alkali products B2B type business

Produce almost 600 MT of caustic Soda per

day. Process flow is continuous

Produce basic chemicals, specialty

chemicals, gases and agricultural chemicals.7


8/28

8

Structure and Market Share Structure of the Industry is oligopolistic having few market

leaders.

Total market share being covered by the 4 companiesaccounts for 99 %

40%

30%

28%

2%

Market Share

Sitara Ittehad Engro Nimir


9/28

9

Scope of the Industry

Recent developments in technology The overall increase in the imports of

chemicals has been at an average rate of33 percent per annum.

Modern agriculture is heavily dependenton chemical, s.

In particular, chemicals are a keystone ofworld manufacturing, as they are anintegral component of all manufacturingsub-sectors.


10/28

10

Caustic Soda Production (%) 2010

Total Production = 435,000 MTPY

Sitara 42 % (180,000)

Ittehad 33 % ( 145,000)

Engro Polymers 23 % (100,000)

Nimir 2 % (10,000)


11/28

11

Trade in Chemicals Sector

768

118

2788

253

3599

400

4133

472

4362

367

5718

538

5166

411

0

1000

2000

3000

4000

5000

6000

2003-

2004

2004-

2005

2005-

2006

2006-

2007

2007-

2008

2008-

2009

2009-

2010

Chemical Trade (Million US $)

Imports Exports

(Source TECHMA Report on Chemical Industry Vision)


12/28

Interview Findings

In chlor-alkali Business Caustic soda is the

most demanded product.

Wide Range of chemical Products.

PIE for Caustic Soda is about 3196 Million.

Market Share is biggest in Sitara, then

ittehad, Engro and Nimir respectively

accounting for 40 %, 30%, 28% and 2 %.

12


13/28

Interview Findings (Cont) Totally B2B type of business

Major Raw materials are Salt and Electricity.

About 60 % Revenues are generated from

Caustic Soda Production.

Less competition due to less players.

Excess Quantity of Caustic Soda add to

exports

13


14/28

Interview Findings (Cont)

Engro has more variety in products apart from basic

chemicals they also manufacture Fertilizers and PVC.

New Entrants require heavy investment and experience

so its very difficult for them to enter in this business.

Suppliers For Salt, they have hired own salt mine in

Warcha.

14


15/28

15

PESTNC Analysis

Political

Political intervention is affecting the

business due to energy crisis.

Apart from WAPDA these industries are

having their own energy producing plants

so they are affected but not badly affected.


16/28

Economic

The GDP growth has not met its target of 4

and its 2.4 % in the year 2011. Also there is

imbalance in trade where imports are higherthan exports.

Requires huge investment

Cheap labor available

Increase in prices of fuel and electricity

16


17/28

Social

As this industry considered being one of the

health hazardous.

As the mercury process caused a lot of

damage, all most most of the firms globallyhave being shifted to membrane cell

technology.

This industry is also playing an important role

in minimizing unemployment by providing

jobs to 1500 people directly and about 10,000

indirectly.17


18/28

Technological

The demand for innovative products andtechnologically improved product is

increasing

The chlor-alkali production process involvesmercury cells, diaphragm cells or membrane

cells

Research and development departmentefficient

18


19/28

19

SWOT Analysis

Strengths

Own Energy producing plants

mines at Khewra ,Warcha thus localminerals at cheap prices.

Experienced work force

Using better technology


20/28

20

Weaknesses

The Caustic Soda manufacturing produces chlorine asa by-product which has limited usage in the country

High cost of energy

Non availability of natural gas and electricity

High freight cost to export surplus capacity


21/28

21

Opportunities

Surplus capacity of caustic soda available to export

While in the rest of the world chlorine is the main

driver for the plant and caustic soda is considered as aby-product. Here it is produced as by product so this

can be exported abroad.

HCL is also produced as by-product and it has

usages.Can make new plants for PVC fertilizers also by using

the chlorine which is produced as by-product


22/28

22

Threats

Other companies using their own

chemicals in further manufacturing of

other products.

Innovative Products

Global Markets like china, India,Bangladesh giving same product ar low

prices.


23/28

23

Porters 5 forcesBarriers to entry

Oligopolistic Structure so difficult to enter. Only few market leaders to set prices. And they

require huge large investment.

Also because Electricity is used as raw materialand due to energy crisis it is very difficult because

the companies have their own energy units. So

they have power edge.

Specified and expert manpower is needed tohandle the delicate technology.

Learning Economies


24/28

24

Bargaining Power of Suppliers:

Suppliers have bargaining power but due to

Government Intervention they cant exploit

their market power.


25/28

25

Rivalry Among Competitors

Pakistans industry is facing pressures fromglobally competitive markets.

Engro chemical has edge due to better pricing andinnovative products.

The market is less competitive and its growing atthe same time.


26/28

26

Bargaining Power of Buyers

Buyers dont have the bargaining Power.

They are forced to but at the stated price due to lesscompetitors in the market.

Engage in B2B type of business industrial customersinvolve in Textile, Soap, Ghee, Chemical andFertilizer etc., production. They have less choice toswitch to others.

Alone textile sector of Pakistan is 43% of caustic

soda consumption. Second major consumption is inthe manufacturing of soap & detergent contributesabout 19%. So with this less competitive market theycant influence the prices.


27/28

Threat of New Substitutes

In chemical industry , the substitutes for

chemicals are not there, So threats of

substitutes is low.

27


28/28

TOWS Matrix

Strengths Weaknesses

Opportunities Can use their own chemicals for furtherprocessing.Can increase their product line by R & D

efforts.

Can use by products like HCL and Chlorine

for further manufacturing.

Threats

They have margin to decrease price because

have their own mine hired at khewra andwarcha and their own energy plant also.

Have to diversity their products range to

overcome pressures from global markets

28

chemical sector 1

Documents