tapping the plastics opportunity in india - kanvic consulting
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Tapping the plastics opportunity in IndiaPresentation to Plastindia 2015 Kanvic Consulting
Contents
2
Understanding the Indian plastics industryA
BAssessing business opportunities for international players
About KanvicC
India is one of the most promising international markets for plastics
3
y= 2005-14E CAGR consumption / capita
x = Consumption per capita in 2014E (kg)
Per capita consumption of plastics and growth trends in key geographies
Source: Plastindia Foundation, Plastics Europe, China PEC, PolyOne, Press Clippings, Kanvic analysis
0%
4%
8%
12%
16%
0 40 80 120 160
E. Europe: 45
India: 14
China: 67
Latin America: 32
Middle East & Africa: 16
Japan: 110
W. Europe: 128
N. America: 141
Note: Bubble size indicates total population in 2014.
Plastics demand in India is driven by fast growing end-user industries
4
Packaged goods
Food Personal / home care Etc
Consumer durables
Automotive Electronics / home appliances Furniture Etc
Infrastructure
Pipes Containers Cables Etc
Agriculture
Irrigation systems Plasti-culture Etc
However different parts of the value chain have not reached to same level of maturity
5
Polymer Manufacturers
Plastics Processors
Equipment Manufacturers
Recycling Players
Dominated by ~15 large Industrial groups
High
Low
Dominated by ~200 players
~4,000 unorganised units ~3,500 organised units
Fragmented with ~30,000 units mostly operated by small players
End
-use
r In
du
stri
es
Structure and organisation of the Indian plastic Industry in 2014
Source: CRISIL, Plastindia Foundation, Kanvic analysis
Con
cen
trat
ion
Flow of recycled plasticsFlow of Virgin PolymersFlow of equipment
Flow of processed plastics
Contents
6
Understanding the Indian plastics industryA
BAssessing business opportunities for international players
About KanvicC
Key opportunities for international firms can be found in two areas
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Raw materials
Equipment Modernise equipment
Bridge supply and demand gap
Key areas Opportunities
1
2
With demand rising faster than domestic production there has been an increasing reliance on Polymer imports
8
Consumption
11.8 +14%
9.1 +9%
4.4 +22%
Imports ExportsProduction
Bridge supply and demand gap1
Flows of Virgin Polymers in India, 2013 volumes and 2004-13 CAGR, MMT, %
Source: Plastindia Foundation, Government of India, Kanvic analysis
1.7 +5%
Supported by the Government’s cut in trade tariffs, Indian plastic processors have gained access to Polymers from international suppliers
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1999 2004 2009 2014
Average trade tariff for PolymersVolume of polymer imports
4,467
1,883
7536947.6
10.0
20.0
38.538.5
20.0
10.07.6
Growth of polymer imports as trade tariffs go down in India, 000 MT, %
1- China
2- Korea
3- USA
4- Saudi Arabia
5- Taiwan
6- Germany
7- Singapore
8- Thailand
Top exporters to India for plastics by volume, 2014
1 Bridge supply and demand gap
Source: Government of India, WTO, Kanvic analysisNote: Top exporters are considered for HS code 39 (plastics and article thereof)
Some attractive opportunities lie in higher-tech raw materials where Indian production may take time to build-up to the required level
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1 Bridge supply and demand gap
2007 2011 2017E
168
85
50
311613
Production Consumption
Supply and consumption of Polyamides in India, 000 T, 2007-2017E
Source: FICCI, Secondary Research, Kanvic analysis
Plastic processing is becoming increasingly organised creating substantial need to renew and modernise the installed capacity
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Modernise equipment2
The market has long been fragmented due to Government restrictions on the size of plastic processing units.
Pictures of Indian Small Scale plastic processing units
The last restrictions have been removed massively between 2007 and 2008 to make the industry more competitive.
Small units had low efficiency by lack of technology, scale, and capacity utilisation.
The market is now likely to concentrate and organise at a fast rate.
Heavy investments in machinery will be required to ramp-up the production capacity.
Source: CRISIL, Plastindia Foundation, National Productivity Council
There is a clear dynamic towards investing in expansion and renewal of plastic processing equipment in India
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2010 2012 2014E 2016P 2018P 2020P
13,563
11,300
9,346
7,9258,098
6,482
6.0
0.4
5.5
Injection Moulding Blow MouldingExtrusion
Addition of new plastic processing machines in India, 2010-2020P, units
Cumulative investments required for new plastic processing machines in India, 2014-2020P, USD Billion
Total cumulative investment ~USD 12 billion
Modernise equipment2
Source: Plastindia Foundation, Kanvic AnalysisNote: A large part of capacity addition is for replacement since total capacity utilisation is ~50%
Indian plastic processors are increasingly relying on international machinery to modernise their facilities
13
2000 2006 2010 2013
46%40%34%5%
54%60%
66%
95%
Domestic Import
Imports contribution to new machines addition in Indian plastic processing, %, 2000-13
Modernise equipment2
Source: Plastindia Foundation, Kanvic Analysis
Generate scale economies
Higher tonnage equipment Faster production cycles
Differentiate
New product designs
Cut costs
Better yield Energy efficient equipment
Priorities for Indian equipment buyers
3,110 4,705 6,482 7,298
Contents
14
Understanding the Indian plastics industryA
BAssessing business opportunities for international players
About KanvicC
15
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Develop winning strategies1
Drive profitable growth2
Achieve operational excellence3
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20
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21
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