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For
(Polymer Division)
Report Submitted By
JULY 2009
DECLARATION
AKSHAY.A.PARAB
ACKNOWLEDGMENT
I express my sincere thanks to Mr. Rohit Shah and Mr. Ninad Dixit for
giving me an opportunity to work for Reliance Industries Limited. I also extend
my gratitude to Mr. K.G. Kapse for giving me an opportunity to work in this
project. I am also thankful to Mr. Rakesh Pandita, Mr. Amit Mishra, Dr.Manish
Desai and Mr.Prabhod Bhatt for their kind cooperation.
I also express my gratitude towards all the respondents whom I visited for
data collection.
Akshay. A. Parab
Table of contents
1) Executive summary
2) Polymers
3) Polypropylene (PP)
Domestic scenario
Installed capacities
4) Polypropylene Market
• Cement sector
• Fertilizers sector
• Food grains Sector
8) SWOT analysis
EXECUTIVE SUMMARY
The project talks about the present and potential demand for
polypropylene raffia in Cement, Fertilizers and food grain sector. Overall,
nearly 430crores plastic woven sacks were used in cement sector, 74crores
sacks were used in fertilizer sector and food grain sector showed good growth
during 2008-2009. The project views these three sectors and estimates its
future demand. Project also studies the raffia sector to know the trends and
growth potential in that sector.
Chemicals Others
Polymers 2% 10%
3% Cement
Fabrics 37%
7%
MF &
Ropes
6%
Food Export
FIBC
grains sacks
15%
11% 9%
Polymers
India's
(in KT) India World share
Building
Blocks
11774
Ethylene 2816 5 2.3%
Propylene 1999 71303 2.7%
Polymers
PE 1975 73596 2.4%
PP 1990 44668 4.4%
PVC 1002 37606 2.6%
PS 423 15525 2.4%
ABS 91 8616 0.9%
PP is crystalline, has high molecular weight, no linear side chains and good
directional stability. It has a high strength-to-weight ratio, good process ability
and gas barrier properties. With density of 0.89 gm per cc, it is the lightest
thermoplastic polymer. PP has high melting point, chemical and heat
resistance, good fatigue resistance, low permeability to water and is
unaffected by bacteria or fungi.
Polypropylene can be classified depending upon its co- monomer
1) Homopolymers
2) Random Copolymer
3) Impact Copolymer
Domestic scenario:-
In India, the PP market size (demand) was estimated at 1.54 million tones in
2007-08. RIL and HPL are the major producers of PP.
PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-
08 to 2012-13, while demand is expected to increase at a CAGR of 10-11 per
cent. The surplus is expected to increase in the PP market primarily on
account of huge capacity additions by RIL and IOC.
Capacity structure
RIL is the market leader in this segment with a capital share of 87 per cent,
followed by HPL with 13 per cent.
PP: Installed capacities
Initial
start-up
(tpa) Location State Capacity technology 2007-08 date
Reliance Industries Baroda Gujarat 160,000 Montell (Spheripol) Apr-85
Reliance Industries Nagothane Maharashtra 120,000 Montell (Spheripol) Apr-92
Total 2,000,000
Source: Industry, CRISIL Research
The entry barriers in this segment are high as capacity sizes are large and
investments of up to Rs. 5 billion are required for a 350,000 tpa PP plant.
Polypropylene Market
Co-polymer
Household applications
application (IM),
16 Woven sacks, Textile pakaging, multi-
multifilaments, tarpulins, 33 layer films
5 Food packaging
Food
packaging, 7 multifilaments
Textile
Household Co-polymer application
pakaging, multi-
applications, 20 (IM)
layer films, 17
BM articles
Prices
Woven sacks.
Raffia- fibres Extrusion Tarpulins 465,724 509,036 554,849 607,560 656,165 708,658 8.8
household
Injection applications,
moulding IM furniture , others 313,388 335,012 358,295 382,211 408,679 435,959 6.8
Textile packaging
TQPP films Extrusion and multi-layer films 254,035 268,725 293,986 321,396 351,314 383,382 8.6
BOPP films Extrusion Food packaging 136,000 165,920 204,082 253,061 316,326 395,408 23.8
Fibres and
filaments Extrusion Ropes,multifilaments 72,270 80,581 90,654 101,985 115,243 130,225 12.5
Injection
moulding IM Various application 243,883 263,786 288,833 315,551 345,704 379,188 9.2
Appliances and
others 67,084 74,114 82,427 92,352 103,555 116,542 11.7
blow moulding BM Household articles 22,155 23,484 24,893 26,511 28,500 30,922 6.9
PE
14%
PP
86%
IMPORTED
HPL 9%
15%
RIL
76%
Source: Industry
1000
900
800
700
600 PP
500 PE
400 Total
300
200
100
0
2004-05 2006-07 2006-07 2007-08 2008-09
From the above graph it is clear that there is an inter polymer shift to PP as
the sales of shows about 10 per cent CAGR growth.
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Quality plays a vital role in deciding the choice of raw material supplier.
The cost of the raw material is almost same but it is still a major guiding force
behind choice of the raw material.
Availability forms a major guiding force behind the buying decision as cost
and quality being almost same.
A. Cement sector:-
No. of player – 54
Capacity-215 MMT
Large cement plants-136
Mini cement plant-382
Major Players
Holcim (ACC ACC
11% Ambuja
&AmbujaAditya Birla 9%
Grasim
9%
Group (Grasim & others
Ultratech
55%
Jaypee group 9%
Ultratech) 3%
India Cement
4%
India Cements
Jaypee Group
50
100
0 0
2004-05 2005-06 2006-07 2007-08 2008-09
Polymer consumption for cement storage rose steadily over the quarter of the
last decade due to much obvious increase in the demand of packaged
cement. India with a large number of pipeline infrastructure projects has
sustained a favorable growth in infra related areas even in times of economic
slowdown.
The Comparative analysis for the years 07-08 and 08-09 testify the fact that
demand for packaged cement and subsequently polymer for its packaging
has not receded even in the slowdown.
4. Environmental Friendly.
Opportunities
a) Northern Region :
Cement Production has been increased by 11%, whereas consumption by 3 %
b) Western Region :
Cement Production has been reduced by 3%, whereas consumption by 8 %
c) Eastern Region
Cement Production has been increased by 7%, whereas consumption by 10 %
d) Central Region
Cement Production has been increased by 3%, whereas consumption by 5 %
e) Southern Region:
Cement Production has been increased by 7%, whereas consumption has
increased by 11%
2. Government norms.
The standard size of package used is 50kgs; however some of them were
also using packages of 25kgs.
The factors deciding the choice of the suitable packaging material are:
The type of packaging material used is either jute or HDPE depends mainly
on what type of fertilizer the company is producing whether it is composite
fertilizer or Urea. If it is urea then 20% of it has to be packed in the jute bags
as per government regulation however if it is composite fertilizer then it is
packed in HDPE bags.
cost analysis PE PP
raw material cost/MT 69.4 61.3
cash discount 0.6 0.6
68.8 60.7
Note:
• To a processor QD & AQD along with MOU discounts are also paid. If we want to
calculate exact cost of production then the same also need to be deducted from resin
price afterwards.
• Also we have not assumed price differential of LLD/LD or PP/L/LLD being used for
lamination of between the 20-25g. This is virtually very low.
• While quoting price customer will not pass on the cash discount & TD to processor
hence his quote will increase by that amount too.
Also the non availability of raw material these days has resulted in loss of
sales (both jute and polymers)
It has been found that mainly HDPE bags are used for packing as compared
to PP bags as PP bags have low shelf life and the cannot be protected from
harmful UV rays and it needs a UV stabilizer which in case of PE bags its not
required.
Thus it is clear that the fertilizer sector on the whole provides a rich market for
plastic woven sacks. However government regulation is acting as an obstacle
to fully utilize this area. Apart form these, cost is another factor affecting the
choice of packaging material in this sector since a bag of fertilizer
approximately cost around Rs.450 as compared to the cost of a cement bag
which is around Rs.280.
C. Food grains Sector :-
India is the only country in the world whose nearly 76% of population is
directly dependant on Agriculture and related industries. Consequently food
grains packaging is a big business which complements the large amount
agricultural surplus available.
Estimated 80% domestic production of food grains are Rice and Wheat.
Therefore, the study focused on these two products.
Current domestic food grain and pulses production is 470 million tones and
ranked No.2 in food grain production in the world. Rice and wheat contributes
77% of total food grain production. 30-40% food grains is procured and stored
by Govt. agencies and rest by private operators. Loss due to poor storage is
as high as 5%. Presently there are three bulk packaging options, namely, jute
bags, HDPE woven sacks and PP non-woven sack. Retail packs are from 1,
2, 5 and 10kgs. The packaging options are PP non-woven, HDPE woven sack
with reverse printed BOPP film laminated and multilayer laminates. Export of
17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for
retail sale. It is estimated that 337 MMT of food grains will be produced by
2011-12. Steady decline in jute production is taking place. Therefore,
alternate packaging material is required.
Agricultural Products are broadly classified into two main types:-
1. Food Grains
2. Commercial Crops
Jute bags are mainly used for packing of food grains in Maharashtra, but the
traditional trend of using jute bags for packaging are changing
Other factors
Reasons for not using Plastic bags for packaging till date
During recent times there is also a shift in packaging pattern observed from
larger pack to the medium sized packing of 10-25kg pack size of food grains.
Plastic woven sack improves printability and eliminates dent formation during
stacking, transportation.
It reduces the cost compared to packaging types viz. metal container such as
tin and others.
Multi layer polyethylene bags are much preferred for small and medium size
packaging.
Strength
Weakness
Opportunities
Threats
• Import
(9% of the market share)
Polypropylene Industry
• Fluctuations in the crude oil and
natural gas prices
Substitutes
Buyer’s views
• cement
o Ready mix cement
• Availability, Cost, Quality of
o AD start bags
the raw material.
• Food grains
o Multi layered
polyethylene bags
• Low profit margins due to • Fertilizer
high over head charges o Polypropylene bags
.
Conclusions
• Overall, for most of the manufacturers, quality of the raw material does
not play an important part. Main factors they consider while choosing
the raw material is cost and availability
• Future of raffia industry show ample growth and many other varied
uses of woven sacks are coming up which shows the industry is going
to flourish in future. Also since it is packaging industry demand is a
derived demand therefore its demand will always remain until a new
better packaging material is found.
• Growth in demand from the raffia sector will be largely due to the
exports of woven sacks
• Thus on the while we can summarize the findings and say that the
Raffia industry in India has been focusing on the traditional sacking
application like cement in view of large volumes offered by these
sectors. The industry should now formulate a strategy to capitalize on
the opportunities and tap the potential in diversified markets both in
sacking and non sacking applications. Many more applications in a
variety of diversified markets exit globally and can be successfully
transplanted to suit the Indian scenario. Such developments will not
only bring about better prospects of value addition for the raffia industry
but also have a multiplier effect for the growth in end-use markets that
this industry caters
Recommendations
6) Have you come across any new application of Raffia would you be
adopting it?
11) Is the brand name of the company a criteria in purchasing raw material?
2) Primary Market
a) Local b) Regional c) National d) International
a) Price
b) grams/bag
c) Strength
d) Availability
e) Quantity
15) Variety of cement requested and their percentages of the total production:
a) Price
b) grams/bag
c) Strength
d) Availability
e) Quantity
7) What are the problems faced by industry? What measures can be taken to
overcome them?