“ Vision 2020 for Indian Chemical Industry” 22 nd   – 23 rd   April, 2009
 
 
Petrochemical Industry Value Chain Feed stock Building Blocks Main Products End Use Electronics, Furniture  Packaging, Pip...
<ul><li>Polyolefins (PO) -  </li></ul><ul><ul><li>Largest share amongst Petrochemicals </li></ul></ul><ul><li>Ethylene –  ...
Global Ethylene Market - 2008 HPL Estimate Asia largest consumer and largest importer Million MT Demand   Production  Surp...
 
<ul><li>Net Importer  … </li></ul>PE Business: 08-09,  KTA HPL Estimate
<ul><li>Almost balanced  … </li></ul>PP Business: 08-09,  KTA HPL Estimate
Positive growth, even in Recession  … Indian PO Consumption -  mmtpa CAGR – 10.8% 3.5 % HPL Estimate
Huge capacity additions in near future KT PO Capacity additions RIL RIL GAIL, RIL HPL RIL GAIL RIL, HPL IOC GAIL ONGC Proj...
Capacity Additions – PO,  KTA  <ul><li>4 million MT addition by 2013, likely to add further  … </li></ul>Source – Company ...
 
<ul><li>Impact short lived, Demand recovered fast. </li></ul><ul><li>3.5% overall growth; most countries reported zero or ...
<ul><li>Higher dependence on the domestic demand </li></ul><ul><li>Rural India unaffected by meltdown </li></ul><ul><li>In...
 
<ul><ul><li>High GDP growth </li></ul></ul><ul><ul><li>Bulging middle class </li></ul></ul><ul><ul><li>Favorable Demograph...
GDP Growth rate over the years Consistent Growth………
Economy  -  Purchasing Price Parity,  2008 <ul><li>4 th  highest purchasing power </li></ul>Source – World Fact Book
<ul><li>Bulging middle class, Shrinking BPL </li></ul>Demography –  Household Income, USD Source – World Fact Book
Demography  –  Working Age Population Young  India  …Assured workforce for next 50 yrs Source – Goldman Sachs %
Changing Lifestyle Lifestyle shift  -  Growth @ 22 % CAGR  … 2004 – $6.3 Billion 2015 – $55.8 Billion
Govt. of India’s Focus on Infrastructure billion USD High growth rate in Infrastructure Sector: Demand multiplier 456 bn $...
 
Overview of downstream polymer processing industry <ul><li>Status </li></ul><ul><ul><ul><li>No. of processing units ~ 2600...
<ul><ul><li>In spite of deregulation, historical perception of large industrialist not changed. </li></ul></ul><ul><ul><li...
<ul><ul><li>Lately, FDIs have started coming in, e.g. </li></ul></ul><ul><ul><ul><li>Alpla (Italy) - Blow Moulding </li></...
<ul><ul><li>Few Indian entrepreneurs making global footprints, e.g. </li></ul></ul><ul><ul><ul><li>Jain Irrigation </li></...
<ul><li>Flexible Packaging :  </li></ul><ul><ul><li>Shift from Pop & Mom stores to Retail induced huge demand for packagin...
<ul><li>Pipe:  </li></ul><ul><ul><li>Replacement of GI & RC pipe </li></ul></ul><ul><ul><li>Increased emphasis on water ma...
High Performing Sector : Projected growth in next 5 years % Last five years PO Industry Growth CAGR 10.8%
<ul><li>Geo-Textiles  –  </li></ul><ul><ul><li>Road building with enhanced life  </li></ul></ul><ul><ul><li>Protection of ...
Geotextile -  Increased shelf-life  …  Without Geo-textile With Geo-textile Rural road in Birbhum district, West Bengal
Geotextile -  Sea Embankment (Geo tube) Road construction  Needs lot of promotional activity with Govt depts.  amazing uti...
Geotextile -  protection against natural calamity  … Without Geo-textile With Geo-textile Mayurakshi River Bank (West Beng...
 
Supply Demand projection till 2015 KT Demand Growth at conservative CAGR of 10%
Growth Engine : PCPIR <ul><li>To promote Petrochemical growth, Govt. announced development of  Ultra Mega Petrochemical Co...
Growth Engine : National Policy on Petrochemicals <ul><li>Increase upstream and downstream investments by providing good i...
Additional support required from Govt <ul><li>At least 5% duty differential between Naphtha and Polymer to be incorporated...
 
Conclusion <ul><li>Major capacity additions happening after a gap of decade </li></ul><ul><li>Indian PO industry to witnes...
 
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Ujjal De Haldia Petro

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Presentation on “Indian Petrochemical Industry Outlook” made by Mr. Ujjal De, Sr. Vice President, Haldia Petrochemicals Ltd. during Two-day Conference on “Vision 2020 – Indian Chemical Industry” held on 22-23 April 2009 at Mumbai.

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Ujjal De Haldia Petro

  1. 1. “ Vision 2020 for Indian Chemical Industry” 22 nd – 23 rd April, 2009
  2. 4. Petrochemical Industry Value Chain Feed stock Building Blocks Main Products End Use Electronics, Furniture Packaging, Pipes Propane Crude Oil & Natural Gas Olefins ( Ethylene, Propylene, Butadiene ) Aromatics ( Benzene, Xylene) Polymers Fiber Chemicals Detergents, Fertilizers Paints, Pharma Textiles Ethane Naphtha Automobiles Elastomers
  3. 5. <ul><li>Polyolefins (PO) - </li></ul><ul><ul><li>Largest share amongst Petrochemicals </li></ul></ul><ul><li>Ethylene – </li></ul><ul><ul><li>Building Block for PO </li></ul></ul><ul><li>So, this presentation is focused on </li></ul><ul><li>Ethylene & PO </li></ul>
  4. 6. Global Ethylene Market - 2008 HPL Estimate Asia largest consumer and largest importer Million MT Demand Production Surplus / Deficit America Middle East / Africa Europe Asia
  5. 8. <ul><li>Net Importer … </li></ul>PE Business: 08-09, KTA HPL Estimate
  6. 9. <ul><li>Almost balanced … </li></ul>PP Business: 08-09, KTA HPL Estimate
  7. 10. Positive growth, even in Recession … Indian PO Consumption - mmtpa CAGR – 10.8% 3.5 % HPL Estimate
  8. 11. Huge capacity additions in near future KT PO Capacity additions RIL RIL GAIL, RIL HPL RIL GAIL RIL, HPL IOC GAIL ONGC Projected HPL Estimate RIL
  9. 12. Capacity Additions – PO, KTA <ul><li>4 million MT addition by 2013, likely to add further … </li></ul>Source – Company announcements HPL IOCL RIL ONGC GAIL
  10. 14. <ul><li>Impact short lived, Demand recovered fast. </li></ul><ul><li>3.5% overall growth; most countries reported zero or negative growth </li></ul>Impact of Global Meltdown Source – Industry Estimates KT Half Yearly PO Consumption since 2006-07 15 %
  11. 15. <ul><li>Higher dependence on the domestic demand </li></ul><ul><li>Rural India unaffected by meltdown </li></ul><ul><li>Inventory correction across the value chain </li></ul><ul><li>Low Price : Virgin material replaced reprocessed </li></ul><ul><li>Lower Excise Duty : Low price induced consumption </li></ul>Reason for the Speedy Recovery
  12. 17. <ul><ul><li>High GDP growth </li></ul></ul><ul><ul><li>Bulging middle class </li></ul></ul><ul><ul><li>Favorable Demography </li></ul></ul><ul><ul><li>Changing Lifestyle </li></ul></ul><ul><ul><li>Govt. Investment in Infrastructure </li></ul></ul>Growth drivers
  13. 18. GDP Growth rate over the years Consistent Growth………
  14. 19. Economy - Purchasing Price Parity, 2008 <ul><li>4 th highest purchasing power </li></ul>Source – World Fact Book
  15. 20. <ul><li>Bulging middle class, Shrinking BPL </li></ul>Demography – Household Income, USD Source – World Fact Book
  16. 21. Demography – Working Age Population Young India …Assured workforce for next 50 yrs Source – Goldman Sachs %
  17. 22. Changing Lifestyle Lifestyle shift - Growth @ 22 % CAGR … 2004 – $6.3 Billion 2015 – $55.8 Billion
  18. 23. Govt. of India’s Focus on Infrastructure billion USD High growth rate in Infrastructure Sector: Demand multiplier 456 bn $ Investment in 11 th Five Year plan (2007– 2012) Source:Planning Comm. 10 th Plan 11 th Plan Increase Impact on Polymer demand Power 61.52 128.22 108% Indirect Road & Railways 44.88 156.12 248% Indirect Ports and Airports 1.77 31.18 1767% Indirect Telecom 19.63 56.35 187% Direct Irrigation 24.89 44.67 79% Direct Water Supply & Sanitation 13.6 25.94 91% Direct Others 3.87 13.61 252% Total 170.55 456.09 168%
  19. 25. Overview of downstream polymer processing industry <ul><li>Status </li></ul><ul><ul><ul><li>No. of processing units ~ 26000 </li></ul></ul></ul><ul><ul><ul><li>Annual Turnover ~ 100000 Rs. Cr. </li></ul></ul></ul><ul><ul><ul><li>Polymer consumption ~ 6 MMTA </li></ul></ul></ul><ul><ul><ul><li>Average Size ~ 196 MTA </li></ul></ul></ul><ul><ul><ul><li>Employment direct / indirect ~ 3.3 million </li></ul></ul></ul><ul><ul><ul><li>Export Value ~ 9800 Rs. Cr. </li></ul></ul></ul>Source : CPMA
  20. 26. <ul><ul><li>In spite of deregulation, historical perception of large industrialist not changed. </li></ul></ul><ul><ul><li>Failure to attract corporate sector and FDIs </li></ul></ul><ul><ul><ul><li>Uneconomical plant size </li></ul></ul></ul><ul><ul><ul><li>Lacks global competitiveness </li></ul></ul></ul><ul><ul><ul><li>Lack of technological upgradation </li></ul></ul></ul><ul><ul><ul><li>High dependence on domestic market </li></ul></ul></ul>Perceived weakness of processing industry
  21. 27. <ul><ul><li>Lately, FDIs have started coming in, e.g. </li></ul></ul><ul><ul><ul><li>Alpla (Italy) - Blow Moulding </li></ul></ul></ul><ul><ul><ul><li>Netafim (Israel) - Micro Irrigation </li></ul></ul></ul><ul><ul><ul><li>Meccaferi (Italy) - Non Woven Geotextile </li></ul></ul></ul><ul><ul><ul><li>Duraline (USA) - Pipe </li></ul></ul></ul><ul><ul><ul><li>Pennault Aggru (India + Austria) - Pipe </li></ul></ul></ul><ul><ul><ul><li>ITOCHU - HM Film </li></ul></ul></ul><ul><ul><ul><li>Transpack Asia - FIBC </li></ul></ul></ul>Emerging trend over the last few years
  22. 28. <ul><ul><li>Few Indian entrepreneurs making global footprints, e.g. </li></ul></ul><ul><ul><ul><li>Jain Irrigation </li></ul></ul></ul><ul><ul><ul><li>Jindal Polyfilms </li></ul></ul></ul><ul><ul><ul><li>Uflex </li></ul></ul></ul><ul><ul><ul><li>Cosmo </li></ul></ul></ul><ul><ul><ul><li>Essel Propack : Worlds largest, Indian MNC Co. in Lamitube Business </li></ul></ul></ul>Emerging trend over the last few years
  23. 29. <ul><li>Flexible Packaging : </li></ul><ul><ul><li>Shift from Pop & Mom stores to Retail induced huge demand for packaging industry </li></ul></ul><ul><li>Raffia : </li></ul><ul><ul><li>High Growth in cement industry </li></ul></ul><ul><ul><li>Partial relaxation on Jute packaging order for food grain & sugar. Incremental business potential ~ 120 KTA </li></ul></ul>High Growth Sector * Estimated FY 08-09 FY 13-14 Cement MMTPA 182 256* Polymer Req, KTA 250 360*
  24. 30. <ul><li>Pipe: </li></ul><ul><ul><li>Replacement of GI & RC pipe </li></ul></ul><ul><ul><li>Increased emphasis on water management </li></ul></ul><ul><li>PE Cable : </li></ul><ul><ul><li>High Growth in power sector </li></ul></ul><ul><ul><li>Replacement of PVC insulation by high performance XL PE </li></ul></ul>High Growth Sector
  25. 31. High Performing Sector : Projected growth in next 5 years % Last five years PO Industry Growth CAGR 10.8%
  26. 32. <ul><li>Geo-Textiles – </li></ul><ul><ul><li>Road building with enhanced life </li></ul></ul><ul><ul><li>Protection of river / sea banks against erosion </li></ul></ul><ul><ul><li>Land slide protection </li></ul></ul><ul><li>Plasticulture (Film Application) – </li></ul><ul><ul><li>Film for Green House </li></ul></ul><ul><ul><li>Mulching </li></ul></ul><ul><ul><li>Pond lining </li></ul></ul>High potential sector at nascent stage Products of natural resource management …
  27. 33. Geotextile - Increased shelf-life … Without Geo-textile With Geo-textile Rural road in Birbhum district, West Bengal
  28. 34. Geotextile - Sea Embankment (Geo tube) Road construction Needs lot of promotional activity with Govt depts. amazing utilization …
  29. 35. Geotextile - protection against natural calamity … Without Geo-textile With Geo-textile Mayurakshi River Bank (West Bengal)
  30. 37. Supply Demand projection till 2015 KT Demand Growth at conservative CAGR of 10%
  31. 38. Growth Engine : PCPIR <ul><li>To promote Petrochemical growth, Govt. announced development of Ultra Mega Petrochemical Complexes under PCPIR. </li></ul><ul><li>Major domestic and foreign investments are being attracted by incorporating transparent investment friendly polices. </li></ul><ul><li>Till now, 3 regions have got approval for developing PCPIR. </li></ul><ul><ul><li>Dahej, Gujarat </li></ul></ul><ul><ul><li>Nayachar, West Bengal </li></ul></ul><ul><ul><li>Vishakhapatnam, Andhra Pradesh </li></ul></ul>
  32. 39. Growth Engine : National Policy on Petrochemicals <ul><li>Increase upstream and downstream investments by providing good infrastructure </li></ul><ul><li>Increase the domestic demand and per capita consumption of plastics and polymers </li></ul><ul><li>Add value to the downstream processing industry through modernization and R&D </li></ul><ul><li>Achieve environment friendly growth </li></ul>
  33. 40. Additional support required from Govt <ul><li>At least 5% duty differential between Naphtha and Polymer to be incorporated </li></ul><ul><li>High VAT component (12.5%) on finished goods to be rationalized for better profitability. </li></ul>
  34. 42. Conclusion <ul><li>Major capacity additions happening after a gap of decade </li></ul><ul><li>Indian PO industry to witness double digit demand growth </li></ul><ul><li>Indian Govt policies, Paradigm shift in processing industry & Indian GDP growth are the PO demand boosters </li></ul><ul><li>PCPIR is likely to catalyze major capacity additions in PO and downstream processing industries </li></ul><ul><li>India geared-up for global footprint in Plastic processed goods </li></ul>At point of influx …

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