Industry Profile

The main application of PVC in India is basically in shape of pipes. India is the eighth major consumer of plastics in the world and the plastic industry demand is expected to grow by around10-12% per annum for the next few years. The global PVC pipe demand is expected to grow by 4% per annum. PVC pipes, because of its anti corrosion features and durabilit y, are used extensively, instead of conventional building material in various construction applications. Further on-going accelerated irrigation benefit program and major thrust given to infrastructure development in India, and the construction boom has given a fillip to PVC building material demand in the recent past. Looking at the rise in PVC consumption, it is expected to have diversified product range within the same product line which the present proposal intends to do. The PVC pipes to be manufactured can cater to the growing demand of macro-irrigation sector, sprinkler irrigation, lift -irrigation etc. which are major growth sectors apart from other conventional infrastructural requirements. As per the latest estimation, global demand for PVC is growing at four per cent per annum, while the Indian industry is expected to grow at 10 per cent in coming years. The continued focus of government on irrigation and construction activity would drive the growth going forward for PVC pipes. Even on a conservative estimate, analysts expect PVC pipes companies to grow at 25 per cent in top line and about 15 per cent in bottom line. PVC and pipes demand is robust on back of growth in housing, rainwater harvesting and irrigation projects along with domestic demand and demand from other small scale industries. Analysts estimate that that the micro irrigation opportunity in the country to be around Rs 61,500 crore in the next decade and more than 85% pipe requirement will be from PVC sector only. As per the estimation, the average growth in PVC consumption over the past five years has been around10% and expected to grow at a higher rate in the coming years. Considering the recent Government policy initiatives and increasing private demand, requirement of PVC pipes is expected to grow at about 20% over the next few years. This will translate into a demand growth of about 15% per annum. So, looking at this prospect, the proposed project is going to meet a substantial part of the domestic PVC pipe requirement of karnataka and southern region of the country. Agriculture plays an important role in the demand where PVC pipes are primarily used in irrigation and rural water supply. Both these activities get the maximum attention and fund allocation from Central as well as State Government. The thrust of government in 11th plan period for irrigation coverage under, rural water supply and sanitation etc. is critical booster for increasing demand for PVC pipes. Every year the State Government is spending lakh of rupees on providing these basic facilities to the people and this is likely to continue over the next few

decades. As a result the demand for PVC pipes and fittings is bound to keep growing. Moreover, the demand for PVC in housing is yet at a very negligible level but demand is increasing with low cost housing norms. As new applications are being accepted for plumbing, sanitation and rain water, the demand for PVC pipes in housing is likely to see a quantum jump. A component like PVC is an input to irrigation. PVC pipes are widely used in irrigation and water supply systems. Consumption of PVC pipes by oil and gas sector is 50%, construction sector is 30% and government programs are 20%.

Overview on Plastic Industry

The Indian Pipe Industry is among the top three manufacturing hubs after Japan and Europe. The penetration level of pipe lines in oil & gas transportation is low at 32%inIndia as compared to 59% in USA and 79% globally. However lower penetration levels represent the huge scope for growth for the pipe industry. The industry is highly Raw Material (RM) intensive with the RM cost accounting for more than 70% of the total cost for steel and PVC pipe companies. These companies depend heavily on imports and hence many companies have integrated backward to reduce dependency on imports and price volatility. Freight cost is another key cost component due to higher imports and exports. With the fall in commodity prices and Baltic Dry Index pipe companies will be benefited in the coming quarters. Indian companies produce a wide range of steel, cement and PVC pipes which are used in various critical and non-critical applications. With the low cost quality products and various certifications, Indian companies have augmented their export sales over the last three to four years. A positive trend is expected in the Indian pipe industry to continue in the next 3-5 years on the back of high oil and gas discoveries world wide, increased efforts by the Government of India (GoI) on infrastructure development for laying pipe lines for oil & gas transport, replacement demand from US and European countries , water & sewage transport and irrigation facilities.

Key Findings
The Government of India increased the annual budget allocation under the Rajiv Gandhi Drinking Water Mission from Rs.65bn to Rs.73bn in the Union Budget 2008-09. For the Xith Five Year Plan, the Government of India is aiming to add 11mn hectares of irrigational facilities, e n t a i l i n g a n i n v e s t m e n t o f R s . 1 , 5 8 0 b n .

The Government Of India in its efforts to reduce crude imports has formulated the New Exploration Licensing Policy for exploration and production of oil & gas. The government of India has awarded 165 blocks till date and the number is set to increase to 245 by 2008. Private players like Reliance Industries Limited(RIL), Cairn etc have shown interest in setting up pipe infrastructure for oil & gas transport. National gas grid will also be set up requiring an investment of Rs.210bn. City gas pipe is currently available in 10 cities and the coverage is expected to grow to 100 cities in the next five years, entailing an investment of Rs.250-300bn

Plastic industry A review:India ranks 8th in the world in total plastic consumption. Its gaining notable importance in different spheres of activity and the per capita consumption is increasing at a fast pace. Continuous advancements in polymer technology, processing machineries, expertise, and cost effective manufacturing is fast replacing the typical materials in different segments with plastics. Share of India's plastic products industry is about 0.5% of India's GDP. The export of plastic products also yields about 1% of the country's exports. The sector has a large presence of small scale companies in the industry, which account for more than 50% turnover of the industry and provides employment to an estimate of about 0.4million people in the country. Approximately Rs100billion are invested in the form of fixed assets in the plastic processing industry.

PVC Pipe Growth Potential in India:-

At present only the most basic PVC applications are being made in India and that also of low quality. Reasons being:Lack of exposure in international markets Lack of information about PVC processing and its versatility

In our country there is a lot of potential in the market about PVC. Although there are a lot of small scale units that are producing PVC on small scale but the quality of that pipe is very poor. So there is need of an organization that has highly skilled staff and having modern machinery and that must focused on quality to penetrate in the market and meets the need and fulfill the expectations of the customers. If such an organization comes than there is also increase in the employment opportunities.

Major Players in PVC Industry in India:Jain Irrigation System:- It is a multinational organization with global presence in 120 countries based in Jalgaon , Maharashtra, India. JISL employs over 7,500 workers, having 24 manufacturing plants, manufactures a number of products, including drip and sprinkler irrigation systems and components, integrated irrigation automation systems, PVC and PE piping systems, plastic sheets, greenhouses, bio-fertilizers, solar water-heating systems, biogas plant on turnkey basis, wind hybrid energy and photovoltaic system. JISL also processes dehydrated, concentrated and frozen fruits and vegetables. Reliance :- Reliance Industries Limited is India's largest manufacturer of Poly Vinyl Chloride (PVC). Reliance has adopted the world acclaimed EDC/Ethylene process (Licensor , BF Goodrich (USA) , Presently M/s Oxy Vinyl . REON product portfolio covers a wide range of grades to cater to a wide spectrum of industries. PVC finds use in Agriculture (Irrigation Pipes, Casing pipes, Pipe fittings)Building & Construction(Doors, Profiles, Plumbing pipes, Conduits, Fencing), Packaging(Bottles & containers, Blister packaging), Medical(Blood bags, tubings), Consumer goods (Toys, Footwear, hoses), Electricals & Electronics(Wire & cables, gaskets, keyboard), etc. Finolex:- Finolex is the largest PVC-U pipe manufacturer in India and the first to have been awarded the IS/ISO 9001:2000 certification. Finolex offers a wide range of PVC-U pipes and fittings, for diverse applications in agriculture, housing, telecom etc. ranging between 20 mm to 400 mm diameter. Supreme:- Supreme is the renowned leader of India's plastic industry with valuable experience in providing innovative and cost-effective piping solutions. Supreme's wide range of piping products meets the various requirements of Irrigation, Bore wells, Potable water supply, Plumbing, Drainage, Sewerage, Rainwater Harvesting and Water management. Jindal pipes:- It is India's one of the best and largest manufacturer of ERW, Black and Galvanized Steel Pipes & Tubes in different thickness from 2.00 mm to 10.00 mm having an

Outer Diameter (OD) ranging from 1/2" to 14" NB conforming to various National and International Standards. This plant have been constantly executing need based and demanding orders for Pipes to meet the requirements of sectors like Agriculture, Oil, Public Health, Housing, Irrigation, Engineering etc.