Indian Pipe Industry

March 2010

Report
On

Indian Pipe Industry

March 2010
by

All Rights Reserved. No part of this report may be reproduced or transmitted in any form without prior written
permission from CARE.

DISCLAIMER
This report is prepared by CARE Research, a division of Credit Analysis & REsearch Limited [CARE]. CARE Research has taken utmost care to
ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor
completeness of information contained in this report is guaranteed. CARE Research operates independently of ratings division and this report does
not contain any confidential information obtained by ratings division, which they may have obtained in the regular course of operations. The opinion
expressed in this report cannot be compared to the rating assigned to the company within this industry by the ratings division. The opinion expressed
is also not a recommendation to buy, sell or hold an instrument.
CARE Research is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information
contained in this report and especially states that CARE (including all divisions) has no financial liability whatsoever to the user of this product. This
report is for the information of the intended recipients only and no part of this report may be published or reproduced in any form or manner without
prior written permission of CARE Research.

Published by Credit Analysis & REsearch Ltd. (CARE Ratings)

th
4 Floor, Godrej Coliseum, Off Eastern Express Highway, Somaiya Hospital Road, Sion (E),
Mumbai – 400 022.
 Indian Pipe Industry
March 2010

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 Indian Pipe Industry
March 2010

Executive Summary
Taking into account the number of natural gas distribution pipeline projects coming up in India over the next
3-5 years, both from the private players and government undertakings, we believe the mood amongst the
Indian pipe players is unanimously upbeat. Globally too, the number of stalled E&P activities have struck
back into action as crude oil price is nearing US$75-80 per barrel in recent weeks whereas replacement pipe
demand from developed countries remains robust.

The Indian Pipe Industry with presence across all categories of pipes viz, Steel pipes, Cement pipes and
Plastic pipes (PVC, HDPE and CPVC) is among the top three manufacturing hubs, after Japan and Europe.
India is also becoming a major export hub to countries like USA, Europe and the Middle East.
Approximately, 40%-80% of the order book for the key players relates to export orders.

Pipes are essential for transporting fluids like oil, water and gas across the country and are integral for
economic growth with ecological benefits especially in a resource-hungry country like India where energy
demand is fulfilled only for a fraction of the population. Pipe transportation is a very economical mode of
transport compared to the traditional modes of rail, road and sea transport. This mode of transportation also
helps in saving scarce natural energy resources and the time taken for transportation. However, pipe
networks need to be guarded from any kind of damage and corrosion.

Despite the above advantages, India with its large geographical area has very low pipe penetration levels at
32% compared to the global average of 79% in oil & gas transport. The pipeline network of India for oil &
gas transport stood at 17,576 kms. Sanitation levels are also lower at 33% compared to 91% in Sri Lanka and
100% in France. Of the 143 mn hectares of agricultural land in India, only 40% is irrigated. Such low
penetration levels offer a huge scope for the Indian pipe companies.

Consumption of pipes by the oil & gas sector is about 50%, by the construction sector is 30% and by the
government programs is 20%.

The industry is highly fragmented with large number of players in cement and PVC pipes due to their less-
critical applications. This leads to competition and pricing pressures among the players. However, pipe
companies catering to oil & gas sector and government orders have limited competition but need to focus on
stringent quality norms. The RM cost forms approximately 70% of the total cost for steel and PVC pipe
companies and hence the industry is highly dependent on the RM availability, also imported RM.

Steel pipe manufacturing players like Welspun Gujarat, Jindal SAW, Man Industries etc have gained several
accreditations and certifications and have become major exporters to oil & gas companies. With growing
 Indian Pipe Industry
March 2010

sales and profits, these players have announced capacity expansions in India and abroad. Companies like
Welspun Gujarat have also integrated backwards to reduce dependency on imported RM and thereby reduce
the price volatility impact.

CARE Research expects the positive trend in the pipe industry to continue in the coming years on the back of
sustained economic outlook, more oil & gas discoveries, infrastructure focus by the Government of India
(GoI) and low penetration levels. Indian companies with their ability to produce export quality products at
competitive price coupled with locational advantage are well poised to cater to the US and the Middle East
markets.
 Indian Pipe Industry
March 2010

Contact
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Analyst
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All Rights Reserved. No part of this report may be reproduced or transmitted in any form without prior written permission from CARE

DISCLAIMER

This report is prepared by CARE Research, a division of Credit Analysis & REsearch Limited [CARE]. CARE Research has
taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public
domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Research
operates independently of ratings division and this report does not contain any confidential information obtained by ratings
division, which they may have obtained in the regular course of operations. The opinion expressed in this report cannot be
compared to the rating assigned to the company within this industry by the ratings division. The opinion expressed is also not a
recommendation to buy, sell or hold an instrument.

CARE Research is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use
of information contained in this report and especially states that CARE (including all divisions) has no financial liability
whatsoever to the user of this product. This report is for the information of the intended recipients only and no part of this
report may be published or reproduced in any form or manner without prior written permission of CARE Research.

Published by Credit Analysis & REsearch Ltd. 4th Floor Godrej Coliseum, Off Eastern Express Highway, Somaiya Hospital
Road, Sion East, Mumbai –– 400 022. Tel:+91- 22-6754 3456 Fax:+91-22-6754 3457
 Indian Pipe Industry
March 2010

Other Industry Research reports by CARE Research are:

i) Indian Banking Sector

ii) Indian Cement Industry

iii) Indian Coal Industry

iv) Indian Commercial Vehicle Industry

v) Indian Construction Industry

vi) Indian Express Service Industry

vii) Indian Gems & Jewellery Industry

viii) Indian Man-made Fibre Industry

ix) Indian Passenger Vehicle Industry

x) Indian Pesticide Industry

xi) Indian Pipe Industry

xii) Indian Shipping Industry

xiii) Indian Soda Ash Industry

xiv) Indian Steel Industry

xv) The Shipbuilding Industry

xvi) Indian Two-Wheeler Industry

xvii) Indian Tyre Industry

xviii) Indian Sugar Industry

 Indian Pipe Industry
March 2010

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