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Polymers: Happy days to continue? - Views on News from Equitymaster
 
 
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  • Dec 12, 2000

    Polymers: Happy days to continue?

    The decade of the nineties has seen appreciable growth in the polymer production capacity of the country. The growth has been primarily to bridge the demand supply gap and exploit the anticipated growth in the sector.

    Demand for polymers has exhibited robust growth rates over the last ten years. Consumption of polymers has increased from 980,000 MT in FY91 to 2.9 MMT in FY99. This spurt in demand could be largely driven by substitution of conventional packaging material, new application avenues and the relatively low per capita consumption (PCC) of polymers in the country. Such a scenario augurs well for the polymer industry and future growth rates.

    Installed capacity of polymers
    ('000 MT) FY91 FY96 FY00
    LDPE 120 187 200
    LLDPE 0 295 925
    HDPE 50 0 520
    PP 55 115 1160
    PVC 164 483 780
    PS 36 150 252
    ABS 24.7 27.5 42.2
    SBR 45 49 45.4
    PBR 20 20 50
      514.7 1326.5 3974.6

    Cognisant of operating in a commodity business, companies have now started to monitor their cost even more closely with focus on attaining the lowest cost producer status. In order to achieve this objective companies have set up capacities on par with international standards. Reliance (RIL) and Indian Petrochemical Corporation (IPCL) are steadily increasing capacity. FY00 also saw Gas Authority (GAIL) enter the polymer business with a 300,000 TPA polymer plant in Uttar Pradesh. Further capacity is expected to be added with the commissioning of Haldia Petrochemicals in West Bengal.

    Although polymer consumption has grown by 12% CAGR over the last decade the PCC currently stands at 3 Kgs / annum as compared to China's 12 Kgs and an international average of 17 Kgs. Therefore, with per capita consumption still at lower levels companies in this sector could look forward to a continuation of robust growth.

     

     

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