Harcharan Singh

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VISION 2015INDIAN CHEMICAL INDUSTRY
Harcharan Singh HPL Additives Limited
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Current Scenario
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INDIA Shining Star of the World
Some facts ..
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• Indian economys size in 2007 USD 1.24
  trillion.
• 12th largest economy of world
• 2nd fastest growing economy in world
• 4th largest economy in world in terms of
  purchasing power.
• Projected to be worlds third largest economy of
  the world by 2035, after USA and China. Shall
  grow to 60 of the size of USA economy

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• Indian economy grew by 9 for three years
  running till 2007. Grew by 7.3 in 2008.
• 7 growth in last decade.
• Services constitute 53 of GDP, followed by
  Industrial sector with 29 and rest by
  Agricultural sector.
• Large domestic market, driven by 300 million
  strong middle class.
• Rapid urbanization.
• Large strides in infrastructure development.
• Large educated, technical human resource bank.

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Indian Chemical Industry
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Salient Facts

• Annual Turnover
• Investment
• Share in GDP
• Share in Manufacturing sector
• Contribution to Exports
• Contribution to Imports
• CAGR last three years
• Share in international market
• Employment - direct

• USD 35 billion
• USD 60 billion
• 7
• 17.6
• 13 -14
• 8 - 9
• 9.6
• 1.9
• 1 Million

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Industry growth - age
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International Trade
USD - Million
Sector Import Export
Inorganic 2321.3 762.4
Organic 5061.3 4778.7
Dyeing, Tanning Coloring 498.9 833.3
Pesticides 167.5 620.2
Petrochemicals 2244.7 2169.1
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Shift in production of major Chemicals
000 MT
Sector 2001-02 2006-07
Alkali 4342 5269
Inorganic 374 602
Organic 1167 1545
Pesticides 82 85
Dyes Dyestuff 25 33
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World Chemical Industry
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Size of world chemical industry USD 2.4 Trillion
Categorization
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Geographical distribution
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Industry Segmentation
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Chemical industry segments
Segments Characteristics Constituent Industries
Basic High volume, low value Limited product differentiation across manufacturers High entry barriers on account of high capital spend stringent regulations Petrochemicals Fertilizers Inorganic chemicals Other industrial chemicals
Specialty High product differentiation and value addition. Typically smaller units with more flexibility Low capital investment levels. Adhesive sealants Catalysts Industrial gases Plastic adhesives additives
Knowledge Differentiated chemical biological substances used to induce specific outcomes in human, animals, plants other life forms. High investment in RD and marketing. Agrochemicals Pharmaceuticals Biotechnology
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Segmentation
World
India
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VISION 2015
INDIAN CHEMICAL INDUSTRY
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Indian chemical industry has potential
substance to grow to a level of USD 100 billion
by 2015
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What does it mean?

• With turnover of USD 100 billion by 2015, Indian
  chemical industry contribution to national GDP
  shall grow to 12.1 from current 6.7.
• Its share in international trade shall grow to
  3.9 from current 1.9
• Direct employment shall rise to 1.5 million, with
  additional indirect employment multiple of 4-5
  times of direct employment

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What needs to be done to achieve goal?

• Areas of focus Specialty and Knowledge
  chemicals.
• Required rate of growth
• Basic chemicals 8 p.a.
• Specialty chemicals 17 p.a.
• Knowledge chemicals 28 p.a.
• Projected market segmentation in 2015
• Basic chemicals 45
• Specialty chemicals 26
• Knowledge chemicals 29

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Factors affecting growth of Indian Chemical
Industry
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Factors hindering growth of industry

• Access to technology
• Unsupportive regulatory framework
• Access to low cost finance
• Access to global markets
• Biased end user mindset.
• Lack of common infrastructure
• RD quality and infrastructure
• Inconsistent tariff structure

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Weakness in Basic segment

• Lack of infrastructure
• Lack of technology
• Capacity bottlenecks
• Poor product quality
• Cost un-competitiveness
• Inadequate marketing

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Specialty chemicals

• Factors of success
• RD base
• Cost base
• Scale of operations
• Product portfolio

• Weakness
• Inadequate marketing
• Poor productivity
• Lack of infrastructure
• Lack of technology

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Factors of success in Knowledge segment

• RD
• Cost base
• Large scale
• Skilled manpower
• Access to global markets

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Indias portfolio of strengths to leverage

• Large domestic market
• Geographical location
• Manufacturing technology / processes
• Availability of raw materials
• Domestic RD and testing facilities
• Availability of technical manpower
• Established brand name in international market
• Quality accredited processes / products

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Drivers for Indias growth

• Increased / increasing domestic volumes
• Global markets
• Improved price realization
• Consolidation
• Improved GDP growth
• Environment regulatory requirements

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Imperatives for Indias growth

• Aggressive growth strategy
• Stimulate demand
• Access to global markets
• Invest in new areas
• Consolidation
• Focus on RD
• Cost reduction
• Operational
• Financial
• Collaboration
• Develop clusters
• Co opetition
• Institutional interaction
• Increased use of IT

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Segment wise relevance of imperatives
Imperative Basic Specialty Knowledge
Aggressive growth strategy Stimulate demand Access to global markets Invest in new areas Medium Medium High
Consolidation High Low High
RD Low High High
Cost reduction Operational Financial High High Medium
Collaboration Clusters Co opetition Institutional interaction Low High Medium