DEVELOPMENT IN THE INDIAN MARKET FOR PLASTICS

ANDREW REYNOLDS, RESEARCH DIRECTOR AMI CONSULTING

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Contents
Introduction The economic environment Where the Indian continent fits in the world Dynamics of the market Characteristics of the Indian market
Polymer demand Structure

Market trends Conclusions

Introduction: about AMI

Market Analysis: in-depth multiclient reports
The Global market for BOPP film The Global market for Stretch film The Global market for Grass Yarns

Conferences and Seminars

Middle East Plastic Pipes, May 15-16, 2012, Dubai Flexible Packaging Middle East, November 13-14 2012, Dubai The Plastics Industry Strategy Seminar, November, Mumbai 2012

Single client services

Feasibility studies Technical and commercial due diligence Strategic analysis/business development Customised market research

Database products
Thermoplastics Compounders Polyolefin film producers Injection moulders Blow moulders Pipe producers Rotational moulders

E-magazines
Sector oriented (e.g. Orientate BOPP) Free-to-reader (at www.amiplastics.com): Compounding World Injection World Film & Sheet Extrusion Pipe & Profile Extrusion

Raw material flow for plastics

Chemical synthesis Pigment & Additive Producers Resin Producers

Compounding

Merchant masterbatch producer

Toll Masterbatch producer

Raw materials

Merchant Com pounders Processor Com pounders

Resin Producer Com pounders

Toll Com pounders

Formulated Compounds

Plastics fabrication

Processors
Injection Molding Blow Molding Film Extrusion Pipe & Profile Extrusion Fiber Extrusion Other

Fabricated products

The economic environment

The IMF details a strong GDP performance in the whole Indian sub-continent Prospects remain bright in the medium term
2010 2011 2012

India Pakistan
Sri Lanka Bangladesh

10.1% 3.8%
8.0% 6.4%

7.8% 2.6%
7.0% 6.3%

7.5% 3.8%
6.5% 6.1%

In this environment and with a population of over one billion plastics conversion has moved ahead strongly

Position of the Indian continent in the world

India 5%

Rest of World 95%

The world market is 214 million tonnes

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Plastics world: Per Capita vs. Population

100.0

NAFTA 80.0

Per capita demand (kg)

60.0

Europe China Asia Latin America 20.0 Middle East & Africa 0.0 0.0 200.0 400.0 600.0 800.0 1000.0 1200.0 1400.0 1600.0 1800.0 2000.0
Indian Subcontinent

40.0

-20.0

Population (millions)
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Plastics world: Per capita & growth

12.0%

10.0% Indian Subcontinent

China

8.0%
CAGR 2011-2016

6.0% Latin America 4.0% Middle East & Africa 2.0%

Asia

Europe NAFTA

0.0% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Per capita demand (kg) 70.0 80.0 90.0 100.0

The World 1983 and 2011

1983
Indian Sub Continent 1% Asia 17%
Europe 38% Greater China 6% Africa and the Middle East 4%

2011
Africa and the Middle East 8.4% Indian Sub Continent 4.9%

Europe 21.4%

Asia 14.7% NAFTA 17.8%

Latin America 4%
NAFTA 30%

Greater China 27.9%

Latin America 4.9%

44.8 million tonnes

213.8 million tonnes

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Dynamics of the Indian Sub Continent market

The subcontinent is dominated by the Indian market which in 2011 continued to grow but a lower rate than that seen in the last five years Growth in India has been rapid since the economic reforms championed by Narasimha Rao and Manmohan Singh in the 1990s Indian development has been assisted by the growth of resin availability following the establishment of global scale plants by Reliance Industries

Local demand has so far been primarily driven by local domestic demand rather than any export focus
Processors increasingly looking at the global opportunity

Demand patterns are often focussed on solutions tailored to a relatively low income groups (significant sales of single unit pouches etc..)
Significant opportunity exists to replace traditional materials
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Global polymer growth by region % p.a.

Europe

2.9%

NAFTA

2.7%

Latin America

5.3%

Greater China

7.8%

Asia

4.5%

Indian Sub Continent

10.2%

GCC 0.0% 2.0% 4.0% 6.0%

7.9% 8.0% 10.0% 12.0%

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Evolution of the Indian industry

The polymer industry in the Indian sub continent has always been highly
entrepreneurial and expansive Early development was based on:

Thermoset producers making the move into thermoplastic material Textile groups investing in polymeric alternatives Traders and small merchants diversifying into new business (often encouraged by

government focus on small industry and the need for changing share ownership)

Evolution of conglomerates active in a number of processes Recent years have seen the development of more stock market quoted companies,
expanding more rapidly via the availability of wider capital sources Fibers BOPP Wire and Cable PET film Processing remains fragmented with over 30,000 operating companies

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Polymer demand in the Indian continent 2011

Bangladesh 1% Other Indian Sub. Sri Lanka Contineint 1% 0% Pakistan 9%

India 89%

Demand is 10.4 million tonnes

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Per Capita vs. Population

120.0

100.0 Germany 80.0

Per capita demand (kg)

60.0

40.0 Sri Lanka 20.0

Other India

India

0.0

Pakistan Bangladesh 0.0 200.0 400.0 600.0 800.0 1000.0 1200.0 1400.0 1600.0

-200.0 -20.0

Population (millions)
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Per Capita & growth

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The plastics industry Indian Sub Continent

Highly fragmented industry in all the countries Entrepreneurial flair Poor logistics Bureaucracy at state and national government level Many companies but limited resources Most companies privately owned Companies run from the top down with a thin management structure Industry structure Most markets remain national High level of trade barriers between nations (but levels are declining) Increasingly aware of global developments Specialisation increasing in all sectors

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End use applications for polymers

Sport and Leisure 0% Housewares Toys Furniture 2% 2% 1% Medical 0% Electrical Appliances 2% Automotive 2% Agriculture 1% Flexible Packaging Industrial 8% Others 11%

Flexible Packaging Consumer 23%

Building 24%

Rigid Packaging Consumer 18%

Rigid Packaging Industrial 6%

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Distribution of polymer processors

Cable Producers Sheet Extruders Thermoplastic 0% 1% Compounders Profile 3% Extrusion Other Processors 1% 2% Pipe Extrusion 6%

Polyolefin Film 13% Rotational Moulding 1% Blow Moulding 7%

Injection Moulding 66%

Over 30,000 processors

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Distribution of plastics processing in India

South 21% West 43% East 8%

North 28%

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Structure of the Indian plastics industry

Quoted Companies (17% of Quoted demand) Companies

Ca. 50

(17% of demand)
Limited Companies Companies (24% ofLimited demand) (24% of demand) Family owned/small Family (59% of demand) owned/small (59% of demand)
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Ca. 700

Ca. 30,0000

Concluding remarks
The Indian sub continent is a dynamic and fast growing market driven by:
Entrepreneurial culture Availability of investment capital Young population (under 30s are around one third of the population) Awareness of the global opportunity Over a billion people with a high degree of education and increasing disposable income Car production increasing from 2.5 million units to 15 million units Infrastructure improvements (building) Improving food production

Opportunity is driven by:

Investment is a two way street

Indian companies going global (e.g. Flex Industries, Motherson Summi, Jain Irrigation, Essel Propack) International companies locating in India (e.g. Ampacet, Alcan, A. Schulman)

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Thank you
Andrew Reynolds, Research Director AMI Consulting

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