Group

Industry
Company
Members
1.
2.
3.
4.

11
Adhesive & Sealant
Pidilite Industries Ltd
Harish Kumar (33021)
Jaganraj J (33022)
Kaanchana.V (33081)
M.Karthik (33082)

A brief understanding or origin and evolution of the industry

The earliest use of adhesives was discovered in Italy. At this site, two
stone flakes partially covered with birch-bark-tar and a third uncovered
stone from the Middle Pleistocene era (circa 200,000 years ago) were
found. This is thought to be the oldest discovered human use of tar hafted

stones.
From tree sap to beeswax, archaeologists have discovered all different

kinds of materials that have been used as adhesives.

Even with their primitive beginnings, adhesives have evolved and have

grown into a multi-billion dollar industry.

70000BC-The cavemen from South Africa back then used a gluey

substance made of tree sap and red ochre to protect their cave painting.
2000BC-The Egyptians first introduced the use of liquid adhesive in their

wooden artefacts.
Between 1500-1000 B.C., paintings and murals were created that showed
gluing operations. Other findings, such as excavation of tombs in Egypt,
show caskets and other burial items were bonded together with some form

of adhesive, typically thought to have been some type of animal glue.

From 1-500 A.D. is when the Greeks and Romans began using different
kinds of glue for bonding thin sections or layers of wood. It was during this
time that the traditionally used animal glues were refined and combined
with other substances such as egg whites, milk, cheese, grains and animal

hides to increase bond strength and durability.

The Romans were the first to use beeswax as a sealant on their boats and

ships.
Glue as a means of assembly gained use in the 1500s, as woodworking

and furniture making became a larger part of society.

In 1750, the first glue patent was issued in Britain for type of glue made
out of fish. After this first patent was issued, many more were issued for

adhesives made of natural rubber, animal bones, fish and casein.

During the 1920s, glue manufacturing was a vital part of the Industrial
Revolution. New materials were created that allowed for easier formulation

of many adhesives. It was during this time that the first plastic polymer

was synthesized into a cellulose nitrate, commonly used in billiard balls.

World War II caused the rapid growth of the synthetic adhesive industry. It
was during this time that manufacturers started to take into consideration
the flexibility, toughness, cure time and temperature/chemical resistance

of the adhesives they would use on their assembly line.

Today, adhesives are being used for endless applications. Numerous
manufacturing processes are using adhesives to replace stitching, stapling

and fastening.
Adhesives have become an integral part of our day-to-day lives. There are
various types of adhesives available derived from both natural and
synthetics sources.

Production / service delivery process

The manufacturing process of Adhesive & Sealant consists of following steps
Dispersion:
Add the monomers or polymers to the water and add a small amount of soap to
the mixture and start stirring. The quantities added are adjusted in such a way as
to get an emulsion of 55% solids.

Polymerisation ( only when a monomer is used):

Add a catalyst (like Benzyl Peroxide) and start heating. Monitor the temperature
with the help of thermostat, start stirring when it reaches to certain temperature.
Stop heating and circulate the cooling water through the jacket till the whole
reaction is complete.
Addition of other ingredients:
While the emulsion is still quite hot, add the other ingredients (depending upon
the type) and stir well.
Some of these Ingredients are :
1. O-Phenyl Phenol (Preservative)
2. Formaldehyde (40%)
3. Ammonia
4. Calcium Carbonate
5. Bleach solution
6. Colouring Agents
Packing:
Cool the adhesive and take it out through the bottom opening valve. Pack it in

the plastic container of different capacities as per the requirement and store it in
cool place before despatch.

Structure of the industry and the structure of the market

The chemical industry is classified into the following segments
Basic:
The Characteristics of these segments are high volume, low added value, limited
product differentiation across manufactures, high capital investment. This
segment is further classified into the following constituent industries
petrochemical, fertilizers, inorganic chemical and other industrial chemical
Speciality:
The characteristics of these segments are high product differentiation and value
addition, low capital investment, typically smaller production units with more
flexibility. This segment is further classified into the following constituent
industries Adhesives Sealants, catalysts, industrial gases, Plastic additives
Knowledge:
The characteristics of these segments are High investment in R&D, differentiated
chemical and biological substances used to induce the specific outcomes of life
forms. This segment is further classified into the following constituent industries
agrochemicals, pharmaceuticals and biotechnology.

Market structure:
Paper Board & Packaging:
This market segment includes professionals involved in Packaging, Dry or Wet
Lamination, High-Gloss Laminating for Graphic Arts, Bookbinding, Nonwoven
Fabrics and Pressure Sensitive Products.
Building & Construction
This market segment includes professionals involved in Civil Engineering, On-Site
& Off Site Applications, Factory Assembled Parts and Prefabricated Houses.
Woodworking & Joinery
This segment includes professionals involved in Cabinet Making, Furniture & Door
Manufacturing, Window Frame Construction and Upholstery.

Transportation

This market segment includes professionals involved in Passenger Cars/Light

Trucks Assembly and Components, Repair and Maintenance, Trucks and Buses,
Bicycles, Motorcycles and Recreational Vehicles, Aircraft/Aerospace and Railway.
Assembly Operations
This market segment includes professionals involved in Sandwich Panel
Manufacturing, Appliances and Electrical/Electronic, HVAC, Mechanical
Equipment, Flexible Materials, Medical Applications, Sports Equipment and Toys
and Abrasives & Filters.
Footware & Leather
This market segment includes professionals involved in Footwear & Leather
Goods.
Do-It-Yourself
This market segment includes professionals involved in Household, Craft & Do-ItYourself type projects.

Industry size and market size ( in Billion INR and in Million/ Billion USD )

Market Size - $32.7 Billion (2176.94 Billion INR) in 2015, Market Growth CAGR of 5.9%, Market Trends Growth in construction spending coupled

with increase in lightweight automobile demand.

Global Adhesives and Sealants Market size was estimated at 9.8 Million
tons and 1.9 Million tons in 2015, as per the latest research report by
Global Market Insights, Inc. Construction, automotive and packaging were

key revenue generating applications for the industry.

Adhesives and sealants market size analysis is set to exceed USD 50
Billion (3328.65 Billion INR) by 2023. Strong infrastructure development
indicators and focus on vehicle weight reduction for better fuel

performance will play a key role in demand development.

Global adhesives market size is set to attain growth rates at 4.9% and
reach 14.4 Million tons by 2023, whereas sealants market size is estimated

to reach 2.7 Million tons with a CAGR of 4.6% up to 2023.

Global market share is moderately consolidated with multinationals such
as Dow, HB Fuller, 3M and Henkel catering to over 47% of the industry
demand. Other important participants include Avery Dennison, Sika AG,

Eastman Chemical, Ashland, Bostik, Uniseal and N.D Industries.

Pressure sensitive applications dominated the glue demand with valuation
over USD 6.2 billion in 2015. These are most commonly used with no
water or heat treatment in applications such as pressure sensitive tapes,

labels, note pads and automobile trim.

Packaging applications includes carton boxes, envelopes, carton closures,
cups, flexible packaging, specialty packaging, bags and disposables, PU,
water based and hot melts are widely used in packaging applications.

Key business drivers :

Pidilite Industries (Pidilite) is a dominant play in Indias growing adhesive and
industrial chemical market with a market share of approximately 60% in its
leading brand categories in the organised segment. The key drivers of the
companys business are:
1) Strong brand equity:
Pidilite is the only company in India which has a direct connect with all the
home building intermediaries carpenter, mason, electrician and
plumbers. Other building material companies have an influence only on a
specific intermediary; for example, the paint companies only influence
painters. This helps create brand equity with the intermediaries and also a
reverse feedback mechanism wherein the intermediaries feed ideas into
the company, which leads to creation of opportunities. For example, the
company launched variants of Fevicol like HeatX, SpeedX and Marine
based on feedback from carpenters. These value added products now
account for 50% of Fevicol sales. Fevicol has developed strong brand
equity with especially the carpenters, who are now reluctant to shift to
other brands of adhesives.
2) Extensive Distribution Network:

Pidilite has a well-entrenched distribution network, with a total of 1,000

distributors for Fevicol reaching 70,000 retail touch points. Similarly, 1,000
distributors exist for Mseal / Dr. Fixit brands which operate under a
different distribution structure, distinct from Fevicol.
3) Innovative advertising:
Despite no major complexity in product chemistry, Pidilites innovation lies
in its capability to continuously launch new SKUs this has helped it
increase target market. The company ties it up with innovative branding
and packaging to enhance product recall.
Pidilite is a testament of innovative branding in India, starting from the
1970s when the company launched the first-of-its-kind furniture catalogue
to create its connect with carpenters. In the past two decades, Pidilite has
followed innovative television, print and outdoor advertisements, which
helped it, establish a utility product such as adhesive into one of the
strongest consumer brands in India.
Innovative advertising also helped the company re-position its products in
the market. The company re-positioned M-seal from a sealant to a multipurpose adhesive to expand applications in 2012.
One instance of packaging innovation by Pidilite was Fevikwik. Whilst there
was an addressable market for Fevikwik, the product wasnt doing well
because it was priced at `20, and once opened, it would harden making
the adhesive unusable. In the early 2000s, Pidilite re-engineered the
packaging of Fevikwik. The company created a plastic packaging material
that did not absorb ambient moisture and could hold small quantities.
Fevikwik was then sold in 0.5 gram packs costing `5 and is now a market
leader in the product.
4) Strong Pricing Power:
Pidilite industries has a strong pricing power in the consumer segment due
to its flagship brands such as Fevicol, Fevikwik and M-Seal which are near
monopolies with a domestic share of around 70% each. So there is no
need for Pidilite Industries to pass on the benefit of lower raw material
prices in the form of price restrictions.

Past and projected growth rate basis for the same

The Companys net worth (Equity Capital + Reserves) has grown from 11395
million Rupees as on 31st March, 2011 to 23494.5 million Rupees as on 31st
March, 2015, giving a Compounded Annual Growth Rate (CAGR) of 19.8 %. The
market capitalization of the Company on 31st March, 2015 was 308059 million
Rupees and has grown at a CAGR of 33.6% since the IPO in 1993.
Due to a slowdown in the overall economic environment, sales of the companys
products were affected.
The companys two major segments, 1) Consumer & Bazaar and 2) Speciality
Industrial Chemicals reported growth at a CAGR of approximately 19% and 13%
respectively in FY10-15. The C&B segments growth has been mainly driven by
the adhesive and sealants sub-segments, which contributed approximately 50%
of the companys C&B revenue. The company has a strong pricing power in the
branded product category (Fevicol, M-Seal, Dr. Fixit), thereby resulting in margin
expansion. The segment growth is largely driven by construction, repair and
maintenance works (Fevicol, M-seal, Dr Fixit are promoted in such a way). Hence,
sales growth in the C&B segment will take place at approximately 12% CAGR in
FY15-18E, albeit at a slow pace due to an increase in penetration in smaller
towns (population below 50,000).

Projected growth in C&B Segment

The speciality industrial chemical segment has grown at 13% CAGR in FY10-15
mainly driven by an increase in demand from packaging, stickers, labelling and
footwear. The specialty industrial segment has major three sub-segments:
industrial adhesive, industrial resins and organic pigments & preparations. The
specialty industrial chemical export revenue recorded approximately 18% CAGR
over the last five years. This segment caters to various industries (e.g. textiles,
leather, footwear, ink, packaging, etc.). The industrial segment revenues are
estimated to grow at a CAGR of about 13% for FY15-18E led by strong growth in

industrial adhesives & resins.

Projected growth rate in industrial chemicals segment

The Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
margin is estimated to increase from 16% in FY15 to 21% in FY18E. Benign raw
material prices coupled with the companys strategy to pass on minimal benefits
to customers would help in boosting the EBITDA margin.

Improvement in the EBITDA margin

Key players in the industry their size and relative position

Pidilite industry is one of the leading adhesive manufacturers in the country and
caters the global market in chemical, industrial chemical and art products
category. The companys most well-known brands are Dr. Fixit, Fevicol, M Seal,
Fevi kwik etc.
Pidilite Industries Limited has been enjoying a leadership positioning with over
60% market share in Indian adhesives market and faces less competition from
local players and new entrant like 3M India.

Top Players around the world (47% of total demand in 2015)

1. Henkel, Germany.
2. Dow Chemical, USA.
3.3M, USA.
4. HB Fuller, USA.
Other important participants include Avery Dennison, Sika AG, Eastman
Chemical, Ashland, Bostik, Uniseal and N.D Industries.

Key products / services product evolution, stages in life cycle

Pidilite's most famous product is the Fevicol range of adhesives. Its other famous
brands are Fevikwik, Dr. Fixit, Roff, Cyclo, Ranipal, Hobby Ideas, M-seal and
Acron.
The following are the key products of Pidilite Industries:
1) Adhesives & Sealants:
a) Fevicol
b) Fevistik
c) Fevibond
d) Fevitite Rapid
e) Fevikwik
f) Dr.Fixit
g) M-Seal
2) Wood finishes and tapes:
a) Masking Tape
b) Wudfin
c) Terminator
3) Construction Chemicals:
a) Dr.Fixit products
b) Roff products
4) Industrial specialists:
a) Pidicryl
b) Pidisper
c) Acrolite
d) Pidisol

Range of products
Pidilite also offers waterproofing services. Percept Waterproofing Services Ltd
which commenced operations in February, 2014 reported sales of Rs.200 million
and Profit after Tax of Rs.7.7 million.
Product Evolution:

1969 Fevicol established as carpenters preferred choice of synthetic

adhesives.
1999 Ranipal, leading brand of optical whitener acquired.
2000 Acquired adhesives and sealants business from Mahindra

Engineering &
Chemicals Products Ltd. (M-Seal).
2001 Dr.Fixit range of construction chemicals launched.
2002 Taken over insulation tape brand called from Bhor industries.
2003 Unveiled new liquid pipe sealant and Fevicol Marine.
2012 Entered into a joint venture agreement with Hybrid coatings for
manufacture of construction chemicals.

2013 Incorporated subsidiary company in the name of Percept

Waterproofing Services Ltd.

2014 Acquisition of adhesive business of Blue Coat Pvt. Ltd. Along with
its wholly owned subsidiary Pidilite International Pvt. Ltd., it incorporated a
Pvt. Ltd. subsidiary in Ethiopia in the name of Pidilite Chemical to

manufacture adhesives.
2015 Along with its wholly owned subsidiary Fevicol Company Ltd. it
incorporated Wood Coat Pvt. Ltd.

Type and profile of suppliers

Types of Suppliers

Raw materials
Chemical purchased
Dye purchased
Packaging materials

Finished Products
Industry
Wholesalers
Retailers
Shopping malls
Stationary stores
Hardware shops

Type and profile of customers

The Adhesive & Sealants Industry customers are broadly classified into two
categories

Consumer Products
Industrial Products

Consumer Products
The finished products are readily available for customer use. The different
sub categories in consumer products which cater the various needs of the
consumers are listed below

Adhesive & Sealants are commonly used by consumers in Home, School

and Office for various purposes.

Wood Finisher is mainly used in construction of wooden floored houses,
wall finishes, and furniture preservatives. The Paints are used for wall

exterior coating, interior coating and finishing works.

Art Material & Stationary items are used mainly by School children. The

products like acrylic colours and brushes comes under this category.
Automobile users mainly use the product for Appearance purpose. The
usage comprises of polishing, rubbing and cleaning of the car/bike exterior
surface for shiny and glossy appearance. For the easy and ready use spray

type cleaners are available in market today.

Construction chemicals are used by consumers for water-proofing,
building repairs, coating & paints, concrete admixtures, grouts, floor
sealants and tile fixing.

Industrial Products
The finished products are raw material for the subsequent industry in the
supply chain process. The different sub categories based on the industrial needs
are listed below

Industrial Adhesive are used in various industries to cater different

purpose like Auto Lamination, converting & Packaging, Food Package,
Newspaper/print media, envelop making, Bundling, Overlapping, Cigarette
and filter adhesive, hot-melt pressure sensitive adhesive, Suitable for
films, paper labels, Used for permanent courier bags sealing. Filter
assembly making, straw fixing, and Shoe cleaner foam fixing on plastic

surfaces.
In Leather & Footware industry the products are used as

emulsifying/dispersing agent, bleaching and finishing purposes.

Textile chemicals are used as discharging agent, pigment dispersion,
binders and thickeners

Thus the Adhesive & sealants industry cater to different portfolio of customer
based on their needs.

Key financials (Rs in Million YE March 2015)

Industry
Net Sales
Raw material as
% of net sales

Market Leader

PIDILITE

43980.74

43980.74

44.05

44.05

9.42

9.42

1.15

1.15

1.05

1.06

1.06

0.08

0.11

0.11

12.09

22.87

22.87

12.48

30.54

30.54

155897.8

55.50

Labour as % of
net sales

6.56

Power and fuel as

% of net sales

4.21

Operating margin
Net margin
Return on equity
(%)
Return on Capital
Employed (%)
Reference:
1.
2.
3.
4.
5.
6.

http://www.pidilite.com/
Pidilite Annual Report 2015-2016.
http://www.adhesives.org/
http://www.in.kpmg.com/pdf/KPMG_Chemtech_Report.pdf
Capitaline Database.
http://bostik-industrial.com/adhesive-education-series-history-ofadhesives/
7. http://www.heritagedaily.com/2013/11/earliest-usage-of-glueadhesives/100236
8. https://www.gminsights.com/industry-analysis/adhesives-and-sealantsmarket
9. https://globenewswire.com/newsrelease/2016/04/19/830110/0/en/Adhesives-and-Sealants-Market-Size-toexceed-50-Billion-by-2023-Global-Market-Insights-Inc.html
10.Dion Global Solutions Limited
11.https://craytheon.com/financials/fundamental_stock_analysis_cagr_annual_
growth_rate_trend_chart.php?company=PIDILITIND
12.http://reports.ambitcapital.com/reports/Ambit_PidiliteIndustries_Initiation_I
tsallstickingtogether_21July2016.pdf