SWOT ANALYSIS

The following describes the Strength, Weaknesses, Threats and Opportunities faced by the company.

STRENGTHS
a. Product Mix spread over four important Polyester products, i.e. Film, PET Chips, Fiber Grade Chips and POY and Fully drawn Yarns. b. Ability to produce various grades of chips such as Bright, Cationic, Film grade, Bottle Grade in various varieties, apart from normal Fiber Grade Chips. c. Strong Cash Flows

OPPORTUNITIES
a. In view of large captive consumption for PTA and MEG, there exists a strong opportunity for the company to enter into backward integration for production of its Raw Materials either by way of setting up a grass root plant or by way of a Merger or acquisition. JBF will continue to explore Various avenues and keep evaluating the viability of any opportunity that may arise. b. The markets for Yarns continue to increase with increasing demand. JBF will keep examining the opportunity of further expansion by way of debottlenecking exercises or by way of grass root expansions.

WEAKNESSES
a. Procurement of Raw Materials from indigenous sources subject to vagaries of satisfactory plant operations with suppliers. b. Major reliance on imports of MEG. c. Raw material prices are subject to high volatility. d. Low profile player in the market

THREATS
a. Imports of POY and Fully Drawn yarns at low rates tan amounting to dumping continue to take place. JBF will continue to represent to Government for protecting the local industry by way of imposing anti dumping duties. b. Of late, heavy expansions are indiscriminately being taken up in the industry for Chips, which can result in excess supply of Chips. JBF, to mitigate the risk, is taking suitable steps into producing higher quantum of specialty grade chips and to develop export market for chips.

WORLD SCENARIO: The world economy endured its most severe correction since the 1930s over the last 2years. Governments world over have become more sensitive and proactive to enforce fiscal corrections to mitigate financial bottlenecks. Monetary and fiscal policies have become more effective and are far better coordinated worldwide. Governments have better tools at their command and are using them relatively effectively as compared to the past. It is estimated that the world GDP which was doomed to be abysmally low around 2%, may recover by another 2% to say around 4% Ensuring fiscal discipline will be the prime focus with most governments. On the other hand, governments will have to cope up with huge debts and the requirement to meet the needs of ever demanding population groups. Vast improvements and innovations in communications and computing technology over the past decade have facilitated the establishment of a global market place for increasing volumes of commodities, capital, and labor. Economies are now extremely choosy in ensuring benefits through capital and technology transfers and hence making goods and services available to the masses at best possible affordable rates. However, Unfortunate turn of events, natural or political does tend to scuttle the entire development process, and governments have to build in a risk management system to mitigate such unfortunate turn of events. The world fiber production for all various fibers i.e. cotton and non cotton, was estimated at 72 million Tones during the year 2010, 64% of which amounting to nearly 46 Mn. Tonnes being in Synthetics category and balance 36 % amounting to 26 Mn. Tonnes being in the Natural fibres category. Polyesters account for almost 37 Mn. Tonnes of the Synthetics category a single highest number of 80%.

However, apart from the fibre applications, there are other non fiber applications in Polyester, totaling to almost 17 Mn. Tonnes in 2010. Consequently, Polyester Production world over Tantamounted to 55 Mn. Tonnes in 2010. The graph portrays the overall phenomenon for the current period:

WORLD AND INDIAN POLYESTER SCENARIO The world production for Polyester has reached a total of 55 Million Tonnes by 2010. The growth of Polyester Filament Yarn has been the highest amongst all the other polyester based products of Staple Fibre, PET Resin for Bottle and PET Resin for Film, clocking a number of almost 17%. Polyester Filament Yarn accounts for nearly 45% of the overall polyester production. Going forward, it is expected that in the next decade i.e. between 2010 and 2020 the composite growth rate for all Polyesters should be slightly over 5 % though the highest growth rate may emerge from Polyester Film in the region of around 7%. Amongst the new applications it is envisaged that there will be a growth in various applications for both PET Resins, that is, for bottle end use as well as for PET resin for film. It is anticipated that new applications in PET Resin such as for A PET sheets, usage for PET in beer bottles etc will be increasing. At the same time newer applications for Polyester Film in items such as Solar Photo Voltaic Cells, lamination of TV screens and other high end applications are likely to emerge. In India, overall growth for polyester has been in the range of around 14% largely driven by growth of Polyester Filament Yarn. Total polyester production in India stands at around 4.3 Million Tonnes by end of 2010 with the Filament yarn accounting for almost 52% of the total production. The graph below outlines the demand trend in India for various types of Polyesters: Last year has seen a major changes in pricing of Raw Material PTA and MEG. This was attributed largely to reasons of demand and supply, though prices of oil did contribute to pricing of these petrochemical based raw6materials. There was a stage when prices kept galloping fuelled by rising demand and shortage in supply of PTA. The graph below depicts this phenomenon. Over the last few months shortage and high prices of cotton had led to the increased demand in Polyester. As of today, polyester is the cheapest item, cheaper than cotton and way below prices of nylon 6 or nylon 66 amongst the competing fibres. Research has also now shown that a major proportion of polyester has now penetrated the lower income group of the society. Further, there appears to be a vast potential for polyester towards technical textiles where India has a very small penetration as compared to other countries world over

PET
PET global demand growth during 2011 was at 7%. The year saw high demand created by growth in packaged drinking water. Uncertain prices encouraged buyers to scout for smaller purchase volumes at more frequent intervals with shorter delivery times to avoid inventories pile ups. This buying pattern favoured the local producers largely in USA and Europe. In addition, the depreciation of Euro during the year made imports costlier, thus promoting domestic producers. Many plants intermittently stopped their operations, which helped to keep the markets balanced in most parts of the globe and demand growth kept prices favourably high. Prices thus gained about 15% during the year. Light-weighting and use of food grade recycled PET was common, particularly in North America and West Europe. A stronger commitment to developing technology for renewable raw materials was seen. Major beverage companies announced and developed bottles entirely from renewable sources.

CRUDE OIL (cracking process) NAPTHA

PARAYLENE(PX)

PURIFIED TEREPHTHALIC ACID(PTA)

POLYETHYLENE TEREPHTHALTE (PET)

PET
76 IV

JBF PRODUCTS
AP OO76

APPLICATION
MINERAL WATER

80 IV

AP OO8O

GENERAL PURPOSE
(FRIDGE BOTTLES)

84 IV HOTFILL QUICKHEAT

AP OO84 AP OO76 HF AP OO84 FRH

CARDONATED SOFT DRINKS JUICES COKE & PEPSI

(40% LESS ENERGY CONSUMPTION)

*IV- INTRINSIC VISCOCITY *AA- ACETALDIHYDE

( LOWER THE IV , LOWER THE AA)

Eg- For mineral water AA should be less than 4ppm(paths per million)

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