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Overview of the Chemical Industry

1. Chemical Industry in India is fragmented and dispersed - multi product and multi
faceted.
2. In terms of volume, it is 12th largest in the world and 3rd largest in Asia.
3. Currently, per capita consumption of products of chemical industry in India is
about 1/10th of the world average.
4. Its size is estimated at around US$ 35 billion approx., which is equivalent to about
3% of India's GDP. . Indian chemical industry is expected to grow to US$100
billion by 2015.
5. The Indian Chemical sector accounts for 13-14% of total exports and 8-9% of
total imports of the country.
6. The compound annual growth rate of (CAGR) of the 'Basic chemicals and
Chemical products' was higher at 10.32% against 9.42% in manufacturing sector
and 8.70% in the overall industrial production.
(most of the stats belong to year 2008, need revision for the current year)

Product segmentation

Chemical Products

Commodity Chemicals

Inorganic Chemicals

Organic Chemicals

Fine and Specialty Chemicals

Agrochemicals

Pesticides

Fertilizers

Paints, Dyes & pigments

Plastic & Petrochemicals

Drugs & Pharmaceuticals


Inorganic Chemicals
• Covers basic products like Caustic, Chlorine, Sulphuric Acid etc.
• Inorganic chemicals mostly used in detergents, glass, soap, fertiliser, alkalies etc.
• Competition from imports are on the rise.
• US$ 2.5 Billion industry. ( year 2000 figures, need to be revised for current year)

Products Installed Production ('000


Capacity MT)
Soda ash 1865 1560
Caustic Soda 1964.5 1350
Liquid Chlorine 1031.1 740
Carbon Black 286.2 240
Calcium carbide 150 80
Titanium dioxide 47 27
Aluminium 30.1 17.5
fluoride
Potassium chloride 13.3 5.5
Sodium chlorate 4.1 1
Red phosporous 1.7 1

Organic Chemicals
• Covers a wide range of chemicals
• Units concentrated mostly in the Western India
• 1 Billion Dollar industry ( year 2000 figures, need to be revised for current year)

Chemicals Installed Production :


Capacity ('000 ('000 MT)
tonnes)
Methanol 386.0 380.0
Formaldehyde 255.0 161.4
Acetic acid 203.6 190.0
Phenol 66.6 62.6
Acetone 63.6 5.0
Acetic 56.2 40.5
anhydride
Nitrobenzene 52.0 42.8
Chloromethane 32.1 33.2
Aniline 28.1 23.5
Maleic 24.4 12.7
anhydride
Pentaerithitol 15.2 13.9
PNCB 11.2 11.0
MEK 7.0 5.0
Citric acid 6.3 5.3
ONCB 5.3 5.3
Isobutyl alcohol 2.0 1.3

Fine and Speciality Chemicals


• Low volume, high price/margin chemicals
• Fragmented with large number of players
• Major end user segments - Textile, Leather, paper, detergent, rubber, paints,
polyester, oil and gas etc.
• Major Players
o India: ION Exchange, Balmer Lawrie, Dai Ichi Karkaria. etc.
o MNC: Ciba, Hoechst, Foseco, Nalco Chemicals, Clariant, ICI etc.
o And many small Indian companies
• Market around US$ 80 million p.a. ( year 1998-1999 figures, need to be revised
for current year)

Category Speciality Chemicals


Adhesives Thickeners, tackifiers, binders, stabilisers
Construction Chemicals Sealants, flame retardants, concrete setting
accelerators / retarders, mastics
Cosmetic Additives Moisturisers, UV absorbers, masking agents,
emulsifiers, proteins
Diagnostic Aids Dyes for angiogram, chemicals for other
diagnostics (as NMR)
Elastomers SBR, Silicones, Puf, EVA
Electronic Chemicals Electronic substrates, packaging materials,
plating chemicals, photoresists, etchnats,
cleaners & strippers, dopants, sp gases
Enzymes (Indl) Bates for leather, enzymes for pharmaceuticals,
food processing industries
Flavours & Fragrances Speciality esters, bases, concentrates
Food Additives Antioxidants, Flavours, food dyes
Fuel Additives Catalysts, stabilisers, functional additives
(Functional) Dyes Dyes for reprographics & dyes for electronic
chemicals
Foundry Chemicals Binders, resins, mould release agents
Indl Cleaning Agents Solvents based on Spl. Esters & alcohols
Lube Additives Antioxidants, dispersants, antiwear & EP
additives, pour point depressants, viscosity
modifiers & antifoamers
Metal Plating & Finishing Cyanates, electrolytic Au/Ag plating, electrolytic
Chemicals / electroless Cu plating chems
Mining Chemicals Flocculants, dispersants, thickeners
Oilfield chemical Pour point depressants, corrosion inhibitors,
demulsifiers, EP additives, thickeners, fluid loss
control agents, stabilisers, mud additives, cement
additives, EOR chemicals
Paint Additives Wetting agents, dispersants, thixotropic,
antisettling, antifoaming agents, defoamers, pH
stabilisers, emulsifiers, biocides, corrosion
inhibitors, plasticisers, thickeners, antiflotation
agents, flow control agents
Paper Additives Retention Aids, formation aids, drainage aids,
flocculants, defoamers, wet web strength
additives, defoamers, biocides, dry strength
additives, sizing agents, creping agents,
dispersants, binders
Photographic Chemicals Fixing agents, toner, photoresists
Polymer Additives Speciality plasticisers, antioxidants, UV
stabilisers, modifiers, flame retardants, antistatic
agents
Rubber Chemicals Antioxidants, antizonants, vulcanisation
accelerators / retarders, modifiers, inhibitors
Surfactants Anionic & nonionic surfactants mainly used in
India. Wetting agents, dispersants, emulsifiers,
defoamers, antifoamers, detergency aids

Textile Auxiliaries Sizing agents, leveling agents, dispersants,


detergents, acid release agents, dye fixing
agents, solvents, anticreasing agents, biocides
Water Management Chem Flocculants, dispersants, corrosion, inhibitors,
biocides
Agrochemicals
• Cash crops like sugarcane, tobacco etc. are the major consumers of pesticides
(above 60%)
• Two types of producers:
o Technical - 60 nos.
o Formulators - above 500 nos.

60 technical grade pesticides being manufactured indigenously by 125 producers


consisting of large and medium scale enterprises (including about 10
multinational companies) and more than 500 pesticide formulators spread over the
country. Technical grade pesticides have been growing at the rate of 10% in the
last few years.

• Major players
o India: United Phosphorus, Rallis and Excel
o MNC: Hoechst Agrevo, Novartis, Bayer etc

• Significant exports
• Average Indian consumption is very low (1/20th of world average)
• Market size 100,000 MT (in terms of technical grade)
o US$ 800 million
o Growth 10% pa
( year 1998-99 figures, need to be revised for current year)

Product Installed Production


Capacity ( in ‘000 MT)

Insecticides 81.9 66.0


Fungicides 10.7 8.0
Herbicides 4.8 1.7
Weedicides 10.3 6.7
Rodenticides 0.9 0.5
Fumigants 1.6 1.8
Total 110.2 80.9

Paints and Dyes

• Market highly fragmented


o 25 large and medium players - 50% market share
o 2000 unorganised players - 50% market share
• Have forward and backward linkages with a variety of sectors like textiles,
leather, paper, plastics, printing inks and foodstuffs. The textile industry accounts
for the largest consumption of dyestuffs
• India is a major exporter of dyes, mostly due to ban of production of some of the
dyes and intermediates in the developed countries due to pollution
• Major Players:
o Paints - Asian Paints, Goodlass Nerolac, ICI, Courtalds, Jenson &
Nicholson
o Dyes & Intermediates - Color Chem (Hoechst), Clariant, IDI, Atul, Mardia
etc.
o Inks - Coates, Hindustan Inks, Sakata

• Total Market - US$ 1 Billion(Year 2000 figures)


• Growth Rate 12% p.a.
• Per capita consumption very low (400 gms) as compared to developed countries
like USA (15 kgs)
• India has emerged as a global supplier of dyestuffs and dye intermediates,
particularly for reactives, acid, vat and direct dyes. India accounts for 7% of the
world production ( Year 2008 figure)

Petrochemicals & Plastic


A big sector in itself, will require separate analysis. Need to confirm if this has to be
taken up as a part of this study.

Drugs & Pharmaceuticals


A big sector in itself, will require separate analysis. Need to confirm if this has to be
taken up as a part of this study.

Production Comparison between Product segments

Main Groups Inst. Cap. Production ( in MT)


as on
March 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
2007
1 2 3 4 5 6 7 8
I: ALKALI 7072334 4342305 4792345 5070374 5271675 5474614 5268987
II: INORGANIC 748615 374132 403827 440608 508157 543965 602309
III: ORGANIC 1889448 1166575 1352653 1473855 1505895 1545262 1545442
IV: PESTICIDES 145391 81803 69565 85118 93966 82240 84701
V DYES 52591 24789 26196 25940 28498 29541 32552
TOTAL MAJOR
CHEMICALS
(I+II+III+IV+V) 9908379 5989604 6644586 7095895 7408191 7675622 7533991

Top Chemical Companies in India

These are the top companies in Indian chemical industry, which can be taken up for
analysis of their business and financial health.

Ciba Speciality
Atul BASF India Chemplast Sanmar
Chemicals
Colour-Chem Essel Propack Finolex Flex
Gharda GHCL Gujarat Alkalies Hikal
Hindustan Organic Jubilant Organosys Navin Fluorine Pidilite
United
Praj Industries Schenectady Tata Chemicals
Phosphorus
Accurex
Mahindra Ashtech 3A Chemie ABR Organics
Biomedical
Acme Synthetic Jyoti Chemical Advaitya Dye Chem Aico
Aimco Pesticides Ajanta Chemical Biomark Laboratories Kadakia
Dujodwala Resins &
Canton Chembond Filtra Catalysts
Terpenes
Galaxy Surfactants Gulshan Polyols Hindustan Insecticides Indiclay
Indo German Jainco Inks &
Ingenero
Carbons Chemicals

A few MNCs which are doing good as well.

Huntsman
Bayer MaterialScience Advanced
Materials

Pricing of chemical products


http://www.icispricing.com/il_shared/il_splash/chemicals.asp?llink=%2Fil_secure
%2Fil_reports%2Frpt_find_matching_reports.asp%3FPageNav%3DChemicals

http://www.indian-chemicals.com/importprices/intermediates/index.htm
Government Policy and Duties

Concessions to Chemical Companies


The Government has granted following concessions on demand of chemical companies
during the recession period:
1. Reduction of Excise Duty from 14%-10% and then from 10%-8%.
2. Anti dumping duty/Safeguards were imposed in respect of following:
a. Soda Ash Imposition of Safeguard Duty 20%
b. Caustic Soda Imposition of Safeguard Duty 15%
c. Carbon Black Anti Dumping duty $78-$195 per MT

3. 150% weighted deductions of expenditure on R&D for recognized R&D units.


4. Period of credit for exports was increased from 180 days to 270 days.

Foreign Investment Policy in Chemical Sector


In chemical sector, 100% FDI is permissible. Manufacture of most chemical products
inter-alia covering organic / inorganic, dyestuffs & Pesticides is delicensed. The
entrepreneurs need to submit only IEM with the Department of Industrial Policy and
Promotion. Only the following items are covered in the compulsory licensing list because
of their hazardous nature.
• Hydrocyanic acid & its derivatives
• Phosgene & its derivatives
• Isocynates & di-isocynates of hydrocarbons

Customs Duty
1. The peak rate of Customs Duty on most Chemicals is 7.5%
2. On basic raw materials like acid grade fluorspar, sulphur, rock phosphate, natural
borates is 5%
3. On most building blocks & feedstock the duty is 5% (ethylene, propylene, crude,
naptha, benzene, toluene, xylene, ethylbenzene)
(figures to year 2008, needs revision for the current year)

Excise Duty
On almost all chemicals the excise duty is 16%
Developments over last year

Petroleum, Chem & PetroChem investment regions (PCPIRs).


The Government of India had plans to develop mega integrated refining and
petrochemical sites, also referred to as petroleum, chemicals and petrochemical
investment regions (PCPIRs).

Each PCPIR would be housed in a 250 square kilometre (61,776 acres) zone with a
refinery and adjacent petrochemical plants. The central government had already
shortlisted six sites across the country for development of these zones.

However the progress has been slow with many states even reconsidering going with
PCPIRs because of following reasons:
• Impact that chemical plants would have on the local environment.
• Opposition concerning rehabilitation of displaced people

More developments took place, need to research ….

Chemical Associations

Chemical & alkali merchants' association


To Bring Together Chemicals & Dyes Merchants' under one Umbrella for Advancement
of their Common Causes

Organisation of pharmaceutical producers of india


To project & promote the interests of the Pharmaceutical Industry at national &
International Levels.

Indian speciality chemical manufacturers' association


To safeguard and further the interest of the speciality chemcials industry

The dyestuffs manufacturers' association of india


To Promote and Protect the Indian Trade,Commerce & Industry connected with
Dyestuffs & Dyes Intermediates & to encourage freindly feeling & unanimity among
them for the comman good.

Chemicals Pharmaceuticals & Cosmetics Export Promotion Council, (CHEMEXCIL)


Chemical & Allied Products Export Promotion Council
Fertilizers Association of India
Dyestuffs Manufacturers Association of India
The Dyestuffs manufacturer's association of India, (DMAI) was set up in 1950
(Manufacture of dyes started in 1940), to promote & protect trade, commerce &
industrial connected with dyestuffs
Pesticides Manufacturers & Formulators Association of India
To include basic technical grade manufacturers of pesticides to foster the interest of the
general public and PMFAI's members by promoting innovations and environmentally
sound use of crop protection / public health products so as to ensure high quality,
abundant food, fiber and maintenance for growing population in Indian sub-continental.

Indian Chemical Manufacturers Association


A recognized representative body of the Rs.500 billion / US $ 16 billion Chemical
Industry. Members include both Indian companies with a global presence, and
subsidiaries of multinationals.