PETROCHEMICALS

Archit Shah A -36

Narayan Pawar A - 31
Shoeib Shaikh B - 49
 CHARACTERISTICS OF INDIAN
PETROCHEMICAL INDUSTRY

• Represents 2% of world market

• Does business worth USD 30 billion
• Rate of growth of the Indian petrochemical industry is 10%
• Profit incurred is around 14%
• Wide variety of products
• Basic components are petrochemicals, inorganic chemicals
and fertilizers
• TheIndian states of Gujarat, Maharashtra, West Bengal and
Andhra Pradesh have the largest concentration of chemical
and petrochemical units
 Demand and Future

• 1980s and 1990s saw some rapid growths for Indian

petrochemical industry.
• Grew at an annual rate of 13 to 14% since late 90s
Sectors having high demand
• Healthcare
• Food preservation
• Hardware
• Transportation
• Equipments in office
 TOP PETROCHEMICAL COMPANIES IN
INDIA

• Reliance Industries Limited

• Gas Authority ofIndia Limited
• Indian Petrochemicals Corporation Limited
• Grasim Industries Limited
• Indo Rama Synthetics Limited
 KEY SEGMENTS

• Polymers
• Polyester Intermediates
• Aromatics
Process of Preparing end use petrochemical products
SWOT OF PETROCHEMICAL INDUSTRY

• STRENGTHS
-Large and very fast growing Indian market
-Huge trained talent pool
-Competitive labor cost

• WEAKNESSES
-Insufficient basic infrastructure
-Prevalence and use of old technology
-Synthetic fiber industry is unorganized and operates in
small clusters
 Contd…

• Opportunities
-Huge demand for polymer and synthetic fiber
-Great opportunity for product development exists

• Threats
-Stiff competition from other regional players like,
china and the Middle East countries
-Stiff rational pricing pressures
-Environmental hazards concerns
 PETROCHEMICAL INDUSTRY
CHALLENGES
• High cost of energy and feedstock and the
impact on demand
• The transformation in the kinetics of
competition in manufacturing
• Increase in the cost of project
 Problems faced by the India petrochemical
industry

• The manufacturing units mostly use obsolete

format of technology and are not able produce
optimally
• There is a necessity for the modernization of
equipments
• Excise duty on synthetic fiber should be
rationalized
• Prevention of reservation on Small Scale Units
• The industry should have access to the primary
amenities of infrastructure
 BRIC EMERGING

• America NO 1 (about 11.02 % )

• Chinese No 2 (about 9.5 % )
• Emerging BRIC countries (about 19%)
DEALS IN PETROCHEMICAL INDUSTRY
DEALS IN CHEMICAL INDUSRTY
VOLUME OF M & A
FEW DEALS
 DISTINCTIVE CHARACTERISTICS

• high tech
• R&D-oriented industry
• Receives 12 percent of patents granted annually.
• produces over 70,000 different products.
• Few industries exhibit such diversity and
complexity
CHARACTERISTICS SIGNIFICANT FOR M&A

• many distinctive segments

• a number of which overlap with the oil and
other energy industries .
• Some of segments are from pharmaceuticals
and life-science products.
 Why becomes object of Takeover
• R&D performs a key role
• R&D discoveries often are not in the firm's core
businesses
• new products may require time to fit into
organization effectiveness
• may fail to achieve significant economies of scope.
• will negatively impact sales and profitability
causing vulnerability to takeovers .
 Reasons For M & A

• technological change,
• globalization of markets,
• favorable financial
• economic environments.
 RISKY BUSINESS
• Size
• Complexity
• geographical location
• require huge investment
• most important parameter is time.
• time = risk. Time changes the nature of risk“
 RIL

• India's largest business house RIL

• total revenues of Rs 80,000 crore (US$ 16.8
billion)
• net profit Rs 12,300 cr
• exports of Rs 11,900 cr.
BUT BUSINESS IS

high profit – high risk

 DIVERSIFICATION
• financial services - Reliance Capital Limited
• Insurance - Reliance General Insurance
• Power –R power
• Telecom - Rcom
• Infocom - Reliance Infocom
• Infrastructure - Reliance Industries
 R Power

2nd Largest Player in Power

sector
Current Capacity -20950
MW
capacity addition Plan
10,000Mw/yr
2017 – 35000 Mw
 R Com
• leading CDMA & GSM
Service providers in
India
• 2nd largest Telecom
player
• Market Capitalization
around $30 billion.
 R Infra

• India's largest private

sector enterprise in
power utility

• Largest Infrastructure
company of india.
CONCLUSION