ByBy

D. P. MisraD. P. Misra

Director GeneralDirector GeneralIndian Chemical CouncilIndian Chemical Council

September 2008

Indian Chemical Industry - OverviewIndian Chemical Industry - Overview• 12th largest in the world and 3rd largest in Asia

• Indian Chemical Industry (incl. pharma)= $50 bn in 2006 – 10.8% CAGR 2002 to 2006

• Market is expected to grow to $75.8 bn - 13.6% CAGR by 2011

• Evolved from being a basic chemical producer to also offering specialty and fine

chemical products

Indian Chemical Industry –SegmentationIndian Chemical Industry –Segmentation

Source: IBEF/KPMG Report October 2007

• Industry divided into 3 segments

• Basic chemicals, specialty & fine chemicals and knowledge chemicals.

• Basic chemicals 57%

• Specialty & Fine Chemicals & Knowledge Chemicals is 43%

– API’s for Pharma co-formulations for Pharma

– Dyes and pigment paints and inks – Adhesives– Flavors & fragrances – Agrochemicals

Total Market – US$ 35 billion as on March’05

Indian Segmental Market Growth Indian Segmental Market Growth (Value wise)(Value wise)

All values in US$ Billion

CAGR: 8.5%CAGR: 16.3%

CAGR: 30.1%

CAGR: 16.2%

Source: Our estimation

44

100

2311 9

3525

40

0

20

40

60

80

100

120

Basic Chemicals Specialty Chemicals High End / Know ledge Segment Total

2005-2007 2007-2012

Source: http://www.chemicals.nic.in

All values in US$ BillionAs on March’ 05

Export – Import Scenario Export – Import Scenario Indian Chemical industry Indian Chemical industry

4.2

5.65.9

7.8

9.111.0

4.7

4.4

5.36.2

7.5

9.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Indian Chemical Exports Indian Chemical Imports

Indian Fine Chemicals IndustryIndian Fine Chemicals Industry• Represents 43% of total Indian Chemical Industry – market size USD $17.2 bn

• Forecasted to grow at CAGR of 15%, double the growth of Global Fine

Chemicals Industry

• Exports of Fine Chemicals (excld. pharma) forecasted to grow USD$ 4bn in

2007 to USD$ 13 bn in 2013

• Per Capita consumption in India is still well below world average

Per Capita Consumption (Kg), 2003

0 2 4 6 8 10 12 14 16 18

Plastics

Pharmaceuticals

World India

Source: Indian Chemical Manufacturers Association

Indian Pharmaceutical Industry OverviewIndian Pharmaceutical Industry Overview

• India is among the fastest growing

pharmaceutical markets in the

world

• The domestic pharmaceutical

market recorded sales of US$ 7.3

billion in 2006, grew by 17.5% over

the previous year*

• Indian pharmaceutical Industry is

8th in terms of volume & 13th in

terms of value – due to lower drug

prices

Pharmaceutical Market

Exports, the core of Indian PharmaceuticalsExports, the core of Indian Pharmaceuticals• Total export revenues (2005-06)……………………….. $ 5.2 billion

– Bulk drugs (APIs) ………………………………………..…….$ 2.8 billion (54 %)– Finished drug formulations (FDFs) …………………………$ 2.4 billion (46 %)

• Revenues from FDF exports expected to reach $ 9.5 billion and surpass those from APIs ($ 8.7 billion) by 2010-11 and also exceed those of the domestic market

DMF Filings – Top Ten countriesDMF Filings – Top Ten countries

330543

359146 177 155 116 107 82 84

1155

438

268

329142 125 131 66 90 68

0

200

400

600

800

1000

1200

1400

1600

India

USAIta

ly

China

Japan

Germany

Spain

France

Isra

el

Switzer

land

2000-07

prior to 2000

Source: FDA / CDER; Crisil Research

INDIAN INORGANIC INDUSTRYINDIAN INORGANIC INDUSTRY

Calcium Carbide, $0.03BnAluminium Fluoride, $0.02Bn

Titanium Dioxide, $0.10Bn

Others, $0.25Bn

Caustic Soda, $1.00Bn

Carbon black, $0.25Bn

Sulphuric Acid, $0.30BnSoda Ash, $0.55Bn

TOTAL – $2.5 BnTOTAL – $2.5 Bn

INDIAN CHLOR ALKALI - 2006INDIAN CHLOR ALKALI - 2006

2300

1950 1980

78.231.2

0

500

1000

1500

2000

2500

CA

US

TIC

SO

DA

(K

TP

A)

CAPACITY PRODUCTION CONSUMPTION IMPORTS EXPORTS

YEAR-2005-06

SODA ASH GROWTH SCENARIOSODA ASH GROWTH SCENARIO

DOMESTIC CONSUMPTION

22682381

25002625

27572895

0

500

1000

1500

2000

2500

3000

3500

2006 2007 2008 2009 2010 2011

YEAR

SO

DA

AS

H (

'000 M

T)

DOMESTIC CONSPN

CAGR – EXPECTED APPROX – 5%

Alcohol chemicals Capacities (ton pa)Acetic acid 450000Acetic anhydride 78000Vinyl acetate monomer 25000Pyridines, picolines and other derivatives 30000Ethyl acetate 160000Mono ethylene glycol 260000Monochloro Acetate 42000Ethylene Dichloride 35000

Alcohol-based Chemicals – Existing capacities in IndiaAlcohol-based Chemicals – Existing capacities in India

INDIAN PETROCHEMICAL INDUSTRYINDIAN PETROCHEMICAL INDUSTRYAT A GLANCEAT A GLANCE

Commodity Polymers(PE, PP, PVC, PS)

Capacity TPA

4,215,000

Synthetic Fibre(PSF, PFY, Nylon, Acrylic)

2,069,000

Elastomers 145,000

Surfactants 409,000

40%

32%

19%

9%

PE

PP

PVC

PS

CAPACITIES OF COMMODITY POLYMERS

29%

60%

4%7%

PSF

PFY

NYLON

ACRYLIC

CAPACITIES OF SYNTHETIC FIBRE

34%

43%

6%

7%10%

PBR

SBR

NBR

EPDM

EVA

CAPACITIES OF ELASTOMERS

76%

24%LAB

EO

CAPACITIES OF SURFACTANTS

PER CAPITA CONSUMPTIONPER CAPITA CONSUMPTION

India(Kg)

World Average (kg)

Plastics 3.8 19.7

Synthetic Fibres 1.7 3.9

Surfactants 0.4 3.5

Elastomers 0.2 2.1

Polymers : India Vs WorldPolymers : India Vs World Global Rank in Polymer Consumption Global Rank in Polymer Consumption

Rank Country 1988(MMT)

Country 2000(MMT)

Country 2010(MMT)

2010/ 2000

1 USA 16.6 USA 27.3 USA 38.9 3.6%

2 Japan 6.4 China 14.4 China 31.3 8.1%

3 Germany 4.3 Japan 9.1 India 12.5 14.0%

4 China 3.7 Germany 6.4 Japan 11.5 2.3%

5 Italy 3.1 S. Korea 4.7 Germany 9.4 3.9%

6 CIS 2.4 Italy 4.7 S. Korea 7.4 4.8%

7 France 2.4 France 4.1 Italy 6.8 3.8%

8 UK 2.2 UK 3.5 Brazil 6.7 7.0%

9 Taiwan 1.9 India 3.4 CIS 6.2 9.1%

10 S. Korea 1.8 Brazil 3.4 France 6.1 4.1%

16 India 1.6 Taiwan 3.3 UK 5.2 4.0%Source CPMA

India - 3rd largest polymer consumer globally, by 2010. . .India - 3rd largest polymer consumer globally, by 2010. . .

Agrochemical IndustryAgrochemical Industry

•Global Agrochemical market in 2005 was $33,576 mn (Source:Agrochemicals-Executive Review, Agronova 2006)

• India is 4th largest producer of Ag Chem after USA, Japan and China.

• India is the second largest producer of pesticides in Asia.

• India exports pesticides for approx.Rs.2500 crores (US$.532 billion).

• Total Ag Chem market in India =Rs.4500 crores (US$ 1 billion).

India – Growth in Polymers India – Growth in Polymers

• Growth triggers

– Strong Economy

– High GDP growth

– Favorable Demography

– Growing Middle Class

– Rising Disposable Income

• Policy thrust

– Export through SEZ

– Agriculture

– Infrastructure

• Retail Revolution

12.5 MMT By FY12

3.0

0.9

0.2 0.

7

0.1 0.

5

6.2

2.5

1.0

0.8

0.2

1.8

Pack

agin

g

Infr

astr

uctu

re

Agr

icul

ture

Con

sum

erG

oods

Hea

lth C

are

Oth

ers

2006-07 2011-12

8

20

22

16

10.5 10.5 10.2

5.4

0

5

10

15

20

25

LDPE LLD/HDPE PP PVC FIBRE FIB. INT. SYNRUBBER

SURF. INT.

CARG Projected (2006-07 to 2011-12)CARG Projected (2006-07 to 2011-12)

Sub-group report on Petrochemicals

%

Projected Demand Capacity AdditionsProjected Demand Capacity Additions

Kilo tons

Capacity

Demand Deficit/ Surplus

Average / Unit Size

No of Plants

required

Ethylene

2005/06 2513 2715 -202

2006/07 2513 3909 -1386 1000 1

2011/12 3463 8647 -5184 1000 5All

Polymers

2005/06 4265 4600 -335 200 2

2006/07 4265 5338 -1073 400 3

2011/12 7175 11193 - 4018 400 10

Source: Based on Information from Dept. of Petrochemicals, MOC&F

Concept of PCPIRConcept of PCPIR

Specifically delineated investment region/s Area of around 250 sq. kms Covers manufacturing facilities & associated services

& infrastructure Includes SEZ/s, Free Trade & Warehousing Zones,

Industrial Parks, EOU units, or Growth Centres duly notified, and existing industrial clusters.

Refineries/feedstock companies as anchor tenants Developer/co-developer to build & develop internal

infrastructure External linkages to be provided by Central Govt &

by concerned State Govt.

Contd….

Users to pay for use of infrastructure except when supported through budgetary resources.

Developer would develop/ build / design/ maintain/ operate part or whole of infrastructure/facilities in PCPIR.

Selection of developer through transparent process.

Developer - benefit of tax holiday under Section 80(I)(A) of IT Act

Eligibility for location - any chemical industry / supporting service in area of manufacturing, stocking, trading including logistic and utilities

Dispute resolution through arbitration.

• Project proposals received for:-

Dahej in Gujarat, Mangalore in Karnataka, Visakhapatnam in Andhra

Pradesh and Haldia in West Bengal

have been identified Paradeep in Orissa Cuddalore in Tamilnadu

Likely PCPIR LocationsLikely PCPIR Locations

InvestorsInvestors in PCPIR Could Look Forward to in PCPIR Could Look Forward to

• World class infrastructure• Highly skilled manpower• Co-existence with value chain• Easier approach to Gulf, Asia & Africa• Fast growing domestic demand• Potential for downstream petrochemical

projects• Large unsatiated & growing market

In case of commodity polymers India’s per capita consumption is 4 .8 kg compared to world average of 25 kg

Similarly in case of synthetic fibre India’s per capita consumption is 1.8 kg compared to 3.5 kg for the world

An InvitationAn Invitation

• Indian Chemical Industry specially petrochemicals, speciality, pharma / biotech experiencing significant growth possibility

• Time to collaborate between India and US both in manufacturing and trade

• Invitation to US companies to invest in India and experience growing market with huge untapped potential