2009 2014 World Outlook Manufacturing Food

India has achieved significant progression in production of chemicals. And with slash in tariffs, Indian chemical companies with well-built schemes and structured operations are likely to be benefited further.

It is not only country’s oldest industry, but the Indian Chemical Industry has been contributing to India’s growing economy in a extraordinary way. It may be hard to believe, but the industry serves the basic need of a great deal of dissimilar industry verticals like natural gas, water, oil, metals, minerals, air, oil, etc and all these verticals at long last fetch into marketplace an array of products, closely 70000 products, to be precise.

Today, India has achieved significant progress in production of basic organic and inorganic chemicals, pesticides, paints, dyestuffs and intermediates, petrochemicals, fine and special line of work chemicals and toiletry product segments. And with slash in tariffs, Indian chemical companies with well-built systems and structured operations are likely to be benefited further. The companies fabricating highly valued chemicals, and who are compliant of industrial quality standards, may make their mark not just in India but even in the overseas markets as well.

In Indian context, the rise in disposable income has led to bettered chemical consumption. This has aided country’s GDP climb further, from 9% to 13%. In an undertake to make the industry more progressive and flourishing, the government of India has introduced a slew of policies and particular economic zones centering on the petrochemical sector. Furthermore, assorted devising companies are focusing on elaboration plans in the coming years.

Chemicals and chemical merchandise influence our lives in a substantial way. Be it donning synthetic clothes, or consuming drugs, or when it comes to using thermoplastic furniture at homes and offices, chemicals have become a way of life in this fast-changing world. In addition, the industry plays a pivotal role in agricultural and development sectors. Some of the other sectors, like engineering, automotive, buyer durables and feed processing likewise depend on this sector in a huge way.

The industry is on a high growth trajectory. The industry, through a series of attempts is expected to achieve USD 100 billion in the upcoming years. The industry’s contribution to the Indian fabricating sector is closely 17.6 percent. Since the ages, Indian chemicals have been swapped and today imports stand at USD 7.92 billion and exports at 5.95 billion. And now with the onset of liberalization and globalization, the Industry is on a major elaboration spree. The industry today is into constructing wide range of goods including fine and distinguishing trait chemicals, drugs and pharmaceuticals, dyes and pigments, agrochemicals and fertilizers, pesticides, plastics and petrochemicals etc.

However, Indian chemical industry is yet to makes it is presence felt in a huge way in the global markets.

Fast-facts on Indian chemical industry

o Highly fragmented

o Operates at the micro level.

o Increased per capita consumption level has put the industry on fast-track

o Higher cost of capital, import duties and power, making it less competitory in the international markets.

o Very little spotlight on Resource & Development

o Presence of some multinational companies

o Big players in bulk chemicals. Presence of little and big players in fine and special line of work chemicals.

Major Segments

The Indian Chemical Industry has following major segments:

* Petrochemicals

* Inorganic Chemicals

* Organic Chemicals

* Fine and specialties

* Bulk Drugs

* Agrochemicals

* Paints and Dyes

Petrochemicals

Petrochemicals form the greatest category in the chemicals, and it is likewise one of the quickest growing sectors. The segement is into manufacturing basic chemicals like Ethylene, Propylene, Benzene and Xylene etc, intermediates like MEG, PAN and LAB etc., synthetic fibres like Nylon, PSF and PFY etc, polymers like LDPE/HDPE, PVC, Polyester and PET etc, synthetic rubber like SBR, PBR etc. The key players include: Reliance, IPCL, NOCIL, Haldia and GAIL etc.

Inorganic Chemicals

At present it is worth US$ 2.5 Billion industry. The segment concentrates on the production of caustic, chlorine, sulphuric Acid etc. The inorganic chemicals are ordinarily used in detergents, glass, soap, fertiliser, alkalies etc. However, the industry is encountering stiff contest from international players, when it comes to catering to the requisites of the local markets.

Organic Chemicals

It is reportedly 1billion dollar industry and includes an array of chemicals. Most of the companies fabricating organic chemicals may be found in western India.

Fine Specialties

The fine distinctivenesses segment is highly fragmented, with sizeable number of big players. However, all these players operate on low volume and high price margin. It is one of the quickest growing spheres with market around US$80 million p.a. And some big and little Indian companies form portion of it. The major end user segments include: Textile, Leather, paper, detergent, rubber, paints, polyester, oil and gas etc.

Bulk Drugs

Bulk Drugs have a huge market in India and in the outside world. Out of the 475 drugs used, 425 are locally procured. There are around 350 units in the coordinated sector, while there may be numerous more in the unorganized sector. Bulk drug production is concentrated in the areas around Bombay, Ankleshwar, Hyderabad – Madras, Chandigarh.

India has very strong base in reverse engineering, molecular alchemy and patents on processes and not just on products. Major players in India in bulk drug category include: Ranbaxy, Dr. Reddy’s, Cheminor, Shasun, Cipla, Lupin, IPCA, Sun, Aurobindo, Kopran, Cadilla, Wockhardt, etc. It is a well-acknowledged fact that most of the bulk drug companies are Indian companies while those into formulations are principally MNCs.

Agrochemicals

India being an agricultural eclipsed country, it is apparent that the country is a major user of agrochemicals; nonetheless, the intermediate Indian consumption is reportedly low i.e., 1/20th of world average. The segment has been witnessing a growth of 10% pa and has registered revenue worth US$800 million. Consumption of the crop varies depending on the crop and region. Cash crops like sugarcane, tobacco etc. consume big amount of pesticides, almost over 60%. Major agrochemicals exports include: Insecticides, Fungicides, Herbicides, Weedicides, Rodenticides, and Fumigants.

Paint and Dyes

Indian dyes are in demand world over, thanks to ban on production of dyes in invented nations due to the reservations related to pollution. Dyes are mainly employed in Paints, Inks, Textiles and Polymers. The total market of paint and dyes is closely US$ 1 Billion, and the growth rate is almost 12%. In addition, the marketplace is highly fragmented. There are in regards to 25 big and medium players, which cover 50% market share, while 2000 other organized players bestow next fifty percent. Moreover, the per capita consumption is very low in India(400 gms) as opposed to the invented countries(15 kgs).

Overseas Trade

In the early 1990s, India was more into importing of chemicals; however, with the setting up of big scale petrochemical plants like Reliance, etc exports have improved. Even exports of bulk drugs, pharma, pesticides, dyes and intermediates have climbed up.

The overall performance of Indian Chemical Industry has been good in the domestic markets; however, in the global markets the industry it is yet to make it is presence felt in a substantial way. And constituents like recession and crises in the Middle East have had a poor affect on the manufacturing and export sector of the industry.

The International Council of Chemical Associations (ICCA), an association that comprises 80% of the world makers of chemicals has declared it is aid for a new round of multilateral trade negotiations in the World Trade Organization.

ICCA’s main worries include: remotion of chemical tariffs, management of anti-dumping practices, making more elementary the habit processes and full execution of TRIPs agreement. While management of anti- dumping exercises would net profit India, the tariff-free world would lead to stiff competition

Road ahead

Highly formulated technology, in-depth exploration capabilities, backward and forward linkages, development of domestic capacity to decrease the dependence on imports are some of the important elements that need to be taken into consideration. Nowadays, safety, health and environs shelter issues have become the major-talking point in almost all industries and even in the Indian chemical industry too. The Indian chemical manufacturers are addressing the issue on a war-footing.

Excerpt. © Reprinted by permission. All rights reserved.WHAT IS LATENT DEMAND AND THE P.I.E.?

The conception of latent demand is rather subtle. The term latent quintessentially refers to something that is dormant, not observable, or not yet realized. Demand is the notion of an economic amount that a target population or market requires beneath dissimilar assumptions of price, quality, and distribution, amongst other factors. Latent demand, therefore, is commonly specified by economists as the industry net profit of a market when that market becomes accessible and beautiful to serve by competing firms. It is a measure, therefore, of potential industry net income (P.I.E.) or total revenues (not profit) if a market is served in an effective manner. It is specifically conveyed as the total revenues potentially extracted by firms. The “market” is specified at a given level in the value chain. There may be latent demand at the selling level, at the wholesale level, the devising level, and the raw materials level (the P.I.E. of higher levels of the value chain being always littler than the P.I.E. of levels at lower levels of the same value chain, assuming all levels maintain minimum profitability).

The latent demand for manufacturing feed for animals excluding dog and cat feed is not actual or historic sales. Nor is latent demand future sales. In fact, latent demand may be lower either lower or higher than actual sales if a market is inefficient (i.e., not representative of comparatively competitory levels). Inefficiencies arise from a number of factors, including the lack of global openness, cultural barriers to consumption, regulations, and cartel-like conduct on the portion of firms. In general, however, latent demand is distinctively more prominent than actual sales in a country market.

For reasons discussed later, this report does not consider the notion of “unit quantities”, only total latent revenues (i.e., a calculation of price times amount is never made, even though one is implied). The units used in this report are U.S. dollars not adjusted for inflation (i.e., the figures incorporate inflationary trends) and not adjusted for future dynamics in interchange rates. If inflation rates or interchange rates vary in a significant way equated to recent experience, actually sales may also exceed latent demand (when conveyed in U.S. dollars, not adjusted for inflation). On the other hand, latent demand may be distinctively higher than actual sales as there are often distribution inefficiencies that reduce actual sales underneath the level of latent demand.

As cited in the introduction, this study is strategic in nature, taking an aggregate and long-run view, irrespective of the players or productions involved. If fact, all the current productions or services on the market may discontinue to subsist in their present form (i.e., at a brand-, R&D specification, or corporate-image level) and all the players may be substituted by other firms (i.e., by way of exits, entries, mergers, bankruptcies, etc.), and there will still be an international latent demand for devising feed for animals excluding dog and cat feed at the aggregate level. Product and service supplying details, and the actual identity of the players involved, while crucial for sure issues, are comparatively not significant for estimates of latent demand.

THE METHODOLOGY

In order to estimate the latent demand for constructing feed for animals excluding dog and cat feed on a international basis, I employed a multi-stage approach. Before applying the approach, one needs a basic theory from which such estimates are created. In this case, I to a great extent rely on the use of sure basic economic assumptions. In particular, there is an assumption governing the shape and type of aggregate latent demand functions. Latent demand functions relate the income of a country, city, state, household, or person to realized consumption. Latent demand (often realized as consumption when an industry is efficient), at any level of the value chain, takes place if an equilibrium is realized. For firms to serve a market, they will have to perceive a latent demand and be capable to serve that demand at a minimal return. The single most crucial variable determining consumption, assuming latent demand exists, is income (or other financial resources at higher levels of the value chain). Other elements that may pivot or shape demand curves include external or exogenous shocks (i.e., business cycles), and or changes in utility for the product in question.

Ignoring, for the moment, exogenous shocks and variations in utility throughout countries, the aggregate relation amongst income and consumption has been a central theme in economics. The figure beneath concisely surmise one aspect of problem. In the 1930s, John Meynard Keynes conjectured that as incomes rise, the intermediate propensity to consume would fall. The intermediate propensity to consume is the level of consumption disunited by the level of income, or the slope of the line from the origin to the consumption function. He approximated this kinship empirically and found it to be true in the short-run (mostly based on cross-sectional data). The higher the income, the lower the intermediate propensity to consume. This type of consumption function is labeled “A” in the figure under (note the rather flat slope of the curve). In the 1940s, another macroeconomist, Simon Kuznets, approximated long-run consumption functions which indicated that the marginal propensity to consume was rather continuous (using time series info all over countries). This type of consumption function is show as “B” in the figure underneath (note the higher slope and zero-zero intercept). The intermediate propensity to consume is constant.

Is it declining or is it constant? A number of other economists, notably Franco Modigliani and Milton Friedman, in the 1950s (and Irving Fisher earlier), explained why the two functions were dissimilar using respective assumptions on intertemporal budget constraints, savings, and wealth. The shorter the time horizon, the more consumption may depend on wealth (earned in former years) and business cycles. In the long-run, however, the propensity to consume is more constant. Similarly, in the long run, households, industries or countries with no income at long last have no consumption (wealth is depleted). While the debate surrounding beliefs regarding how income and consumption are related and interesting, in this study a very peculiar school of thought is adopted. In particular, we are taking into account the latent demand for manufacturing feed for animals excluding dog and cat feed throughout a heap of 230 countries. The smallest have less than 10,000 inhabitants. I assume that all of these regions fall along a “long-run” aggregate consumption function. This long-run function applies in spite of galore of these countries having wealth, current income dominates the latent demand for developing feed for animals excluding dog and cat food. So, latent demand in the long-run has a zero intercept. However, I grant firms to have dissimilar propensities to consume (including being on consumption functions with differing slopes, which may account for deviations in industrial organization, and end-user preferences).

Given this overriding philosophy, I will now describe the methodology used to fabricate the latent demand estimates for devising feed for animals excluding dog and cat food. Since ICON Group has asked me to utilise this methodology to a big number of categories, the rather academic discussion under is general and may be used to a wide potpourri of categories, not just formulating feed for animals excluding dog and cat food.

Step 1. Product Definition and Data Collection

Any study of latent demand throughout countries requires that numerous standard be traditionalisti to define “efficiently served”. Having imposed respective number of things from which only one can be chosen and matched these with market outcomes, I have found that the optimal approach is to assume that sure key countries are more likely to be at or near efficacy than others. These countries are given more outstanding weight than others in the estimation of latent demand equated to other countries for which no known data are available. Of the numerous alternatives, I have found the assumption that the world’s most eminent aggregate income and most eminent income-per-capita markets reflect the best standards for “efficiency”. High aggregate income alone is not sufficient (i.e., China has high aggregate income, but low income per capita and may not assumed to be efficient). Aggregate income may be operationalized in a number of ways, including gross domestic product (for industrial categories), or total disposable income (for household categories; population times intermediate income per capita, or…

2009 2014 World Outlook Manufacturing Food Photo

2009 2014 World Outlook Manufacturing Food Image

2009 2014 World Outlook Manufacturing Food Pic