india: performance of chemical industry · • indian chemical industry expects to reach a market...

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India: Performance of Chemical Industry

Quarterly Update: Q1 FY 2021 (Apr’2020 – Jun’2020)

August, 2020

Authored by: Aarushi Bhardwaj, Analyst


Key Economic Indicators

5th

Largest economy in the world

2.11 % Contribution of

Chemical Industry in GDP

USD 1+ Bn

Chemical Sector Total FDI Inflows

(FY20)

14th Largest chemicals

export market globally

6th Largest Chemical

Industry in the world (FY19)

8th Largest chemicals

import market globally

USD ~50 Bn

FDI in Indian Economy in FY20*

Note: FY20 denotes financial year from April 2019 to March 2020

Source: : Invest India, GoI, Industry Reports & Journals

Bn: Billion; CAGR: Compound Annual Growth Rate; CPI: Consumer Price Inflation; FDI: Foreign Direct Investment; FY: Fiscal Year GDP: Gross Domestic Product; GoI: Government of India; GST: Goods and Services Tax; HSN: Harmonized System Nomenclature; Mn: Million; MT: Metric Tones; p.a.: Per Annum; Q: Quarter; USD: United States Dollar; YoY: Year on Year

6+ Mn New Employment Generated, Direct & Indirect (FY20)*

*: Metrics in FY20 across sectors and industries, manufacturing and service


Photo from Unspalsh

Chemical Industry Trend

Production(In Mn MT) Gross Output



10 10 10 11 12 12

13 15 16

16 16 16

0

5

10

15

20

25

30

FY15 FY16 FY17 FY18 FY19 FY20

Major Chemicals Major Petrochemicals

USD 207 Bn. FY18

Fertilizers 31%

Agrochemicals 2%

Bulk Chemicals

20%

Others 7%

Speciality Chemicals

17%

Petrochemicals 23%


Government Initiatives & Policies • 100% FDI is allowed under automatic

route in chemicals sector (except for certain hazardous chemicals)

• Expected increase in demand for silicon and lithium-ion batteries to encourage investments in India by lithium and silicon manufacturers due to tax benefits on electric vehicles

• GoI is working on a draft chemical policy that will focus on meeting the rising demand for chemicals and reduce imports

• GoI has initiated mandating BIS-like certification for imported chemicals to prevent dumping of cheap and substandard chemicals into the country

Key Insights • Indian chemical industry expects to

reach a market size of over USD 300 bn by 2025

• Indian chemical industry grew at over 10 per cent over the past ten years

• The industry is estimated to have 40,000-50,000 companies

• Chemicals cover an array of more than 70,000 commercial products

• During April 2019-January 2020, export of dyes increased 9.1 per cent y-o-y to USD 2.3 billion

• Export of inorganic, organic and agro chemicals stood at USD 863.4 million, USD 7.1 billion and USD 2.8 billion between April 2019-January 2020, respectively

• Demand is expected to grow at approximately 9% p.a. over the next 5 years

Upcoming Events

• 6th ISDC Conference - International Conference on Soaps, Detergents & Cosmetics from 6-8 Sep’20 in Goa

• 8th Refining India 2020 Conference from 28-29 Sept’20 at New Delhi

• 11th Biennial International Exhibition and Conference on 8-10 Oct’20

• India Chem 2021 from 17-19 March 2021 at Bombay Exhibition Centre, Mumbai, India




Photo by Unsplash

India's chemical industry is ranked the third largest in Asia and sixth largest globally with respect to output


Summary

7.3 7.7 7.1

6.4 6.7 7.4 7.0

5.4

0.0

2.0

4.0

6.0

8.0

Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21

Gross Income (Bn USD)



Performance of top 10 chemical companies in India

Foreign Trade

4.8% 4.8% 4.7%

18.2%

6.5% 4.1% 0.7% 0.6% 0.7%

2.2%

0.9%

0.5%

3.1% 3.1% 3.2%

10.5%

4.4%

2.0%

1.5% 1.6% 1.6%

6.8%

2.7%

1.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Apr'19 May'19 Jun'19 Apr'20 May'20 Jun'20

Chemical material and products Artificial resins, plastic material etc.

Dyeing/tenning/coloring materials Organic and Inorganic Chemicals

Export Import

7.9% 6.9% 6.6% 11.6% 9.5% 8.9%

14.1% 17.2%

10.9%

12.0%

8.6% 8.5%

2.5%

2.6%

2.7%

4.6%

3.8% 2.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Apr'19 May'19 Jun'19 Apr'20 May'20 Jun'20

Plastic and Linoleum Petroleum Products

Organic and Inorganic Chemicals

All figures in Bn USD Apr’20 May’20 Jun’20

Export 2.92 4.16 4.46

Import 2.68 3.23 2.62


Production Amid COVID-19 Lockdown • All non-essential production was shut in India from March 24 to April 19, 2020,

resuming in phases after

• A total of 152 new manufacturers started making sanitizers, commanding 61 percent market and 46 percent value share

• In April 2020, India had monthly production decrease of 15.9 percent, also affecting the chemical industry

• Packaging segment saw an uplift due to stockpiling, increase in delivery services and healthcare-focused activities

Tecnova’s Experience in Chemical Industry

• Market research and entry strategy for American and European adhesive manufacturers

• M&A, and distribution and pricing strategy for lubricant manufacturers from USA and Europe

• Market assessment and growth strategy formulation for U.S.A., Asia and Europe based paint and coating companies

• Due diligence and Greenfield strategy for bulk and speciality chemical companies from USA, Europe and Japan

Key Headlines • FMCG factories ran at 40 percent

production capacity from end of March to end of April 2020

• India proposed to impose a 15% tax on all chemical and petrochemical imports, to protect the domestic industry in the current fiscal year ending March 2021

Notable Deals in Q4 FY20

• Reliance issued new shares at INR 1,257 each to existing shareholders in 1:15 ratio

2

0

1

0 0

Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21



Number of IPOs


Photo from Unsplash

For any further enquiries, please contact

Ashish Garg

Manager - Marketing

Sales and Marketing

Tel: +91 124 4356 347

Mobile: +91 9871750121

Email: [email protected]

Jagadeesh Govindaraj

Head - Execution

Execution

Tel: +91 124 4356 357

Mobile: +91 9643818349

Email: [email protected]

mailto:[email protected]

mailto:[email protected]

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