Project title

Market study on Polypropylene plastic woven sacks

For

Reliance Industries Limited

(Polymer Division)

Report Submitted By

AKSHAY ANAND PARAB

(Student of Vidyalankar Institute of Technology

Wadala (East) Mumbai 400 031)

JULY 2009

DECLARATION

This is to declare that the study presented by me to Vidyalankar

Institute of Technology in part competition of the MMS under the title

ldquoReliance Industries Limited (RIL)rdquo has been accomplished under

the guidance of ____________________________

AKSHAYAPARAB

ACKNOWLEDGMENT

I express my sincere thanks to Mr Rohit Shah and Mr Ninad Dixit for

giving me an opportunity to work for Reliance Industries Limited I also extend

my gratitude to Mr KG Kapse for giving me an opportunity to work in this

project I am also thankful to Mr Rakesh Pandita Mr Amit Mishra DrManish

Desai and MrPrabhod Bhatt for their kind cooperation

I am extremely grateful to Mr Anjan Pyne and Mr Vasudev Deshpande

for sharing their valuable time and helping me throughout the project

I also express my gratitude towards all the respondents whom I visited for

data collection

Lastly I thank all those who helped me directly or indirectly in the

successful completion of this project

Akshay A Parab

Table of contents

1) Executive summary

2) Polymers

Polymers Capacities in 2008 India vs World

3) Polypropylene (PP)

Domestic scenario

Installed capacities

4) Polypropylene Market

Market trend in percentage

5) Analysis of Plastic woven sack market

Raffia Global consumption

Raffia Domestic consumption

A) Raffia Growth trend in India

B) Raffia capacity additions 2008-09

C) Customer satisfaction level

6) Plastic woven sacks and jute woven sacks ndash A comparison

7) End users consumption of Raffia

Cement sector

Fertilizers sector

Food grains Sector

8) SWOT analysis

9) Michael Porterrsquos Five Force Model

10) Conclusion and Recommendations

EXECUTIVE SUMMARY

The project talks about the present and potential demand for

polypropylene raffia in Cement Fertilizers and food grain sector Overall

nearly 430crores plastic woven sacks were used in cement sector 74crores

sacks were used in fertilizer sector and food grain sector showed good growth

during 2008-2009 The project views these three sectors and estimates its

future demand Project also studies the raffia sector to know the trends and

growth potential in that sector

The traditional sacking application cement contributes about 37 of total

raffia demand of 674KT in 2008-09 Taken into account jute sack shortages

and the dilutions by JPMA it is estimated that there will be massive increase

in raffia demand in future Demand is expected from other diversified sacking

and non- sacking applications

The present end sector distribution of sacking use can be summarizes

as follows

Bulk Packaging Sector wise demand ndash 674 KT

Cement37

Polymers3

Fabrics7

Chemicals2

Food grains11

MF amp Ropes

6Export sacks

9

FIBC15

Others10

The various diversified application of raffia tapes and fabrics with an

estimated potential of 113000 tones in 2004-05 is growing at 9 to touch

163000 tones by 2008-09 which indicates tremendous growth potential n

future This shows there is a massive growth potential in this sector in bulk as

well as non-sacking operations

Diversified market potential for 2008-09

Geotextiles18paper

bailing13

fruits amp vegetables

14

tarpulins20

other 2

sugar15

tea6

Staple food6

Postal bags6

The demand in food grains fertilizers and exports is expected to go up

Packaging of food grains in plastic woven sacks has gone up by 12 year

2008-09 Thus there is huge growth potential in the food grain sector for raffia

industry

Polymers

Small Share of Global Market

The Indian petrochemicals industry is small by international standards

with ethylene capacity in India accounting for only 23 of global

capacity Polymers constitute the single largest segment within the

Indian petrochemical industry but are rather small in the global context

accounting for only around 25 of the global production

Building Blocks amp Polymers Capacities in 2008

India vs World

(in KT) India World

Indias

share

Building

Blocks

Ethylene 2816 117745 23

Propylene 1999 71303 27

Polymers

PE 1975 73596 24

PP 1990 44668 44

PVC 1002 37606 26

PS 423 15525 24

ABS 91 8616 09

The Indian petrochemical industry has witnessed rapid reduction in

import tariff since 1991 which has forced the industry to face increased

international competition from countries with feedstock advantage

(Middle East) where low price of feedstock eg gas at 075$mmbtu in

Saudi Arabia petrochemical production cost is just a fraction of the

same in India which gives manufacturers in those countries significant

advantage at the export front

Based on the trends in the end-user sectors factoring in the various

parameters affecting demand for polymers this section tries to arrive at

the likely demand scenario in the coming years through 2011-12

The demand scenario projected is based on the following assumptions

bull Indian economy would be able to sustain the growth tempo amp

continue to grow at rates witnessed in the last 3 years or more

bull The issues which are currently hindering industryrsquos growth

would be addressed appropriately to the industryrsquos satisfaction

Polypropylene (PP)

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

DECLARATION

This is to declare that the study presented by me to Vidyalankar

Institute of Technology in part competition of the MMS under the title

ldquoReliance Industries Limited (RIL)rdquo has been accomplished under

the guidance of ____________________________

AKSHAYAPARAB

ACKNOWLEDGMENT

I express my sincere thanks to Mr Rohit Shah and Mr Ninad Dixit for

giving me an opportunity to work for Reliance Industries Limited I also extend

my gratitude to Mr KG Kapse for giving me an opportunity to work in this

project I am also thankful to Mr Rakesh Pandita Mr Amit Mishra DrManish

Desai and MrPrabhod Bhatt for their kind cooperation

I am extremely grateful to Mr Anjan Pyne and Mr Vasudev Deshpande

for sharing their valuable time and helping me throughout the project

I also express my gratitude towards all the respondents whom I visited for

data collection

Lastly I thank all those who helped me directly or indirectly in the

successful completion of this project

Akshay A Parab

Table of contents

1) Executive summary

2) Polymers

Polymers Capacities in 2008 India vs World

3) Polypropylene (PP)

Domestic scenario

Installed capacities

4) Polypropylene Market

Market trend in percentage

5) Analysis of Plastic woven sack market

Raffia Global consumption

Raffia Domestic consumption

A) Raffia Growth trend in India

B) Raffia capacity additions 2008-09

C) Customer satisfaction level

6) Plastic woven sacks and jute woven sacks ndash A comparison

7) End users consumption of Raffia

Cement sector

Fertilizers sector

Food grains Sector

8) SWOT analysis

9) Michael Porterrsquos Five Force Model

10) Conclusion and Recommendations

EXECUTIVE SUMMARY

The project talks about the present and potential demand for

polypropylene raffia in Cement Fertilizers and food grain sector Overall

nearly 430crores plastic woven sacks were used in cement sector 74crores

sacks were used in fertilizer sector and food grain sector showed good growth

during 2008-2009 The project views these three sectors and estimates its

future demand Project also studies the raffia sector to know the trends and

growth potential in that sector

The traditional sacking application cement contributes about 37 of total

raffia demand of 674KT in 2008-09 Taken into account jute sack shortages

and the dilutions by JPMA it is estimated that there will be massive increase

in raffia demand in future Demand is expected from other diversified sacking

and non- sacking applications

The present end sector distribution of sacking use can be summarizes

as follows

Bulk Packaging Sector wise demand ndash 674 KT

Cement37

Polymers3

Fabrics7

Chemicals2

Food grains11

MF amp Ropes

6Export sacks

9

FIBC15

Others10

The various diversified application of raffia tapes and fabrics with an

estimated potential of 113000 tones in 2004-05 is growing at 9 to touch

163000 tones by 2008-09 which indicates tremendous growth potential n

future This shows there is a massive growth potential in this sector in bulk as

well as non-sacking operations

Diversified market potential for 2008-09

Geotextiles18paper

bailing13

fruits amp vegetables

14

tarpulins20

other 2

sugar15

tea6

Staple food6

Postal bags6

The demand in food grains fertilizers and exports is expected to go up

Packaging of food grains in plastic woven sacks has gone up by 12 year

2008-09 Thus there is huge growth potential in the food grain sector for raffia

industry

Polymers

Small Share of Global Market

The Indian petrochemicals industry is small by international standards

with ethylene capacity in India accounting for only 23 of global

capacity Polymers constitute the single largest segment within the

Indian petrochemical industry but are rather small in the global context

accounting for only around 25 of the global production

Building Blocks amp Polymers Capacities in 2008

India vs World

(in KT) India World

Indias

share

Building

Blocks

Ethylene 2816 117745 23

Propylene 1999 71303 27

Polymers

PE 1975 73596 24

PP 1990 44668 44

PVC 1002 37606 26

PS 423 15525 24

ABS 91 8616 09

The Indian petrochemical industry has witnessed rapid reduction in

import tariff since 1991 which has forced the industry to face increased

international competition from countries with feedstock advantage

(Middle East) where low price of feedstock eg gas at 075$mmbtu in

Saudi Arabia petrochemical production cost is just a fraction of the

same in India which gives manufacturers in those countries significant

advantage at the export front

Based on the trends in the end-user sectors factoring in the various

parameters affecting demand for polymers this section tries to arrive at

the likely demand scenario in the coming years through 2011-12

The demand scenario projected is based on the following assumptions

bull Indian economy would be able to sustain the growth tempo amp

continue to grow at rates witnessed in the last 3 years or more

bull The issues which are currently hindering industryrsquos growth

would be addressed appropriately to the industryrsquos satisfaction

Polypropylene (PP)

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

I express my sincere thanks to Mr Rohit Shah and Mr Ninad Dixit for

giving me an opportunity to work for Reliance Industries Limited I also extend

my gratitude to Mr KG Kapse for giving me an opportunity to work in this

project I am also thankful to Mr Rakesh Pandita Mr Amit Mishra DrManish

Desai and MrPrabhod Bhatt for their kind cooperation

I am extremely grateful to Mr Anjan Pyne and Mr Vasudev Deshpande

for sharing their valuable time and helping me throughout the project

I also express my gratitude towards all the respondents whom I visited for

data collection

Lastly I thank all those who helped me directly or indirectly in the

successful completion of this project

Akshay A Parab

Table of contents

1) Executive summary

2) Polymers

Polymers Capacities in 2008 India vs World

3) Polypropylene (PP)

Domestic scenario

Installed capacities

4) Polypropylene Market

Market trend in percentage

5) Analysis of Plastic woven sack market

Raffia Global consumption

Raffia Domestic consumption

A) Raffia Growth trend in India

B) Raffia capacity additions 2008-09

C) Customer satisfaction level

6) Plastic woven sacks and jute woven sacks ndash A comparison

7) End users consumption of Raffia

Cement sector

Fertilizers sector

Food grains Sector

8) SWOT analysis

9) Michael Porterrsquos Five Force Model

10) Conclusion and Recommendations

EXECUTIVE SUMMARY

The project talks about the present and potential demand for

polypropylene raffia in Cement Fertilizers and food grain sector Overall

nearly 430crores plastic woven sacks were used in cement sector 74crores

sacks were used in fertilizer sector and food grain sector showed good growth

during 2008-2009 The project views these three sectors and estimates its

future demand Project also studies the raffia sector to know the trends and

growth potential in that sector

The traditional sacking application cement contributes about 37 of total

raffia demand of 674KT in 2008-09 Taken into account jute sack shortages

and the dilutions by JPMA it is estimated that there will be massive increase

in raffia demand in future Demand is expected from other diversified sacking

and non- sacking applications

The present end sector distribution of sacking use can be summarizes

as follows

Bulk Packaging Sector wise demand ndash 674 KT

Cement37

Polymers3

Fabrics7

Chemicals2

Food grains11

MF amp Ropes

6Export sacks

9

FIBC15

Others10

The various diversified application of raffia tapes and fabrics with an

estimated potential of 113000 tones in 2004-05 is growing at 9 to touch

163000 tones by 2008-09 which indicates tremendous growth potential n

future This shows there is a massive growth potential in this sector in bulk as

well as non-sacking operations

Diversified market potential for 2008-09

Geotextiles18paper

bailing13

fruits amp vegetables

14

tarpulins20

other 2

sugar15

tea6

Staple food6

Postal bags6

The demand in food grains fertilizers and exports is expected to go up

Packaging of food grains in plastic woven sacks has gone up by 12 year

2008-09 Thus there is huge growth potential in the food grain sector for raffia

industry

Polymers

Small Share of Global Market

The Indian petrochemicals industry is small by international standards

with ethylene capacity in India accounting for only 23 of global

capacity Polymers constitute the single largest segment within the

Indian petrochemical industry but are rather small in the global context

accounting for only around 25 of the global production

Building Blocks amp Polymers Capacities in 2008

India vs World

(in KT) India World

Indias

share

Building

Blocks

Ethylene 2816 117745 23

Propylene 1999 71303 27

Polymers

PE 1975 73596 24

PP 1990 44668 44

PVC 1002 37606 26

PS 423 15525 24

ABS 91 8616 09

The Indian petrochemical industry has witnessed rapid reduction in

import tariff since 1991 which has forced the industry to face increased

international competition from countries with feedstock advantage

(Middle East) where low price of feedstock eg gas at 075$mmbtu in

Saudi Arabia petrochemical production cost is just a fraction of the

same in India which gives manufacturers in those countries significant

advantage at the export front

Based on the trends in the end-user sectors factoring in the various

parameters affecting demand for polymers this section tries to arrive at

the likely demand scenario in the coming years through 2011-12

The demand scenario projected is based on the following assumptions

bull Indian economy would be able to sustain the growth tempo amp

continue to grow at rates witnessed in the last 3 years or more

bull The issues which are currently hindering industryrsquos growth

would be addressed appropriately to the industryrsquos satisfaction

Polypropylene (PP)

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

1) Executive summary

2) Polymers

Polymers Capacities in 2008 India vs World

3) Polypropylene (PP)

Domestic scenario

Installed capacities

4) Polypropylene Market

Market trend in percentage

5) Analysis of Plastic woven sack market

Raffia Global consumption

Raffia Domestic consumption

A) Raffia Growth trend in India

B) Raffia capacity additions 2008-09

C) Customer satisfaction level

6) Plastic woven sacks and jute woven sacks ndash A comparison

7) End users consumption of Raffia

Cement sector

Fertilizers sector

Food grains Sector

8) SWOT analysis

9) Michael Porterrsquos Five Force Model

10) Conclusion and Recommendations

EXECUTIVE SUMMARY

The project talks about the present and potential demand for

polypropylene raffia in Cement Fertilizers and food grain sector Overall

nearly 430crores plastic woven sacks were used in cement sector 74crores

sacks were used in fertilizer sector and food grain sector showed good growth

during 2008-2009 The project views these three sectors and estimates its

future demand Project also studies the raffia sector to know the trends and

growth potential in that sector

The traditional sacking application cement contributes about 37 of total

raffia demand of 674KT in 2008-09 Taken into account jute sack shortages

and the dilutions by JPMA it is estimated that there will be massive increase

in raffia demand in future Demand is expected from other diversified sacking

and non- sacking applications

The present end sector distribution of sacking use can be summarizes

as follows

Bulk Packaging Sector wise demand ndash 674 KT

Cement37

Polymers3

Fabrics7

Chemicals2

Food grains11

MF amp Ropes

6Export sacks

9

FIBC15

Others10

The various diversified application of raffia tapes and fabrics with an

estimated potential of 113000 tones in 2004-05 is growing at 9 to touch

163000 tones by 2008-09 which indicates tremendous growth potential n

future This shows there is a massive growth potential in this sector in bulk as

well as non-sacking operations

Diversified market potential for 2008-09

Geotextiles18paper

bailing13

fruits amp vegetables

14

tarpulins20

other 2

sugar15

tea6

Staple food6

Postal bags6

The demand in food grains fertilizers and exports is expected to go up

Packaging of food grains in plastic woven sacks has gone up by 12 year

2008-09 Thus there is huge growth potential in the food grain sector for raffia

industry

Polymers

Small Share of Global Market

The Indian petrochemicals industry is small by international standards

with ethylene capacity in India accounting for only 23 of global

capacity Polymers constitute the single largest segment within the

Indian petrochemical industry but are rather small in the global context

accounting for only around 25 of the global production

Building Blocks amp Polymers Capacities in 2008

India vs World

(in KT) India World

Indias

share

Building

Blocks

Ethylene 2816 117745 23

Propylene 1999 71303 27

Polymers

PE 1975 73596 24

PP 1990 44668 44

PVC 1002 37606 26

PS 423 15525 24

ABS 91 8616 09

The Indian petrochemical industry has witnessed rapid reduction in

import tariff since 1991 which has forced the industry to face increased

international competition from countries with feedstock advantage

(Middle East) where low price of feedstock eg gas at 075$mmbtu in

Saudi Arabia petrochemical production cost is just a fraction of the

same in India which gives manufacturers in those countries significant

advantage at the export front

Based on the trends in the end-user sectors factoring in the various

parameters affecting demand for polymers this section tries to arrive at

the likely demand scenario in the coming years through 2011-12

The demand scenario projected is based on the following assumptions

bull Indian economy would be able to sustain the growth tempo amp

continue to grow at rates witnessed in the last 3 years or more

bull The issues which are currently hindering industryrsquos growth

would be addressed appropriately to the industryrsquos satisfaction

Polypropylene (PP)

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

The project talks about the present and potential demand for

polypropylene raffia in Cement Fertilizers and food grain sector Overall

nearly 430crores plastic woven sacks were used in cement sector 74crores

sacks were used in fertilizer sector and food grain sector showed good growth

during 2008-2009 The project views these three sectors and estimates its

future demand Project also studies the raffia sector to know the trends and

growth potential in that sector

The traditional sacking application cement contributes about 37 of total

raffia demand of 674KT in 2008-09 Taken into account jute sack shortages

and the dilutions by JPMA it is estimated that there will be massive increase

in raffia demand in future Demand is expected from other diversified sacking

and non- sacking applications

The present end sector distribution of sacking use can be summarizes

as follows

Bulk Packaging Sector wise demand ndash 674 KT

Cement37

Polymers3

Fabrics7

Chemicals2

Food grains11

MF amp Ropes

6Export sacks

9

FIBC15

Others10

The various diversified application of raffia tapes and fabrics with an

estimated potential of 113000 tones in 2004-05 is growing at 9 to touch

163000 tones by 2008-09 which indicates tremendous growth potential n

future This shows there is a massive growth potential in this sector in bulk as

well as non-sacking operations

Diversified market potential for 2008-09

Geotextiles18paper

bailing13

fruits amp vegetables

14

tarpulins20

other 2

sugar15

tea6

Staple food6

Postal bags6

The demand in food grains fertilizers and exports is expected to go up

Packaging of food grains in plastic woven sacks has gone up by 12 year

2008-09 Thus there is huge growth potential in the food grain sector for raffia

industry

Polymers

Small Share of Global Market

The Indian petrochemicals industry is small by international standards

with ethylene capacity in India accounting for only 23 of global

capacity Polymers constitute the single largest segment within the

Indian petrochemical industry but are rather small in the global context

accounting for only around 25 of the global production

Building Blocks amp Polymers Capacities in 2008

India vs World

(in KT) India World

Indias

share

Building

Blocks

Ethylene 2816 117745 23

Propylene 1999 71303 27

Polymers

PE 1975 73596 24

PP 1990 44668 44

PVC 1002 37606 26

PS 423 15525 24

ABS 91 8616 09

The Indian petrochemical industry has witnessed rapid reduction in

import tariff since 1991 which has forced the industry to face increased

international competition from countries with feedstock advantage

(Middle East) where low price of feedstock eg gas at 075$mmbtu in

Saudi Arabia petrochemical production cost is just a fraction of the

same in India which gives manufacturers in those countries significant

advantage at the export front

Based on the trends in the end-user sectors factoring in the various

parameters affecting demand for polymers this section tries to arrive at

the likely demand scenario in the coming years through 2011-12

The demand scenario projected is based on the following assumptions

bull Indian economy would be able to sustain the growth tempo amp

continue to grow at rates witnessed in the last 3 years or more

bull The issues which are currently hindering industryrsquos growth

would be addressed appropriately to the industryrsquos satisfaction

Polypropylene (PP)

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

future This shows there is a massive growth potential in this sector in bulk as

well as non-sacking operations

Diversified market potential for 2008-09

Geotextiles18paper

bailing13

fruits amp vegetables

14

tarpulins20

other 2

sugar15

tea6

Staple food6

Postal bags6

The demand in food grains fertilizers and exports is expected to go up

Packaging of food grains in plastic woven sacks has gone up by 12 year

2008-09 Thus there is huge growth potential in the food grain sector for raffia

industry

Polymers

Small Share of Global Market

The Indian petrochemicals industry is small by international standards

with ethylene capacity in India accounting for only 23 of global

capacity Polymers constitute the single largest segment within the

Indian petrochemical industry but are rather small in the global context

accounting for only around 25 of the global production

Building Blocks amp Polymers Capacities in 2008

India vs World

(in KT) India World

Indias

share

Building

Blocks

Ethylene 2816 117745 23

Propylene 1999 71303 27

Polymers

PE 1975 73596 24

PP 1990 44668 44

PVC 1002 37606 26

PS 423 15525 24

ABS 91 8616 09

The Indian petrochemical industry has witnessed rapid reduction in

import tariff since 1991 which has forced the industry to face increased

international competition from countries with feedstock advantage

(Middle East) where low price of feedstock eg gas at 075$mmbtu in

Saudi Arabia petrochemical production cost is just a fraction of the

same in India which gives manufacturers in those countries significant

advantage at the export front

Based on the trends in the end-user sectors factoring in the various

parameters affecting demand for polymers this section tries to arrive at

the likely demand scenario in the coming years through 2011-12

The demand scenario projected is based on the following assumptions

bull Indian economy would be able to sustain the growth tempo amp

continue to grow at rates witnessed in the last 3 years or more

bull The issues which are currently hindering industryrsquos growth

would be addressed appropriately to the industryrsquos satisfaction

Polypropylene (PP)

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

The Indian petrochemicals industry is small by international standards

with ethylene capacity in India accounting for only 23 of global

capacity Polymers constitute the single largest segment within the

Indian petrochemical industry but are rather small in the global context

accounting for only around 25 of the global production

Building Blocks amp Polymers Capacities in 2008

India vs World

(in KT) India World

Indias

share

Building

Blocks

Ethylene 2816 117745 23

Propylene 1999 71303 27

Polymers

PE 1975 73596 24

PP 1990 44668 44

PVC 1002 37606 26

PS 423 15525 24

ABS 91 8616 09

The Indian petrochemical industry has witnessed rapid reduction in

import tariff since 1991 which has forced the industry to face increased

international competition from countries with feedstock advantage

(Middle East) where low price of feedstock eg gas at 075$mmbtu in

Saudi Arabia petrochemical production cost is just a fraction of the

same in India which gives manufacturers in those countries significant

advantage at the export front

Based on the trends in the end-user sectors factoring in the various

parameters affecting demand for polymers this section tries to arrive at

the likely demand scenario in the coming years through 2011-12

The demand scenario projected is based on the following assumptions

bull Indian economy would be able to sustain the growth tempo amp

continue to grow at rates witnessed in the last 3 years or more

bull The issues which are currently hindering industryrsquos growth

would be addressed appropriately to the industryrsquos satisfaction

Polypropylene (PP)

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

The demand scenario projected is based on the following assumptions

bull Indian economy would be able to sustain the growth tempo amp

continue to grow at rates witnessed in the last 3 years or more

bull The issues which are currently hindering industryrsquos growth

would be addressed appropriately to the industryrsquos satisfaction

Polypropylene (PP)

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

PP is the main thermoplastic produced from propylene It is obtained from

polymerization of propylene in the presence of suitable catalysts

PP is crystalline has high molecular weight no linear side chains and good

directional stability It has a high strength-to-weight ratio good process ability

and gas barrier properties With density of 089 gm per cc it is the lightest

thermoplastic polymer PP has high melting point chemical and heat

resistance good fatigue resistance low permeability to water and is

unaffected by bacteria or fungi

Polypropylene can be classified depending upon its co- monomer

1) Homopolymers

2) Random Copolymer

3) Impact Copolymer

Using common plastic processing techniques like injection moulding

extrusion compression moulding and thermoforming PP is converted to Flim

fibres filaments injection moulded goods extruded sheets and pipes

It is used in consumer goods packaging home products automotive parts

industrial products textile yarns fibres and fabrics

During 2000-01 to 2006-07 demand for PP increased at a CAGR of 7 per

cent The major PP producers are RIL and HPL In 2007-08 the installed

capacity of PP in India was around 2 million tpa and the marketsize was

estimated at Rs118 billion in 2007-08

Domestic scenario-

In India the PP market size (demand) was estimated at 154 million tones in

2007-08 RIL and HPL are the major producers of PP

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

PP supply is expected to increase at a CAGR of 13-14 per cent during 2007-

08 to 2012-13 while demand is expected to increase at a CAGR of 10-11 per

cent The surplus is expected to increase in the PP market primarily on

account of huge capacity additions by RIL and IOC

Capacity structure

RIL is the market leader in this segment with a capital share of 87 per cent

followed by HPL with 13 per cent

PP Installed capacities

(tpa) Location State Capacity technology 2007-08

Initial

start-up

date

Reliance Industries Baroda Gujarat 160000 Montell (Spheripol) Apr-85

Reliance Industries Nagothane Maharashtra 120000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425000 Union Carbide (Unipol) Oct-96

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280000 Union Carbide (Unipol)

2001-02

Total 2000000

Source Industry CRISIL Research

The entry barriers in this segment are high as capacity sizes are large and

investments of up to Rs 5 billion are required for a 350000 tpa PP plant

Polypropylene Market

Market trend in percentage

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Woven sacks tarpulins 33

Household applications 20

Textile pakaging multi-layer films 17

Food packaging 7

multifilaments 5

Co-polymer application (IM)

16

BM articles 2 Woven sacks tarpulins

Household applications

Textile pakaging multi-layer films

Food packaging

multifilaments

Co-polymer application(IM)

BM articles

Prices

In 2008 average international PP price is expected to remain strong due to

an increase in the prices of propylene and healthy demand

Factors influencing prices-

Fluctuations in the crude oil and natural gas prices

Economic growth of the major polypropylene consuming countries like

USA and China

Domestic industrial growth and development

Demand for consumption in the international market

Government policies and regulation

PP Market forecast

(Tonnes) Process Major

applications

2007-

08E

2008-

09F

2009-

2010F

2010-

2011F

2011-

2012F

2012-

2013 F

CAGR

(per

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

cent)

PPHP

127545

1

139739

2

154474

8

171467

1

190272

7

211605

6 11

Raffia- fibres Extrusion

Woven sacks

Tarpulins 465724 509036 554849 607560 656165 708658 88

Extrusion Others 34034 38118 42883 48458 54999 62424 129

Injection

moulding IM

household

applications

furniture others 313388 335012 358295 382211 408679 435959 68

TQPP films Extrusion

Textile packaging

and multi-layer films 254035 268725 293986 321396 351314 383382 86

BOPP films Extrusion Food packaging 136000 165920 204082 253061 316326 395408 238

Fibres and

filaments Extrusion Ropesmultifilaments 72270 80581 90654 101985 115243 130225 125

PPCP 266038 287270 313726 342063 374204 410110 9

Injection

moulding IM Various application 243883 263786 288833 315551 345704 379188 92

Automobiles 60196 63969 70452 76791 83741 91979 88

Luggage 33997 37397 41510 45661 50684 55752 104

Furniture 82606 88306 94443 100748 107724 114915 68

Appliances and

others 67084 74114 82427 92352 103555 116542 117

blow moulding BM Household articles 22155 23484 24893 26511 28500 30922 69

TOTAL

154148

9

168466

3

185847

4

205673

4

227693

1

252616

6 104

Raffia Industry (an overview)

Source Industry CRISIL Research

Source Crisil researchE Estimate F Forecast BM Blow moulding IM Injection Moulding CAGR Compounded annual growth rate

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Analysis of Plastic woven sack market

Raffia Global consumption

2008 total consumption ndash 84 MMT

PE Bulk Packaging Growth - 68 CAGR over last 5 years

PP Bulk Packaging Growth ndash 81 CAGR over last 5 years

PE14

PP86

PP Bulk Packaging is about 15 of total PP consumption

PE Bulk Packaging is about 16 of total PE consumption

Source CMAI 2008

Raffia Domestic consumption-

PP Raffia Company share 2008-09

Total consumption about 676 KT

RIL76

HPL 15

IMPORTED9

Consumption has increased by 4 to 676 KT from 644 KT

A) Raffia Growth trend in India

Source Industry

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Industry sales 2004-05 2006-07 2006-07 2007-08 2008-09 CAGR

PP 380 439 534 643 676 15

PE 215 215 234 263 241 0

Total 595 654 768 906 917 10

Growth 4 10 17 18 1

0

100

200

300

400

500

600

700

800

900

1000

2004-05 2006-07 2006-07 2007-08 2008-09

PP

PE

Total

From the above graph it is clear that there is an inter polymer shift to PP as

the sales of shows about 10 per cent CAGR growth

Some of the reasons for this shift are as follows

Change in market preference

PP has low density among all synthetic polymers

PP has direct softening point and thus a direct support for its

use in cement and where there is hot filling of certain products

PP has a higher coefficient of friction and hence higher stack

ability during storage

B) Raffia capacity additions 2008-09

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

205 KTA capacities added in North-East West amp South

377 383

32 18

98

22

369

437

19

89

0

5

10

15

20

25

30

35

40

45

50

Ahmed

abad

Kolkat

a

Chand

igar

h

Daman

Delhi

Hyder

abad

Indo

re

Kanpu

r

Mad

ras

Mum

bai

The operating capacity can be defined as the extent to which the

manufacturers are utilizing the plants

Mathematically it can be defined as

Operating capacity = Capacity being used for production X 100

Total Installed Capacity

The average operating capacity of the manufacturers is about 80-85 This

shows that the producers in order to survive in this sector have to make full

utilization of their capacities as their profits depend on the volumes Therefore

it is important for them to select the proper machinery and also maintain it

properly besides this they have to also think about the plant layout that will

enable them to utilize the manpower properly so that they can utilize every

single minute as at the end of the day it reflects in the loss of few thousand

rupees Therefore it is not only essential but also imperative that they utilize

the machinery to 90 of its capacity to make their unit a profitable one and to

write off the plant and machinery cost within 2-3 years period

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Study also revealed that the conversion cost at the factory is coming to

around Rs12kg whereas from market one gets around Rs19kg Therefore

the profitability becomes only Rs7kg of material processed Since the per

unit return on sacks varies between 30-50 paisa therefore it is imperative to

produce volume and hence within 3-4 years one has to plan a above 80

looms project to become a more profitable and viable unit It also indicates

that uniform flow of raw material has to be maintained as the heating time

required for machinery is about 2 hours and each loom stores about 500kg of

raw material (work in process) Thus saving of electricity wastage and

overhead cost becomes a key factor for profitable venture

C) Customer satisfaction level

The main factors guiding the source of raw material are

Quality

Availability

Cost

Quality plays a vital role in deciding the choice of raw material supplier

The cost of the raw material is almost same but it is still a major guiding force

behind choice of the raw material

Availability forms a major guiding force behind the buying decision as cost

and quality being almost same

Plastic woven sacks and jute woven sacks ndash A comparison

Sr No Description Jute Bags PP Bags

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

1 Mass of bag 665gms 135gms2 Moisture regain 22 Nil

3Max oil content on dry de-oiled material basis 3 per cent max by wt Nil

4Basic price per bag (excluding sales tax)

Rs1705 (Average of last 5 months amp incl of excise duty)

Rs1044(incl of 16 excise duty amp freight)

5Cost of packing 1milMt of wheatrice

Rs3750crs Rs1875 per bag (ieRs1705+ Rs170)

Rs2088crs Rs1044 per bag

6Packing cost of 20milMts of wheat by FCI Rs75000cr Rs41760cr

7Packing cost of 20milMts of rice by FCI Rs41700cr

8 Aeration Good

9 ProblemQuality complains

Supplies are generally not strictly as per delivery schedule and have been carried over to next months in the past in spite of pre-inspection by Quality Assurance Wing of DGSampD complaints about poor texture of bags leading to spillage of grains and variations in length width of bags are there Besides complaints about damage by water rains during transit are also very frequent

Good no mould cake formation condensation or musty smell on rice wheat Raw material available in plenty No disturbance in supply schedule The quality checks may be easier to enforce on PP bags and the possibilities of bags getting damage by water rain during transit will be lesser

10 Other advantagesdisadvantages

1 Not resistant to water seepage and contamination2 Contamination of food grains by jute batching oils 3 Cost of transportation is much higher than of PP bags which are almost 15th in weight of jute bags 4Rough handling may result in bursttear of bags

1 Resistant to water seepage and contamination is very high 2 No JBO Present and therefore no such possibility of contamination of grains with JBO 3 Cost of transportation are much lesser than the jute bags 4 During trails no bursttear of bags so far noticed on rough handling of bags

End users consumption of Raffia

A Cement sector -

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

No of player ndash 54

Capacity-215 MMT

Large cement plants-136

Mini cement plant-382

ACC11 Ambuja

9

others55 Ultratech

9India Cement

4

Jaypee group3

Top 6 players constitute about 45 of the production capacity

Demand-supply scenario in cement industry projecting comparison

between total pp consumed Vs RIL pp consumption

Major Players

Holcim (ACC

ampAmbujaAditya Birla

Group (Grasim amp

Ultratech)

India Cements

Jaypee Group

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

380

462513

627600

271

326

380

469505

0

50

100

150

200

250

2004-05 2005-06 2006-07 2007-08 2008-09

0

100

200

300

400

500

600

700

cement capacity(mn tonnes)

cement consumption(mntonnes)

pp consumption( kt)

Ril pp consumtion(kt)

Polymer consumption for cement storage rose steadily over the quarter of the

last decade due to much obvious increase in the demand of packaged

cement India with a large number of pipeline infrastructure projects has

sustained a favorable growth in infra related areas even in times of economic

slowdown

The Comparative analysis for the years 07-08 and 08-09 testify the fact that

demand for packaged cement and subsequently polymer for its packaging

has not receded even in the slowdown

Cement Vendors chose polymer vendors based on Performance Evaluation

Financial Health MoU status and technology Efficiency Infrastructure and

Logistics Distance from the production Unit also plays a vital Role in selection

of polymer bags

Threats to Polypropylene Consumption

1 Ready-Mix Cement is the looming threat to the demand of packaged

cement and polymer consumption (polypropylene) RMC can be

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

delivered to the construction sites in transit mixers and can be used

directly without any further treatment

a Unpacked cement consumption increased by 15 compared to

last year for a particular Vendor (ACC Cement)

b It has already eaten into about 2 of market share of plastic

woven sack(used for storing cement)

c Advantages of RMC over SMC

1 Assured and uniform quality of required grades

2 Speedy construction through mechanized

operations

3 Multi Transportation of raw materials for concrete

eliminated

4 Environmental Friendly

2 Increase in Freight costs due to increase in fuel and steel prices at

about 5 during 2008-10

3 Increase in of unpacked cement including

a Out of 217 MMT of cement used 12 MT was RMC and 15MT

packed in AD star bags

4 Increased use of paper AD star bags and Bulk Jumbo Bags

5 Environmental challenges Change in law Emission norms

6 Lesser availability of Raw Materials for production of polymer bags

7 Expected fall in cement prices (15-20Rs per bag) might effect

polypropylene consumption

Opportunities

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

1 Growing Cement requirement

a) Northern Region

Cement Production has been increased by 11 whereas consumption by 3

b) Western Region

Cement Production has been reduced by 3 whereas consumption by 8

c) Eastern Region

Cement Production has been increased by 7 whereas consumption by 10

d) Central Region

Cement Production has been increased by 3 whereas consumption by 5

e) Southern Region

Cement Production has been increased by 7 whereas consumption has increased by 11

2 Government norms

3 Opportunities in rural market

B Fertilizers sector

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Installed capacity ndash 1842lakhs MTAnnum

Out of which 12461lakhs MT is for nitrogen and 5959lakhs MT is for

phosphate

No of fertilizer plants

Large size 57

Small and medium size 78

Sector wise Nutrient wise installed capacity of fertilizer manufacturing units is

given below

Manufacturing

units

Sr No Sector Capacity (lakh MT) Percentage share

Nitrogen Phosphate Nitrogen Phosphate

1 Public sector 3598 421 28 774

2

Cooperative

sector 2941 103 2358 1602

3 Private sector 5919 4509 4842 7625

Total 12458 596 100 100

The standard size of package used is 50kgs however some of them were

also using packages of 25kgs

The factors deciding the choice of the suitable packaging material are

The hygroscopic nature of fertilizers

The condition of usage such as dampness etc

Prolonged storage of fertilizers due to seasonality

Subsidy borne by government of India due to relative cost (applies to Urea)

The type of packaging material used is either jute or HDPE depends mainly

on what type of fertilizer the company is producing whether it is composite

fertilizer or Urea If it is urea then 20 of it has to be packed in the jute bags

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

as per government regulation however if it is composite fertilizer then it is

packed in HDPE bags

Per bag cost analysis of PEPP bags as on 1 st June 2009

cost analysis PE PPraw material costMT 694 613cash discount 06 06 688 607 excise duty+ E Cess 0082 0082 744 657trade discount 20 30 724 627 per kg cost 724 627

Bag costingraw material 088 088 637 552filler Rs26kg 012 012 31 31conversion cost 130 130costkg 798 713 UV Stabilizer cost 00 15costkg 798 728 weight of bag 1280 1170 total costbag 102 85

Note

To a processor QD amp AQD along with MOU discounts are also paid If we want to calculate exact cost of production then the same also need to be deducted from resin price afterwards

Also we have not assumed price differential of LLDLD or PPLLLD being used for lamination of between the 20-25g This is virtually very low

While quoting price customer will not pass on the cash discount amp TD to processor hence his quote will increase by that amount too

Also the non availability of raw material these days has resulted in loss of

sales (both jute and polymers)

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

It has been found that mainly HDPE bags are used for packing as compared

to PP bags as PP bags have low shelf life and the cannot be protected from

harmful UV rays and it needs a UV stabilizer which in case of PE bags its not

required

Thus it is clear that the fertilizer sector on the whole provides a rich market for

plastic woven sacks However government regulation is acting as an obstacle

to fully utilize this area Apart form these cost is another factor affecting the

choice of packaging material in this sector since a bag of fertilizer

approximately cost around Rs450 as compared to the cost of a cement bag

which is around Rs280

C Food grains Sector -

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

India is the only country in the world whose nearly 76 of population is

directly dependant on Agriculture and related industries Consequently food

grains packaging is a big business which complements the large amount

agricultural surplus available

Estimated 80 domestic production of food grains are Rice and Wheat

Therefore the study focused on these two products

Current domestic food grain and pulses production is 470 million tones and

ranked No2 in food grain production in the world Rice and wheat contributes

77 of total food grain production 30-40 food grains is procured and stored

by Govt agencies and rest by private operators Loss due to poor storage is

as high as 5 Presently there are three bulk packaging options namely jute

bags HDPE woven sacks and PP non-woven sack Retail packs are from 1

2 5 and 10kgs The packaging options are PP non-woven HDPE woven sack

with reverse printed BOPP film laminated and multilayer laminates Export of

17MMT is carried out either in FIBC or in jute bags for bulk and PET jars for

retail sale It is estimated that 337 MMT of food grains will be produced by

2011-12 Steady decline in jute production is taking place Therefore

alternate packaging material is required

Agricultural Products are broadly classified into two main types-

1 Food Grains

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

2 Commercial Crops

Domestic Food Grain Production

Production (million tones)

2007-08 2008-09 2007-08 2008-09

Food

grains Pulses

Rice 9431 971 Tur 315 253

Wheat 7268 7783 Gram 582 623

Jowar 789 732 Urad 152 098

Bajra 978 863 Moong 152 049

Maize 1821 1756 Other 289 381

Ragi 243 178

Milets 061 039

Barley 13 152

Need for Storage of Food Grains

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

1 Storage is necessary for uniform supply

2 To preserve them for future use

3 Storage starts immediately after procurements of food grains

4 To provide a reserve for contingencies such as droughts floods and

war

5 To speculate on high prices either in domestic or in the export market

Procurement and losses while Storage

1 About 30 to 40 per cent of the grain produced in the country is stored

by Government and private agencies

2 Remaining 60 to 70 per cent is retained by farmers for household use

and consumption

3 The loss of food grains stored by Govt agencies is less than 1 But

at the farmers end it can be as high as 5 per cent as a national

average

Food grain Packaging (Maharashtra ndash FCI)

Jute bags are mainly used for packing of food grains in Maharashtra but the

traditional trend of using jute bags for packaging are changing

Food grains packed in plastic bags in year 2008-09 7091 MT in Borivali

district (1 50000 bags)

Food grains packed in plastic bags from Jan 2009- April 2009 10000 MT in

Borivali district (2 00000 bags)

Maharashtra region is divided into 6 district divisions with its storage capacity

and monthly requirement given below

DISTRICT STORAGE CAPACITY MONTHLY REQUIREMENT

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

(metric tones) (metric tonnes)

Borivali 100000 20000

Panvel 80000-90000 18000-19000

Nagpur 600000-700000 120000-140000

Manmad 1000000-1100000 200000- 240000

Pune 500000-600000 100000-120000

Goa 30000-40000 8000-10000

Food grains if required are stored for a period of 2-3 years

Main factors that influence packaging in this industry are

Requirement to prevent contamination of packed material

Packaging material must be moisture resistant

Packaging material must be rot resistant

Good shelf life even under exposed and covered storage

Other factors

Better cost economics

Easy availability of packaging material

Subsidy borne by government

Reasons for not using Plastic bags for packaging till date

Fumigation of grains is problem because of compact nature of

plastic bags

Availability of Aluminium Phosphide tablets which is used as

insecticides at these districts are nil

Sliding down and down gradation also becomes a problem

Storage stack which is 18-22bags in height has to be reduced to

13-14 bags in case of plastic bags

Availability and price of jute bags being major drawbacks jute bags are slowly

but surely replaced by plastic bags Cost is the main influencing factor for

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

these changing trends (Basic price per bag excluding sales tax Rs1705 for

jute bags and Rs1014 for plastic bags)

Changing trends seen in packaging-

During recent times there is also a shift in packaging pattern observed from

larger pack to the medium sized packing of 10-25kg pack size of food grains

Plastic woven sack improves printability and eliminates dent formation during

stacking transportation

It reduces the cost compared to packaging types viz metal container such as

tin and others

Multi layer polyethylene bags are much preferred for small and medium size

packaging

Polyethylene packaging has show a good demand in this sector

There is a bright future of various modes of plastic packaging in food grain

sector Emergence of more and more private players in organized retail

sector the scenario of bulk storage and packaging is changing Due to

growing awareness against adulteration amongst consumers and various

types of sales methods adopted by sellers a revolution in retail food grain

packaging is emerging in the country

SWOT Raffia industry

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Strength

Growing industrialization in India leading to more demand of sophisticated packaging by end customer

The demand is directly related to demand of end product so till time a new better material does not come to replace the position is safe

New big player entering the market

Weakness

Training required for handling Reservation of jute packaging in food grains and other sectors which

can be a rich market Manufactures lack commercially viable units Low resale value Resale only possible 2-3 times Stack ability height less than jute High capacity production required in order to earn profit

Opportunities

Exports provide a sound market Poor showing of jute industry Increasing production of cement fertilizers etc Food grain sector can be a huge market

Threats

Poor quality of product might affect good export potential International fluctuation in petroleum products affects industry Criticism from certain sector of society as being dangerous to

environment Not bio degradable High dependency on labors

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Conclusions

Polypropylene Industry Fluctuations in the crude oil and

natural gas prices

Economic growth of the major polypropylene consuming countries like USA and China

Demand for consumption in the international market

Government policies and regulation

Substitutes

cemento Ready mix cemento AD start bags

Food grainso Multi layered

polyethylene bags Fertilizer

o Polypropylene bags

Buyerrsquos views

Availability Cost Quality of the raw material

Low profit margins due to high over head charges

Suppliers

Reliance Industries Limited (76 of the market share)

Haldia Petrochemicals(15 of the market share)

Import(9 of the market share)

Potential Entrants

Indian Oil Corp Limited

Foreign player (raw material)

Michael Porterrsquos Five Forces Model

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Foreign raw material manufactures are targeting Indian market so the

share of import is expected to increase

Cement serves as an important market in Maharashtra however Raffia

manufactures earn a lot of profit from unorganized sector as well

Substantial portion of sales goes to tarpaulin which is again a seasonal

market hence the manufacturers keep looking for new areas for

expansion such as paper bailing defense geotextiles etc

Domestic market is more price sensitive than quality sensitive

Profit margin in this industry is relatively low due to high overhead

charges

Overall for most of the manufacturers quality of the raw material does

not play an important part Main factors they consider while choosing

the raw material is cost and availability

Future of raffia industry show ample growth and many other varied

uses of woven sacks are coming up which shows the industry is going

to flourish in future Also since it is packaging industry demand is a

derived demand therefore its demand will always remain until a new

better packaging material is found

Food grain sector shows ample scope in future as government is

relaxing the jute packaging orders

There is lot of scope in exports for this industry that should be properly

utilized by maintaining the quality

Domestic market also offers a lot of opportunity from unorganized

sectors

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Exports can be of a much more importance than they have now as it is

a labour centric industry which provides an edge to India

One of the major problems concerning this industry is the quality of

manpower which is generally of lower profile mainly illiterate labour

force abounds these factories

Demand for raffia grade for woven sack applications is expected to

grow at a CAGR of 92 per cent to over 721842 tones

HDPE is preferred for packaging of fertilizers due to its moisture

resistance property

Growth in demand from the raffia sector will be largely due to the

exports of woven sacks

Multi layered polypropylene bags can be a good substitute of pp bags

in fertilizers and food grains sectors because of its low processing cost

and high aesthetic values

Thus on the while we can summarize the findings and say that the

Raffia industry in India has been focusing on the traditional sacking

application like cement in view of large volumes offered by these

sectors The industry should now formulate a strategy to capitalize on

the opportunities and tap the potential in diversified markets both in

sacking and non sacking applications Many more applications in a

variety of diversified markets exit globally and can be successfully

transplanted to suit the Indian scenario Such developments will not

only bring about better prospects of value addition for the raffia industry

but also have a multiplier effect for the growth in end-use markets that

this industry caters

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Recommendations

The availability of raw material should be made faster

Focus should now shift on bringing various new diversified applications

of Polypropylene raffia as Polyethylene is gaining strengthen in food

grains and fertilizer sector

The quality should be increased as exports are opening up which

stress the need for having good quality products which can be derived

only from good quality raw material

There is increasing amount of entries of foreign raw material providers

to Raffia industry so Indian raw material manufacturers need to keep

good check on their strategies

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Bibliography

Plastic Woven sack News its various issues

The Annual General Repot for the period 2008-2009 of RIL

Plastic Industry ndash January February issues

Market Survey by Dr I Satya Sundaram

CRISIL Research 2007 ndash 2008

Cement Industry updates

National Journal ndashPetrochemicals

Notes collected from FAI about the Indian Fertilizer Industry

Plast India Reviews

Other sources of information were various Journals on Plastic Industry

Various research methodologies

Internet

Annexure

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

Questionnaires for the Raffia manufacture-

1) Primary Marketa) Local b) Regional c) National

2) What threats are you facing from current market

3) How much is the approximate requirement of raw material a month

4) Is raw material availability a problem a) YES b) NO

5) Which (PP Raffia) grades do you purchase regularly

6) Have you come across any new application of Raffia would you be adopting it

7) Changing trends in market

8) Rate the raw material on a scale of 1 2 3 4 5 6 7 8 9 10 1 poor 10 the best

9) Do you see an increase in requirement of raw material in near future a) YES b) NO

10 Future expansion plans a) Yes b) No c) Canrsquot say

11) Is the brand name of the company a criteria in purchasing raw material

12) Do you have your own lamination plant a) Yes b) No

13) Total installed capacity of the plant

14) Capacity being used for production

15) Production per hour

16) No of looms

a) Less than 10 b) 10-15 c) 15-20 d) 20-25 e) 25-30 f) 30-35

g) 35-40 h) Above 40

17) What factors determine your sales price

18) What are the problems faced by industryQuestionnaires for End Users (Cement Industry) -

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

1) What is the market size

2) Primary Marketa) Local b) Regional c) National d) International

3) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

4) What are the problems faced by industry What measures can be taken to overcome them

5) Future expansion plans a) Yes b) No c) Canrsquot say

6) Total annual production for Maharashtra (in million tones) a) Below 2 b) 2-3 c) 3-4 d) 4-5 e) above 5

7) What of total production is packed generally

8) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

9) Any other substitute to PWS better suited for packaging

10) Do you see an increase in sales in near future a) YES b) NO

11) Any particular monthly trend followed in sales

12) How many vendors do you have for packaging materiala) Below 10 b) 10-15 c) 15-20 d) 20-25 e) more

13) On what basis are the vendors chosen

14) Does the distance of the manufacturer of plastic woven sacks from production unit mattera) Yes b) No

15) Variety of cement requested and their percentages of the total production

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

No Name of Product Percentage Product 1Product 2Product 3

16) Cement shipping waysBulk cement by rail 1048576 Truck 1048576 Bagged cement by rail 1048576 Truck 1048576 Type and size of cement bag ____________________________

17) Average requirement of bags a month

18) Any particular changes in packaging in near future

Questionnaires for End Users (Fertilizers Industry)-

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report

1) What is the market size

2) Which locations according to you get maximum sales a) Northern b) Western c) Eastern d) Southern

3) Any particular preferences for packaging material

4) Are PE bags preferred more than PP bags a) Yes b) No

5) What are the reasons for using PE bags

6) Rank the below criteria on scale of importance while selecting packaging from 1 to 5 (1 being the best) a) Price b) gramsbag c) Strength d) Availability e) Quantity

7) What are the problems faced by industry What measures can be taken to overcome them

8) Any future expansion plans a) Yes b) No c) Canrsquot say

9) Do you see an increase in sales in near future a) Yes b) No

10) Any particular monthly trend followed in sales

11) Average requirement of bags a month

12) Any particular changes in packaging in near future

End Users (Food grains Sector)-

The food grains provided by the farmer to the government can be quantified

but those provided to the increasing private sector is difficult to quantify So

the questionnaire wonrsquot justify the exact figures Brief information given by the

FCI on the production of food grains has been included in the report