Petrochemical Industry
The petrochemical industry in India has been one of the fastest growing industries in the country. Since the beginning, the Indian petrochemical industry has shown an enviable rate of growth. This industry also has immense importance in the growth of economy of the country and the growth and development of manufacturing industry as well. It provides the foundation for manufacturing industries like construction, packaging, pharmaceuticals, agriculture, textiles etc.
The Indian petrochemical industry is a highly concentrated one and is oligopolistic in nature. Even a few days back, only four major companies viz. Reliance Industries Ltd (RIL), Indian Petrochemicals Corporation Ltd. (IPCL), Gas Authority of India Ltd. (GAIL) and Haldia Petrochemicals Ltd. (HPL) used to dominate the industry at a large extent. The recent amalgamation of IPCL with RIL has made the industry more concentrated further, as they jointly account for over 70% of country's total petrochemical capacity. However, the scene is a bit different for the downstream petrochemical sector, which is highly fragmented in nature with over 40 companies exist in the market.
The Characteristics of Indian Petrochemical Industry
Petrochemical Industry in India is a cyclical industry. This industry, not only in India but also across the world, is dominated by volatile feedstock prices and sulky demand. India has one of the lowest per capita consumptions of petrochemical products in the world. For example, the per capita consumption of polyester in India lies at 1.4 kg only comparing to 6.6 kg for China and 3.3 kg for the whole world. Similarly, the per capita consumption of polymers is 4 kg in India, whereas the per capita consumption is around 20 kg for the whole world.
The Growth
The petrochemical industry in India came into existence during 1970s. The 1980s and 1990s saw some rapid growths for Indian petrochemical industry. The biggest reason for this growth was the high demand for petrochemicals in India, which grew at an annual rate of 13 to 14% since late 90s. It also called for rapid expansion of capacity. The BMI forecast of average annual growth in India over 2007-2011 is 14 to 16%. However, the industry suffered setbacks during 2008 due to surge in the price of crude oil. It will be tough for Indian petrochemical industry to plug the deficit of 5mn TPA of ethylene and 4mn TPA of polymer by 2012 (according to the predictions of the government).
The Present Scenario Presently India has three gas-based and three naphtha-based cracker complexes with a combined annual capacity of 2.9 MMT of ethylene. Besides this, there are also 4 aromatic complexes with a capacity of 2.9 MMT of Xylenes.
The production of 5.06 MMT polymers during FY09 accounted for around 62% of the total production of key petrochemicals. It also achieved 88.5% capacity utilization. The industry also produced 2.52 MMT of synthetic fibres during FY09 with a 73% of capacity utilization.
Key Segments
Petrochemical industry is constituted of the following key segments:
- Polymers:
The demand for polymers saw a growth of 13.4% during 2007, comparing to a demand growth of 5.6% in 2006. According to the prediction of Chemicals and Petrochemicals Manufacturers' Association (CPMA), the demand growth for polymer would further be augmented to over 15% in the coming year. - Polyester Intermediates: The combined production of 5 fibre intermediates (CAN, DMT, Caprolactum, MEG and PTA was 3,417 KT during 2007. Among those, PTA and MEG accounted for 69% and 27% respectively, while the rest were DMT, Caprolactum and CAN.
- Aromatics (Paraxylene): The demand for Paraxylene (PX) saw a growth of 18% during 2007. According to the prediction of CPMA, it is expected to grow at the same rate in the coming year as well.
- Benzene, Toluene, MX and OX: The demands for Toluene and OX saw a contraction rate of 4% and 10% respectively during 2007. However, Benzene and MX saw a positive growth though.
Top Petrochemical Companies in India
Though the Indian petrochemical industry is highly dominated by only a few players, however, there are a number of petrochemical companies in India, doing their share of business. Some of the top companies can be listed as below:
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Originally, there were two organizations in the petrochemical sector under the administrative control of the Department of Chemicals and Petrochemicals.
1. The Indian Petrochemicals Corporation Ltd. (IPCL) is the leading producer of petrochemical products and has manufacturing plants at Vadodara (Guj.). Nagothane (Maharashtra) & Gandhar (Guj.)
2. The Petrofils Cooperative Limited (PCL) is a joint venture company of the Government of India and the weavers’ cooperative societies. It produces polyester filament yarn and nylon filament yarn at its two plants located at Vadodara & Naldhari in Gujarat.
However, with effect from June 4, 2002, the IPCl has ceased to be a government company following disinvestments of equity to the strategic partner, Reliance Petro Investments Ltd. Earlier, in April 2001, the PCL was closed down and the liquidator was appointed by the government. The PCL was incurring losses from 1994-95 onwards.
The Central Institute of Plastics Engineering and Technology was established in 1968 as an autonomous organization under the administrative control of the Department of Chemicals and Petrochemicals.
At present there are 12 extension centers of CIPET at Ahmadabad, Amritsar, Bhopal, Bhubaneswar, Chennai, Hyderabad, Imphal, Lucknow, Mysore, Patna, Haldia, and Guwahati.
