Report On Chemical Industry Analysis: Mohammed Juned 4MT18MBA41

Report on Chemical Industry Analysis
Submitted by:
MOHAMMED JUNED
4MT18MBA41
Submitted to:
Prof. Abhaya Kumar
Senior Professor
Dept. of MBA
Mangalore Institute of Technology and Engineering, Moodbidri.
As Other Assessment for Subject Investment Management
Date of Submission:
30/09/2019
Signature of the Student Signature of the Faculty

INTRODUCTION
Chemical industry, the business of using chemical reactions to turn raw materials, such as coal, oil, and
salt, into a variety of products. During the 19th and 20th cent. Technological advances in the chemical
industry dramatically altered the world's economy. Chemical processes have created pesticides and
fertilizers for farmers, pharmaceuticals for the health care industry, synthetic dies and fibbers for the
textile industry, soaps and beauty aids for the cosmetics industry, synthetic sweeteners and flavours for
the food industry, plastics for the packaging industry, chemicals and celluloid for the motion picture
industry, and artificial rubber for the
The chemical industry is exploring the use of renewable feed stocks to improve sustainability,
prompting the exploration of bioprocesses for the production of chemicals. Attractive features of
biological systems include versatility, substrate selectivity, region selectivity, chemo selectivity,
enantio selectivity and catalysis at ambient temperatures and pressures. However, a challenge
facing bioprocesses is cost competitiveness with chemical processes because capital assets
associated with the existing commercial processes are high. The chemical industry will probably
use biotechnology with existing feed stocks and processes to extract higher values from feed
stocks, process by-products and waste streams. In this decade, bioprocesses that offer either a
process or a product advantage over traditional chemical routes will become more widely used
"Polymers and plastics, especially polyethylene, polypropylene, polyvinyl
chloride, polystyrene and polycarbonate comprise about 80% of the industry’s output
worldwide". These materials are often converted to polymer products and used by the industry to
transport highly corrosive materials. Chemicals are used in a lot of different consumer goods, but
they are also used in a lot of different other sectors; including agriculture manufacturing,
construction, and service industries. Major industrial customers include rubber
and plastic products, textiles, apparel, petroleum refining, pulp and paper, and primary metals.
Chemicals are nearly a $3 trillion global enterprise, and the EU and U.S. chemical companies are
the world's largest producers.
Sales of the chemical business can be divided into a few broad categories, including basic
chemicals (about 35 to 37 percent of the dollar output), life sciences (30 percent), specialty
chemicals (20 to 25 percent) and consumer products (about 10 percent).
About chemical industry in India

The chemical industry consists of the companies that produce industrial chemicals. This
industry utilizes chemical processes such as chemical reactions and refining methods to convert
raw materials such as oil, natural gas, air, water, metals, and minerals into more than 70,000
different products. These products include petrochemicals,
agrochemicals, ceramics, polymers and rubber, chemicals (oils, fats, and waxes), explosives,
fragrances, and flavours. The chemical industry is, thus, central to the modern world economy.
Consumer products:
Consumer products include direct product sale of chemicals such as soaps, detergents,
and cosmetics. Typical growth rates are 0.8 to 1.0 times GDP.
Consumers rarely if ever come into contact with basic chemicals but polymers and specialty
chemicals are the materials that they will encounter everywhere in their everyday lives, such as
in plastics, cleaning materials, cosmetics, paints & coatings, electronic gadgets, automobiles and
the materials used to construct their homes. These specialty products are marketed by chemical
companies to the downstream manufacturing industries as pesticides, specialty polymers,
electronic chemicals, surfactants, construction chemicals, Industrial Cleaners, and fragrances,
specialty coatings, printing inks, water-soluble polymers, food additives, paper chemicals, oil
field chemicals, plastic adhesives, adhesives and sealants, cosmetic chemicals, water
management chemicals, catalysts, textile chemicals. Chemical companies rarely supply these
products directly to the consumer.
Every year, the American Chemistry Council tabulates the U.S. production volume of the top
100 chemicals. In 2000, the aggregate production volume of the top 100 chemicals totaled 502
million tons, up from 397 million tons in 1990. Inorganic chemicals tend to be the largest
volume, though much smaller in dollar revenue terms due to their low prices. The top 11 of the
100 chemicals in 2000 were sulfuric acid (44 million
tons), nitrogen (34), ethylene (28), oxygen (27), lime (22), ammonia (17), propylene (16), polyet
hylene (15), chlorine (13), phosphoric acid (13)
SWOT Analysis of Chemical Industry

Strengths:
 A diversified manufacturing base
 Vibrant download streams industry in different segments
 Competitive core industries
 Capability to produce world class end product
 Strong presences in some export markets segment
 Large domestic market
 Raw materials components source within in country
 Good R&D base and quality humans resources
Weakness:
General handicap
 Cost of power: very high cost and poor quality of power

 Cost of finance: chemical industry is highly capital intensive, cost of finance in India is
very high
 Infrastructure: infrastructure facilities are not world class
Weakness: legacy of past policies of industrialisation
 Technology: low investment in R&D to be able to sell value added products and
compete in developed countries is absent
 Cost of disadvantages: location disadvantage, such as extra transport cost raw
materials as well as finished product
 Scale of productions: plant size are not comparable to world scale operations
 Multiplicity of taxes: multiple levels (various taxes and duties )
Opportunities:
 Success stories in dyes and agro chemical have boosted the confidence to take on global
competition squarely
 The markets in the developed countries are opening up and India can take advantages of
this. A large number of products are going off patent
 With the knowledge available in the country, there is a tremendous potential to grow and
increase exports in dyestuff and agro chemical markets
 India has the capacity for major value addition, being close to Middle East. this is
relatively cheaper and abundant source for petrochemical feedstock
Threats:
 Quantitative restrictions for imports have been removed already most of the chemical are
now in the open general list of imports
 Tariffs levels in India for most chemical are significantly higher than in other countries
manufacturing the chemicals
 Pressure on the governments to reduces these tariff levels
 Unless industry acquires competitiveness, it may face extinctions
Porter's 5 Force Frame work
Industry competition:
 Most of the competition industries in the country with as many as 10,000 different
players
 Top players in the country has only 6%market shares and top five have 18%
 High growth prospects
 Very low entry barriers
 Fixed cost requirements is low and need for working capital is high
Bargaining power of buyers

 End users of products is different from the influence
 Consumer has no choice but to buy what doctor says
 Buyers are scatted and they as such does not wield much power in the pricing of the
products

Bargaining power of suppliers
 Chemical industry depends upon several organic chemicals
 Very competitive and fragmented industry
 Chemical are largely a commodity
 Supplier have very low bargaining power
 Chemical industry can switch from their supplier without incurring a very high cost
Barriers to entry
 Most easily accessible industry for an entrepreneur in india
 Capital requirements for the industry is very low, creating a regional distribution
network is easy
 Point of sales id restricted in this industry in india
 Quality regulations by government may put some hindrance for establishing new
manufacturing operations
 Impending new patents regime will be the barriers to entry
Threat of substitutes
 One of the great advantage of the chemical industries
 Demand for chemical chemicals products continue and the industry thrives
 Key reasons for high competitiveness in the industry is that as ongoing concern

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Report on Chemical Industry Analysis

Prof. Abhaya Kumar

Mangalore Institute of Technology and Engineering, Moodbidri.

As Other Assessment for Subject Investment Management

Signature of the Student Signature of the Faculty

About chemical industry in India

SWOT Analysis of Chemical Industry

 Cost of power: very high cost and poor quality of power

Bargaining power of buyers

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