KEY DEVELOPMENTS AND CURRENT STATE OF THE INDIAN OIL AND GAS SECTOR

The oil and gas sector in India is a critical component of the country’s economy, accounting for 15 percent of the country’s gross domestic product (GDP).Economic growth is directly linked with energy demand, and a conservative estimate of 7 per cent growth is expected to double India’s per capita energy consumption from 560 kilograms of oil equivalent (kgoe) in FY10 to 1,124 kilograms of oil equivalent (kgoe) by FY32. As oil and gas is one of the main sources to meet the required demand for energy in India, its demand is forecast to rise further. In 2011, natural gas accounted for 10 per cent of the country’s total energy requirements, whereas estimates suggest that this figure will reach 20 per cent by 2025, with oil and gas together accounting for approximately 45 percent of the total demand.

Market reports estimate that this growth is expected to take the size of the Indian gas market to that of the gas market in Japan, the largest consumer of liquefied natural gas (LNG) in Asia, by the end of 2015. Despite having significant reserves in India, the increase in demand is expected to be primarily met through imports.

To cope up with the increasing demand, the government has allowed 100 per cent FDI in the oil and gas sector, enabling some large partnerships such as the US$ 7.2 billion deal between British Petroleum (BP) and Reliance Industries. In order to further aid the development of the sector, the government introduces legislations such as the New Exploration Licensing Policy (NELP) to enable companies to bid for exploration rights, and encourage private sector participation. The participation of the private sector is expected to bring in monetary resources and technological capabilities, especially in the field of deep sea exploration while simultaneously reducing the dominance of PSUs in the country’s competitive landscape.

Posted By:

Reema Kapoor

ICIS

Indian paint industry forecast to double by 2018

The Indian paint industry was given a market value of US$5 billion at the beginning of 2013, and has been forecast to double by the time we reach 2018.

Though the paint industry witnessed some slowdown in the last few years due to global economic uncertainties and growing urbanization, good growth has been forecast for the next five years.

In recent years several factors have contributed to the fortunes of the Indian paint industry including the adoption of the latest technologies, innovative product launches, aggressive marketing strategies, comprehensive product portfolios, and value added services offered by companies.

In recent years, there has been a major transition in the type of products and services brought in by manufacturers and an evolving preference towards mid and premium segment products. Innovation has been seen all around the market landscape of decorative and industrial paint categories.

As the paints market has grown and evolved there has been increased demand for premium products. This has come about as buyers have become more aesthetically aware, and have the means to opt for better value products, even at higher prices.

As with other fields, some challenges also exists in this promising sector that can affect the growth trajectory of the paint industry, if not handled accordingly. For instance, the industry is highly raw material-intensive and any fluctuation in the availability of raw material leads to substantial price fluctuation in paint production costs.

In terms of volume, the industry stood at 3.11 million tonnes, of which the decorative segment accounted for an approximate nearly 77% share in 2012.

The 70:30 trend within the decorative and industrial segments is expected to continue in the future, mainly because of the growth in urbanisation and the increase in disposable income.

The country looks set to continue to enjoy a healthy growth rate compared to other economies, backed by the increasing level of disposable income, and demand from infrastructure, industrial and automotive sectors.

Posted By:

Reema Kapoor

ICIS

The Petrochemical Industry Outlook in India

The petrochemical industry has been one of the of the fastest growing industries in the Indian economy; it provides the foundation for manufacturing industries such as pharmaceuticals, construction, agriculture, packaging industry, textiles, automotive, etc. The petrochemical industry in India is oligopolistic with four main players dominating the market, namely Reliance Industries Ltd. (RIL) along with Indian Petrochemical Ltd. (IPCL), Gas Authority of India Ltd (GAIL), and Haldia Petrochemicals Ltd. (HPL).

The major driver for the growth of petrochemical industry in India is its (India's) ongoing economic development. With the Government announcing an infrastructure development program of over INR 500 Billion, coupled with growth in key end-use sectors like auto, personal / lifestyle products, and retail (packaging), a boost is expected in the demand for petrochemical products in India. The Government has set in place policies to promote investment in the petrochemical sector, and several key domestic companies have unveiled ambitious expansion plans for the next few years. Two major elements in this support are the decision to allow 100 percent foreign direct investment projects in this sector, and establishment of a series of special economic zones (SEZs) and a number of petroleum, chemicals, and petrochemical investment regions (PCPIRs).

The future of the Indian petrochemicals industry is bright with domestic demand driving the market for products. With Government support slowly falling into place, the future could see more investments from multinationals as well as domestic companies.

Growth drivers of Paint Industry

1. Increasing level of income and education: The increasing proportion of young population along with increasing disposable incomes is leading to a change in consumer habits. The Indian economy is shifting from a savings economy to a spending economy. With more income at their disposal, people are now ready to pay for better products and paint is no exception.

Educated consumers are more brand conscious and seek value in what they consume. Thus, paint companies offering value-added features like non-toxicity, weather protection, texture, eco-friendly production, etc. will attract more demand. These value-added products enable the manufacturers to earn a better premium as compared to the regular paints, thus offering higher margins.

2. Increasing Urbanization: Urbanization is leading to a shift from temporary houses to permanent houses. Urban houses are well-designed in its interior as well as exterior aspect. This calls for more houses being painted using medium and premium paints. For urban houses, interior design is becoming a fashion statement and a lot of paint is used to decorate the interiors. This will lead to an increase in the per capita consumption of paint which will increase the overall demand of paint. Urbanization also brings more nuclear families. More nuclear families mean more number of houses even for the existing population thus further driving the demand.

3. Increasing share of organized sector: Decrease in taxes on key raw materials will improve the position of the organized players. The Organized sector is expanding its distribution network and adopting the installation of tinting machines at retail outlets. These tinting machines offer a wide variety of colour shade options to choose from. The unorganized players are not in a position to offer such facility as it is comparatively capital intensive. Shift in use, from distemper segment towards premier segment is also shifting market share from the unorganized sector to the organized sector.

4. Development of the Realty, Automobile and Infrastructure sector: The growth of the paint industry is largely dependent on the development of the realty and housing sector, as decorative segment generates about 70% of the total paint demand from this sector.  The Automobile segment generates more than two-third of the demand for Industrial paints, and hence is the growth driver for Industrial Paints. The Infrastructure segment creates direct demand for paints as well as creates indirect demand through supporting the growth of the realty, automobile, FMCG and other industries where paint is used.

The growth potential in the above 3 sectors is immense, the paint industry being dependent on these 3 sectors is expected to grow along with them.

5. Availability of financing options: Easier housing finance and auto finance is expected to favour more people to buy houses and travel in personal vehicles. This will drive the growth of housing and automobile sector, of which the Paint industry will get its share.

6. Increasing Penetration in the Rural Markets: Paint usage in rural areas is generally in the distemper segment, hence dominated by the unorganized players. Demand in rural areas is dependent on agriculture, which is dependent on the monsoons. With the development of irrigation facility, the dependence of agricultural output on monsoons will be on a decreasing trend. Also, with the modernization of agriculture and accompanying development of rural India, consumer preferences are expected to improve. Paint companies are expanding their distribution network in rural parts of India, which is a relatively untapped market for the organized players. These factors supported by the increasing penetration of the paint companies will help drive the demand for paints.

By : Reema Kapoor

ICIS, NOIDA

 

The Powder Coating Technology

The Powder Coating Technology

What is Powder Coating?

Powder coating is a finishing technology where a decorative and highly protective coating can be applied to a wide range of products. The process involves spraying finely ground, electro-statically charged particles of pigment and resin onto a surface to be coated. The charged powder particles adhere to the electrically grounded surfaces and then are heated and fused into a smooth coating in a curing oven.

 

Fig. 1.1: Spray gun for powder coating.

What does Powder Coating Offer?

·                 Superior Appearance

·                 Mechanical Resistance Properties

·                 Corrosion Resistance

·                 Solvent Resistance

·                 Highly durable: chip, scratch, fade and wear resistant

·                 Ready to use and require no mixing, solvent or catalysts

Liquid Finishes vs. Powder Coating

·               Solvents Necessitate venting, filtering, and solvent recovery systems that is not necessary in powder coating.

·               Liquid Spray Coating achieve material usage of 20-85% while powder coating has a Material usage of 95-98%

·               Liquid overspray is lost in filters while 99% of Powder overspray is collected and reused

Fig. 1.2: The powder coating lab.

Powder Types

·                Thermoplastic: 

o           Powder melts and flows to form a film.

o           Continues to have the same chemical composition when it solidifies

o           Will re-melt when heated.

o           Thick coating surface and not in same market as liquid paint.

o           Examples 

Ø    Polyethylene

Ø    Polypropylene

Ø    PVC

·               Thermoses:

o      Powder melt flow and cross-link chemically to products

o      Cured coatings have different chemical structures than the basic resigns. 

o      Will not re-melt when reheated

o      Can produce thin paint like coating of 0.001 – 0.003 inch thick.

o      Examples

Ø   Epoxy

Ø   Hydroxyl polyester (urethane)

Ø   Acrylic Urethane

Process

Fig. 1.3: The powder coating gun.

Fig. 1.4: Stages of powder coating.

By : Anshul Gupta