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
“Reliance Industries Limited. (RIL)” has been accomplished under
the guidance of ____________________________.

AKSHAY.A.PARAB
 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. K.G. Kapse for giving me an opportunity to work in this
project. I am also thankful to Mr. Rakesh Pandita, Mr. Amit Mishra, Dr.Manish
Desai and Mr.Prabhod 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 v/s 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 – A comparison

7) End users consumption of Raffia

• Cement sector
 • Fertilizers sector
• Food grains Sector

8) SWOT analysis

9) Michael Porter’s 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 – 674 KT

Chemicals Others
Polymers 2% 10%
3% Cement
Fabrics 37%
7%
MF &
Ropes
6%
Food Export
FIBC
grains sacks
15%
11% 9%

The various diversified application of raffia tapes and fabrics with an

estimated potential of 113,000 tones in 2004-05 is growing at 9% to touch
163,000 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

 Staple other Postal
food 2% bags
sugar 6% 6%
15% tarpulins
20%
tea
6%

fruits & Geotextiles

paper 18%
vegetables
bailing
14%
13%

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 2.3% 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 2.5% of the global production
Building Blocks & Polymers Capacities in 2008:
India v/s World

India's
(in KT) India World share
Building
Blocks
11774
Ethylene 2816 5 2.3%
Propylene 1999 71303 2.7%
Polymers
PE 1975 73596 2.4%
PP 1990 44668 4.4%
PVC 1002 37606 2.6%
PS 423 15525 2.4%
ABS 91 8616 0.9%

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, e.g. gas at 0.75$/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.

• Indian economy would be able to sustain the growth tempo &
continue to grow at rates witnessed in the last 3 years or more.
• The issues, which are currently hindering industry’s growth
would be addressed appropriately to the industry’s 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 0.89 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 Rs.118 billion in 2007-08.

Domestic scenario:-
In India, the PP market size (demand) was estimated at 1.54 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

Initial
start-up
(tpa) Location State Capacity technology 2007-08 date
Reliance Industries Baroda Gujarat 160,000 Montell (Spheripol) Apr-85
Reliance Industries Nagothane Maharashtra 120,000 Montell (Spheripol) Apr-92

Haldia Petrochemicals Mednipur West Bengal 265,000 Technimont (Spheripol) Feb-00

Reliance Industries Hazira Gujarat 425,000 Union Carbide (Unipol) Oct-96
Reliance Industries Jamnagar Gujarat 225,000 Union Carbide (Unipol) Apr-99

Reliance Industries Jamnagar Gujarat 225,000 Union Carbide (Unipol) Jun-99

Reliance Industries Jamnagar Gujarat 300,000 Union Carbide (Unipol) Dec-99

Reliance Industries Jamnagar Gujarat 280,000 Union Carbide (Unipol) 2001-02

Total 2,000,000
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 350,000 tpa PP plant.

Polypropylene Market

Market trend in percentage

 BM articles, 2 Woven sacks, tarpulins

Co-polymer
Household applications
application (IM),
16 Woven sacks, Textile pakaging, multi-
multifilaments, tarpulins, 33 layer films
5 Food packaging
Food
packaging, 7 multifilaments
Textile
Household Co-polymer application
pakaging, multi-
applications, 20 (IM)
layer films, 17
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

 CAGR
Major 2007- 2008- 2009- 2010- 2011- 2012- (per
(Tonnes) Process applications 08E 09F 2010F 2011F 2012F 2013 F cent)

1,275,45 1,397,39 1,544,74 1,714,67 1,902,72 2,116,05

PPHP 1 2 8 1 7 6 11

Woven sacks.
Raffia- fibres Extrusion Tarpulins 465,724 509,036 554,849 607,560 656,165 708,658 8.8

Extrusion Others 34,034 38,118 42,883 48,458 54,999 62,424 12.9

household
Injection applications,
moulding IM furniture , others 313,388 335,012 358,295 382,211 408,679 435,959 6.8

Textile packaging
TQPP films Extrusion and multi-layer films 254,035 268,725 293,986 321,396 351,314 383,382 8.6

BOPP films Extrusion Food packaging 136,000 165,920 204,082 253,061 316,326 395,408 23.8

Fibres and
filaments Extrusion Ropes,multifilaments 72,270 80,581 90,654 101,985 115,243 130,225 12.5

PPCP 266,038 287,270 313,726 342,063 374,204 410,110 9

Injection
moulding IM Various application 243,883 263,786 288,833 315,551 345,704 379,188 9.2

Automobiles 60,196 63,969 70,452 76,791 83,741 91,979 8.8

Luggage 33,997 37,397 41,510 45,661 50,684 55,752 10.4

Furniture 82,606 88,306 94,443 100,748 107,724 114,915 6.8

Appliances and
others 67,084 74,114 82,427 92,352 103,555 116,542 11.7

blow moulding BM Household articles 22,155 23,484 24,893 26,511 28,500 30,922 6.9

1,541,48 1,684,66 1,858,47 2,056,73 2,276,93 2,526,16

TOTAL 9 3 4 4 1 6 10.4

Source: Crisil research

E: Estimate, F: Forecast, BM: Blow moulding, IM: Injection Moulding, CAGR: Compounded annual growth rate

Raffia Industry (an overview)

Source: Industry, CRISIL Research

 Analysis of Plastic woven sack market
Raffia: Global consumption
2008 total consumption – 8.4 MMT
PE Bulk Packaging Growth - 6.8 % CAGR over last 5 years
PP Bulk Packaging Growth – 8.1 % CAGR over last 5 years

PE
14%

PP
86%

PP Bulk Packaging is about 15 % of total PP consumption

PE Bulk Packaging is about 1.6% of total PE consumption
Source: CMAI 2008

Raffia: Domestic consumption:-

PP Raffia Company share 2008-09.
Total consumption about 676 KT

IMPORTED
HPL 9%
15%

RIL
76%

Source: Industry

Consumption has increased by 4% to 676 KT from 644 KT

A) Raffia: Growth trend in India

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

1000
900
800
700
600 PP
500 PE
400 Total
300
200
100
0
2004-05 2006-07 2006-07 2007-08 2008-09

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 & South.

 50
43.7
45
40 37.7 38.3 36.9
35
30
25 22
20
15
9.8 8.9
10
5 3.2 1.8 1.9
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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 Rs.12/kg whereas from market one gets around Rs.19/kg. Therefore
the profitability becomes only Rs.7/kg 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 – A comparison

Sr. No Description Jute Bags PP Bags

 1 Mass of bag
2 Moisture regain
Max oil content on dry de-
3 oiled material basis
Basic price per bag
4 (excluding sales tax)
Cost of packing 1mil.Mt of
5 wheat/rice
Packing cost of 20mil.Mts
6 of wheat by FCI
Packing cost of 20mil.Mts
7 of rice by FCI
8 Aeration
9 Problem/Quality complains
10 Other
advantages/disadvantages
End users consumption of Raffia
A. Cement sector:-
665gms
22%
3 per cent max by wt.
Rs.17.05 (Average of last 5
months & incl. of excise
duty)
Rs.37.50crs @ Rs.18.75 per
bag (ie.Rs17.05+ Rs.1.70)
Rs.750.00cr
Good
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 DGS&D
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.
1. Not resistant to water,
seepage and contamination
2. Contamination of food
grains by jute batching oils
3. Cost of transportation is
much higher than of PP
bags which are almost 1/5th
in weight of jute bags
4.Rough handling may result
in burst/tear of bags
135gms
Nil
Nil
Rs.10.44(incl. of 16% excise
duty & freight)
Rs.20.88crs @ Rs.10.44 per
bag
Rs.417.60cr
Rs.417.00cr
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.
1. Resistant to water,
seepage and contamination
is very high
2. No J.B.O. 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 burst/tear
of bags so far noticed on
rough handling of bags.
No. of player – 54
Capacity-215 MMT
Large cement plants-136
Mini cement plant-382

Major Players
Holcim (ACC ACC
11% Ambuja
&AmbujaAditya Birla 9%
Grasim
9%
Group (Grasim & others
Ultratech
55%
Jaypee group 9%
Ultratech) 3%
India Cement
4%

India Cements
Jaypee Group

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
 250 700
627
600 600
200
513 cement capacity(mn tonnes)
505 500
462 469
150 cement consumption(mn
400
380 380 tonnes)
326 pp consumption( kt)
300
100 271
200 Ril pp consumtion(kt)

50
100

0 0
2004-05 2005-06 2006-07 2007-08 2008-09

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 1.5MT

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 – 184.2lakhs MT/Annum

Out of which 124.61lakhs MT is for nitrogen and 59.59lakhs 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 35.98 4.21 28 7.74
Cooperative
2 sector 29.41 10.3 23.58 16.02
3 Private sector 59.19 45.09 48.42 76.25
Total 124.58 59.6 100 100

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 PE/PP bags as on 1st June 2009.

cost analysis PE PP
raw material cost/MT 69.4 61.3
cash discount 0.6 0.6
68.8 60.7

excise duty+ E Cess 0.082 0.082

74.4 65.7
trade discount 2.0 3.0
72.4 62.7

per kg cost 72.4 62.7

Bag costing
raw material 0.88 0.88
63.7 55.2
filler Rs26/kg 0.12 0.12
3.1 3.1
conversion cost 13.0 13.0
cost/kg 79.8 71.3

U.V. Stabilizer cost 0.0 1.5

cost/kg 79.8 72.8

weight of bag 128.0 117.0

total cost/bag 10.2 8.5

Note:
 • To a processor QD & 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 LLD/LD or PP/L/LLD 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 & 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 Rs.450 as compared to the cost of a cement bag
which is around Rs.280.
 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 No.2 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 94.31 97.1 Tur 3.15 2.53
Wheat 72.68 77.83 Gram 5.82 6.23
Jowar 7.89 7.32 Urad 1.52 0.98
Bajra 9.78 8.63 Moong 1.52 0.49
Maize 18.21 17.56 Other 2.89 3.81
Ragi 2.43 1.78
Milets 0.61 0.39
Barley 1.3 1.52

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 – 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, 50,000 bags)
Food grains packed in plastic bags from Jan 2009- April 2009: 10,000 MT in
Borivali district (2, 00,000 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 1,00,000 20,000
Panvel 80,000-90,000 18,000-19,000
Nagpur 6,00,000-7,00,000 1,20,000-1,40,000
Manmad 10,00,000-11,00,000 2,00,000- 2,40,000
Pune 5,00,000-6,00,000 1,00,000-1,20,000
Goa 30,000-40,000 8,000-10,000

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 Rs.17.05 for
jute bags and Rs.10.14 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
 Michael Porter’s Five Forces Model

Suppliers Potential Entrants

• Reliance Industries Limited • Indian Oil Corp. Limited

(76% of the market share)
• Foreign player (raw material)
• Haldia Petrochemicals
(15% of the market share)

• Import
(9% of the market share)

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

Buyer’s views
• cement
o Ready mix cement
• Availability, Cost, Quality of
o AD start bags
the raw material.
• Food grains
o Multi layered
polyethylene bags
• Low profit margins due to • Fertilizer
high over head charges o Polypropylene bags

.
 Conclusions

• 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 9.2 per cent to over 721.842 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 – January, February issues.
• Market Survey by Dr. I. Satya Sundaram.
• CRISIL Research 2007 – 2008.
• Cement Industry updates.
• National Journal –Petrochemicals.
• 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 Market
a) 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) Can’t 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 industry?

Questionnaires for End Users (Cement Industry) :-
1) What is the market size?

2) Primary Market
a) 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) Can’t 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) grams/bag
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 material?

a) 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 matter?
a) Yes b) No

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

No. Name of Product Percentage

Product 1
Product 2
Product 3

16) Cement shipping ways:

Bulk cement % by rail � Truck �
Bagged cement % by rail � Truck �
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) grams/bag
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) Can’t 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 won’t justify the exact figures. Brief information given by the
FCI on the production of food grains has been included in the report.