In this interaction, Anil Krishna, GM and VP of Sales, Borouge India, emphasises that India has a potential to attract the exported manufacturing business from China
Borouge, a joint venture between the Abu Dhabi National Oil Company (ADNOC) and Austria based Borealis, provides innovative and sustainable plastics solutions for various industries. Since its entry in India in 1999, the company has been continuously growing in the country across all sectors.
Driving the company’s growth strategy in the region is Anil Krishna, General Manager and Vice President of Sales, Borouge India, with Borouge gearing up to enhance its presence across India. Krishna brings along 33 years of management experience from multinational companies such as Unilever and Henkel where he expanded the business through acquisitions and drove sales strategies in India. In this interaction with Rakesh Rao, Krishna elaborates on the dynamics of polyolefins market and how increasing urbanisation and infrastructure modernisation is assisting growth of specialty polymers.
What are your priorities in India?
In India, we pursue the same strategy as anywhere else in the world. This means we will continue focusing on innovative, sustainable plastics solutions. Through our value-added approach, we serve high end market segments in the Indian industry, particularly in advanced packaging, pipe & fittings and wire & cable.
Our innovative plastics solutions help our customers to obtain competitive edge. It is crucial for us to be close to our customers and partner with them to continuously improve production processes and product properties. Our focus is to continue to work with our agents in all Indian regions and markets where they have strong position and to enhance our direct sales and technical capabilities to meet customers’ needs.
How do you view the Indian polyolefins market?
With a polyolefins (PO) demand reaching 6.4 million tonnes per annum (tpa) as of 2012 and an anticipated demand of 9.9 million tpa (by 2020), India is the second biggest polymer market in Asia after China and the third biggest one globally.
India’s growth in the polyolefins industry is mainly attributed to rapid urbanisation and growth of mega-cities boosting investments in advanced infrastructure applications such as water, gas and sewerage distribution systems, and power & communication wires and cables. The continuing improvement of living standards is leading to an increased demand for advanced packaging for food and healthcare products, as well as white goods, automotives and mid-range household products.
The packaging industry accounts for approximately 70% of overall PO demand. Almost half of all the polymers consumed in India are used for flexible packaging applications for consumers and sacking for industrial products. The growing volume of the organised retail sector in India as well as the increasing preference for branded products has greatly contributed to this growth and will continue to do so in the future. Moreover, India’s growing focus on renewable energy will see an increase in material substitution from conventional steel to plastic pipes and in extra high voltage wires and cables for long distance transmissions. Major infrastructure projects have been on hold over the last 1-2 years. We believe that in the coming years these projects will kick off.
PP & PE are highly commoditised products. How does Borouge offer product differentiation in polyolefins segment?
Borouge’s flagship technology is the world class Borstar technology. Some of our advanced packaging solutions employ the Borealis Nucleation Technology (BNT) and our wire and cable solutions employ Borlink – a new standard for technology in the wire and cable industry.
All three proprietary technologies make our products highly competitive. Due to the light weighting of our polypropylene (PP) and polyethylene (PE) solutions, our customers across all industries achieve remarkable resin-use reductions helping them to decrease costs of manufacturing (less materials) processing (lower energy), transportation and storage. This helps our customers to increase their profitability without compromising on product quality.
Furthermore, the robustness of our polymers leads to longer product life cycles as well as reduced maintenance costs and warranty risks. In addition, our consequent sustainability approach which we pursue over the whole value chain is certainly another competitive edge which I believe will become an increasingly crucial factor for the purchase decision in the coming years, especially in Asia.
Our PE100 pipe for example is increasingly used by farmers in innovative irrigation projects to replace the present open channels. India holds 17% of the world’s population but only 4% of water resources. Population currently stands at 1.2 billion and is expected to surpass that of China by 2030. A total of 70% of the available water resources in India is used in the agricultural sector, 20% in industry and only 10% for domestic consumption. By installing drip irrigation pipes made of Borouge’s materials we can avoid loss of water caused by evaporation and reduce water usage by up to 75%. Such drip irrigation pipes use five different types of Borouge’s compounds that are mixed together and last 3-7 times longer than conventional pipes.
Borouge is currently expanding its polyolefins capacity at its Abu Dhabi-based plant. What does it mean for your India business?
With the coming increase in production capacity from the current 2 million tpa to 4.5 million tpa within the course of 2014, Borouge will continue to expand its business across Middle East, Africa, Asia and Southeast Asia and the Indian sub-continent. Across all our application areas including advanced packaging, piping (water, oil & gas, wastewater), automotive and cables, Borouge expects a higher offtake from the Indian market.
India is a very potential market with per capita consumption of only 6-7 kg of polyolefins per year, which represents one-third compared to China. With a bigger volume of products coming to the market in 2014, we will specifically increase our exposure to the Indian electric cables market. Special polymers from Borouge which are used in underground high-voltage cables can help in drastically reducing technical and commercial losses seen in overhead transmission lines.
India will eventually need to use direct current (DC) transmission lines to transmit electricity over long distances, with minimum losses. These high-voltages lines need special insulation that Borouge is equipped to supply. In China, Borouge is associated with two long-distance HVDC lines. Even though, underground HVDC cables have higher initial costs, their sheer efficiency results in low lifecycle costs.
What are the challenges for companies such as Borouge which imports most of their polyolefin requirements in India?
Significant import duties in India act as a deterrent, whereas the import duties in countries such as Vietnam are almost zero. We believe in open markets and free trade. In our view any governmental interference does impede the free flow of goods and hinders the competitiveness and innovative power of a country on a global level. There might be positive short term effects to protect the national industry but in the long term such protectionism will lead to decreased foreign investment and international trade.
What is the long term outlook for the Indian polyolefins market?
As China is becoming more expensive as a manufacturing location, many manufacturers are likely to move to other destinations. Therefore, India has a golden opportunity to attract the exported manufacturing business from China if it is able to provide a feasible investment environment, good infrastructure, well-educated labour and access to raw material at competitive prices.