The amount of utilities the humble looking has in our daily lives are endless. Most especially, buildings are deeply related to glass. Glass is almost magical when it comes to the number of uses and the properties it has. The possibilities and designs in this area are too much to count.
Glass Industry has accumulated over 5000 crores in the past few quarters.
Talking about India, float glass and sheet glass are the ones used and produced prominently. Our glass Industry has accumulated over 5000 crores in the past few quarters. The growth in this area has been considerably noticeable. The demand has been rising, all thanks to various industries that make use of glass in their manufacturing processes. These industries include construction, food processing, cosmetics and even pharmaceuticals. The glass industry is being expanding steadily. As of now, decorations of the interiors, furniture and murals have been tapped. More additions are being made every single day. The glass industry is deeply dependent upon architecture and construction. These make use of a log of glass and glass products. Prominently, they use flat glass. Out of these industries, construction sector is the biggest user of float glass. About 60 percent of it is being bought by the construction industry. Windows, partitions and mirrors, all need glass. As we are building more and more houses every day, the need for glass is also increasing. In the last 5 years, the glass industry has grown every year by at least 10 percent.
Production of glass is done out of various raw materials such as silica, calcium compounds and soda. These are usually melted, mixed up and then colored as per the buyer’s needs. With huge advancements in technology and housing needs, it is only a matter of few years before flat glass rises in demand globally, that too by a number as big as 6 percent. Most of the developing countries are expected to be the biggest contributors. China, Europe and North America are the major players and dominate about 70 percent of the glass market demand. India is a complete gold mine for the glass industry.
Companies like saint gobain, NSG and Hindustan national glass are the key players of the glass industry. As the cost of production is more or less stable and the demand is only expected to rise further, glass industry is looking very bright at the moment. The major industries which are deeply attached to the glass segment like automobiles, beverages, especially liquor and infrastructure etc are all booming. Hence, glass is booming right alongside and is expected to keep doing so in the coming years. Also, various industries such as laboratories, jewelry pieces such as bangles etc also make heavy use of glass. Let’s face it. Their demand is not reducing any time soon.
Various ceramic and glass products have the unique ability of withstanding their environmental pressures in just the right way. They can be fashioned into several different molds which only makes them hot commodities. The demand is not going down any time soon and this is a very good time to start a business in this field.
Glass and Ceramics Industry
Glass is an inorganic product that is typically produced by melting a mixture of silica (sand, 75 per cent), soda (around 15 per cent) and calcium compound (lime, 10 per cent) with the desired metallic oxides that serve as colouring agents. The glass industry covers products such as flat glass (including sheet glass, float glass, figured and wired glass, safety glass and mirror), glass hollow wares and containers, vacuum flasks, laboratory glassware and fibre glass. Glass products are used widely in households, construction, laboratories and consumer items such as bangles, beads, pearls, etc.
The Glass Industry consists of four segments
This is the largest segment in the glass sector and comprises of glass packaging for drinks, food, perfumes and pharmaceuticals.
This is the second largest segment and contributes to one-third of the total global production. Specialty glass is mainly used for technical applications such as optics, electronics, lighting, engineering, ophthalmic lenses, etc. Borosilicate glasses are also included in this category.
These account for around 16% of the total production of glass worldwide. This segment comprises of float glass, rolled glass, cast glass and other flat glasses used mainly for architectural applications.
Fiber glass consists of thin filaments of glass fiber that are used primarily as reinforcement material in polymer products. The resultant composite is called Fiber Reinforced Polymer (FRP) or Glass Reinforced Plastic (GRP), commonly referred to as fiber glass.
The flat glass market stands at 5473 TPD, while the container glass market stands at 9305 TPD. The construction segment accounts for 80% of the flat glass demand.
On the packaging front, according to CRISIL Research the Indian packaging industry attained a size of Rupees 850 billion in 2011-12, growing at 14% CAGR in the previous three years. The growth has been primarily led by the pharmaceuticals and FMCG. The industry is estimate to attain a size of Rupees 1300 billion in 2014-15.
Glass packaging currently constitutes only about 8% of the packaging materials industry but is one of the fastest growing segments among its competitors. The glass packaging is growing at a steady 16-17% CAGR and is estimated to reach Rupees 104 Billion in 2014-15. The beverages industry is the largest end-consumer of glass packaging with alcoholic beverages contributing to about 50% of the demand.
The four major products of the glass industry have been experiencing a steady annual compound growth even though the economy through FY13-14 had fallen below the 7% mark at 6.7% and remaining around the 6% mark in FY14-15.
Global Glass Industry
The major glass producing countries in the world are Germany, USA, UK, China and Japan. The major importing countries are USA, Germany, Japan, France, Italy and Australia. The main consuming regions are Europe, China and North America, that together account for 74 per cent of global demand for glass. Europe is the most mature glass market and has the highest proportion of valueadded products.
The global glass industry is quite concentrated, with four companies – NSG/Pilkington, Saint-Gobain, Asahi and Guardian, producing 67 per cent of the total high quality float glass in the world. Lower quality float and sheet glass production is gradually being replaced by high quality float glass across the globe.
Indian Glass Industry
The glass industry in India is quite old and well established. The first glass plant in India was set up in 1908. The glass makers employed methods such as moulding, folding, twisting, double-stripping and wire-winding to manufacture glass. It remained largely a cottage industry for a long time. In recent years, the industry has transformed and developed. From rudimentary mouth blown and hand working processes, the industry has evolved to adopt modern processes and automation in a large way. However, mouth blown processes and handcrafted glassware continue to play a role in developing innovative designs in decorative and table glassware products that are exported in large quantities.
Exports and Imports
The domestic glass industry is facing increasing competition in the global, as well as domestic markets. State-of-the-art technology in manufacturing is becoming increasingly important in the industry. Modern technology and operations are replacing traditional methodologies in fiber glass composites. Such up-gradation is driven by healthy demand for fibre glass products, particularly due to growth in petrochemical sector and allied products.
CHALLENGES FACED BY THE GLASS INDUSTRY
- Low GDP growth: General slowdown in the economy. GDP growth plummeted to 5.2% in the last 2 years. According to current projections the GDP will continue to stay below the 6% mark.
- Lack of Demand: Sluggish demands from the construction and automotive segments. Slower growth rates in the alcoholic beverage sector. The constrained financial condition of key players like USL, Unitech, DLF etc.
- Surplus Capacity: HNG, HSIL, Piramal and Firozabad have added capacities in the last 2 years. Capacity utilization of float glass and container glass is below 75%. Price bargaining power reduced. No increase in the rates due to the demand-supply mismatch.
- Rising Input Costs: Increase in input costs- raw materials. Mining issues across states with respect to Govt. delaying mining leases have added to the woes. Levy of anti-dumping duty led to soda-ash price increasing by 20% in the last 2 years. Power and fuel contribute to 61% of product costs. Power tariff revisions.
- Exchange Rate Fluctuations: Fuel and gas have direct impact on cost of glass products. Increasing price of soda ash has also contributed to the rise in input cost.
- Buyer Concentration Risk: There is a need for companies to diversify glass usage. There is too much concentration in alcoholic beverages and construction segment.
- Import risk: Float glass import from middle-east. Container glass import from China.
- Alternate Packaging: Threat of substitutes like PET, PP, LPPE etc. Food processing and pharma have shifted to PET and Tetrapak packaging. Country liquor is switching to Tetrapak and PET.
THE FUTURE OF THE INDIAN GLASS INDUSTRY
Increasing urbanization and higher disposable incomes will drive the demand for end user segments such as IMFL, Beer, F&B etc. Also there is the case of attractive cost economics due to the refillable nature of glass.
Low per capita container glass consumption (1.8kg) in India as against 9kgs in China and 27kgs in USA provides a tremendous growth opportunity.
Increasing middle class is resulting in rising discretionary spending levels, from 13% in 2011 to an estimated 37% in 2025.
Low per capita alcohol consumption of 1.8 litres in India as against 8.7 litres in Europe and 8.5 litres in USA. This figure can only grow due to increasing urbanization and rising discretionary spending levels.
India expects to have a 13.2% growth in the Beer market.
India’s pharma industry accounts for 1.4% of global pharma industry in value terms and 10% in volume terms. There has been 20% volume growth (CAGR) in FY12-17 as against 16% growth in FY07-12.
Food and beverage industry has grown to 15% (CAGR) in FY12-17 as against 10% in FY07-12. Construction industry’s spending has increased to 13.9% during 2007 through 2013.
Automobile production has increased by 12.2% (CAGR) over FY05-13 while export volume has increased to 19.1% (CAGR).
Ceramics is a diverse industry that contains several categories of products, including sanitaryware, refractories, cement, advanced ceramics and ceramic tiles. Tiles could be further segmented into wall tiles, floor tiles, vitrified and porcelain tiles. Tiles and sanitaryware constitute the bulk of the ceramics industry in India and will be discussed in detail in this report.
Global Ceramics Industry
Ceramic Tiles Industry
The global ceramic tiles industry production was estimated at 6,560 million square metres in 2005. The ratio between consumption and production has been stable at around 94 per cent. Ceramic tile production has been increasing at a cumulative rate of close to 6 per cent.
Asia is the most significant region by production, as well as consumption, accounting for more than 50 per cent of both. China is the leading country in the production of ceramic tiles with a share of 33 per cent at a total production of 2,200 million square metres, followed by Spain and Italy.
Europe accounts for 30 per cent and USA accounts for 14 per cent of the total global production of ceramic tiles.
In terms of consumption the pattern remains similar, with Asia accounting for 51 per cent, Europe for 26 per cent and USA accounting for 18 per cent of the total global ceramic tile consumption.
Global Sanitaryware Industry
The global sanitaryware industry is estimated to be 187 million pieces and growing at about 7 per cent Y-o-Y. The main sanitaryware producing countries in the world are China, Italy, Mexico, Brazil and Spain, which together account for about 35 per cent of global production.
India, with a size of 6.7 million pieces, accounts for about 3.3 per cent of global production. Penetration of sanitaryware in India-about 30 per cent, is much lower than even neighboring Asian countries, indicating significant growth potential for this sector in the Indian market
The Indian sanitaryware market has been growing at about 10 per cent a year, as compared to the global average growth of about 7 per cent.
Indian Ceramics Industry
ndia’s ceramic tile industry emerged in the 1950s. Tiles form the most significant part of the Indian ceramics industry and consist of floor tiles (46 per cent), vitrified and porcelain tiles (12 per cent) and wall tiles (42 per cent). The floor tiles segment is growing faster as compared to wall tiles.
Vitrified and porcelain tiles are recent entrants into the ceramic tile industry and have increased the size of the market considerably. It is expected that this segment will capture the bulk of the market gradually, replacing the conventional floor and wall tiles segment. These tiles are light and have the added advantage of being offered in designer looks as compared to mosaic tiles, which are heavier and more expensive to transport. Both, organised and unorganised sectors play a key role in the manufacturing of ceramic tiles in India.
Indian sanitaryware market
India’s sanitaryware market is estimated at US$ 42 million. Production of sanitaryware has been increasing rapidly over the past few years and stands at nearly 190,000 tonnes per year. Production has been growing at about 17 per cent CAGR over the past 5 years.
About 50 per cent of production is from the organised sector, which comprises of about 15 firms. The unorganised sector, comprising of nearly 150 units, accounts for the other 50 per cent. EID Parry and Hindustan Sanitaryware are the biggest organised players, together accounting for about two-third of the output of the organised sector.
The industry offers a bright picture for existing players, as well as potential investors.
The glass and ceramics industry in India is poised for sustained growth, powered by long term demand for construction. In India, the construction sector is expected to do well mainly due to the fiscal incentives given to infrastructure development. Increase in income levels and availability of a range of financing options for housing is enabling rapid growth in housing construction.
At the same time, industry players are gearing up for growth through building capacity and focusing on technology and process improvements. Improving capability of Indian players is getting reflected in increasing exports across both ceramics and glass.