Janaki Krishnamoorthi examines the prospects of the Indian pipe industry.
Did you know that the Indian pipe industry, with a presence across all categories of pipes, is among the top three manufacturing hubs globally, after Japan and Europe? Indeed, Indian companies produce a wide range of metal, cement and PVC pipes that are used in various applications from building construction and industrial applications to transportation of water, oil, gas, chemicals, groundwater tapping, waste disposal and irrigation facilities.
Still, only one-third of Indiaâ€™s petroleum products are moved through pipelines at present. The penetration level of pipelines in oil and gas transportation is only 32 percent in India compared to 59 per cent in the US and 79 per cent globally. The pipeline network of India for oil and gas transport stood at 13,517 km in April 2006. Sanitation levels are also lower at 33 per cent compared to 91 per cent in Sri Lanka and 100 per cent in France. Of 140 million hectare of cultivable land in India, only 40 per cent is irrigated. These low penetration levels represent the huge scope for growth for the pipe industry not only in these sectors but in other hitherto unexplored segments, a fact to which major pipe manufacturers attest.
Demand triggersâ€œThe opening up of the Indian economy has triggered large-scale growth in the infrastructure sector and our company has identified its specific application areas in various fields,â€ reveals Raghav Jindal, Managing Director, Jindal Pipes Ltd (JPL). These fields encompass agriculture, water and sanitary pipes, gas mains, penstocks, power and electrification, tubular poles and structure, rolls for paper and textile mills, refineries, drill pipes for oil wells, steel tubular furniture and air services. â€œWe also anticipate and visualise substantial demand for electric resistance welded (ERW) line pipes in the near future, as major oil, gas, power and fertiliser companies plan to go in for various cross-country line pipes. Our company has already taken steps to broaden and improve production and testing facilities to cater to this huge demand by installing sophisticated equipment as per the requirement,â€ he adds. JPL, the flagship company of Jindal Group, is one of Indiaâ€™s largest manufacturer of ERW, black and galvanised steel pipes and tubes with an installed capacity of 250,000 tpa for the manufacture of ERW steel pipes and tubes.
â€œThe Indian market has great demand for PVC pipes and fittings,â€ echoes Vivek Khandekar, President, Finolex Industries Ltd. Part of the Rs 3,500-crore Finolex Group, it is the largest manufacturer of PVC pipes and fittings in India. â€œThe market for PVC pipes has been rapidly growing since our entry into this business. Over the past decade, there has been remarkable growth, particularly in the construction segment, and it will be phenomenal in future with the rapid expansion in the construction industry.â€ Currently, consumption of pipes by the oil and gas sector is around 50 per cent; the balance is used by the construction sector (30 per cent) and government projects (20 per cent).
International edgeIndian companies have also augmented their export sales over the past three to four years to countries like the US, Europe and the Middle East. Indiaâ€™s close proximity to the international demand zone, the Middle East, and the benefits of low labour costs have helped domestic manufacturers make inroads into the international market, giving them a competitive edge against their global counterparts.
â€œOur existing liberal economic policy helps manufacturers to import raw materials by paying nominal duties,â€ says Jindal. â€œAs a result, the cost of finished products has fallen and this helps the manufacturer to export the product to various countries at a very competitive price. Our company also used to export our pipes to Egypt, Congo, Tanzania, Kenya, Sudan, Jamaica and Brazil.â€
Metal or not?There is no dearth of pipe materials in India, which are generally classified on the basis of raw materials used and the production process. They range from galvanised, concrete, steel and copper pipes to PVC, seamless, ERW, insulated and pre-stressed concrete cylinder pipes. Several factors, including the pipeâ€™s physical and tensile properties, determine application.
â€œApplication area, climatic conditions, pressure bearing capacity, multi-utility products (dual-purpose use like hot and cold water distribution), chemical compatibility and UV resistance generally determine the kind of pipe that will be utilised for each project,â€ says Manoj Dhar, Business Development Manager, Lubrizol Advanced Materials India Pvt Ltd. The company has introduced FlowGuard Plumbing and Corzan Industrial Systems where 70 per cent of the base material is chlorinated polyvinyl chloride (CPVC). Their heat-resistant and low-combustibility CPVC speciality plastics are used in fire sprinklers, plumbing systems and industrial piping.
While metal pipes (galvanised iron, steel) still dominate the residential and industrial sector, new materials are also gaining ground. â€œAs far as the construction segment is concerned, PVC plumbing systems are fast replacing other conventional systems,â€ Khandekar tells us. â€œWith the increased spend on infrastructure, the use of PVC plumbing pipes has increased considerably and will grow further. Moreover, PVC pipes have found space across all other sectors as well. Eventually, every material has its own advantages and disadvantages; the workmanship during installation influences the performance of a piping system.â€ Other new materials that have been introduced in the market are composite pipes, stainless steel and PEX or cross-linked polyethylene. Often, plumbing contractors mix and match using two or three different kinds of pipes like copper for internal plumbing and plastic for external usage.
Industry concernsFluctuations in the price of raw materials, particularly steel; increasing local taxes; and a rise in petrol prices are some issues of great concern to the industry. â€œTo overcome these problems, the government should enhance the export benefit, balance the tax structure and give necessary guidelines to all bank through RBI to provide adequate funds to all manufacturers to increase infrastructure and purchase raw material for stock,â€ suggests Jindal. However, he maintains that the Indian metal sector has remained resilient and, to some extent, immune to the global economic crisis compared to other industries.
Industry sources are convinced that the positive trend in the Indian pipe industry will continue for the next three to five years on the back of high oil and gas discoveries worldwide, increased emphasis by the Indian government on exploration and production of oil and gas, water augmentation programmes, water and sewage treatment plants, irrigation facilities, and the rapidly growing construction industry. Success, clearly, is in the pipeline!