A. INDUSTRY STRUCTURE AND DEVELOPMENT

CEMENT

The Indian Cement Industry with capacity of 173 million tonnes is the World's second largest after China. It has 136 large Cement plants and over 350 mini plants. Much to its credit, it is making commendable progress in capacity creation, conforming to global benchmarks in technology and production of every variety of cement. The Industry is also utilizing growing volumes of by-products like fly ash and slag for making blended cement.

The Industry's overall capacity utilization improved from 94% to 96% during the year under review.

TYRE

The Rs.16,000 crore Indian tyre industry has capacity of over 65 million tyres per annum. Five major tyre companies account for nearly 80% of the total turnover. Truck and bus tyres are the principal segments of the industry having a share of over 70% of industry turnover. Radialisation has taken place in almost the entire passenger car segment. In the truck and bus segment too, radialisation is gaining in pace. The replacement segment dominates the industry as it constitutes about 65% of the market. Around 23% of tyre production in India is exported to more than 65 countries.

Tyre being a derived demand product, its prospects are linked to factors like Gross Domestic Product (GDP) growth, agricultural and industrial production and rise in vehicle demand. The industry’s growth is also influenced by secondary factors, such as infrastructure development and interest rates.

The Indian Tyre Industry is equipped to meet the demand of the domestic market, besides generating surpluses for export.

RAYON & TRANSPARENT PAPER

The domestic Viscose Filament Yarn (VFY) industry is suffering cost disadvantage vis-a-vis its counterpart in China on account of fiscal levis and also due to higher cost of controlled inputs like power and fuel. While the appreciation of Rupee vis-a-vis Dollar has made imports highly competitive, domestic costs have gone up due to steep increases in prices of main raw materials. The anti-dumping duty imposed earlier also needs review due to adverse foreign exchange movement and rise in cost of production.

Fall in domestic demand, stiff global competition and rise in illegal imports led to a rise in the inventory of Transparent Paper(T.P). This coupled with high cost of production forced the industry to cut production.

SPUN PIPES

The year under review was challenging for the pipe industry, as the prices of raw material turned volatile in the latter half of the year. The industry is still facing competition due to higher input costs compared to ductile pipes.

HEAVY CHEMICALS

Capacity utilization of Caustic Soda industry during the year improved to around 85%. With the commissioning of new aluminium smelter capacity, the gap between supply and demand of caustic soda lye has narrowed down. However, the availability of joint products like chlorine and hydrochloric acid continues to be higher than the demand. Production of sulphuric acid in most of the plants was adversely affected due to very high prices and also non-availability of sulphur.