Industry Specific Risk of Plastic Pipe Industry in India

  • Gross margin may be impacted by anti-dumping duty on CPVC & Volatility in PVC and HDPE resin prices
  • The Ministry of Finance has imposed provisional anti-dumping duty on CPVC resins/compounds imported from China and Korea. The anti-dumping duties range from US$2,031–2,165 per tonne for resin and US$2,591–2,849 per tonne for the compound. Due to this provisional anti-dumping duty, the prices that the company pays for CPVC have increased. Inability to pass on the price hike in the CPVC products category could adversely impact the gross margins of the company.
  • If governments cease to encourage the building of new houses and related infrastructure, it could have a material adverse effect on the business, results of operations, and financial condition.
  • Plastic pipes are derived from crude oil. Any adverse moment in crude oil prices will directly impact the raw material price of pipes
  • Volatility in the international price of feedstock, fluctuations in the exchange rate, and demand-supply mismatch are the key risks faced by players in the pipes and fittings industry.
  • Unable to pass rise in raw materials price to the customer because still, 40% industry is unorganized, where organized players face intense competition
  • The slowdown in the residential, non-residential, and macroeconomy in general: The plastic pipes industry derives the majority its of demand from plumbing, irrigation and water transportation, and sewerage applications, which in turn depend on the level of activity in residential, non-residential construction, agriculture, and industrial spaces.
  • Stagnation in the construction industry
  • Highly fragmented market

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Trends in the Industry

1. Rise of Domestic QSR Food Chains
2. Rise in Off-premises consumption
3. Increase in Health Awareness amongst customers
4. Environmentally Aware consumption
5. Increased Focus on Hygiene and Safety
6. Ghost Kitchens on the rise
7. Rise in Fusion Food
8. Consolidation and Shutdowns in the Industry forced due to COVID19 impact