India: float glass makers focus on added value

Capitalising on a substantial improvement in their financial position in the last fiscal year, Indian float glass manufacturers are looking to increase their focus on value-added products for use in t…

Capitalising on a substantial improvement in their financial position in the last fiscal year, Indian float glass manufacturers are looking to increase their focus on value-added products for use in the construction and automobile sectors in order to improve their margins in the current fiscal year. According to industry analysts, after suffering depressed market conditions and high-interest costs relating to the largely debt-funded capacities throughout almost the entire 1990s, the float glass industry has made progress towards recovery in the last three years, and particularly in the last fiscal year, witnessing a notable improvement in its financial profile. Healthy growth in demand for float glass from the construction and automobile sectors and technological support obtainted from the foreign parent companies of the Indian manufacturers have been the two key factors leading to the growth of the industry. Most of the major producers in the domestic float glass industry have outlined plans to increase the share of value-added products in order to improve their margins and do battle with imports. St. Gobain, the largest producer of float glass in India with a domestic market share of 36%, will raise its production of value-added products such as tinted and reflective glass, while Gujarat Guardian, with a local market share of about 30%, has proposed manufacture of tinted green glass, according to sources. India currently has an annual total flat glass manufacturing capacity of 0.68 million tonnes, comprising 0.17 million tonnes of sheet glass (about 25% of the total capacity) and 0.51 million tonnes of float glass (75 %). There are four major domestic players, three of which are either the subsidiaries or joint ventures of large multinational companies (MNCs): St. Gobain is the Indian entity of the French glass giant, Compagnie de St Gobain, with global market share of 13%; Floatglass India and Gujarat Guardian are the Indian ventures of Asahi Glass Co of Japan and Guardian Industries Corp of US, which account for a share of 22% and 12% in the global market, respectively. The main consumer of float glass is the construction sector (60%), the products being mostly clear unprocessed glass, coloured glass and processed glass, apart from the automobile sector (15%) and mirror manufacturing (15%). “The market has cottoned on to the advantages of float glass over sheet glass. Float glass offers high optical clarity, consistent quality and a clear and smooth surface. Further, it is available in larger sizes and is stronger than sheet glass,” an industry analyst said. According to a Crisil report on the float glass industry, the increasing consumer preference for float glass had resulted in this segment posting healthy growth of 8-9% in the recent years, while the sheet glass segment had to deal with growth of 1-2 %. “The greater consumer awareness has been largely brought about by the increased promotions and dealer training by the MNCs which have a presence in India,” the report said. Market analysts said that the industry was likely to improve its financial profile in the current fiscal year given the continuation of the present pricing arrangements. The gap between imported and domestic prices has decreased by around INR 6 to INR 9 per mm/sq. m., following the imposition of a provisional anti-dumping duty of USD 82 per tonne and USD 67 per tonne on imports from China and Indonesia, respectively in January 2003. “Although the provisional levy is for a period of six months up to June 2003, domestic players believe that it would extended beyond this period as imports could once again rebound when duty rates are lowered from the current level of 25% to around 15 to 20% by 2004-05 to comply with the WTO regulations,” a Crisil analyst said.

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