Inorganic Chemicals Industry

INORGANIC CHEMICALS INDUSTRY PROFILE

The global inorganic chemicals industry, estimated at US$ 2.4 trillion, is one of
the fastest growing sectors of the manufacturing industry. The industry growth exceeds
that of the manufacturing sector, despite the challenges of escalating crude oil prices and
demanding international environmental protection standards which are now adopted
globally. Pharmaceuticals and petrochemicals are the two biggest segments in chemicals
that account for approximately 26 per cent and 35 per cent respectively of the
overall industry size. Europe, is the largest consumer of chemicals in the world,
accounting for approximately half the global chemical consumption, USA consumes
approximately one fifth.

The global inorganic chemicals industry is being shaped by the following trends
that are impacting business models, processes and product segments of multinational
players.

Globalization

The global manufacturing footprint of MNCs is getting transformed, as

companies seek to gain proximity to consumer markets, raw material sources,
cheaper energy sources and lower tax regime in an effort to drive down costs and
safeguard profitability.

Consolidation

Mergers and acquisitions are increasingly prevalent and companies seek

economies of scale in manufacturing, logistics and R&D and to pave entry into new
markets, expanding the global reach.

Increased environment consciousness

This is a global phenomenon, that is driving the industry to innovate and

modernize. Effluent disposal issues have resulted in research into cogeneration and up
gradation of Technology, having a healthy impact on costs and profitability.
INDIAN INORGANIC CHEMICAL INDUSTRY
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A SIGNIFICANT IN INDIA’S ECONOMY INDUSTRY STRUCTURE AND

SEGMENTATION

Indian chemicals industry, which includes basic chemicals & its products,
petrochemicals, fertilizers, paints, gases and pharmaceuticals, is one of the oldest
industries in the country and plays an important role in its overall economic
development. Other features that set it apart, are the requirement for large capital for
set-up, high power consumption for production and a highly diversified product
range, covering more than 70,000 commercial products. The chemical industry
forms the backbone of the industrial and agricultural development of India, by
providing building blocks for downstream industries.

The chemical industry accounts for about 17.6 per cent of the output of India’s
manufacturing sector and about 3 per cent of the GDP. The industry output is estimated
at US$ 35 billion, with a total investment of approximately US$ 60 billion.

The Indian chemical industry is the 12th largest in the world and 3rd largest in
Asia, in terms of volume. It accounts for about 13 per cent of total exports and 8 per cent
of the total imports of India. During the last 5 years, exports of chemicals have
exceeded imports thereby resulting in a positive balance of trade, as against negative
balance in the nineties. The industry contributes about 18-20 per cent of total customs
and excise duties collection in India. India’s current per capita consumption of
chemicals is just a tenth of the world’s average, indicating the tremendous scope
for industry’s growth in India. The industry size is projected to more than double, to
reach US$ 80 – 100 billion by 2010.

The industry is highly fragmented, with close to 7000 firms developing multiple
products at dispersed locations. Western India accounts for half of the total Indian
chemical industry.

Concentration of the inorganic chemical industry

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Gujarat 53%
Maharashtra 9%
Uttar Pradesh 6%
Tamil Nadu 6%
Madhya Pradesh 5%
Punjab 4%
others 17%

Industry Segmentation
The chemicals industry is broadly classified into basic chemicals, specialty
chemicals and knowledge chemicals. Basic chemicals have traditionally formed the bulk
of the chemicals industry in India and still account for 57 per cent of the output. The
industry is now evolving and developing with higher investments in R&D. As a result,
knowledge chemicals and specialty chemicals have grown and today occupy nearly 43
per cent of the industry.

Composition of Indian chemical industry

Basic Chemicals 57%
Speciality Chemicals 26%
Knowledge Chemicals 17%

Inorganic chemicals are those that are not carbon based. Typically, they are of
mineral origin. The chemicals produced by this industry are intermediate products that
are used as inputs in industrial and manufacturing processes.

The inorganic chemicals industry consists of two segments–basic inorganic

chemicals and alkaline chemicals. The chemicals in each segment are:

Basic Inorganic Chemicals

-Aluminum Fluoride

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-Calcium Carbide
-Carbon Black
-Potassium Chlorate
-Sodium Chlorate
-Titanium Dioxide
-Red Phosphorus

Alkali chemicals

-Soda Ash
-Caustic Soda
-Liquid Chlorine

MARKET SIZE
The inorganic chemicals industry had an output of approximately 5.8 million
tonnes in 2006-07. Of this, alkaline chemicals contributed 5.26 million tonnes, or
nearly 90 per cent and basic inorganic chemicals contributed 0.6 million tonnes.
Among alkaline chemicals, soda ash is the largest segment, contributing to 40 per
cent of the output caustic soda has a 36 per cent share and liquid chlorine has 24
per cent.

Carbon black is the biggest segment in basic inorganic chemicals, with a share of nearly
71 per cent of the output. Calcium carbide with 16 per cent and titanium dioxide with 10
per cent, are the other significant segments.

DOMESTIC PROD UCTION OF INORGAN IC CHEMICALS HAS

BEEN GROWING

Production of inorganic chemicals has been growing at a CAGR of 4.4 percent between
FY’2002 and FY 2007. The output has gone up from 4.7 million tones in 2001-02 to 5.9
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million tones in 2006-07. Alkaline chemicals have grown at a CAGR on 3.9 percent,
from 4.34 million tones to 5.26 million tones during this period. Basic inorganic
chemicals have grown at a CAGR of 10 per cent, from 374000 tonnes to 602000 tonnes.
As a result of faster growth, the share of inorganic chemicals has gone up, from 8 percent
to 10 percent.

EXPORTS AND IMPORTS OF INORGANIC CHEMICALS

Imports of inorganic chemicals into India have gone up, from 256,000
tonnes in 2001-02 to 842,000 tonnes in 2005-06, at a CAGR 34.7 per cent. Alkaline
chemicals have grown at 36.8 per cent CAGR and basic inorganic chemicals have grown
at 25.4 per cent CAGR.

There was a sudden growth in alkali chemicals imports in 2005-06, which was
contributed by a spurt in imports of soda ash.

Exports have followed a similar trend, with a growth of 24.2 per cent
CAGR between FY’02 and FY’06. Basic inorganic chemicals have grown at 31.4 per
cent CAGR and alkaline chemicals, at 21.1 per cent CAGR, during the period.

KEY PRODUCT SEGMENTS

CAUSTIC SODA

Production of caustic soda has been increasing at a CAGR of 4.9 per cent, from
1.56 million tonnes in 2001-02 to 1.91 million tonnes in 2006-07. Imports have been
declining over the past 4 years, after a sudden increase in 2002-03. Exports have had a
fluctuating trend.
There are about 40 manufacturers of caustic soda in India. Caustic soda, finds
use in various applications, such as, finishing operations in textiles, manufacture of
soaps and detergents, control of pH (softening) of water for various applications and
general cleansing / bleaching applications. As such, demand for caustic soda is driven by
user industries such as, FMCG, textiles, food processing, paper and pulp, etc.

SODA ASH
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Soda ash production in India has been growing at 2.5 per cent CAGR
from 1.83 million tones in 2001-02 to 2.08 million tones in 2006-07. Imports have
grown at 41.3 per cent CAGR between FY’02 and FY’06, largely due to a jump of 350
per cent between 2004-05 and 2005-06. Exports have more than doubled between FY’02
and FY’06, from 87,000 tonnes to 197,000 tonnes.
Glass manufacturing is the largest application for soda ash whether it is in the
production of containers, fiberglass insulation or flat glass for the housing, commercial
building, and automotive industries. Soda ash also is used to clean the air and soften
water. Household detergents and paper products are a few other common examples of
readily
Identifiable products using soda ash.

LIQUID CHLORINE

Liquid chlorine production in India has been growing at 6.1 per cent CAGR,
from 0.9 million tonnes in 2001-02 to 1.27 million tonnes in 2006-07. Imports have been
negligible,
and exports have fluctuated widely over the past 5 years.
Liquid chlorine is used primarily for various bleaching applications, across
paper and pulp, textiles and other industries.

CARBON BLACK

Carbon black production has grown from 248,000 tonnes in 2001-02 to 422,000
tonnes in 2006-07, a CAGR of 11.2 per cent. The sector has a capacity of 455,000
tonnes. Both imports and exports have been increasing, imports from 16,300 tonnes in
FY’02 to 55300 tonnes in FY’06, at a CAGR of 35.6 per cent and exports from 36,900
tonnes in FY’02 to 97,000 tonnes in FY’06, at 27 per cent CAGR.

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The most widespread use of carbon black is as a pigment the manufacture of

automotive tyres, industrial rubber, plastics and toners for printers.

SOURCES OF INORGANIC CHEMICALS

There are many different sources of raw materials for the manufacture of
inorganic chemicals. Very few of them are found in their elemental form. Sulfur is a
notable exception. It occurs in underground deposits and can be brought to the surface by
compressed air after it is melted by superheated steam. However, increasing quantities of
sulfur are recovered from petroleum and natural gas (where they occur as impurities).

Air contains molecular nitrogen and oxygen. They may be separated by

liquefaction and fractional distillation along with inert gases, especially argon. Salt or
brine can be used as sources of chlorine and sometimes bromine, sodium hydroxide, and
sodium carbonate, whereas metals such as iron, aluminum, copper, or titanium as well as
phosphors, potassium, calcium, and fluorine are obtained from mineral ores. Saltpeter
was once an important source of nitrogen compounds, but today most ammonia and
nitrates are produced synthetically from nitrogen gas in the air.

Recovery and recycling provide increasing amounts of some metals. As

environmental concerns increase, these operations will probably become an important
source of materials used in the manufacture of certain inorganic chemicals.

KEY USER INDUSTRIES

The inorganic chemicals industry produces intermediate products that are used as
inputs for several user industries. Hence, the demand for chemicals will depend on the
demand for the products in whose production they are used. In this context, it is
pertinent to look at some of the key user segments for inorganic chemicals and assess the
potential demand for those products. Five major segments are discussed here paints,
glass, automotive, paper and detergents/soaps.

PAINTS INDUSTRY

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The Indian paint industry is divided into two segments decorative and industrial.
The market is highly fragmented, with 25 large and medium players and about 2,000
unorganized players. Asian Paints is the market leader in the industry, with a market
share of 37 per cent, followed by Kansai Nerolac and Berger Paints, both accounting for
18 per cent and 15 per cent, respectively. The paint industry has shown a compounded
annual rate of growth (CAGR) of 28 per cent over the past five years. The continued
growth in the demand from the housing sector, backed by low home finance rates,
augurs well for the decorative segment. The household construction industry is
expected to grow at 8 per cent in the next five years. Demand will be generated
through the new constructions, coming in housing and industries. The decorative
segment, spurred by these trends, is expected to grow at CAGR of 30-32 per cent
over the next couple of years.
The automobile sector, accounts for the lion’s share of industrial paints demand.
The growing demand in consumer durables is expected to improve the demand in
powder coatings. Overall, the industrial paints segment is expected to grow at 18-20 per
cent in the coming years.

GLASS INDUSTRY

The glass industry in India manufactures almost a complete range of glass items.
Glass products are manufactured both in the organized and small-scale sector and the
major segment of tiny and small-scale sector is concentrated in Ferozabad, Uttar
Pradesh. However, the large units are spread over throughout the country.
The Indian glass industry has been growing across all segments. Sheet and Float
glass have recorded the fastest growth at nearly 67 per cent CAGR between 2001 and
2005. This growth has been driven primarily by India’s booming automotive and
construction sectors. Other glassware such as bottles and fiberglass has recorded more
modest growth rates, of about 5 to 6 per cent CAGR over the same period.

Exports of glassware from India have been growing at a rate of 17 per cent
CAGR over the period 2001-02 to 2006-07. From a level of US$ 139 million in 2001,
exports have increased to US$ 307 million by 2007.

AUTOMOTIVE INDUSTRY
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The Indian automotive market has been one of the key drivers of the economy.
The domestic market has been growing at 14 per cent CAGR from FY’02 to
FY’07. All segments of the vehicles market are growing. Exports of vehicles have been
growing at over 40 per cent CAGR during the same period. Growth in vehicle sales
has been complemented by that in auto components. The components sector has
been growing at 22 per cent CAGR and components exports at 33 per cent CAGR over
FY ‘02 to FY ‘07.

Growth in the automotive industry is based on several fundamental and long

lasting changes in the Indian economy the primary drivers being:
• Growth in GDP of close to 8 per cent a year, which is expected to be
stabilize.
• Shift in demographics – rising income levels, emergence of young consumers
and increasing consumerism.
• Improvement in road infrastructure.
• Increasing availability of vehicle financing.
Based on these drivers, the growth in automobiles is expected to continue at almost
the same pace over the coming years.

PAPER INDUSTRY

An improvement in the standard of living of Indians, especially, in urban areas

has resulted in a gradual shift towards better quality of papers, hence increasing
the demand of high-end varieties of paper. Further, with rising exports and keeping
in view the current trend of outsourcing, foreign publishers have started
outsourcing Printing and publishing jobs to India. This will significantly Increase the
demand for different varieties of paper.

DETERGENTS/SOAPS INDUSTRY

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The soaps and detergents industry include laundry soaps, Synthetic detergents,
and toilet soaps including bathing bars. The production of soap during 2005-2006 was 4,
86,533 tonnes and detergents was 9, 28,222 tonnes. The export and import of soaps
during 2005-06 was 15,344 tonnes and 35,579 tonnes. The export and import of
detergents during 2005-06 was 32,342.02 tonnes and 20,547 tonnes, respectively.

GOVERNMENT POLICIES SUPPORTING THE INDUSTRY

With the chemical industry now having reached a stage of maturity, this sector
has been to a large extent de-regulated. Licensing requirements have also been done
away with, except for hazardous chemicals and a few specified drugs.
• Entrepreneurs are allowed to set up chemical industries following the Industrial
Entrepreneurs’ Memorandum (IEM) route.
• Tariff levels have been reduced substantially for most chemicals
andpetrochemical products and majority of the chemical items can now be freely
imported or exported through simplified procedures.
• 100 per cent FDI under the automatic route is allowed for all chemical items
except hazardous chemicals, where Government/FIPB approval and license to
manufacture are required.
• Plans are underway to set up port based chemical parks in SEZs have been
planned to use the output of chemical parks.

MARKET & OPPORTUNITIES

There was a spurt in inorganic chemical exports in 2004-05, mainly due to
increase in exports of carbon black, titanium dioxide and aluminium fluoride.

The industry is reaching capacity saturation levels in some of the key segments,
which indicates that imports could increase further unless capacity is added urgently.
The capacity utilization across different segments in 2006-07 is given in the table –
Carbon black, soda ash and caustic soda are approaching full capacity utilization levels.

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Chemical Capacity Utilization

Carbon Black 93%
Soda Ash 88%
Caustic Soda 87%
Liquid Chlorine 80%
Aluminium Fluoride 75%
Calcium Carbide 61%
Titanium Dioxide 58%
POTENTIAL LOCATIONS FOR INVESTMENT
Access to raw materials and power are key requirements for the chemicals sector.
Most of the key chemicals manufacturing units in India have been clustered in Western
India, in the states of Gujarat and Maharashtra. As these states, also have among the best
infrastructure facilities in India, in the states, also have among the best infrastructure
facilities in India and provide easy access to major ports, these form India and provide
easy access to major ports, these form the most attractive locations for the chemicals
industry. Andhra Pradesh is another potential location, as it has a flourishing chemicals
industry base as well.

GUJARAT

FACTOR CONDITIONS

✔ Proactive policies of the government and capability driven are supporting factors
for driving this industry.

✔ The state accounts for 34.5 per cent of the total sales by industries. The state has
accounted for investments worth US$ 32.57 billion in this sector, aggregating
50.3 per cent of the total investment from 1991.

✔ The state has vast reserves of limestone, bauxite and natural gas, which has
enabled the mineral-based industry to flourish.

✔ The state boasts of abundant raw-material, good infrastructure and skilled man-
power.

✔ The states SSIs have had impressive performance.

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✔ The state has vast reserves of limestone, bauxite and natural gas, which has
enabled the mineral-based industry to flourish.

✔ The state boasts of abundant raw-material, good infrastructure and skilled man-
power.

✔ The exports of chemicals have accounted for 30 per cent of the total exports for
the year 2002-03.

✔ In the past, international firms have investment in the state in the chemicals
segment.

✔ The state offers quality manpower, good infrastructure facilities such as, power,
water supply, ports and gas grid.

ANDHRA PRADESH

FACTOR CONDITIONS

✔ The state has high literacy rates and the presence of good vocational training
institutions have ensured that the state has well qualified manpower.

✔ Proactive policies along with capabilities have made the state attractive in the
chemicals and pharmaceuticals industry.

✔ The state derives close to around 40 per cent of its revenues from the chemicals
sector. This industry is growing at a healthy rate, when compared to other
sectors in state.

✔ Majority of the FDI’s in the state has been in chemicals & petrochemicals sector
(as on Feb. 2004).

✔ The state supports the chemical industry with excellent research institutes.`

✔ The contribution of exports by drugs & pharmaceuticals, chemicals & allied

products has been 17.8 per cent during the year 2002-03.

MAHARASHTRA

FACTOR CONDITIONS

✔ Chemicals, petrochemicals, oil & gas contribution around 44 per cent of the total
NVA (Net Value Added).

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✔ The state contributes 27.4 per cent of the country’s chemicals, petrochemicals and
oil & gas output.

✔ The chemical industry is expected to grow 15 per cent per annum till 2010 and
thus, present ample opportunities for the state.

✔ The state accounts for 18.2 per cent of the countries employment in the sector.

✔ The upstream and downstream linkages for the industry are the strongest in the
state.

✔ The pharmaceuticals sector accounts for 40 per cent of country’s output.

✔ The upstream and downstream linkages for the industry are the strongest in the
state.

✔ 12 percent of the total exports have been contributed by the chemicals and
petroleum crude for the 2002.

Income details

Inorganic Chemicals
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

2587.3 2763.2 3200.8 3261.3 3672.9 3687.0

Total Income 4 3 1 5 3 5
Income from financial services 69.29 57.86 38.92 39.57 56.83 47.17
Fund based financial services income 41.99 48.07 34.16 35.77 41.79 33.18
Interest income 37.99 38.76 30.38 32.5 37.96 26.76
Dividends 2.74 7.88 3.33 2.89 3.62 6.22
Income from leasing, etc. 1.26 1.43 0.45 0.38 0.21 0.2
Fee based financial services income 0.29 0 0 0.13 0.06 0.02
Income from treasury operations 27.01 9.79 4.76 3.67 14.98 13.97
Profit on sale of investments 26.78 5 2.16 2.76 7.79 0.92
Profit on long term investment 1.88 3.05 0.54 0.02 5.09 0.19
Profit on current investment 0.15 1.17 0.03 0.03 0.03 0
Income from other treasury operations 0 0.46 1.62 0 0 0.35
Gain relating to forex transactions 0.23 4.33 0.98 0.91 7.19 12.7
Income from non-financial services 49.27 106.04 55.39 56.43 92.9 186.89
Other income 15.77 12.23 12.2 19.31 16.26 18.14
Prior period & extra-ordinary income 28.41 30.12 182.92 70.87 48.87 25.17

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Prior period income 20.96 25.63 96.91 16.43 25.36 15.14

Cash prior period income 3.07 1.67 10.41 2.62 2.12 0.48
Bad debts recovered 0.12 0.06 0.16 0.11 0.06 0.03
Residual and combined cash prior period income 2.95 1.61 10.25 2.51 2.06 0.45
Non-cash prior period income 17.89 23.96 86.5 13.81 23.24 14.66
Provisions written back 16.99 23.39 85.01 10.93 22.98 14.32
Residual and combined non cash prior period income 0.9 0.57 1.49 2.88 0.26 0.34
Extra-ordinary income 7.45 4.49 86.01 54.44 23.51 10.03
Profit on sale of fixed assets 4.37 0.43 23.41 5.71 14.78 5.3
Insurance claims 0.83 0.91 3.12 9.08 1.17 1.88
Gain on change in accounting policies 0 0 0 0 0 0
No of companies 71 80 80 78 71 61

Expenses details

Inorganic Chemicals
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

2547.1 2700.8 3033.2 3095.5 3595.7 3553.8

Total expenses 7 5 3 5 6 8
Fund based financial services expenses 116.65 84.4 87.03 96.91 116.61 133.65
Interest paid 116.64 84.4 86.78 96.75 116.26 133.2
Financial charges on instruments 0 0 0 0 0 0
Other fund based financial services expenses 0.01 0 0.25 0.16 0.35 0.45
Fee based financial services expenses 8.13 8.79 9.96 8.35 13.79 15.24
Bill discounting charges 0.28 0.18 0.23 0.29 0.45 0.8
Bank charges, guarantee fees, etc. 7.85 8.61 9.73 8.06 13.34 14.44
Treasury operations expenses 3.81 2.48 31 1.68 0.87 1.34
Loss on sale of investments 2.5 1.28 30.16 0.1 0.55 0.66
Loss on sale of long term investment 2.11 0.09 29.7 0 0 0
Loss on sale of current investment 0.19 0 0 0 0 0.02
Loss relating to forex transactions 1.31 1.2 0.84 1.58 0.32 0.68
Compensation to employees 234.39 270.69 263 261.47 291.29 195.72
Indirect taxes 295.3 302.26 344.77 349.77 393.62 398.8
Rent & lease rent 9.9 8.24 8.61 6.97 8.04 8.85
Repairs & maintenance 55.08 60.81 67.04 77.16 85.08 77.59
Insurance premium paid 10.81 9.87 11.55 11.09 13.21 10.6
Outsourced professional jobs 4.72 6.64 5.89 8.11 8.76 12.45
Advertising expenses 1.34 1.37 1.56 1.29 1.28 0.5
Marketing expenses 36.25 32.54 32.09 35.62 40.64 43.95
Distribution expenses 58.37 75.56 71.84 69.35 80.46 87.38
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Directors' fees 0.12 0.22 0.26 0.29 0.4 0.61

Travel expenses 11.99 12.01 12.32 13.06 14.22 14.49
Communications expenses 4.91 5.17 5.12 4.5 4.53 3.96
Printing & stationery expenses 2.26 2.22 2.43 2.39 2.24 1.56
Royalties, technical know-how fees, etc. 0.7 0.64 0.63 0.75 0.75 0
Outsourced jobs 10.97 12.31 14.02 7.88 9.84 9.88
Miscellaneous expenditure 50.34 47.36 54.85 63.22 69.23 68.43
Provisions & contingencies 6.36 45 66.92 6.77 8.6 2.02
Provision for NPAs 0 0 0 0 0 0
Provisions for dimunition in investments 1.07 0.08 59.55 0 1.59 0.22
Provisions for unspecified contingencies 0.98 0 2.84 0.53 0.24 0.19
Depreciation (net of transfer from reval. reserves) 101.24 106.05 112.31 113.82 131.17 136.07
Amortisation 9.32 3.81 2 1.14 0.9 1.15
Write-offs 8.92 5.89 6.26 3.18 9.91 4.16
Less: Expenses capitalised 2.46 3.47 6.62 11.66 10.52 8.29
Less: DRE & expenses charged to others 0.09 0 0.32 2.74 1.57 1.93
Prior period and extra-ordinary expenses 51.06 24.98 12.63 22.56 28.3 27.06
Prior period expenses 37.1 13.38 4.57 15.51 19.03 10
Cash prior period expenses 2.79 5.03 3.8 9.87 10.41 9.75
Prior period taxes 2.47 0.71 0.41 7.76 8.58 4.13
Residual and combined cash prior period expenses 0.32 4.32 3.39 2.11 1.83 5.62
Non cash prior period expenses 34.31 8.35 0.77 5.64 8.62 0.25
Prior period depreciation 0 0.01 0 0.03 5.14 0
Residual and combined non cash prior period expenses 34.31 8.34 0.77 5.61 3.48 0.25
Extra-ordinary expenses 13.96 11.6 8.06 7.05 9.27 17.06
Loss on impairment of assets 0 0 0 0 1.55 0
Loss on sale of assets 2.49 11.6 2.47 2.19 4.46 11.86
Tax on extra-ordinary income 0 0 0 0 0 0
Loss on change in accounting policies 0 0 0 0 0 0
Provision for direct tax 66.41 58.71 69.74 58.51 75.74 80.41
Corporate tax 50.33 41.81 46.62 44.82 51.82 55.05
Deferred tax 17.63 18.27 32.26 17.48 28.31 26.8
Less: Deferred tax assets / credit 1.84 1.53 9.22 6.99 7.12 3.9
Other direct taxes 0.29 0.16 0.08 3.2 2.73 2.46
Fringe benefit tax 0 0 0.04 3.17 2.7 2.43
Profit /surplus after tax 49.72 48.72 170.89 167.57 110.04 121.21
No of companies 71 80 80 78 71 61

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Assets

Inorganic Chemicals
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

Gross fixed assets 2472.39 2732.83 2914.72 3112.92 3404.26 3424.64

Land & building 372.27 406.81 429.03 441.52 472.88 469.66
Plant & machinery 1811.05 1940.1 2045.58 2092.99 2384.25 2465.48
Transport & comm. equipment/infrastructure 41.86 47.27 56.36 55.42 64.55 55.53
Furniture,amenities & other fixed assets 61.21 67.05 78.07 89.23 91.44 90.11
Capital work-in-progress 153.46 227.44 249.81 379.48 343.06 295.68
Intangible assets 22.72 26.13 30.6 29.35 29.66 30.31

Net pre-operative expenses pending allocation 9.61 17.82 19.51 20.03 26.87 26.22
Net lease reserve adjustment 0 -9.94 0 0 0 0
Less: Cumulative depreciation 1038.19 1153.68 1203.64 1207.16 1295.18 1214.21
Less: Arrears of depreciation 3.34 4.09 4.71 5.13 0 0

Net fixed assets 1430.86 1565.12 1706.37 1900.63 2109.08 2210.43

Investments 185.84 154.11 239.55 189.38 207.64 209.58

Equity shares 129.91 127.37 138.36 99.07 131.53 133.96
Preference shares 10 13.75 123.47 120.16 120.16 120.58
Mutual funds 17.09 12.65 16.1 5.82 7.36 12.97
Debt instruments 18.08 1.57 2.77 2.97 4.4 1.54
Approved securites (slr/statutory req.) 0 0 0 0 0 0
Assisted companies 0 0 0 0 0 0
Others 13.62 1.2 19 21.5 5.92 1.93
Less: Provision for dimunition in value of investments 2.86 2.43 60.15 60.14 61.73 61.4

Group companies 130.8 118.17 236.24 190.44 218.29 218.28

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Non-group companies 44.27 37.12 44.35 35.9 44.12 50.44

Market value of quoted investments 48.11 34.48 69.79 75.24 70.29 77.14

Deferred tax assets 59.62 62.98 44.97 37.18 28.59 24.66

Current assets 1497.71 1660.47 1688.46 1659.34 1875.19 1494.77

Cash & bank balance 332.61 435.89 403.43 378.26 457.79 166.03
Inventories 401.56 409.55 462.07 470.99 555.47 500.04
Receivables 572.29 588.8 571.01 643.76 692.11 761.71
Expenses paid in advance 191.25 226.23 251.95 166.33 169.82 66.99

Loans & advances 0 0 0 0 0 0

Deferred revenue expenditure 16.68 11.15 10.83 9.35 11.64 6.17
Total assets 3281.88 3647.21 3806.32 3925.55 4419.44 4066.99
No of companies 71 80 80 78 71 61

Liabilities

Inorganic Chemicals
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

1373.7 1407.0 1581.5 1670.2 1877.3

Net Worth 4 1 1 1 7 1543.6
Authorised capital 637.65 656.65 665.5 683.15 666.15 619.3
Issued equity capital 412.66 420.66 429.21 370.76 396.21 365.23
Paid up equity capital (net of forfeited capital) 401.3 412.86 418.93 355.49 391.16 361.89
Forfeited equity capital 1.69 1.69 1.69 1.65 1.65 1.65
Paid up preference capital (net of forfeited capital) 103.52 63.52 109.82 135.54 232.25 277.13
Capital contibution, suspense and application money 3.63 65.29 28.41 42.85 19 19.75
1022.6 1134.6 1233.3
Reserves & surplus 863.6 863.65 6 8 1 883.18
1052.1 1107.6 1210.6
Free Reserves 935.62 987.28 3 5 3 884.25
Security premium reserves (Net of deductions) 218.7 188.4 199.56 185.45 212.07 235.17
Other free reserves 716.92 798.88 852.57 922.2 998.56 649.08
Specific reserves 181.37 190.68 199.47 164.85 176.31 175.95
Revaluation reserves 45.4 39.64 61.42 52.02 47.85 42.63
Less Accumulated losses 298.79 353.95 290.36 189.84 201.48 219.65
Deposits 0 0 0 0 0 0
1051.4 1108.9 1198.3 1392.9 1399.0
Total borrowings 894.54 4 4 8 4 8
Bank borrowings 352.01 556.98 672.46 837.93 930.69 987.11
Short term bank borrowings 246.27 258.1 286.98 315.45 383.35 434.38
Long term bank borrowings 105.74 298.88 385.48 522.48 547.34 552.73
Financial institutional borrowings 181.78 164.68 105.36 63.78 88.94 73.16
Central & state govt. (usually sales tax deferrals) 3.23 3.13 3.13 3.13 3.13 3.1
Debentures / bonds 45.42 43.53 31.23 7.01 7.29 11.58
Convertible 0 0 3.37 3.37 1.68 0
Non-convertible 45.42 43.53 27.86 3.59 5.56 11.23
Fixed deposits 63.57 47.47 49.85 50.44 46.5 51.37
Foreign borrowings 6.36 3.43 22.99 15.46 162.37 142.72
Of which : euro convertible bonds 0 0 0 0 92.38 79.94
Borrowings from corporate bodies 101.27 86.52 71.2 112.33 68.1 50.38
Group / associate cos. 19.73 22.09 21.86 29.07 24.82 11.22
Borrowings from promoters / directors 23.14 23.6 22.07 17.21 12.27 22.2
Commercial paper 5 5 0 0 0 0
Hire purchase borrowings 2.88 3.95 4.33 4.28 4.79 2.78
Deferred credit 52.14 55.81 58 41.58 34.25 31.68
Other borrowings 57.74 57.34 68.32 45.23 34.61 23

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 Inorganic Chemicals Industry

1070.1
Secured borrowings 616.56 780.61 827.13 937.92 1046 3
Unsecured borrowings 277.98 270.83 281.81 260.46 346.94 328.95
Current portion of long term debt 47.42 41.44 41.28 48.79 102.19 89.54
1006.4
Current liabilities & provisions 843.58 9 936.41 878.08 956.95 915.76
Sundry creditors 374.86 394.79 443.44 450.33 464.41 602.35
Acceptances 6.11 13.33 18.81 18.74 38.57 39.06
Deposits & advances from customers and employees 27.86 27.78 32.63 46.01 54.87 51.59
Interest accrued 108.59 104.4 44.94 16.32 15.07 13.11
Share application money 0.24 0.02 0.02 0.02 0.02 0.02
Other current liabilities 114.01 148 117.74 133.72 129.06 58.09
Provisions 211.91 318.17 278.83 212.94 254.95 151.54
Deferred tax liability 170.02 182.27 179.46 178.88 192.18 208.55
3281.8 3647.2 3806.3 3925.5 4419.4 4066.9
Total liabilities 8 1 2 5 4 9
1311.6 1356.2 1509.2 1608.8 1817.8
Net Worth (net of reval & DRE) 6 2 6 4 8 1494.8
1405.0 1229.3
Contingent liabilities 360.99 632.55 850.52 5 4 450.94
No of companies 71 80 80 78 71 61

Profits

Inorganic Chemicals
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

PBT 116.13 107.43 240.63 226.08 185.78 201.62

Provision for direct tax 66.41 58.71 69.74 58.51 75.74 80.41
Corporate tax 50.33 41.81 46.62 44.82 51.82 55.05
Deferred tax 17.63 18.27 32.26 17.48 28.31 26.8
Less: Deferred tax assets / credit 1.84 1.53 9.22 6.99 7.12 3.9
Other direct taxes 0.29 0.16 0.08 3.2 2.73 2.46
Fringe benefits tax 0 0 0.04 3.17 2.7 2.43
PAT 49.72 48.72 170.89 167.57 110.04 121.21
PAT (as reported by the co.) 49.59 52.81 171.4 170.8 111.4 121.43
Prior period and extra-ordinary
income 28.41 30.12 182.92 70.87 48.87 25.17
Prior period and extra-ordinary
expenses 51.06 24.98 12.63 22.56 28.3 27.06
Net prior period and extra-ordinary
items 22.65 -5.14 -170.29 -48.31 -20.57 1.89
PBPDTA net of P&E 255.7 257.15 251.57 299.5 305.88 342.75
PBPT net of P&E 145.14 147.29 137.26 184.54 173.81 205.53
PBT net of P&E 138.78 102.29 70.34 177.77 165.21 203.51
PAT net of P&E 72.37 43.58 0.6 119.26 89.47 123.1
Distribution of profits
PBPDTA 0.01 0.01 0.01 0.01 0.01 0.01
0.0017156 0.0015863 0.0001946 0.0002634
Provision 0.0002729 6 1 5 4 5.93E-05
Depreciation & Amortisation 0.0047440 0.0041884 0.0027096 0.0033052 0.0040456 0.0040257

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 Inorganic Chemicals Industry

5 9 7 5 4
0.0022383 0.0016531 0.0016822 0.0023201 0.0023590
Tax 0.0028496 6 6 4 1 3
0.0021334 0.0018574 0.0040508 0.0048178 0.0033708 0.0035560
PAT 5 9 7 6 1 1
Non--provisions for 25.69 35.16 11.38 16.95 20.41 19.49
Diminution in investment 0 0 0 0 0 0
Sundry debtors 3.09 0.47 0.57 0.16 1.08 0.83
Loans and advances including npas 21.76 24.23 0.19 0.18 0.1 0
Loans and advances to group
companies 0 0 0 0 0 0
Interest expenses 0.56 2.49 2.47 16.43 18.45 18.06
Power expenses 0 0 0 0 0 0
Gratuity 0 7.97 7.97 0 0.6 0.6
Others 0.28 0 0.18 0.18 0.18 0
No of companies 71 80 80 78 71 61

Investments

Inorganic Chemicals
Mar- Mar- Mar- Mar- Mar- Mar-
Rs. Crore (Non-Annualised) 03 04 05 06 07 08

Investments 185.84 154.11 239.55 189.38 207.64 209.58

In equity shares 129.91 127.37 138.36 99.07 131.53 133.96
Group companies 113.3 99.92 111.7 70.72 98.57 98.14
Other than group companies 16.61 27.45 26.66 28.35 32.96 35.82
In preference shares 10 13.75 123.47 120.16 120.16 120.58
Group companies 10 13.75 123.47 119.72 119.72 120.14
Other than group companies 0 0 0 0.44 0.44 0.44
In debt instruments 18.08 1.57 2.77 2.97 4.4 1.54
Other than governement debentures/bonds 18.07 1.52 2.66 1.29 3.36 1.21
Group companies 7.5 0 0.32 0 0 0
Other than group companies 10.57 1.52 2.34 1.29 3.36 1.21
In bonds/debentures of government/local bodies 0.01 0.05 0.11 1.68 1.04 0.33
In mutual funds 17.09 12.65 16.1 5.82 7.36 12.97
Group companies 0 4.5 0.75 0 0 0
Other than group companies 17.09 8.15 15.35 5.82 7.36 12.97
In others 13.62 1.2 19 21.5 5.92 1.93
Less: Provision for dimunition in value of investments 2.86 2.43 60.15 60.14 61.73 61.4
Non-provisioning of dimunition in investments 0 0 0 0 0 0
Book value of quoted investments 40.19 30.74 43.22 34.01 39.53 39.26
Market value of quoted investments 48.11 34.48 69.79 75.24 70.29 77.14
Marketable securities 54.44 37.04 52.62 36.99 44.3 47.24
Investment lodged as security 0.66 0.58 20.83 20.29 21.1 20.47
No of companies 71 80 80 78 71 61

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APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

TOOLS OF ANALYSIS

Correlation
Coefficient of correlation is independent of change of scale and origin of the
variable X and Y. By change of origin we mean subtracting some constant from every
given value of x and y by change of scale. We can divide or multiply every value of x and
y by some constant.
_ _
∑(X-X) (Y-Y)
r= -------------------------
_ _
√∑(X-X) 2 √∑(Y-Y) 2
✔

Trend Analysis:
The method of least squares may be used either to fit a straight line trend
is represented by the equation
✔

✔
Yc = a+bx
In order to determine the values of the constants a and b the following to
normal equations are to be solved.

ΣY = Na+bΣX

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APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

ΣXY = aΣX+bΣX²

COST STRUCTURE

Table no: 1
S. Particulars
No 2003 2004 2005 2006 2007 2008
1 Sales 2473.87 2663.02 2966.77 3131.60 3550.97 3596.57

2 Raw Material 924.76 1028.08 1294.97 1357.97 1621.49 1676.26

& spares
3 Power ,Fuel 378.80 341.23 378.59 430.17 468.96 364.19
&water
charges

4 Employee 234.39 270.69 263 261.47 291.29 195.72

compensatio
n
5 Interest paid 116.64 84.4 86.78 96.75 116.26 133.2

6 Depreciation 101.24 106.05 112.31 113.82 131.17 136.07

7 Value added 1170.31 1293.71 1293.21 1343.46 1460.52 1556.12

(1)-(2)-(3)
8 Fixed 452.27 461.14 462.09 472.04 538.72 464.99
charges
(4)+(5)+(6)
9 Fixed 0.386 0.356 0.357 0.351 0.368 0.298
charges /
Value
added(8/7)
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APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

INTERPRETATION

From the above table it is observed that the cost structure of the inorganic industry
is fluctuating because of the fluctuations occurred in fixed charges and value added.

RAW MATERIAL PRODUCTIVITY

The relationship between input & output is called productivity.

Net sales
Raw material productivity = ----------------------------------
Raw materials expenses
Table no: 2
YEAR NET SALES RAW PRODUCTIVITY
(rs in crs) MATERIAL RATIO
2003 2473.87 784.49 3.153
2004 2663.02 925.92 2.826
2005 2966.77 1144.85 2.591
2006 3131.6 1207.88 2.592
2007 3550.97 1456.40 2.438
2008 3596.57 1553.962 2.314

Graph No: 2.1

INTERPRETATION

From the above table it is clear that the raw material productivity of the inorganic
industry has been continuously decreasing. It is high in the year 2003 because of
purchasing of raw material and sales are very high. In the year 2008 raw material
productivity is very low.

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APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

OPERATING PERFORMANCE

Operating performance shows the relationship between profit before interest and tax and
net assets.
EBIT
Operating performance = -----------------
Net Assets
Table no: 3
YEAR EBIT NET ASSETS OPERATING
PERFORMANCE
2003 232.13 3281.88 0.070
2004 191.83 3647.21 0.052
2005 327.66 3806.32 0.086
2006 322.99 3925.55 0.082
2007 302.99 4419.44 0.068
2008 335.27 4066.69 0.082

Graph No: 3.1

INTERPRETATION

From the above table it is clear that the operating performance of the inorganic
chemicals industry has been fluctuating. It is high in the year 2005 because of the EBIT is
increased and net assets decreased. In the year 2006 it is very low due to increase of the
EBIT

FINANCIAL PERFORMANCE
Financial performance shows the relationship between profit after tax and net
worth.
PAT
Financial performance= --------------
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APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

Net worth

Table no:4
YEAR PAT NET WORTH FINANCIAL
PERFORMANCE
2003 49.72 1373.74 0.036
2004 48.72 1407.01 0.034
2005 170.89 1581.51 0.108
2006 167.57 1670.21 0.100
2007 110.04 1877.37 0.058
2008 121.21 1543.60 0.078

Graph No: 4.1

INTERPRETATION

From the above table it is clear that the financial performance of the inorganic
chemicals industry has been fluctuating. It is high in the year 2005 because the PAT &
net worth are increased when compared with other years .In the year 2004 it is low.

NET PERFORMANCE

Net performance shows the relationship between Net profit to Total assets
Net profit
Operating performance = -----------------
Total Assets
Table no: 5
YEAR NET PROFIT TOTAL NET
ASSETS PERFORMANCE
2003 49.72 3281.88 0.015
2004 48.72 3647.21 0.013
2005 170.89 3806.32 0.044
2006 167.57 3925.55 0.042
2007 110.04 4419.44 0.024
2008 121.21 4066.99 0.029

Graph No: 5.1

INTERPRETATION

24
APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

From the above table it is clear that the net performance of the inorganic
chemicals industry has been fluctuating. It is high in the year 2005 because of the net
profit is increased and total assets decreased. In the year 2004 it is very low.

Growth trend in total income

Growth trend in income represents how much percentage of income is either
increased or decreased at current year for growth trend in income we are using growth
trend formula as

Pn = Po (1+r)n

Here Pn = Current year

Po =base year
r = growth rate
year Total income Trend in(percentages)
2003 2587.34 ------
2004 2763.23 0.068
2005 3200.81 0.158
2006 3261.35 0.018
2007 3672.93 0.126
2008 3687.05 0.003

Table no: 6

Graph No: 6.1

Interpretation

25
APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

From the above table it is observed that the growth trend of the inorganic chemicals
industry is fluctuating. In the year 2005 it is high because of total income increased. in
the 2008 it is low.

TREND IN SALES:
The method of least squires may be used either to fit a straight line trend
Is represented by the equation
Yc = a+bx
In order to determine the values of the Constance a & by the following to normal
equations are to be solved
∑Y= Na+b∑X
∑XY= a∑X +b∑X2
Table no: 7
YEARS SALES

2003 2473.87

2004 2663.02
2005 2966.77
2006 3131.6
2007 3550.97
2008 3596.57
Estimated sales for 2009 3908

Estimated sales for 2010 4149.2

Estimated sales for 2011 4390.4
Graph No: 7.1

Interpretation

26
APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

The estimated sales for 2009 is 3908

The estimated sales for 2010 is 4149.2
The estimated sales for 2011 is 4390.4
TREND IN INCOME:

The method of least squires may be used either to fit a straight line trend
Is represented by the equation
Yc = a+bx
In order to determine the values of the Constance a & by the following to normal
equations are to be solved
∑Y= Na+b∑X
∑XY= a∑X +b∑X2
Table no: 8
YEARS INCOME
2003 2587.34
2004 2763.23
2005 3200.81
2006 3261.35
2007 3672.93
2008 3687.05
Estimated income for 2009 4024.29
Estimated income for 2010 4261.11
Estimated income for 2011 4497.22
Graph No: 8.1

INTERPRETATION:

The estimated income for 2008 is 812.77.

The estimated income for 2009 is 812.83.
The estimated income for 2010 is 851.13.

27
APGCMS, RAJAMPET.

4600
 Inorganic Chemicals Industry

CORRELATION BETWEEN TOTAL INCOME vs. TOTAL

EXPENSES
Table no: 9
(Rs. In Crores)

YEAR TOTAL INCOME TOTAL EXPENSES

2003 2587.34 2547.17

2004 2763.23 2700.85

2005 3200.81 3033.23

2006 3261.35 3095.55

2007 3672.93 3595.76

2008 3687.05 3553.88

Correlation between total income and total expenses is = 0.993

INTERPRETATION:

The Coefficient of correlation between total income and total expenses is

showing positive sign for the investors. The 100 % change in total income will lead to
99.30% change in total expenses.

28
APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

CORRELATION BETWEEN TOTAL EXPENSES vs. PROFIT

Table no:10
(Rs. In Crores)

YEAR TOTAL EXPENSES PROFIT

2003 2547.17 49.72

2004 2700.85 48.72

2005 3033.23 170.89

2006 3095.55 167.57

2007 3595.76 110.04

2008 3553.88 121.21

Correlation between total expenses and profit is = 0.562

INTERPRETATION:

The Coefficient of correlation between total expenses and profit is

showing positive sign for the investors. The 100 % change in total expenses will lead to
56.20% change in profit.

CORRELATION BETWEEN TOTAL INCOME vs. TOTAL ASSETS

29
APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

Table no: 11
(Rs. In Crores)

YEAR TOTAL INCOME TOTAL ASSETS

2003 2587.34 1430.86

2004 2763.23 1565.12

2005 3200.81 1703.37

2006 3261.35 1900.63

2007 3672.93 2109.08

2008 3687.05 2210.43

Correlation between total income and total assets is = 0.977

INTERPRETATION:

The Coefficient of correlation between total income and total assets is

showing positive sign for the investors. The 100 % change in total income will lead to
97.70% change in total assets.

SWOT ANALYSIS OF INORGANIC CHEMICAL INDUSTRY

30
APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

STRENGTHS

➢ A diversified manufacturing base having a capacity to produce quality

chemicals from World class plants.

➢ Vibrant downstream industries in different segments.

➢ Competitive Core Industries essential for the development of chemical

industries.

➢ Capability to produce World class end products.

➢ Strong presence in the export market in sub segments such as Dyes, Pharma
and agrochemicals.

➢ Large domestic market.

➢ Major raw material component sources within the country

➢ Good R&D base and quality human resources.

WEAKNESS

➢ Cost of power
Very high cost of power, unreliability of supply and frequent
interruption. Transmission and distribution losses are very high.

➢ Cost of finance
Inorganic chemical industry is highly capital intensive, cost of finance
in India is very high; interest rates are 14% -15% p. a. as compared to 2% to
6% prevailing in developed countries.

➢ Infrastructure
India ranked 55th in infrastructure development in the global
competitiveness report 1999. Infrastructure facilities are not of world class.
Transport and communications are complex resulting in delays and slow
movement of goods. In-adequate port facilities result in high demurrage costs.
For example turn around time for Vessels is an average of eight days in India
as against one or two days in Singapore.

➢ Labour Laws
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APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

Labour & Industrial relation laws at present do not allow flexibility in

deployment of labour. This discourages modernization and investment in
technological changes and eventually leads to industrial sickness thus
adversely affecting workers as well.

OPPORTUNITIES

➢ A decade of economic reforms has tested the resilience of the Indian Chemical
Industry. Individual enterprises have realised their weaknesses and are gearing
up to face the new challenges. Success stories in dyes and Agrochemicals have
boosted the confidence to take on global competition squarely.

➢ On WTO front, India should seek greater market access. The markets in the
developed countries are opening up and India can take advantage of this. The
signing of the IPR protocol gives an opportunity to create Intellectual capital
by investment in as well as R&D collaboration with national laboratories. A
large number of products are going off Patent. India can pursue the possibility
of producing these on a more economic scale as compared to other countries.

➢ In certain categories of chemicals, we do have advantage for exports (Dyes,

Pharma, and Agrochemicals). By creating strategic alliances with countries like
Russia and CIS countries. With the know how available in the country, there is
a tremendous potential to grow and increase exports in dyestuff and
Agrochemical market.

➢ India has the capacity for major value addition being close to middle East. This
is a cheap and abundant source for Petrochemicals feedstock.

➢ Availability in abundance of raw materials for Titanium Dioxide (TiO2) and

Agro based products like castor oil offer an opportunity to generate significant
value addition. This however would require substituting their exports in raw
form by manufacturing higher value derivatives.

THREATS

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APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

➢ If the major end product industries are attracted away from India to other
countries it would cause a shift in the consumption pattern for the manufacturers
of the inorganic building blocks. It has to be recognized that demand for the end
product drives the demand for intermediates and also the bulk chemicals. For
example if world scale capacity for Polyurethane and MDI comes up in our
neighboring countries, it will have an adverse impact on the demand growth for
Aniline in India.

➢ Most of the manufacturers in the unorganised sector need to be better informed

about the pollution control measures that could put a halt to their production
activity at any time.

➢ China, a major competitive threat, is investing heavily in infrastructure (they are

adopting the cost-effective German model). It would not only overtake India in
current export territories but could also invade Indian market with cheaper
imports.

➢ Stiff competition from China, Korea and Taiwan.

➢ Decline in realisation due to over capacity of the unorganised sector, intense

unfair local competition and adverse demand-supply scenario. Manufacturers
have been forced to reduce prices in a bid to sustain volume sale and therefore
the realisation levels are estimated to have declined by 50% from 1994-95 levels.

➢ Recession in end use industries e.g. The Textile industry (which is the major
market for dyestuff industry) is facing a big crisis which has affected the dyestuff
industry.

➢ Movement of key raw material prices for the production of alcohol in India is
influenced by political considerations rather than economic principles.

➢ Large capacity for Organo Phosphorous compound is being set up in China; with
economies of scale pushing domestic prices downwards.

➢ Weak registration laws for new products will adversely affect both Indian
producers and MNC producers in India due to imports of these products from
China as an alternate

OBSERVATIONS
33
APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

➢ The cost structure of the inorganic industry is fluctuating because of the

fluctuations occurred in fixed charges and value added.
➢ The raw material productivity of the inorganic industry has been continuously
decreasing. It is high in the year 2003 because of purchasing of raw material and
sales are very high. In the year 2008 raw material productivity is very low.
➢ The operating performance of the inorganic chemicals industry has been
fluctuating. It is high in the year 2003 because of the EBIT is increased and net
assets decreased. In the year 2006 it is very low.
➢ The financial performance of the inorganic chemicals industry has been
fluctuating. It is high in the year 2005 because the PAT & net worth are increased
when compared with other years .In the year 2004 it is low
➢ The net performance of the inorganic chemicals industry has been fluctuating. It is
high in the year 2005 because of the net profit is increased and total assets
decreased. In the year 2004 it is very low
➢ The growth trend of the inorganic chemicals industry is fluctuating. In the year
2005 it is high because of total income increased, in the 2008 it is low.
➢ The Trend analysis table estimated sales values rapidly increased.
➢ Trend analysis table estimated income values rapidly increased

➢ The Coefficient of correlation between total income and total expenses is showing
positive sign for the investors. The 100 % change in total income will lead to
99.30% change in total expenses.
➢ The Coefficient of correlation between total expenses and profit is showing
positive sign for the investors. The 100 % change in total expenses will lead to
56.20% change in profit.
➢ The Coefficient of correlation between total income and total assets is showing
positive sign for the investors. The 100 % change in total income will lead to
97.70% change

CONCLUSION

34
APGCMS, RAJAMPET.
 Inorganic Chemicals Industry

By the studying all relevant ratios such as operating Performance, Net

Performance, financial Performance Raw material productivity of the INORGONIC
CHEMICALS INDUSTRY we can conclude that the fluctuating in the EBIT and
gradually increased Net worth not Increased more than operating profit. The profit after
tax is also fluctuating expects 2005&2006 because the total Net worth in this years low
increased than remaining years. The Raw material productivity is gradually decreased
because Net sales not increased more than Raw material expenses. When we observe the
other development indicators such as growth performance of the industry it is also
showing the positive growth rate. The trend analysis of the industry which is more
important for the analysis process is also supporting this fact. By the overall observation
we can say that the Inorganic chemicals industry has the more opportunities to grow and
earn more profits when compare with other Industries.

35
APGCMS, RAJAMPET.