MAGNUM Blog

The Abrasives industry in India currently has two major players offering a full range of Abrasives products. In terms of value and volume, the metal fabrication segment of the end-use industry is projected to grow at the highest CAGR during next financial year as government thrust to develop infrastructure in our country is promising.

The metal fabrication segment is the fastest-growing end-use industry segment in the abrasives market. This growth is attributed to its usage and demand in the metal fabrication for cutting-off and grinding, removing welds and excess material, surface blending, finishing, and polishing.

Industrial demand is weak in the domestic market and likely to persist. While exports are seeing some green shoot in this industry. Despite the bleak environment, expects not to lose volumes and in-turn take this opportunity to gain.

Asia Pacific is the fastest-growing market for abrasives due to its increasing economic growth. owing to the rapid growth in industries such as automotive, machinery and metal fabrication in the region. The growth of this region is supplemented by the increase in the consumption and production of industrial products in developing economies such as India and China. Augmented demand for automobiles is expected to indirectly drive the growth prospects of the abrasives market in the coming years.  The rise in the sales of electronic devices is likely to boost the demand for coated abrasives in the electronic industry during the forecast period, especially in the consumer goods sector.

Abrasives Market is the emerging market, and it is expected to grow at CAGR of 5-6 % during the period (2020-2024)Abrasives are used in automotive, electronics, construction, and manufacturing industries to provide a superior polished surface finish during manufacturing. Beyond this, they are used to shape materials through grinding and remove surface layers of paint or corrosion, cut hard materials made of steel or concrete, and polishes finished products. Furthermore, investments in R&D activities to produce innovative and less hazardous abrasives are expected to provide opportunities for growth in the future.

Road Ahead

Robust growth of the Infrastructure sector is expected to drive the market and also due to rising environmental concerns, leading automobile manufacturers are manufacturing low-weight automobiles, which are economical, emit low carbon dioxide, and yet provide superior performance. Customer centric approach to give a specific finish, speed of cutting and stock removal or cutting requirements.

BENEFICIARIES : GRINDWELL NORTON, CARBORANDUM UNIVERSAL, WENDT INDIA.

India becomes the second-largest steel producer in the world, overtaking Japan, with a growth rate of 4.9%. India is also expected to become the world number two in steel consumption. The sector would be driven by strong government thrust for infrastructure development and housing for all. Government initiatives such as ‘Smart Cities’ and ‘Affordable Housing’ as well as building of industrial corridors will boost India’s steel demand. Rail Infra, Supply Chain Management, Heavy Engineering & Defence, Gas Pipelines etc. would also add to demand of this sector.

Transforming India into a global manufacturing hub for pharma, with sectors along the industrial and freight corridors. To set up automotive and ancillary industries to make India global hubs for manufacturing & exporting cars & Two wheelers. Further improving Steel demand as China becomes net importer of Steel. Moody’s changing “steel outlook” for all regions which include the US, Europe, Russia, Brazil and Asia to stable. Increase in price of around 3000-4000 per tonne added advantage.

• Steel-making capacity is expected to reach 300 million tonnes per annum by 2030–31.

• Crude steel production is expected to reach 255 million tonnes by 2030–31, at 85% capacity utilisation.

• Production of finished steel to reach 230 million tonnes, assuming a yield loss of 10% for conversion of crude steel to finished steel – that is, a conversion ratio of 90%.

• With 24 million tonnes of net exports, consumption is expected to reach 206 million tonnes by 2030–31. (source PWC report)

Port connectivity through the Sagarmala programme envisages port-led industrial development covering all major maritime zones in India. Oil and gas sector, the Urja Ganga Gas Pipeline Project aims to develop a 15,000-km gas pipeline network. Advance Warehousing & Logistic Hubs. National Investment and Manufacturing Zones (NIMZs) are being developed across the country, with 14 NIMZs already receiving in-principle approval. In addition, eight investment regions along the Delhi–Mumbai Industrial Corridor Project (DMIC)have also been announced as NIMZs.

Road Ahead

Overall demand visibility remains steady going forward. Industry Growth of around 4-6% can be assumed.

Government’s focus on infrastructure and restarting road projects is aiding the demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.

BENEFICIARIES : TATA STEEL, JSW STEEL, JINDAL STEEL, KALYANI STEEL, SAIL

Indian dairy & dairy products industry holds an inimitable space in the country for its high employment potential and for ensuring the availability of nutritious yet affordable food for India’s vast population. India is the largest producer as well as largest consumer of milk in the world. It contributes ~19% to the world milk production and consumes almost whole of its milk production by itself.

The profit margin and value chain analysis of dairy processing companies involved in the business segments of ice-cream, milk powder, cheese, butter, cottage cheese, yoghurt, flavoured milk and probiotic dairy products industry, Sweets like Cadbury, Khoya Sweets, Condense Milk.

The milk processing industry in India is expected to expand at a compound annual growth rate (CAGR) of ~14 to 15% between FY 2012 and FY 2023, the market size of butter is expected to grow by 14.5%, curd by 14.4%, paneer by 14.1% and ghee by 14.1%, among others.

Dairy farming is an important way for farmers to increase their earnings and access to more nutritious food for their families. While dairy farming provides not only fresh milk and a source of basic income, value-added products, such as yogurt and cheese provide a higher source of revenue. Dairying is an important source of subsidiary income to small/marginal farmers and agricultural labourers. The manure from animals provides a good source of organic matter for improving soil fertility and crop yields. Dairy farming is now taken up as a main occupation around big urban centres where the demand for Organic milk & milk product is high.

Road Ahead

We expect growth of 14-15%. The Industry has Organised & Unorganised player but branding and other marketing strategies have proved Organised sector gaining market share.

The Sector remains under essential category & commodity, so slowdown impact does not hamper the growth.

BENEFICIARIES :   NESTLE, HATSUN AGRO, PARAG MILK, BRITANNIA, VADILAL

Gas sector is among the core industries in India and plays a major role in influencing decision making for all the other important sections of the economy. India’s economic growth is closely related to its energy demand, therefore, the need for gas is projected to grow more, thereby making the sector quite conducive for investment.

The Government has adopted several policies to fulfil the increasing demand. It has allowed 100 per cent Foreign Direct Investment (FDI) in many segments of the sector, including natural gas, petroleum products and refineries among others. Today, it attracts both domestic and foreign investment as attested by the presence of Reliance Industries Ltd (RIL) and Cairn India.

India has been the fourth-largest Liquefied Natural Gas (LNG) importer since 2011 after Japan, South Korea, and China. Gas pipeline infrastructure in the country stood at 16,981 kms at the beginning of April 2020. Government of India is planning to invest Rs 70,000 crore (US$ 9.97 billion) to expand the gas pipeline network across the country.

A gas exchange is planned in order to bring market-driven pricing in the energy market of India and the proposal for the same is ready to be taken to the Union Cabinet according to Mr Dharmendra Pradhan, Minister of Petroleum and Natural Gas, Government of India.

The Oil Ministry plans to set up bio-CNG (compressed natural gas) plants and allied infrastructure at a cost of Rs 7,000 crore (US$ 1.10 billion) to promote the use of clean fuel. As on March 01, 2020, Gas Authority of India Ltd. (GAIL) had the largest share (71.61 per cent or 11,411 kms) of the country’s natural gas pipeline network (16,324 kms).

With 8,748 kms of refined products pipeline in India, IOC was leading the segment with 51.25 per cent of the total length of product pipeline network as on March 01, 2020.Under City Gas Distribution (CGD) network, 86 Geographical Areas constituting 174 districts in 22 States / Union Territories are covered.

Road Ahead

Energy demand of India is anticipated to grow faster than energy demand of all major economies on the back of continuous robust economic growth. India’s energy demand is expected to double to 1,516 Mtoe by 2035 from 753.7 Mtoe in 2017.  Moreover, the country’s share in global primary energy consumption is projected to increase by two-fold by 2035.Natural Gas consumption is forecast to increase at a CAGR of 4.31 per cent to 143.08 million tonnes by 2040.

BENEFICIARIES :   GAIL, IOC, MGL, IGL.

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and now focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development. With current focus on Bullet Train project, also Road development by NHAI, Railways corridors, Waterways development, Renewable Energy projects, etc have been in focus and also lot of LOIs, Contracts, and Work Orders have been allocated.

In September 2020, Ministry of Petroleum & Natural Gas announced that it aims to operate 50% of fuel stations, which are owned by public sector oil companies, using solar power within five years—under the government’s green energy drive. Electrical charging station for next gen EV cars are all getting Nod for development.

With Surplus current account deficit, Foreign inflows, Stimulus, Incentive the Infra growth in India would be growing exponentially in next 5-10 years. The largest deal was done by Abu Dhabi Investment Authority, Public Sector Pension Investment Board and National Investment and Infrastructure Fund as they made investment worth US$ 1.1 billion in GVK Airport Holdings Ltd.  The Government set a target of constructing roads worth US$ 212.80 billion in the next two years. Indian energy sector is expected to offer investment opportunities worth US$ 300 billion over the next 10 years. NHAI will be able to generate revenue of Rs one lakh crore (US$ 14.31 billion) from toll and wayside amenities over the next five years. Government has given a massive push to the infrastructure sector by allocating US$ 24.27 billion to develop the transport infrastructure. Indian Railways has received an allocation of US$ 10.33 billion in Union Budget 2020–21 and will get more allocation going forward.

Road Ahead

India plans to spend US$ 1.2 trillion on infrastructure during 2020–23 to have a sustainable development of the country.  India’s Northeast states in focus for Development of infrastructure projects for the region.

Growth opportunity in this sector are infinite and companies gets order on performance and capabilities to develop projects with help of finance schemes.

BENEFICIARIES :   KEC INTERNATIONAL, LARSEN & TOUBRO, IRB INFRA, IRCON INTERNATIONAL, RIIL, PNC INFRA