enhancing india’s exports

8/14/2019 Enhancing Indias Exports

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E nh anc ing I nd ia snha nc ing I nd ia sE xpo r t sxpo r t s

Reliances Experience - Focus Polymer Exports

By

Kamal P Nanavaty

ETIG Knowledge Forum

January 15th, 2004

Mumbai


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Reliance : AnReliance : AnOverviewOverview


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Reliance - Businesses

Materials and energy value chains and infrastructure

Textiles

PolyesterPlastics &

Polyester PetroleumProducts

Oil & GasInfrastructure

NarodaPatalganga

HaziraJamnagar

Bombay High

KG Basin

Suiting PSF LLDPE LPG Crude Oil Power

Shirting PFY PP Gasoline Natural Gas Telecom

Furnishings POY PVC Naphtha

Pillows P. Chips MEG ATF

Fabrics PTA Ethylene Kerosene

PX Propylene Diesel

LAB VCM Petcoke

EO Sulphur

Ducts


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Reliance FinancialsReliance Financials

0

10000

20000

30000

40000

50000

60000

70000

98-99 99-00 00-01 01-02 02-03

Rs. Crs.

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Rs. Crs.

Turnover

PAT

Over 30% CARG in Turnover & PAT over the last 12 years


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Reliance Key Facts

s

Gross turnover of Rs. 65,061 crs. ( US $ 13.7 billion)

s Gross Profit of Rs. 9,366 crs. ( US $ 1.97 billion)

s

Net Profit of Rs. 4,104 crs. ( US $ 0.864 billion)s Compounded annual net profit growth over 5 years ~

19%


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Reliance in Numbers

s

5% of Indias total exports

s 30% of the total profits of the private sector in India

s 10% of the Govt.s indirect tax revenues

s 5th largest single location oil refinery in the world

s 2nd largest producer of polyester fibre & yarn in the world

s 3rd largest producer of paraxylene (PX) in the world


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Reliance - Product FlowReliance - Product Flow

Products exported :

Oil Products Diesel, Gasoline, ATF, Naphtha TAME, VGO, Petcoke

Polyester POY, PSF, PTY, PET Chips

Intermediates

PTA, PX, MEG, DEG, TEG Polymers

PP, PE Chemicals

OX, LAB, Benzene Textiles


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Enhancing Indias ExportsEnhancing Indias Exports


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Indias Top Exporters (2002 03)Indias Top Exporters (2002 03)

Company Exports (Rs. Crs.)

1. Reliance Industries 11510

2. TCS 4545

3. Infosys 3376

4. Wipro 2882

5. Videsh Sanchar Nigam 2847

6. Indian Oil Corp. 2626

7. MMTC 2294

8. BHEL 1923

9. Ranbaxy 1902

10. MRPL 1875

Source : ETIG, Company Annual Reports & websites


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Reliances Export MarketReliances Export Market

8 overseas sales officesExports to over 100 countries


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Focus : Po lym er Expo r tsocus : Po lym er Expo r tsPEs

PPPVCPS


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Inter Regional Polymer Trade FlowsInter Regional Polymer Trade Flows

1.2

1.2

0.3

3.0

1.0

5.0

2.0

1.2

(Million MT)

China is the key driver for world polymer trade

Global Trade : 35 MMT

Asian Trade : 18 MMT


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Asia Pacific Polymer Trade (2002)Asia Pacific Polymer Trade (2002)

Exporters ImportersCountry Exports (KT) Country Imports (KT)

1. South Korea 4617 China 11516

2. Saudi Arabia 3281 Taiwan 452

3. Japan 2082 Indonesia 444

4. Thailand 1851 Vietnam 368

5. Singapore 1701 Pakistan 325

6. Taiwan 1696 Australia 323

7. India 925 Japan 312

8. Indonesia 505 Israel 309

9. Kuwait 490 Thailand 300

10. Malaysia 470 Iran 225

11. Qatar 370 Philippines 201

12. Others 649 Others 96918637 15744

Asian Polymer Trade value ~ USD 13 billion1.1 million TEUs required to move this volume


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As ia Pac i fi c Conta ine r Ba lances ia Pac i f i c Conta ine r Ba lance

s Current global container demand ~ 61 million TEU

s Huge imbalance in container demand / supply in Asia Pacific

s Asia to Europe (west bound) and Asia to N. America (east bound)

demand is outstripping supply, despite record capacity addition of 640 K

TEUs in 2002

s Situation expected to ease only by 2006

Source : Mitsui OSK Shipping Research


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Polymers Exported by ReliancePolymers Exported by Reliance

Polymer HS Code

High Density Polyethylene ( HDPE) 390120

Linear low Density Polyethylene ( LLDPE ) 390110

Polypropylene (PP ) 390210


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Reliance Polymer ExportsReliance Polymer Exports

s Reliance is one of Asias largest exporters of polymers

s Accounts for ~ 70% of Indias total polymer exports

s Bulk of polymer exports are manufactured at Jamnagar, Gujarat

s 27% of polymer production is exported

s Exports from JNPT / NSICT, Kandla , Mundra, Sikka


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Indian Polymer Producers Export SharesIndian Polymer Producers Export Shares

RIL + IPCL

64%

Haldia

17%

GAIL

7%

Supreme

8%

Others

4%


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Reliance Polymer ExportsReliance Polymer Exports

Manufacturing Site Port Mode Products

Jamnagar Kandla Containers PP

Sikka Break Bulk PP

Hazira JNPT Containers PP, PE

NSICT Containers PP, PE

Vadodara JNPT Containers PP

NSICT Containers PP

Nagothane JNPT Containers PP, PE

NSICT Containers PP, PE

Gandhar JNPT Containers PE

NSICT Containers PE


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Logistics Constraints - Reliance ExperienceLogistics Constraints - Reliance Experience

s Major exporting Plant for Reliance at Jamnagar

s Nearest gateway port Kandla

s Capacity constraints ex-Kandla limited export evacuation to ~ 1/3 of

required volume.s Necessitated Innovation initiated direct break bulk movement via

Sikka jetty.


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CommonFeederto JNPT

Via Singapore/UAE / to finaldestination

(S.E. Asia)

Ahmedabad

Jamnagar

Logistics InnovationLogistics Innovation

Break Bulkto China & S.E.Asia

BreakBulkto

Jebel Ali

ContainersFrom Kandla

ContainersFrom Kandla

Jamnagar

Break Bulk movement initiated

MOVEMENT - THEN MOVEMENT - NOW


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Exports General ConcernsExports General Concerns

s Infrastructure

s

Logistics

s Regulatory


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InfrastructureInfrastructure

Sub optimal operations at major gateway ports

Lack of timely development of new ports at

suitable locations - no container port betweenMumbai and Chennai

Lack of connectivity by expressways to ports


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Infrastructure ComparisonInfrastructure Comparison

JNPT Kandla Jebel AliLaem Cha

BangSingapore Busan

Container Terminals 2 1 6 5 3 6

No.of Berths 5 4 10 5 20 31

Draft (m) 12 10 12 14 17 15

Volume - '000 TEUs PA 1,573 126 4,194 1,110 16,800 9,436

Max. size of Vessels (DWT 50,000 30,000 80,000 50,000 150,000 50,000

* Export hub near Bangkok

Indian ports need urgent upgradation


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Asian Container Ports Global Ranking (2001)Asian Container Ports Global Ranking (2001)

Port Country TEU's ('000) Rank in Asia 2001 World Rank 1996 World Rank

Hong Kong China 17900 1 1 1

Singapore Singapore 15520 2 2 2

Busan Korea 8073 3 3 5

Kaohsiung Taiwan 7541 4 4 3

Shanghai China 6340 5 5 18

Shenzen China 5076 6 8 < 130

Port Klang Malaysia 3760 7 12 26

Jebel Ali UAE 3502 8 13 14

Yantian China 2700 9 17 88

Qingdao China 2640 10 18 42

JNPT India 1190 26 49 93

Chennai India 352 43 123 128Mumbai India 321 45 130 69

Chinese ports have upgraded and grown at amazing speeds !

Source : Containerization International


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Logistics - JNPTLogistics - JNPT

Inadequate equipment

Lack of modernisation

Inadequate productivity

Fewer shipping lines calling

Infrastructure not in line with volume growth


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JNPT..JNPT..


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Logistics - NSICTLogistics - NSICT

Acute congestion with frequent gate closure

Capacity constraint to store containers

Infrastructure not in line with volume growth

Sharp increase in ICD outbound traffic crowding out factory stuffed export traffic

CONCOR unable to cope with onbound traffic -> congestion at port


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NSICT..NSICT..


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Logistics - KandlaLogistics - Kandla

Draft restrictions limiting larger vessels call

Only feeders can operate restricted to Indian flag

Higher Feedering cost monopoly of Indian ship owners, lack of global competition

Smaller vessel capacity resulting in lower container throughput

Weekly vessel call limiting export evacuation

L i i M d


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Logistics - MundraLogistics - Mundra

Full fledged operation yet to start

All major lines yet to call

Port hinterland yet to be developed

L i tiL i ti


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LogisticsLogistics

Higher Fuel Cost in India leading to high Inland

movement cost.

Poor condition & load bearing capacity of roads

more wear and tear of vehicles

slower movement

Ad hoc local regulations - Imposition of load restrictions,issuance / removal of Golden Pass system, permits for

inter state movement

R l tR l t


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RegulatoryRegulatory

Lengthy and cumbersome documentation procedure.

- Number of documents per shipment - 17 nos.

- Number of govt. agencies 4 nos.

- Number of signatures ~ 150

EDI still to be fully implemented at all major ports.

Public holidays

India 17 + 7 addl. Bank holidays

Jebel Ali 13 Days

Thailand 16 Days

China 15 Days

Vietnam 9 Days


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C St dCase Study


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Case StudyCase Study

ACTIVITY NO OF DAYS CUM DAYS NO OF DAYS CUM DAYS

L/C --> PRESHIPMENT 5 5 3 3

PRESHIPMENT --> DESPATCH 7 12 1 4

DESPATCH --> INVOICE 7 19 2 6

TOTAL DAYS 19 19 6 6

KOREAINDIA

Typical Export Cycle Time PolymersIndian Port : Kandla

Korean Port : Pusan

Destination : China

Speed essential to ensure competitiveness

Wish listWish list


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Wish listWish list

Infrastructure

Modernization of existing ports and facilities

Govt. grants and facilitation for development of new ports.

Linking all major ports with expressways to existing / planned trunk

highways

Regulatory

24 X 7 operations - Online customs clearance EDI Electronic Data

Interchange at all ports

Single window and single paper clearance for pre / post shipment

procedures & benefits


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Wish ListWish List


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Wish List.Wish List.

Regulatory

Limited Port & Customs Holidays.

Simplified procedure for refund of excise duty paid on inputs used

in exported product

Facility to import catalyst for replacement under EPCG scheme

and export of spent catalyst for reprocessing

Govt. to exempt export profits from Income Tax, instead of theformula being followed currently

Wish ListWish List


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Wish List.Wish List.

Regulatory

For ISFTA shipments, dispensing with inspection of

production site by Export Inspection Agency (EIA) which is

currently required after every 10 shipments

Deemed exports supplies to be exempted from Sales Tax


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