Chemical Sector 1
-
Upload
ayesha-khalid -
Category
Documents
-
view
219 -
download
0
Transcript of Chemical Sector 1
-
7/28/2019 Chemical Sector 1
1/28
1
Assignment # 2
STRATEGIC MARKETING
SITARA CHEMICALS
DATED : 14.4.2013
-
7/28/2019 Chemical Sector 1
2/28
Presentation Agenda
Industry Overview
Company Overview
Scope of Industry Structure of Industry
Interview Findings
PESTNC Analysis SWOT Analysis
Porters 5 forces
TOWS matrix2
-
7/28/2019 Chemical Sector 1
3/28
3
Ayesha Khalid12121002
Iqra Kausar
12121001HASSAN TARIQ
12121003
Khalil ur rehman12121010
Haider Dar
12121014
-
7/28/2019 Chemical Sector 1
4/28
4
Industry OverviewThe chemical sector is one of the five highest growthand globally traded sectorsKey contributor in the economic development of anycountry
It is Basic chemicals producing industry thus producing
raw materials for other industries. Annual Production of Caustic Soda in the year 2010was 137 MT.
Annual production of Soda Ash was 300.7 MT.
Annual Production for Chlorine Gas was 11.5 MTAnnual Production of Sulphuric Acid is 61.7 MT
-
7/28/2019 Chemical Sector 1
5/28
5
Industry Overview (Cont..)
2.5% GDP growth in fiscal year 2010-
2011 out of which 18.4% share is
contributed by Chemicals.
close approximation of investment in
chemical sector ranges between Rs. 550 -600 billion.
-
7/28/2019 Chemical Sector 1
6/28
6
Sub- Division(Chlor Alkali
Industry) Major Products Caustic Soda Liquid,( Flakes & Solid)
Liquid Chlorine,
Hydrochloric Acid,
Sodium Hypo Chlorite,
Ammonium Chloride,
Bleaching Powder etc.
PVC
Urea
Sulphuric Acid
Lime
-
7/28/2019 Chemical Sector 1
7/28
Company Overview Sitara chemicals incorporated in 1981
Founded y Haji bashir Ahmed
Produce basic chlor-alkali products B2B type business
Produce almost 600 MT of caustic Soda per
day. Process flow is continuous
Produce basic chemicals, specialty
chemicals, gases and agricultural chemicals.7
-
7/28/2019 Chemical Sector 1
8/28
8
Structure and Market Share Structure of the Industry is oligopolistic having few market
leaders.
Total market share being covered by the 4 companiesaccounts for 99 %
40%
30%
28%
2%
Market Share
Sitara Ittehad Engro Nimir
-
7/28/2019 Chemical Sector 1
9/28
9
Scope of the Industry
Recent developments in technology The overall increase in the imports of
chemicals has been at an average rate of33 percent per annum.
Modern agriculture is heavily dependenton chemical, s.
In particular, chemicals are a keystone ofworld manufacturing, as they are anintegral component of all manufacturingsub-sectors.
-
7/28/2019 Chemical Sector 1
10/28
10
Caustic Soda Production (%) 2010
Total Production = 435,000 MTPY
Sitara 42 % (180,000)
Ittehad 33 % ( 145,000)
Engro Polymers 23 % (100,000)
Nimir 2 % (10,000)
-
7/28/2019 Chemical Sector 1
11/28
11
Trade in Chemicals Sector
768
118
2788
253
3599
400
4133
472
4362
367
5718
538
5166
411
0
1000
2000
3000
4000
5000
6000
2003-
2004
2004-
2005
2005-
2006
2006-
2007
2007-
2008
2008-
2009
2009-
2010
Chemical Trade (Million US $)
Imports Exports
(Source TECHMA Report on Chemical Industry Vision)
-
7/28/2019 Chemical Sector 1
12/28
Interview Findings
In chlor-alkali Business Caustic soda is the
most demanded product.
Wide Range of chemical Products.
PIE for Caustic Soda is about 3196 Million.
Market Share is biggest in Sitara, then
ittehad, Engro and Nimir respectively
accounting for 40 %, 30%, 28% and 2 %.
12
-
7/28/2019 Chemical Sector 1
13/28
Interview Findings (Cont) Totally B2B type of business
Major Raw materials are Salt and Electricity.
About 60 % Revenues are generated from
Caustic Soda Production.
Less competition due to less players.
Excess Quantity of Caustic Soda add to
exports
13
-
7/28/2019 Chemical Sector 1
14/28
Interview Findings (Cont)
Engro has more variety in products apart from basic
chemicals they also manufacture Fertilizers and PVC.
New Entrants require heavy investment and experience
so its very difficult for them to enter in this business.
Suppliers For Salt, they have hired own salt mine in
Warcha.
14
-
7/28/2019 Chemical Sector 1
15/28
15
PESTNC Analysis
Political
Political intervention is affecting the
business due to energy crisis.
Apart from WAPDA these industries are
having their own energy producing plants
so they are affected but not badly affected.
-
7/28/2019 Chemical Sector 1
16/28
Economic
The GDP growth has not met its target of 4
and its 2.4 % in the year 2011. Also there is
imbalance in trade where imports are higherthan exports.
Requires huge investment
Cheap labor available
Increase in prices of fuel and electricity
16
-
7/28/2019 Chemical Sector 1
17/28
Social
As this industry considered being one of the
health hazardous.
As the mercury process caused a lot of
damage, all most most of the firms globallyhave being shifted to membrane cell
technology.
This industry is also playing an important role
in minimizing unemployment by providing
jobs to 1500 people directly and about 10,000
indirectly.17
-
7/28/2019 Chemical Sector 1
18/28
Technological
The demand for innovative products andtechnologically improved product is
increasing
The chlor-alkali production process involvesmercury cells, diaphragm cells or membrane
cells
Research and development departmentefficient
18
-
7/28/2019 Chemical Sector 1
19/28
19
SWOT Analysis
Strengths
Own Energy producing plants
mines at Khewra ,Warcha thus localminerals at cheap prices.
Experienced work force
Using better technology
-
7/28/2019 Chemical Sector 1
20/28
20
Weaknesses
The Caustic Soda manufacturing produces chlorine asa by-product which has limited usage in the country
High cost of energy
Non availability of natural gas and electricity
High freight cost to export surplus capacity
-
7/28/2019 Chemical Sector 1
21/28
21
Opportunities
Surplus capacity of caustic soda available to export
While in the rest of the world chlorine is the main
driver for the plant and caustic soda is considered as aby-product. Here it is produced as by product so this
can be exported abroad.
HCL is also produced as by-product and it has
usages.Can make new plants for PVC fertilizers also by using
the chlorine which is produced as by-product
-
7/28/2019 Chemical Sector 1
22/28
22
Threats
Other companies using their own
chemicals in further manufacturing of
other products.
Innovative Products
Global Markets like china, India,Bangladesh giving same product ar low
prices.
-
7/28/2019 Chemical Sector 1
23/28
23
Porters 5 forcesBarriers to entry
Oligopolistic Structure so difficult to enter. Only few market leaders to set prices. And they
require huge large investment.
Also because Electricity is used as raw materialand due to energy crisis it is very difficult because
the companies have their own energy units. So
they have power edge.
Specified and expert manpower is needed tohandle the delicate technology.
Learning Economies
-
7/28/2019 Chemical Sector 1
24/28
24
Bargaining Power of Suppliers:
Suppliers have bargaining power but due to
Government Intervention they cant exploit
their market power.
-
7/28/2019 Chemical Sector 1
25/28
25
Rivalry Among Competitors
Pakistans industry is facing pressures fromglobally competitive markets.
Engro chemical has edge due to better pricing andinnovative products.
The market is less competitive and its growing atthe same time.
-
7/28/2019 Chemical Sector 1
26/28
26
Bargaining Power of Buyers
Buyers dont have the bargaining Power.
They are forced to but at the stated price due to lesscompetitors in the market.
Engage in B2B type of business industrial customersinvolve in Textile, Soap, Ghee, Chemical andFertilizer etc., production. They have less choice toswitch to others.
Alone textile sector of Pakistan is 43% of caustic
soda consumption. Second major consumption is inthe manufacturing of soap & detergent contributesabout 19%. So with this less competitive market theycant influence the prices.
-
7/28/2019 Chemical Sector 1
27/28
Threat of New Substitutes
In chemical industry , the substitutes for
chemicals are not there, So threats of
substitutes is low.
27
-
7/28/2019 Chemical Sector 1
28/28
TOWS Matrix
Strengths Weaknesses
Opportunities Can use their own chemicals for furtherprocessing.Can increase their product line by R & D
efforts.
Can use by products like HCL and Chlorine
for further manufacturing.
Threats
They have margin to decrease price because
have their own mine hired at khewra andwarcha and their own energy plant also.
Have to diversity their products range to
overcome pressures from global markets
28