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    Glass and Ceramics

    MARKET & OPPORTUNITIES

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    CONTENTS

    Glass and Ceramics Industry in India 2

    Conclusion 9

    Appendix 10

    A report by KPMG for IBEF

    Glassand CeramicsMARKET & OPPORTUNITIES

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    MARKET & OPPORTUNITIES2

    Glass and Ceramics Industry in India

    GlASS

    Glass is an inorganic product that is typically produced by

    melting a mixture o silica (sand, 75 per cent), soda (around

    15 per cent) and calcium compound (lime, 10 per cent)

    with the desired metallic oxides that serve as colouring

    agents. The glass industry covers products such as at glass

    (including sheet glass, oat glass, gured and wired glass,

    saety glass and mirror), glass hollow wares and containers,

    vacuum asks, laboratory glassware and bre glass. Glass

    products are used widely in households, construction,

    laboratories and consumer items such as bangles, beads,

    pearls, etc.

    ThE GlASS INdUSTRy cONSISTS

    Of fOUR SEGMENTS

    container Gass

    This is the largest segment in the glass sector and

    comprises o glass packaging or drinks, ood, perumes

    and pharmaceuticals.

    Speiat Gass

    This is the second largest segment and contributes to

    one-third o the total global production. Specialty glass

    is mainly used or technical applications such as optics,

    electronics, lighting, engineering, ophthalmic lenses, etc.

    Borosilicate glasses are also included in this category.

    fat Gass

    The at glass industry accounts or 16 per cent o the total

    global glass production. This segment comprises o oat

    glass, rolled glass, cast glass and other at glasses which are

    used mainly or architectural and automotive applications.

    The global market or at glass was estimated at 41

    million tonnes in 2005, with a value o US$ 19 billion at the

    primary manuacturers level. Out o the total production,

    70 per cent was consumed in windows or buildings, 10

    per cent in glazing products or automotive applications

    and 20 per cent was used in urniture and other

    interior applications.

    fire Gass

    Fibre glass consists o thin laments o glass bre that

    are used primarily as reinorcement material in polymer

    products. The resultant composite is called Fibre Reinorced

    Polymer (FRP) or Glass Reinorced Plastic (GRP), commonly

    reerred to as bre glass.

    Global Glass Industry

    n Container Glass n Specialty Glass n Flat Glass n Fibre Glass

    45%

    33%

    16%

    6%

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    G l A S S A Nd c E R A M Ic S

    GlObAl GlASS INdUSTRy

    The major glass producing countries in the world areGermany, USA, UK, China and Japan. The major importing

    countries are USA, Germany, Japan, France, Italy and

    Australia. The main consuming regions are Europe, China

    and North America, that together account or 74 per cent

    o global demand or glass. Europe is the most mature

    glass market and has the highest proportion o value-

    added products.

    The global glass industry is quite concentrated, with

    our companies NSG/Pilkington, Saint-Gobain, Asahi and

    Guardian, producing 67 per cent o the total high quality

    oat glass in the world. Lower quality oat and sheet glass

    production is gradually being replaced by high quality oat

    glass across the globe.

    For automotive glazing, there are only three major

    players NSG/Pilkington, Asahi and Saint-Gobain who,

    along with their respective associates, meet nearly75 per cent o the worlds Original Equipment (OE) glazing

    requirements.

    In 2005, the glass industry was running at around 90 per

    cent capacity utilisation globally and was heavily inuenced

    by a strong demand in China.

    Inian Gass Inustr

    The glass industry in India is quite old and well established.

    The rst glass plant in India was set up in 1908. The

    glass makers employed methods such as moulding,

    olding, twisting, double-stripping and wire-winding to

    manuacture glass. It remained largely a cottage industry

    or a long time. In recent years, the industry has transormed

    and developed. From rudimentary mouth blown and hand

    working processes, the industry has evolved to adopt

    modern processes and automation in a large way. However,

    mouth blown processes and handcrated glassware

    continue to play a role in developing innovative designs in

    decorative and table glassware products that are exported

    in large quantities.

    The Indian glass industry has been growing across all

    segments. Sheet and oat glass have recorded the astest

    growth, at nearly 67 per cent CAGR between 2001 and 2005.

    This growth has been driven primarily by Indias booming

    2003

    2002

    2001 125

    127

    million square metres

    Production of Sheet and Float Glass

    2005

    2004

    800600400200 1,2000

    718

    723

    990

    1,000

    2001

    000 tonnes

    Production of Bottles and Glassware

    2005

    2004

    2003

    2002

    1,355

    1,200900600300 2,1000

    1,420

    1,550

    1,600

    1,680

    1,500 1,800

    Joint Ventures / Strategic Alliances Among Global Players

    There is an increasing trend o glass manuacturers

    to share the risk o new oat investments, either with

    other manuacturers, secondary processors who wish to

    backward integrate to secure long term oat supply, or

    other local or nancial partners. Examples over the past

    years include:

    Pilkington with Saint-Gobain in 2004 or Brazil region

    HanGlas with Saint-Gobain in 2004 or China region

    Pilkington with MEP in 2005 or Russia region

    Pilkington with SYP in 2005 or China region

    Asahi with Maruti/Labroo in India in 2006

    In addition to the risk-sharing JVs, a number o strategic

    alliances have been ormed in the automotive glass

    industry. These include:

    Pilkington and Nippon Sheet Glass (NSG) o Japan

    (now NSG Group): or a joint Research, Development

    and Engineering (RD&E) agreement or automotive

    products and processes. This also consists o a

    joint marketing approach or Japanese vehicle

    manuacturers

    Saint-Gobain and Central Glass o Japan have a joint

    marketing agreement, including cooperation on

    product and technology developments

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    MARKET & OPPORTUNITIES4

    automotive and construction sectors which have beenkey drivers o the economy in the past ve years. Other

    glassware such as bottles and bre glass has recorded more

    modest growth rates o about 5-6 per cent CAGR, over the

    same period.

    Exports and Imports

    The domestic glass industry is acing increasing competition

    in the global, as well as domestic markets. State-o-the-art

    technology in manuacturing is becoming increasingly

    important in the industry. Modern technology and

    operations are replacing traditional methodologies in bre

    glass composites. Such upgradation is driven by healthy

    demand or bre glass products, particularly due to growth

    in petrochemical sector and allied products.

    Some segments, like vacuum asks, have been adversely

    aected by sti competition in the international market.

    Indias exports in this segment declined rom US$ 111.2

    million in 1998-99 to US$ 64. million in 200-04.

    However, some segments have aced up to the

    competition rom global players well. For instance, theglass container production more than doubled, rom

    approximately 0.8 million tonnes in 1997-98 to around

    1.7 million tonnes in 2004-05. This is despite the sti

    competition aced rom alternative packaging materials.

    Exports o glassware rom India have been growingat a rate o 17 per cent CAGR over the period 2001-02 to

    2006-07. From US$ 19 million in 2001, exports increased

    to US$ 07 million in 2007. The products exported have

    been primarily bottles, jars, bre glass and glass beadwork,

    which together accounted or more than hal o all glassware

    exports in 2006-07.

    The global market or Indian glassware is ragmented and

    spread across several countries, with no dominant market. USAis the biggest market or Indian glass products and accounted

    or 14 per cent o exports in 2006-07. UAE with 8 per cent and

    Poland with 6 per cent, were the other key markets.

    000 tonnes

    Production of Fibre Glass

    2005

    2004

    2003

    2002

    522001

    40302010 700

    57

    60

    65

    63

    50 60

    2002

    202001

    20.5

    000 tonnes

    Production of Lab Glassware

    2005

    2004

    2003

    2015105 350

    21.9

    20

    25

    25 30US$ million

    Glass Exports

    200150 30025010050 3500

    2005-06

    2004-05

    2003-04

    2002-03 174.13

    139.312001-02

    210.00

    218.23

    235.73

    2006-07 307.60

    Country-wise Exports (2006-07)

    USA 14%

    UAE 8%

    Poland 6%

    Italy 5%

    Belgium 5%

    PRP China 5%

    Brazil 4%

    Turkey 3%

    Saudi Arabia 3%

    Mexico 3%

    Spain 3%

    UK 3%

    Others 38%

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    5G l A S S A Nd c E R A M Ic S

    KEy SUccESS fAcTORS IN ThE INdIAN GlASS