AVAILABILITY, COST MOVEMENT AND NEW DEVELOPMENTSIN POLYMERIC FILMS

• Brief Introduction :• This presentation is focused on two most important constituents of the

Polymeric Films; mainly Polyester Or PET Films and Biaxially Oriented Polypropylene films or BOPP Films.

• A brief run down of capacities in the major markets of the worldmainly – U.S.A, Europe, West Asia, India, China, Japan and Korea.

• Focus on India and capacity build up in India.• Emergence of India as a Power house for PET and BOPP films.• Tapping global Markets for Flexible Packaging Laminates a novel

strategy.• The supply chain and cost advantages.• New Products and newer opportunities.

World Polyester Film Demand by End use and Film gauge a historical track and Future trends.

• Observations :

• Decline in Imaging or photographic applications and decline in Magnetic Tapes or Audio and Video Tapes.

• Growth of Packaging and Electrical / Electronics

Comparison of World Polyester Film Demand by end use 2006 with 2011

World Polyester Film Demand – in Packaging Films.

Observation : Emergence of Asia – mainly China and India

• The data for global capacity for BOPP Films is Presented in a different format mainly due to the predominance of Flexible Packaging as an end use for BOPP.

• Also use of BOPP in flexible Packaging globally is about 4 times of that of PET Films.

World BOPP Film Capacity - 2002 to 2007Region 2002 2003 2004 2005 2006 2007

Western Europe 982 1024 1092 1106 1126 1129Eatern Europe 75 91 108 151 214 232TOTAL EUROPE 1057 1115 1200 1257 1340 2361North America 586 619 635 637 624 619Central and South America 234 277 285 300 312 350TOTAL AMERICAS 820 896 920 937 936 969Central and East Asia 1214 1450 2137 2693 2924 2961South East Asia and Oceania 447 492 552 623 660 731TOTAL ASIA - PACIFIC 1661 1942 2689 3316 3584 3692MIDDLE EAST and AFRICA 121 155 178 225 277 287TOTAL WORLD CAPACITY 3659 4108 4987 5735 6137 6309

Kilotonnes

Regional distribution of BOPP films upto 2007.

Observations :

• Emergence of Asia Pacific as the dominant producer of BOPP films.

• Comparative slow start for Indian BOPP manufacturers

Manufacturers 2008 2009 2010 2011

Jindal Polyfilms 72000 84000 146000 171000U flex 54000 54000 54000 54000SRF 29000 4000 54000 54000Ester 28000 28000 53000 53000Garware 20000 20000 20000 20000Polyplex 20000 32000 45000 45000MT2 14000 14000 14000 14000Venlon 3000 3000 3000 3000Sumilon 2000 2000 2000 2000

Current Indian Capacity and Future Trends.PET FILMS - Thin Films m.t. / Year

Notes :

• Expansions : Jindal, SRF and Polyplex are expected in second half of 2009 and hence only 50% of such expansions are considered in 2009.

• For 2010 Jindal’s addition of 50,000 tpa has been considered. Ester’s expansion has been considered in 2010.

• For 2011 Jindal’s addition of 25,000 tpa has been considered.

Capacity build ups are a great source of comfort for users of Pet film in India.

Also Pet film prices are likely to be much lower than the prices in USA, Europe, Japan and Korea.

Manufacturers 2008 2009 2010 2011

Jindal Polyfilms 120000 220000 300000 380000Cosmo Films 60000 75000 90000 105000Uflex 30000 30000 30000 30000Max India 30000 30000 30000 30000Biax 5000 5000 20000 35000Others 10000 2000 2000 -Polyplex 15000 30000 30000SRF 15000 30000

Current Indian Capacity and Future Trends.BOPP Films m.t. / Year

• Notes :

• In 2008 Jindal’s 2 new lines are expected to produce 30,000 MT as start ups are expected in Aug and Oct ‘’08.

• Jindal’s additional 2 more lines are expected to start up by mid 2009.

• Polyplex’s & Cosmo’s new line is expected to contribute 50% of installed capacity in 2009.

• In 2010, Jindal’s further 2 more lines are expected to start up.

• Polyplex and Cosmo are expected to reach full capacity.

• Biax and SRF are expected to start their new lines.

• 2011, see’s all present players reach full capacity with Jindal emerging as the largest producer in the world by a fair distance with a total of 10 lines in India.

Emergence of India as a Power house for Pet and BOPP Films

From the data presented so far, it is evident that China and India are the drivers of the growth momentum.

Advantage that India offers :

• Unlike the Chinese policy of “ Buyer Beware “, India offers reliability in quality, delivery and commitment to internationally acceptable and commonly understood “ ENCO Terms “.

• No gap between “ SAY WHAT I MEAN” and MEAN WHAT I SAY”• Enforceable and equitable Legal system. Letter of Credit not

enforceable in China.• Lower cost of production in India compared to China. However,this does

not ensure lower pricing.• Huge investment in new capacities ensuring availability of quality

products at competitive prices.• Decline of U.S.A, Europe and Japan as dependable suppliers as all

producers in these regions suffering from huge reduction in margins.

Tapping global Markets for Flexible Packaging dominates a Novel Strategy.

• With the data presented so far, it is evident that the supply, pricing and quality of Indian producers of base films of Pet, BOPP and Metallized films are equivalent to the best in the world.

• To move forward and en-cash on the opportunity available a few important facts and suggestions.

• First of all facts :• Man power cost for production and marketing of most medium or large sized

converters in India are about 4 to 5% of sales Price. In Europe and U.S.A this is about 18 to 20%.

• Pricing strategies for the major converters in Europe and U.S.A is to price their products at about 100% over their Raw material cost as against Indian converters pricing their products at 50% over their Raw material cost.

• With imposition of Dumping Duties on Indian PET Films in USA, Brazil, Europe, Turkey and Korea the cost of Pet films in these countries is about 20 – 25% higher than the price in India. This provides a great opportunity to be competitive in the world’s largest markets.

• To really en-cash on the opportunity provided by the scenario that has emerged, I strongly recommend following strategy.

• To approach the large converters in the developed markets of Europe and USA to appoint Indian converters as their out sourcing agents.

• Indian converters to gradually take over the long lead time, repeat runs from large global converters like, ALCAN, AMCOR, PRINTPACK.

• To supply fully converted products to them and at 20% lower cost to start with :

• As a rough estimate more than 30000 mt of laminates can move to Europe and USA per year from 2009 onwards. Priced at US$ 5.00 per kg this could provide an increased market for US$ 1.5 billion for IndianProducers.

• For reference the size of the European market for converted laminates is US$ 16billion.

• The size of the U.S laminate market is estimated at approx US$ 21 billion.

• The financial health of the converting industry in Europe and U.S is rapidly deteriorating with high cost of inputs ( as a result of Anti Dumping duties) coupled with high labour costs. Most major converters are either shrinking capacities or moving to lower cost operations in Eastern Europe.

• This situation provides great opportunity for Indian converters to tie up with the European and U.S converters to provide :

• Outsourcing facility from India.• Utilize15 the marketing strengths of the European and U.S converters to

aquire knowledge of these markets and gradually build up volumes.

NEW OPPORTUNITIES IN INDIA FOR FLEXIBLE PACKAGING CONVERTERS

• In the last 12 years, no new investment has been made in building polyester film lines in Europe and the U.S.

• In India vast improvements in technology has been achieved in terms of accuracy of gauge, - flatness of the films.

• Increasing speeds resulting in lower costs.• Introduction of Co-extrusion technology to reduce haze improve tensile strength and

provide ultra clear films with no extra cost.• In BOPP no major investments have been made in Europe and the U.S over the last 5

years, whereas in India BOPP production has more than doubled in the last 5 years.• Excellent quality has been achieved in BOPP films with higher barrier.• Film hot tack properties to receive extrusion coating.• Low density cavitated films for wrap around labels.• Low gauge heat sealable films.The lowest additions are various grades of off line coated films now available in India.• One side PVDC coated PET film for High Barrier Meat Packing applications.• Both sides Acrylic Coated BOPP film for Aroma retention overwraps.• One side PVDC, other side Acrylic BOPP for High Oxygen barrier applications.• One side PVDC, other side Acrylic cavitated BOPP for high oxygen barrier biscuit

monolayer applications.• One side Acrylic Coated, other sides LTS for high speed, low SIT applications for

biscuit packaging.