India drums up growth

Originally published:  01/05/2010

The Indian market for 210 litre steel drums has traditionally grown at around 3 to 4 per cent per annum, but the past three years have seen “accelerated growth of perhaps five to six per cent”, says Anand Dayal, general manager, industrial packaging for Balmer Lawrie, the country’s largest steel drum manufacturer. “The growth in the Indian economy, which is projected at anywhere between 7 to 8 per cent, is the most positive factor helping growth in the steel drum market,” he says. Thus, providing the country’s GDP growth continues at this rate, he anticipates that the next five years could well see the steel drum sector enjoying growth in the region of 6 to 7 per cent.

“We are now seeing multinational chemical companies entering India and this is helping the non-lubricant segment grow at almost 7 to 8 per cent compared to 3 to 4 per cent in the lubricant segment,” he continues. That said, though, lubricants remain the single largest consumer of steel drums in India, accounting for almost 40 per cent of total consumption. In terms of market geography, around 55 per cent of overall national demand for 210 litre steel drums is located in the west of the country, although demand in both the south and north is “growing at a faster pace” with the east “remaining stagnant”.

Tempering this growth is the rising use of 200 litre plastics drums, which Dayal identifies as “the single largest negative factor” affecting the Indian market for steel units. “There has been a mushrooming of plastics drum manufacturers,” he says, adding that price “is the only strategy” adopted by these companies. However, he continues, “with stringent environmental norms coming into play and an awareness of a ‘green’ economy”, it is likely that over the coming year “price will not be the only determining factor” at play.

The local steel drum industry is also dogged by “huge overcapacity” in the region of 10m excess units per annum, something that in turn is leading “to price attrition and depressed margins”. Over the next few years, this will likely decrease as the industry consolidates through mergers, acquisitions and closures. “Our emphasis on quality, just-intime delivery and [the company’s] multilocational presence across the country with six manufacturing plants helps us to stay ahead of the competition,” he says.

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