CASE REPORT “Manufacture of rubber and plastic products”

On
December 7, 2023

LETTER OF TRANSMITTAL

Date: 7th December, 2023

Prof. Rihana Shaik

Visiting Faculty

IIM Sambalpur.

Dear Ma’am,

Subject: Manufacture of rubber and plastic products

As per the guidelines provided by you, we hereby submit the industrial analysis report on
the Manufacture of rubber and plastic products industry. The report delves into key factors
influencing the rubber and plastic products industry, and the findings presented herein are
the result of rigorous investigation and critical evaluation of relevant data. The report
covers aspects such as market structure, competitive forces, and emerging trends, offering
a holistic view of the industry's dynamics.

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We hope that this report meets the criteria outlined for the assignment, and are confident
that it contributes valuable insights to our understanding of the general insurance industry.

Kindly evaluate the same and provide your valuable inputs.

Best Regards,

Group 15

Section C.

EXECUTIVE SUMMARY

There are numerous risks covered by the general insurance market, such as car, health, life,
and property and casualty. The industry is highly regulated and susceptible to various
factors that may affect its performance, such as prevailing economic conditions, natural
calamities, and advancements in technology. With customers becoming more conscious of
the hazards they encounter, there is an increasing demand for insurance. There are reasons,
such as the rise in natural disasters, climate change, and technological innovation, are
driving this. Among the many difficulties the insurance sector faces are underwriting
profitability. It's getting more and harder for insurers to appropriately price their goods.
There are several reasons for this, such as a rise in fraud, competitiveness, and natural
disasters. Insurance companies are also having trouble adhering to rules which are subject
to frequent changes and that their costs may rise. It also faces trouble finding and keeping
talent. It is anticipated that the general insurance sector would expand in the upcoming
years because of rise in insurance demand, technology advancements, and regulatory
modifications. The sector will, however, also have to contend with a number of difficulties,
such as ensuring profitability, adhering to regulations, and finding qualified personnel.

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 CONTENT
Sl. No. Title Pages
1. Industry Overview
Industry History 5
Size 6
Products and coverages 7
Geographic scope of the 8
industry
World view of the industry 8
Life cycle stage: emerging, 9
growing, shaking out,
maturing, declining
Contribution to the GDP / 10
Economy
2. Market Analysis
Factors influencing 11
competition
Competitive Landscape 12
3. PESTLE’s Analysis 14
4. Challenges for the 15
industry
5. Aftermath of COVID-19 16
6. References 18

LIST OF ILLUSTRATIONS

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 Sl. No. Title Pages
1 PESTEL Analysis 14
2 GICs Market Penetration 16
across India
3 Market Share of GICs across 16
India
4 Density of life and non-life 16
insurance in India

1. INDUSTRY OVERVIEW

The plastic and rubber industries comprise the establishments that manufacture goods by
processing plastic and rubber raw materials. The industry has had global success mainly
due to the enormous growth rate of polymer consumption, from raw materials to end-user
products. Polymer materials are now widely used across industries such as automotive,
packaging, construction, and healthcare.

While plastics and rubber play a fundamental role in modern society, it is essential to
develop a more circular approach to their use in the future due to the growing concerns
around plastic waste. Moreover, the incredible versatility and diversity of plastics, from
food packaging applications to underground wind turbines, make recycling and recovery
very challenging and expensive. While many plastics are cost-effective, the value of
recovered plastics is often merged.

1.1 INDUSTRY HISTORY

1.1.1 Plastics
The history of plastics can be traced back to the 17th century when natural polymers like
shellac and amber were used to create a variety of objects. However, it was not until the
19th century that synthetic plastics began to be developed.
In 1839, Charles Goodyear discovered the process of vulcanization, which made rubber
more durable and versatile. This discovery led to a boom in the rubber industry, as rubber
was used to make a wide variety of products, including tires, hoses, and shoes.

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In 1869, John Wesley Hyatt invented celluloid, the first commercial synthetic plastic.
Celluloid was used to make a variety of products, including billiard balls, combs, and
photographic film.
In the early 20th century, a number of new synthetic plastics were developed, including
Bakelite, polystyrene, and vinyl. These plastics were lighter, stronger, and more versatile
than natural polymers, and they quickly became essential materials for the manufacturing
of a wide variety of products.
The production of plastics increased dramatically in the second half of the 20th century, as
new applications for plastics were developed. Plastics are now used in a wide variety of
products, including packaging, automotive parts, construction materials, and medical
devices.
1.1.2 Rubber
The history of rubber can be traced back to the ancient Mesoamericans, who used latex
from rubber trees to make a variety of products, including balls, sandals, and waterproof
clothing.
In the 15th century, Christopher Columbus brought rubber back to Europe from the
Americas. However, it was not until the 19th century that rubber became a widely used
material.
In 1839, Charles Goodyear discovered the process of vulcanization, which made rubber
more durable and versatile. This discovery led to a boom in the rubber industry, as rubber
was used to make a wide variety of products, including tires, hoses, and shoes.
In the early 20th century, a number of new synthetic rubbers were developed, including
neoprene and styrene-butadiene rubber. These synthetic rubbers were more resistant to
heat, chemicals, and oil than natural rubber, and they quickly became essential materials
for the manufacturing of a wide variety of products.

The production of rubber increased dramatically in the second half of the 20th century, as
new applications for rubber were developed. Rubber is now used in a wide variety of
products, including tires, seals, gaskets, and hoses.

1.2 SIZE

1.2.1 Plastic

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1.2.2 Rubber

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1.3 PRODUCTS AND COVERAGES
1.3.1 Plastic

1.3.2 Rubber

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 Natural Rubber

Synthetic

1.4 GEOGRAPHIC SCOPE OF THE INDUSTRY

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The Indian plastic and rubber industry is geographically dispersed across the country, with
major clusters located in the following regions:
 Western India: Maharashtra, Gujarat, Rajasthan
 Northern India: Uttar Pradesh, Haryana, Delhi
 Southern India: Tamil Nadu, Karnataka, Andhra Pradesh
 Eastern India: West Bengal, Odisha, Assam

1.4.1 Rubber Producing Regions in India

– In India, 8.5 lakh hectares under rubber cultivation, and almost 5 lakh hectares was in
Kerala and Kanyakumari district of Tamil Nadu and 1 lakh hectares was in Tripura.
1. The northeastern states, particularly Tripura and Assam, account for over 16% of the
total production.
2. The share of Kerala has come down from around 90% to 78%. The non-traditional
regions of Karnataka, Goa and Maharashtra have a combined share of 6% in the total
output.

Three Zones of Rubber Cultivation:

– Traditional region comprising Kerala state and Kanyakumari District of Tamil Nadu;
– Non-traditional region comprising all states other than Kerala state and Kanyakumari
District of Tamil Nadu and North East region; and
– Northeastern region comprising Assam, Tripura, Meghalaya, Nagaland, Manipur,
Mizoram and Arunachal Pradesh.
The potential in northeastern States was for 4 lakh hectares. Considering challenges such
as landslides, it was decided to plant rubber on 2 lakh hectares.

1.4.2 Plastic Producing Regions in India

Plastic processing in other parts of the country, such as Rajasthan, Punjab, Haryana,
Uttarakhand, J&K, and Himachal Pradesh, is expected to grow due to increased feedstock
availability and a greater focus on manufacturing.
In India, there is significant regional variation in plastic consumption, with Western India
accounting for 47%, Northern India for 23%, and Southern India for 21%.
These regions are home to a large number of plastic and rubber processing units, as well as
manufacturers of raw materials and machinery. The industry is also supported by a strong
infrastructure network, including ports, roads, and railways.

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The geographic distribution of the industry is driven by a number of factors, including the
availability of raw materials, labour, and infrastructure. The presence of major industries,
such as automotive and packaging, also plays a role in attracting plastic and rubber
manufacturers to a particular region.
1.5 WORLD VIEW OF THE INDUSTRY

1.5.1 Plastic

1.5.2 Rubber

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1.4 LIFE CYCLE STAGE: EMERGING, GROWING, SHAKING OUT,
MATURING, DECLINING

1.6.1 Emerging:
Preceding the 2000 liberalization, the Indian insurance sector was in its
nascent stage. Marked by government control and a confined market,
competition was limited. The industry's growth potential and innovation
were constrained, setting the stage for transformative changes post-
liberalization.

1.6.2 Growing:
Following liberalization in 2000, the Indian insurance industry experienced
robust growth. The infusion of private players, heightened product
innovation, and the integration of cutting-edge technologies were
instrumental in expanding the general insurance market.

1.6.3 Shaking Out:

A shaking-out phase may ensue with heightened competition, prompting
industry consolidation. Companies vie for market supremacy, fostering
mergers and acquisitions to fortify their positions. This strategic
maneuvering aims to bolster market footholds and competitiveness

1.6.4 Maturing:
As of the last update, the Indian general insurance industry was in a
maturing phase, marked by consistent growth. Private insurers coexisted
robustly with state-owned counterparts. Emphasis on diversification of
products and heightened operational efficiency reflected the industry's
evolution towards maturity and sustainability.

1.6.5 Declining:
Vigilance is essential for signs of maturation or decline in the general
insurance industry. Market saturation, regulatory shifts, and changes in
consumer preferences are pivotal factors that can significantly influence the
industry's direction.

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 1.5 CONTRIBUTION TO THE GDP/ECONOMY

India's ranking has improved by one spot in the non-life. During the covid crisis, in India,
between 30 and 40% of people bought additional insurances, and 25–50% still intended to
buy new policies. During the first quarter, non-life insurance saw a 14% growth in gross
premium as demand for health insurance grew during the second wave of covid. Compared
to Rs. 39054 crores in fy21, non-life companies registered premium collections worth Rs.
44434 crores in the first quarter of fy22.

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 2. MARKET ANALYSIS
2.1 FACTORS INFLUENCING COMPETITION
2.1.1 Regulatory Environment:
Regulations from bodies like IRDAI significantly shape the general insurance
industry. They dictate market entry criteria, influence product development and
pricing, and prescribe business conduct standards, collectively defining the
competitive landscape by fostering fair practices and ensuring consumer
protection.

2.1.2 Technological Advancements:

Embracing technology, including digital platforms and data analytics, enhances
operational efficiency, elevates customer service standards, and fosters
continuous product innovation. Companies’ adept at leveraging these
technological tools position themselves for a distinctive competitive advantage
in the market.

2.1.3 Product Differentiation:

Distinguishing through unique insurance products is a pivotal competitive
strategy. Companies innovating and customizing offerings to meet diverse
customer needs not only stand out but also resonate strongly in the market.

2.1.4 Brand Recognition:

Brand strength in the general insurance industry is a valuable asset, fostering
consumer trust and loyalty. Recognized and established brands wield a
competitive advantage, influencing customer choices and fostering long-term
retention.

2.1.5 Distribution Channels:

The breadth and efficiency of distribution channels, whether agents, brokers, or
digital platforms, are pivotal for market access. Efficiency fosters competitive
advantage.

2.1.6 Customer Service and Experience:

Exceptional customer service and positive experiences serve as competitive
advantages. Companies prioritizing customer-centric strategies not only attract
but also retain clients effectively.

2.1.7 Risk Management and Underwriting Practices:

Proficient risk management and underwriting practices are integral for accurate
risk assessment and pricing. Such robust practices bolster financial stability and
enhance overall competitiveness.

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2.2 COMPETITIVE LANDSCAPE (MAJOR COMPETITORS)

The Indian general insurance market is characterised by a dynamic and competitive

environment, with an increasing number of firms providing a wide range of goods and
services. Technological innovation, fierce price competition, and an emphasis on the
consumer experience define the industry.

There are a few major players in the Indian general insurance market, both state and
private. According to market share, the top five general insurance providers in India in
2022 were:

New India Assurance: 12.7% market share

National Insurance Company: 12.1% market share

United India Insurance Company: 11.4% market share

Oriental Insurance Company: 9.3% market share

HDFC ERGO General Insurance Company: 8.9% market share

In the Indian general insurance sector, these five firms hold more than half of the entire
market share.

In addition to the top five players, there are a number of other significant competitors in
the Indian general insurance industry. These include:

ICICI Lombard General Insurance Company: 7.4% market share

Bharti AXA General Insurance Company: 6.4% market share

Reliance General Insurance Company: 5.8% market share

Cholamandalam MS General Insurance Company: 5.7% market share

Tata AIG General Insurance Company: 4.9% market share

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The competitive landscape of the general insurance sector in India

Many factors contribute to the intense competition in the Indian general insurance market,
including:

Growing insurance demand: As India's economy grows and living standards rise, so does
the country's need for insurance. More people and companies are seeking insurance against
a greater range of dangers as a result of this.

New player entry: The Indian government has been allowing private companies to enter
the insurance market, which has raised market competition.

Technological innovation: To enhance their offerings and clientele's experience, insurers

are leveraging technology. Insurance businesses are finding it harder to set themselves out
from the competition as a result.

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 PESTLE Analysis
Political
Global
Increased tariffs and trade tensions:
Disrupting global supply chains and
increasing costs.
International trade agreements:
Providing Indian companies with
preferential access to markets.
Government support for the industry:
Encouraging innovation and
competitiveness.
International environmental treaties:
Pressuring governments to reduce
greenhouse gas emissions.
Economic
Global
Moderate global economic growth:
Creating export opportunities for Indian
companies.
Volatile oil prices: Impacting the cost of
raw materials.
Currency fluctuations: Affecting import
costs for Indian companies.
Carbon pricing mechanisms: Penalizing
companies with high carbon emissions
Social
Global
Growing demand for eco-friendly
products: Creating opportunities for
sustainable rubber and plastic products.
Changing consumer demographics:
Creating new market opportunities.
Focus on social responsibility: Holding
companies accountable for their social and
environmental impact.
Technological
India
Government policies: Promoting industry
growth but needing more stringent
environmental regulations.
Taxation on single-use plastics:
Encouraging sustainable alternatives.
Subsidies for recycled and bio-based
plastics: Promoting sustainability
India
Rapid economic growth: Creating strong
demand for rubber and plastic products,
but putting pressure on the environment.
Inflation: Increasing production costs and
consumer prices.
Readily available credit: Supporting
business expansion, but requiring
sustainable plans
India
Growing middle class: Leading to
increased demand for rubber and plastic
products.
Increased awareness of environmental
impact: Driving demand for sustainable
products and anti-single-use plastic
movement.
Growing social activism: Demanding
environmental protection and action
against climate change.
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 Global
Automation and digitalization:
Increasing efficiency and productivity with
potential environmental benefits.
Development of new materials: Offering
improved performance and sustainability.
3D printing: Reducing waste and enabling
custom-made products.
Legal
Global
Stringent environmental regulations:
Increasing costs and pushing for
sustainability.
Stricter product safety regulations:
Raising testing and compliance expenses.
Importance of intellectual property
laws: Protecting innovation in the industry.
Environmental
Global
Climate change: Increasingly impacting
production and requiring sustainable
practices.
Resource scarcity: Depletion of natural
resources leading to rising costs and
emphasizing resource efficiency.
Pollution: Air and water pollution from
plastic production and waste disposal
demanding sustainable waste management.
PORTERS 5 FORCES MODEL
India
Limited access to technology: Hinder
competitiveness with global players.
Need for government support for
research and development: Encouraging
technological innovation.
Digital divide: Limiting access to the
latest technologies and hindering market
reach.
India
Complex legal system: Creating
challenges for businesses.
Need for easier compliance procedures:
Streamlining legal processes.
Encouragement of foreign investment:
Attracting capital and technology.
India
Limited waste management
infrastructure: Leading to pollution and
environmental damage.
Need for stricter regulations and
enforcement: Encouraging responsible
waste management.
Focus on circular economy: Promoting
recycling and resource recovery.
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The plastics and rubber industry in India is a large and diverse sector with a significant
impact on the country's economy. The industry is characterized by a number of factors that
influence its competitiveness and profitability. Porter's Five Forces analysis provides a
framework for understanding these factors and evaluating the overall attractiveness of the
industry.
2.3 Threat of New Entrants
The threat of new entrants into the plastics and rubber industry in India is moderate to
high. The barriers to entry are relatively low, as there are no significant technological or
capital requirements. Additionally, the industry is fragmented, with a large number of
small and medium-sized enterprises (SMEs). This makes it easy for new entrants to enter
the market.
However, there are some factors that may deter new entrants. For example, the plastics and
rubber industry is subject to a number of government regulations, which can be complex
and costly to comply with. Additionally, the industry is characterized by fierce
competition, which can make it difficult for new entrants to gain market share.
2.4 Bargaining Power of Suppliers
The bargaining power of suppliers to the plastics and rubber industry in India is moderate.
There are a number of suppliers of raw materials, such as petroleum and natural rubber.
However, the industry is concentrated, with a few large suppliers controlling a significant
portion of the market. This gives the suppliers some bargaining power.
However, the bargaining power of suppliers is somewhat limited by the fact that there are a
number of substitutes for raw materials. Additionally, the plastics and rubber industry is a
major customer for many suppliers, which gives the industry some bargaining power.
2.5 Bargaining Power of Buyers
The bargaining power of buyers to the plastics and rubber industry in India is moderate to
high. The industry is characterized by a large number of buyers, including packaging
companies, automotive manufacturers, and construction companies. This gives the buyers
some bargaining power.
However, the bargaining power of buyers is somewhat limited by the fact that there are a
number of substitutes for plastics and rubber products. Additionally, the plastics and rubber
industry is a major supplier to many buyers, which gives the industry some bargaining
power.
2.6 Threat of Substitute Products
The threat of substitute products to the plastics and rubber industry in India is moderate to
high. There are a number of substitutes for plastics and rubber products, such as glass,
metal, and paper. Additionally, there is a growing trend towards the use of biodegradable
plastics, which could pose a threat to the industry in the long term.
3.5 Rivalry Among Existing Competitors

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Rivalry among existing competitors in the plastics and rubber industry in India is high. The
industry is fragmented, with a large number of SMEs competing for market share. This
competition is further intensified by the fact that the industry is cyclical, with demand
fluctuating depending on economic conditions.

3. CHALLENGES FOR THE

INDUSTRY

4. AFTERMATH OF COVID-19
4.1 Rubber Industry

The global rubber market size stood at USD 40.77 billion in 2019 and is projected to reach
USD 51.21 billion by 2027, exhibiting a CAGR of 5.3% during the forecast period.
Properties such as heat and abrasion resistance make rubber a highly useful and valuable
raw material in various end-use industries. It is mostly used in manufacturing products

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such as tires, crap tubes, adhesives, hoses, gaskets, and roll coverings. The rising demand
from the automotive industry for tire and non-tire applications is one of the key rubber
market trends. It is majorly used in the manufacturing of tires due to its strong properties,
such as tear resistance and toughness. It also works under low-temperature conditions. It is
a perfect material for the manufacturing of tires and hence, accounts for over 40% of the
share in the overall tire composition. Additionally, properties, such as weather resistance,
insulation property, and flexibility increase the usage in industrial applications including
transmission belts, elevators, and non-flat belts.

COVID-19 Outbreak to Negatively Impact the Market

The COVID-19 pandemic has affected the market in the same manner as numerous
disrupted industries across the globe. Silicone rubber is majorly used in the automotive
industry for the manufacturing of tires and several components. During this pandemic,
several countries including China, India, Germany, Italy, Brazil, and Canada declared
complete lockdown. This further led to the shutdown of production facilities, and raw
material transportation. This epidemic has severely affected the supply chain of numerous
manufacturing units. Since, both raw material supply and finished goods distribution are
majorly affected, causing a massive drop in revenue. China is a major consumer of
materials and an epicenter of coronavirus, thus, inhibiting the development of the market.
Restrictions over export and import of products such as tires, and general, and industrial
goods act as a factor in the decline of the market.

4.2 Plastic Industry

The global plastics market size was valued at USD 570.83 billion in 2022 and is projected
to grow from USD 507.16 billion in 2023 to USD 717.17 billion by 2030, exhibiting a
CAGR of 5.1% during the forecast period.

Plastics are polymers that are used to manufacture various products, including paper clips,
spacecraft, and others due to their versatility, easy manufacturing, moldability, lightweight,
waterproof nature, and low cost. They are traditionally derived from petroleum and natural
gas. The depleting sources of polymers have encouraged manufacturers to use renewable
sources. The plastics manufactured using renewable biomass sources, such as corn starch,
vegetable oil, food waste, and sawdust, are called bioplastics. Moreover, rising awareness
about the environmental harm caused by polymers influences manufacturers to develop

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recyclable products. Rising demand for high-performance plastic packaging solutions for
the protection of products coupled with increasing technological advancement are the key
factors driving the market.

COVID-19 Hindered Market Growth

In the wake of the COVID-19 pandemic, the plastics demand from the automotive and
building & construction industries has declined substantially. This decline was associated
with decreased manufacturing activities in these industries along with lockdown
restrictions imposed globally. Additionally, the significant drop in prices of crude oil due to
the decline in demand and lower storage capacity for oversupply reduced market growth.
On the contrary, the demand from the medical industry for producing Personal Protective
Equipment (PPE), such as face masks, goggles, shields, gloves, respirators, gowns, and
coveralls, will propel the market. For instance, according to the National Health Service
trust in Lincolnshire, England, about 2.3 billion PPE products were distributed to health &
social care personnel in England between February and July 2020.

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 5. REFERENCES
 IndustryARC. (n.d.). Industrial Rubber Products market - forecast(2023 - 2028). In

IndustryARC. https://www.industryarc.com/Report/15900/industrial-rubber-

products-market.html

 Infographics - Plastics market. (n.d.).

https://www.fortunebusinessinsights.com/infographics/plastics-market-102176

 Plastics and Rubber Products Market Industry Report, Trends 2032. (n.d.).

https://www.thebusinessresearchcompany.com/report/plastics-and-rubber-

products-global-market-report

 Rubber market size, industry share, outlook [2020-2027]. (n.d.).

https://www.fortunebusinessinsights.com/industry-reports/rubber-market-101612

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