FUTURE OUTLOOK OF POY/PFY INDUSTRY

PFY industry, as we know, had faced difficult market conditions during the years 1999-2002 due to excess capacity over demand which lead to cut throat unhealty competition causing substantial erosion in profitability of these companies. However, as now new capacities came up during this period, the gap between supply and demand got gradually bridged up and POY manufacturing units/companies are doing reasonably well since beginning of 2002 and are expected to do much better during the next few years in view of the sustained demand growth. As per detailed survey conducted by 'CRISINFAC' the domestic Polyester industry is likely to witness robust demand growth and higher profit margins in the next five years due to the following positive factors favouring Polyester industry.

1. Price Competitiveness of Polyester viz-a-viz other substitutes like cotton, silk and woolen yarns.
2. Excise duty reduction to encourage demand :- Excise duty on POY has been progressively reduced over the previous few years to 16% and is expected to be reduced further which will further increase the price compititiveness of POY.
3. Increase of PFY in non-appael segments :- In India, fibre is mostly used for textile applicaions i.e. 93% and only 7% for non-apparel applications like home textiles, automotive an industrial segments as against 59% worldwide. The demand of non-apparel segment is expected to grow @ 20% p.a. as Polyester offers high tenacity an strength which is most suitable for such applications.
4. Lower per capita consumption :- The averageper capita consumption (PCC) of fabric in India is much lower than in its neighbouring countries. India has a huge potential market, given that its PCC is as low as 1.4 kg as compared China (5 kgs), Pakistan (3 kgs) and Indonesia (5 kgs). India has the advantage of a large an growing domestic market, and a good GDP growth.
5. Rapid urbanization :- higher spend on clothing :- In India, out of the total population, about 70% is rural. Behaviour patterns suggest that most of the fabrie demand in this segment is need-based. The urban demand, on the other hand, is also driven by fashion trends and favours more sophisticated textiles, and variety in designs and colours. The average urban spend on apparel is higher than rural spend.
6. However, over the years, the clothing pattern in India has shifted. Men's clothing consumption has moved from the traditional cotton based wear to synthetic fabrics. Cotton dhoti are giving way to trousers (mostly made of polyester or polyester blends). Likewise, women are moving from cotton saris to synthetic saris/dresses.
7. Levy of Anti-dumping duty on import of POY to lower threats of import leading to availibility of better contribution to domestic manufacturers.
8. Rapid additions in downstream processing facilities leading to incremental demand.
9. Manufacturing of manmade fibres globally is getting shifted mainly to China and India. As China's domestic comsumption almost matches its production, India will be able to increase its presence in the International market.