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Indian Glass industry as a whole has been impacted by the sharp rise in the cost of key raw materials clubbed with the unprecedented depreciation of Indian rupees against the US dollars, a double blow on the cost front. Apart from the rise in the cost of raw materials, a sharp rise in the cost of power and energy has also impacted the industry. The glass production has been affected by the sluggish demand from the user segments viz auto, constructive. Even though the short term growth looks pale, the long term growth of the industry is intact backed by the expected revival in auto sector, real estate sector and in the retail sector due to the allowing of 51% FDI.
Glass consumption growth is expected to increase in all the major sectors such as consumer goods, pharmaceuticals, automotive and construction driven by up tick in demand. The lower per capita consumption of 1.5 kg in India as compared to the other countries and the strong economic drivers for end user segments (liquor, beer, pharma, food, cosmetics etc.) will boost the demand for the industry.
The domestic production of Glass sheet fell for the first time in the last four months in August 2012 when compared to the corresponding month last year due to the high input cost coupled with sluggish demand from its user segments-auto and construction sector. The production reduced by 13% y-o-y to 8250 thousand sq meters in August 2012. Glass sheet production grew by only 2% in July 2012 after reporting double digit growth for the past three months (April-14%, May-10% and June-11%) when compared to the corresponding month previous year. While on an m-o-m level also, Glass sheet production declined by 13% from 9463 thousand sq meters in July 2012, where the production remained flat when compared to the previous month.
Glass sheet and fiber glass WPI index grew by 2% in August 2012 over the same month last year, while on an m-o-m level, the index improved by 1% in August 2012 while remaining almost flat for the previous four months.
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