“Everything from construction material to healthcare and agricultural equipment are slowly moving towards plastic. The business opportunities are so huge and the industry in India has touched only a small portion of the whole lot,” Ganesh said. “Our advice to SMEs in the plastic manufacturing industry is to survive until the bad times are over. Reduce your expenses, refrain from borrowing, and survive for the next six months to one year, the business environment will turn industry friendly after that.”
The prolonged slump in the automobile industry - the major market for plastic components - has had a direct impact on the plastic manufacturing industry in Tamil Nadu. It is estimated that about 40-60 percent of a modern car is made of plastic components and units in Chennai provides nearly 80 per cent of the total automobile requirement in Tamil Nadu.
Although the packaging industry is doing fairly well, the plastic industry cannot hope for a recovery until the raw material prices are fixed. The increment is so bad that the prices are increased every Wednesdays. “We are asking the authorities to increase the price once in 15 days, but not every week. Two months back, they were increasing the prices twice in a week,” Ganesh said.
Acknowledging that the state government is doing everything to keep the industry running, he said the industry is relieved of the power crisis now. Unless the government retracts from its current policy of buying power from outside, the industry will be unaffected.
However, the major issue of inefficient working capital remains unsolved. “There is nearly a 200 per cent increase in raw material over the years. One had to spend about Rs 30 lakhs to produce 100 tones a couple of years back, but now it takes at least a crore. No banks are supporting the SMEs to meet this challenge, not even with collaterals,” Ganesh said. Nearly 30-35 per cent of the small scale industries have shut their operations in the last two years due to many issues beginning with the power crisis. “If the working capital issue is not solved, we predict it’s going to be anywhere 60-65 per cent,” he said.
The heavy price of imported raw materials has had a negative impact on plastic exports as well. In addition, the low volume of production makes it hard for SMEs to go for exports. Production can improve only if the machinery is upgraded. With 90 per cent of industry being small and medium players, the industry is unlikely to meet the demands unless there is adequate financial support to upgrade their machineries.
However, the association is betting high on the 300-acre proposed plastic park coming up in the suburbs of Chennai, which will hopefully solve many an issues of the industry including the transport expenses.
Contrary to the common notion, Ganesh said the plastic processing is one of the cleanest and greenest in the manufacturing industry. It causes no water pollution, air pollution or water wastage. “The problem lies in the usage and not in production. It should also be noted that any plastic can be recycled 100 per cent. Nearly 98 per cent of the plastics are collected, recycled and reused. The remaining 2 per cent is the waste which is often uncollectable, mostly the thin carry bags. The only solution is to segregate the waste at the source,” Ganesh said. He also reminded that plastic wastage can be mixed with bitumen in tarring roads. It increases the life cycle of roads by almost 60 per cent and reduces the cost by 10 per cent.
TAPMA is currently undertaking a huge promotional campaign to create the awareness about the need of segregating waste at the source. The initiative is aimed at educating the general public beginning at the school level to hotels and households.