Transcript Exclusive Motors

www.pwc.com
NJB - CFC/IJSG/21
Market Need Analysis and Supply
Chain Strategy for JGT
Strictly Private
and Confidential
September 2013
Submitted by PwCPL
Table of Contents
Section
Overview
1
Background
1
2
Key Findings
7
3
Recommendations
Page
27
This proposal does not constitute a contract to perform services. Final acceptance of this engagement by PricewaterhouseCoopers is contingent upon
successful completion of PricewaterhouseCoopers' acceptance procedures. Any engagement arising out of this proposal will be subject to the execution of our
formal engagement contract, including our standard terms and conditions and fees and billing rates established therein.
Section 1
Background
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
1
Section 1 – Background
Objective
• PwC has been assigned the responsibility of identifying the market need of Jute
Geotextiles (JGT) for three specific uses – erosion control of river bank, erosion
control of hill slopes and construction of rural roads. In addition, this engagement
aims to identify improvement opportunities in the JGT supply chain to meet the
market need.
• Key Outputs:
- Strategy option report to address the market needs for JGT
- Analysis of current supply chain situation and identification for opportunity for
improvement.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
2
Section 1 – Background
Approach
• To achieve the objective following approach was taken:
- Domestic and international field study undertaken to assess the market and
potential application of JGT
- Interaction with key stakeholders to get inputs with respect to opportunities and
challenges faced by the sector
- Demand side analysis of JGT in domestic and international market
- Industry analysis and future potential for JGT
- Submission of Strategic Option Report, highlighting the action plan for the sector
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
3
Section 1 – Background
Methodology of the research
The assignment is divided into three phases: (i) secondary information collection; (ii) primary
survey; (iii) assessment of market potential.
• The information collection was aimed at :
- Estimating the demand for Geotextile segment (both domestic and global, present
as well as growth trends)
- Estimate the present market for Geotextile and the its sub segments which include
Jute Geotextiles as well their growth trends
- Estimate the demand for three focus usages – convert the same to JGT usage
- Local policies and their relevance
- Gain insights into technical issues
- Case-studies on previous experiences of JGT applications and profile of the users
- Awareness and users perception and feedback about JGT
- Primary discussion with stakeholders to arrive at an estimation of JGT contribution
in the entire natural geotextile segment which would give a rough estimate of the
supply side projection for JGT
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
4
Section 1 – Background
What we delivered
• Strategy option report - PwC submitted the “Strategy Option Report” on 4th April, 2011
which included the following:
- Domestic and global technical geotextile consumption and projections
- Value drivers for JGT based on stakeholder interviews
- Analysis and structure of the JGT industry
- Potential and sectoral opportunities for JGT Industry (India, Bangladesh and Export
markets)
- SWOT for JGT and strategy plan for promoting JGT
• Interim report - PwC submitted the “Interim Report” on 2nd February, 2012 which
included the following
- Estimation of market potential for JGT in the domestic and international markets
- JGT supply chain analysis
- Supply chain issues and recommendations
- International marketing strategy for JGT
- Recommendation and implementation roadmap for strategy options
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
5
Section 1 – Background
Ongoing activities
No.
Activities to be Implemented
Plan


1
Documentation of the modus
operandi regarding standardization of 
the product in European countries
and suggest options for JGT to get
access to these committees.

Discuss with stakeholders like NSRI
Reach out to international standards
experts and understand the standard
setting process
Study to provide information on how
options for jute manufacturing
countries or otherwise natural GT
champions to get access to these
committees
Suggest the way forward for JGT in
international markets
2
Other international markets for JGT
PwC to conduct a high level assessment of
other potential international markets for
JGT
3
Final report preparation
Consolidation of findings and final report
preparation
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
Output
JGT
standardization
approach for
international
markets
List of other
potential markets
PY4 report
September 2013
6
Section 2
Key Findings
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
7
Section 2 – Key Findings
PwC has submitted PY I -III activity reports suggesting strategy options.
The salient features of the strategy options are as follows……. 1
Global Market Scenario
• Demand for natural geotextiles is expected to reach a figure of 480 million sqm in 2018 against the projected
global geotextiles demand of 4760 million sqm.
• The major share of the global demand will generate in Asia Pacific region (53%) in 2018 followed by North
America (19%) and Western Europe (15%)
• Coir geotextiles is the major competitor to JGT in natural geotextiles sector
• Present consumption of JGT is around 50-55 million sqm globally.
Item
Geotextiles Demand
Sy nthetic Geotextile Demand
% Share
Natural Geotextile Demand
% Share
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
1998
137 0
1318
2003
2030
1890
2008
2810
2600
2013
3680
3345
2018
47 60
4280
96%
93%
93%
91%
90%
52
140
210
335
480
4%
7%
7%
9%
10%
September 2013
8
Section 2 – Key Findings
PwC has submitted PY I -III activity reports suggesting strategy options.
The salient features of the strategy options are as follows……. 2
Domestic scenario - India
• Given a scenario that JGT captures a mere 10% of the total potential market which includes rural
road, river bank erosion, hill slope erosion and railways embankment, this would translate to a
consumption of:
- Yearly demand of 97 million sq.m valued at around INR 387 crores per annum (USD 81
million) and will benefit the Jute industry and farmers.
Sectors
Rural Roads - PMGSY
Riv er Bank Erosion
Hill Slope Erosion
Railway s
TOTAL
Volum e/ y r (Mn Sq.m )
39
19
10
29
97
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
Potential JGT Usage
Value/ y r (INR Cr.)
1 56
76
39
116
387
Value/ y r (USD Mn)
33
16
8
24
81
September 2013
9
Section 2 – Key Findings
PwC has submitted PY I -III activity reports suggesting strategy options.
The salient features of the strategy options are as follows……. 3
Domestic scenario - Bangladesh
• Given a scenario that JGT captures a mere 5% of the total potential market which includes rural
road, river bank erosion and railways embankment, this would translate to a consumption of:
- Our estimates of potential sector-wise usage are also shown in the table below. Even the most
conservative estimates projects a yearly demand of 24 million sq.m valued at around BDT 180
crores which is equivalent to USD 22 million.
Sectors
Rural Roads
Riv er Bank Erosion
Railway s
TOTAL
Potential JGT Usage
Volume/ y r (Mn Sq.m) Value/y r (BDT Cr)
Value/ y r (USD Mn)
23.0
1 7 2.0
21 .0
0.8
6.0
0.7
0.2
2.0
0.2
24.0
180.0
21.9
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
10
Section 2 – Key Findings
Underlying assumptions – market share estimation
• Existing share of natural geotextile in India is estimated at 10%-11% based on Ministry of Indian
Textiles estimates. The natural Geotextile market is dominated by coir and jute geotextiles and current
market share of JGT is around 4-5%.
• The promotional efforts being made by National Jute Board are sure to yield results and take the market share
of JGT from the existing 4-5% to a moderate 10% share of the projected demand.
• Inclusion of JGT in the Schedule of Rates published by various departments has lead to greater visibility of JGT
and therefore greater demand.
• Standardization and normative references has also helped in establishing JGT as a tried and tested material for
application in stabilization of soil through vegetation against erosion of landscape and soil slopes as well as
protection of river bank against erosion and similar application involving separation and filtration.
• Based on our discussion with sector experts, it was concluded that the share of natural fibres in the geotextile
market has increased dramatically due to considerations of sustainability and biodegradability. But within this
increased share for natural fibres jute has gained less than proportionately. Based on discussion it was
concluded with proper marketing impetus JGT has the potential to gain more than 10% of the market.
•
Based on these findings we have come to the conclusion that the existing market share of 4-5%
for JGT can be taken up to 10% given the current efforts and increased visibility of JGT amongst
various stakeholders as a positive outcome of the efforts and hard work of NJB and the other
project stakeholders.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
11
Section 2 – Key Findings
International export potential of JGT ..... 1
Current scenario
• Jute Geotextiles is largely exported from India under HS code 63051080 which is categorized as
Jute Soil Saver. Exports under the code for the last three years are highlighted below:
• JGT is also exported other than the code provided, which goes unaccounted
JGT Export (India)
Ex port Data (MT ) 2007 -08 2008-09 2009-10
2007 -08
2008-09
2009-10
CAGR
Value (INR Cr.)
1 0.44
7 .83
6.53
-21 %
Australia
Volume (MT)
5883
37 51
341 7
-24%
USA
Growth
343.94
568.1 6
7 61 .41
49%
3242.39
1 542.67
692.47
-54%
Greece
288.36
280.37
408.30
1 9%
Germany
7 7 6.1 8
31 1 .80
408.03
-27 %
• Australia accounted for the highest share of exports
in the year 2009-10 followed by USA, Greece,
Germany and South America. Almost all the export
countries witnessed negative growth compared to
2007-08 performance. Exports to USA dropped by
nearly 54% compared to 2007-08.
South Africa
1 1 7 .7 2
403.39
403.41
85%
• Like India JGT is exported from Bangladesh under
the HS Code-53109010 as “Jute Soil Saver”. Export
data not available for exports from Bangladesh
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
Peru
0.00
1 6.65
238.36
27 8%
Italy
405.88
298.38
1 21 .7 3
-45%
Spain
1 7 .44
1 0.00
1 1 0.00
1 51 %
France
1 86.28
1 1 3.37
87 .63
-31 %
Belgium
1 53.86
39.97
61 .20
-37 %
5.36
1 .56
53.04
21 5%
UK
80.36
64.1 9
25.7 5
-43%
Czech Republic
36.61
53.47
22.84
-21 %
0.00
9.00
1 9.80
48%
228.62
38.02
3.03
-88%
Korea
Japan
Others
September 2013
12
Section 2 – Key Findings
International export potential of JGT ..... 2
Potential international markets
• Based on Erosion Control Technology Council (ECTC) estimates the consumption share of organic erosion
control products by region can be estimated as follows:
Region
Market Share (%)
North America
66
Europe
20
Rest of the world
14
• Moreover the world consumption share of organic erosion control products by type can be estimated as follows:
Product Type
Market Share (%)
Excelsior/ straw
59
Coir
22
Jute
19
• In contrast to the very limited promotion of jute for geotextiles, there have been a series of efforts to research
the market and promote use of coir. It started off with looking at geotextiles as one of the high value export
possibilities being looked at for coir. With time it became apparent that it was the most promising area and has
taken coir from virtually negligible market share (some white coir netting) to around 22% of the natural
products used for soil erosion in the international market.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
13
Section 2 – Key Findings
International export potential of JGT ..... 2
US market for JGT
• The North American geotextile market is famous for its vast opportunities. The region accounts for roughly 21%
of the global geotextile market which corresponds to roughly 770 million sq.mt.
• In USA it is a Government mandate that no land area can be left untreated with respect to soil erosion be it
private property or public. Hence the market in USA is more customer focused market unlike others.
• Erosion control is the most relevant market segement for potential use of Jute Geotextiles. The
market size of this segment is estimated at around 43 million sq.mt.
Figure : North American Geotextile Applications
Silt Fences. 5%
• As a result, two big consumers of erosion control mats (ECMs)
are construction companies and landscape companies.
Erosion Control.
5%
Reinformcement.
6%
Drainage
Applications. 11%
• Two of the biggest contributors to erosion are construction sites
and urban runoff.
Separation &
Stabilization. 28%
Lining Systems. Ashpalt Overlays.
26%
19%
• Companies that do highway and road construction make up a
large sector of the customer base as well.
• Other major markets for ECMs are landfills, urban and suburban
drainage areas (for example, ditches, and spillways), building
construction, and landscaping.
• The US geotextile market is growing, but the supply continues to
outpace the demand due to steady capacity increases by
manufacturers of synthetic geotextiles. This is one of the key
reasons that natural geotextiles are yet to establish a strong hold
in the market.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
14
Section 2 – Key Findings
International export potential of JGT ..... 2
European market for JGT
• Europe accounts for approximately 16% of the global geotextile market which corresponds to roughly 590
million sq.mt. Market share of natural geotextile is around 7% of the total geotextile market. Based on this it can
be estimated that the potential market for Jute Geotextile in Europe is approximately 41 million
sq.mt.
• Europe has imposed an additional fee (as fine) on the usage of synthetics for landscaping purpose, which will
make synthetics less price competitive. Keeping in mind these factors, there seem to be a good export potential
for Jute Geotextiles.
• JGTs export to European countries is on the rise, mostly due to the increase of its use in hill slope management.
As the application of JGT in soil erosion management in European countries proved fruitful, they’re very much
optimistic about expanding its use that will open up a big global market for jute geo textiles.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
15
Section 2 – Key Findings
International export potential of JGT ..... 3
Marketing channels
• Jute geotextiles, being technical construction materials, their marketing and distribution is linked to a large
extent with specialist engineers, who "specify" the use of a particular geotextile material based on its suitability
for the intended application.
• Although a small volume of geotextiles is sold directly to retail buyers, the marketing and distribution of the
major portion of such products takes place according to the pattern described below.
- Client: The "client" for geotextiles is the construction supervisor. He is not usually the direct buyer of the
product but rather the person responsible for the construction work in which the geotextile is to be used.
- Consultant/ Specialist Consulting Engineer: In the construction industry, the client usually engages an
outside consultant, a "specialist consulting engineer," to make a detailed technical design and profile for the
construction job. The consultant is the specifier of the product. The marketing effort of a geotextile
exporter therefore begins with the consultant
- Contractor/Sub-Contractor: The job is then handed over to one or more contractors, who may decide to
subcontract various portions of the work to other companies. The contractor or the subcontractor then buys
the materials, as specified by the consultant, from the manufacturer,
- Intermediaries: Agents, distributors and importers make the final sale of the product to the applicator, that
is, to the contractor or the subcontractor
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
16
Section 2 – Key Findings
International marketing issues and constraints
• Lack of awareness and poor end users perception
- Natural products show variability in physical properties such as warp and weft density,
roughness of the fibers etc. which may be taken as inconsistency of product quality. In spite of
the studies that have been carried out to allay these concerns, some end users are yet to be
convinced of the true environmental credentials of jute products.
• Inconsistent supply of JGT
- International end users have been disappointed that they are unable to source adequate
quantities of jute erosion control geotextiles. The supply side of the market is not very
responsive to demands and end users would rather specify competing products than wait for
the next consignment of jute geotextiles to be imported.
• Standards for jute geotextile
- For soil erosion control geotextiles, few standards have been formulated or set to date. On the
other hand, standards that do exist already concern geotextile properties that actually have no
influence on erosion control performance. The standards committees have a tendency to set
criteria with which they are familiar, because of this JGT does not comply with most of the
standards that has been set for geotextile application world over.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
17
Section 2 – Key Findings
International marketing issues and constraints
• Commercial interest in formulating geotextile standards
- There is concern in the natural geotextile sector that the synthetics lobby on the Standards
Committees is attempting to marginalize natural products, such as jute and coir. This is done
by deliberately setting technical specifications that can never be met by the natural products,
but that can be met easily by the synthetic products.
• Local manufacturing facilities
- With market going global, a majority of Indian jute industry is still following the primitive
methods of manufacturing jute products and hence the products made find it difficult to
compete with Synthetic geotextiles.
- Many of the leading Jute manufacturers have taken initiatives to improve existing facilities
and ensure compliance with international procurement standards
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
18
Section 2 – Key Findings
Value drivers for JGT
• Jute Geotextiles (JGT) evidently poses no environmental threat.
• Being biodegradable, JGT ultimately coalesce with the soil on which it is laid, adding
nutrients to it and retaining water for quicker growth of vegetation.
• Due to a growing environmental, health and social awareness the demand for
sustainable materials, products and services are increasing.
• Besides the protection provided by jute geo-textiles, their biological properties
compared to synthetic fibres are a key characteristic. Some important aspects include:
- Improved growing opportunities for vegetation
- Animals can dig through the material
- Greater moisture retention capacity
- No need for post-application waste removal because of the bio-degradability
- When degraded, the geo-textiles form a natural soil for micro-organisms
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
19
Section 2 – Key Findings
Structure of the JGT sector – Porters five forces
Threat of new
entrant
•
LOW
Threat of
substitutes
•
HIGH
Bargaining power
of buyers
•
HIGH
Bargaining power
of suppliers
•
MEDIUM
Competitive rivalry
•
HIGH
1
There are a lot of factors that new entrants have to overcome if they want to be able to
compete successfully with the JGT market in India and Bangladesh. These barriers of entry
give a lot of advantage to domestic manufacturers of JGT in terms economies of scale, access
to distribution channels, and experience.
2
Substitute products like Synthetic Geotextiles can provide a higher perceived benefit or
value and could possibly reduce the demand for JGT. It can even go that far that the switch
to alternatives makes like SGT can even lead to JGT getting obsolete in the market if not
positioned well.
3
Buyers of JGT have a very high bargaining power since most of the end users are
Government departments which can constrain the strategic freedom of manufacturers and
their ability to influence higher margins.
4
Suppliers of JGT have a medium bargaining power mainly because of high dependence on
Jute growing countries and low contribution in terms of total product portfolio which can
again constrain the strategic freedom of manufacturers and their ability to influence higher
margins.
5
JGT has stiff competition from coir geotextile and needs to urgently strengthen its position
or else to be the preferred choice in natural geotextile products
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
20
Section 2 – Key Findings
Analysis of key supply chain issues
Input supply
• Decline in raw jute production
- Raw jute production has remained stagnant and acreage declined primarily because of the fact
that jute growers have been unable to obtain remunerative returns for raw jute.
• Lack of large scale storage
- Lack of or minimal availability of appropriate storage and warehousing facilities affect the
consistent availability, price and quality of raw jute.
• Price fluctuation
- The fluctuating price of raw jute and jute products may result into an adverse impact on both,
the domestic and export market as it would make jute products non-competitive vis-a-vis
synthetics and ultimately resulting in a loss of market share
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
21
Section 2 – Key Findings
Analysis of key supply chain issues
Operations
• Lack of production capacity and planning
JGT Potential Million Sq.m T housand MT
- The production capacity in India and Bangladesh put
India
97
63.05
together is around 2,700 thousand MT. The total
Bangladesh
24
15.6
domestic demand for JGT based on the market need
121
78.65
assessment report would require a dedicated capacity T OT AL
of around 79 thousand MT.
- The yearly demand for JGT could be in range of 100 – 120 thousand MT for domestic
consumption only. This would require dedicated capacity building activity in the area of JGT
production.
- Jute mills in India are characterized with high conversion costs and the industry is not in a
position to cater to the potential JGT demand unless the production facilities, equipment, raw
jute and store materials and resource skills is not upgraded. As of now the whole process of
capacity planning is lacking with JGT production as it is mostly adhoc.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
22
Section 2 – Key Findings
Analysis of key supply chain issues
Operations
• Investment in technology
- Jute industry in general suffers from technological obsolescence, as there have been only
lukewarm response in adoption of new technology developed by international machinery
manufacturers and GOI sponsored projects. Jute industry predominantly produces traditional
products and a few mills have come forward to take up this challenge..
• Lack of process differentiation
- Manufacturers consider JGT as traditional consumer products classified as Jute Diversified
Products (JDP’s) and production process, as a result the supply chain line till production is
being flown through same supply chain process as used for traditional jute products. This leads
to poor quality of JGT and inconsistent end products
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
23
Section 2 – Key Findings
Analysis of key supply chain issues
Operations
• Lack of product standardization for international markets
- The demand for export orders are customer specific and varies from customer to customer and
order to order or even varies when using for the same purpose. This makes a situation where
JGT producers cannot produce the finished goods as “off the shelf item”.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
24
Section 2 – Key Findings
Analysis of key supply chain issues
Order fulfilment
• The demand for JGT, specific to end users, are not always public to JGT manufacturers as proper
marketing network is yet to develop.
• The uniqueness of customer order (in terms of product specification) is always there which is
again unpredictable till the order is received.
• Due to lack of scope for prediction, JGT producers are not in a position to supply the goods
immediately.
• This issue gets aggravated when the order is a bulk one.
• The other reason for long lead times is the fact that JGT is not a priority item for manufacturers
and other production lines takes precedence over JGT order fulfillment.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
25
Section 2 – Key Findings
Analysis of key supply chain issues
Marketing and sales
• The industry has been largely operating in silos with limited sharing of market intelligence on
type and quantity of jute products required for an export market.
• Marketing efforts have been at best piece meal with no concerted industry wide effort. Key
challenges faced on the marketing front are as follows.
• The marketing channel is opaque and the identification of end user challenging, apart from the
Government Agencies.
• However during the JGT project period 2010 to date NJB has organized around 67
such seminars to promote the usage of JGT both in the domestic and international
market
• Since the purpose / usage of Jute Product and the JGT is different, the market for the products is
supposed to be different which was never realised and practiced during marketing effort in the
past.
• The value proposition (eco friendliness and social importance) of JGT over SGT is not
disseminated to mass and there is very less awareness of economic value calculation for eco
friendliness.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
26
Section 3
Recommendations
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
27
Section 3 – Recommendations
SWOT of JGT
Strengths
 The low labour costs in India and Bangladesh, among the lowest in the world, combined with the relatively high
profit margins on JGT makes this sector very interesting
 JGT ‘s advantage over Synthetic Geotextiles – increased interest in environmental products , cost,
customization, ease with which it can be laid and the lack of maintenance can help in gaining a stronghold in the
overall Geotextile market which has shown positive growth signs in the recent past
 Jute attracts international support and cooperation as a natural corollary to the United Nations’ Sustainable
Development Programme and Millennium Development Goals for socioeconomic development, protection of
environment and reduction of poverty.
 Domestic opportunities provide JGT producers to first establish a stronghold in the local market and thereby
establishing a firm manufacturing base, and then start exporting.
Weaknesses
OPPORTUNITIES
 Inadequate R&D/ quality management facilities compared to Synthetic Geotextiles resulting in lost opportunity
 Lack of or minimal availability of appropriate storage and warehousing facilities affect the consistent availability,
price and quality of raw jute.
 Undeveloped domestic market for JGT because of limited exposure to engineering projects using geo textiles
 A lack of market development knowledge by the exporters leads to ineffective promotion of products in both
international and domestic markets resulting in loss of potential market opportunities
 Poor awareness in the domestic market about JGT leads to customers opting for available substitutes
 Marketing has been another weak point of the JGT sector which has not been able to leverage on the advantages
of JGT over other substitutes. International marketing efforts have been at best piece meal with no concerted
industry wide effort
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
28
Section 3 – Recommendations
SWOT of JGT
Strengths
 JGT would need to defend itself from substitutes like Geotextiles from developed countries which have more
sufficient support from their government
 JGT’s strength in the infrastructure sectors makes it reliant on government sector and state agencies. Since most
the infrastructure projects in developing countries are specification driven (state agencies) and low margin
businesses, consequently, major contractors hesitate to use significant quantity of geotextile despite its clear
benefits.
 Since the product is highly customizable as per specifications, the lack of adequate testing facilities at the
manufacturing site could prove to be a major impediment for most end-users.
 Some applications are clearly suited to jute, but the material characteristics need more elaboration. Other
applications are more easily satisfied by the other types of geotextiles
Weaknesses
THREATS
 Jute industry in general suffers from technological obsolescence, as there have been only lukewarm response in
adoption of new technology
 Contractors often work on tight timelines and budgets and are unwilling to order material much in advance
which requires quick response time and high end machinery
 Not enough mills that have the capability to manufacture open weave JGT which again leads to lost
opportunities.
 For soil erosion control geotextiles and hence for JGT, few standards have been formulated or set to date. In the
international markets there are strict technical specifications required of geotextile applications, which natural
products cannot attain
 Absence of industry representation in the compliance standards committee leads to standards developed in
favour of competing synthetic geotextiles.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
29
Section 3 – Recommendations
Supply chain – improvement opportunities
Input supply
• Improve jute yield and productivity
- This can only be achieved through use of high quality seeds.
- Direct governmental involvement would be required as neither the jute industry has the
capability to fund the research nor is the jute seed market big and lucrative enough to attract
private research and development companies to invest in research in jute seed development.
• Improve the existing marketing systems and infrastructure to improve farm
remuneration
- Organising the growers into self help groups and empowering them to address their issues will
go a long way in reducing the volatility in raw jute prices and ensuring better returns to them.
- A special program for formation of Self Help groups of growers and their empowerment may
be taken up immediately by NJB through cess fund.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
30
Section 3 – Recommendations
Supply chain – improvement opportunities
Input supply
• Develop buffer stock for raw jute
- Considering the high fluctuation of prices of raw jute, it is imperative to develop a buffer stock,
which can be used during upward price revision.
- It is suggested that buffer stock should be maintained by JCI and BJMC, and respective
Government bodies should compensate both JCI and BJMC for the cost of holding utilizing the
jute cess fund.
• Encourage contract farming
- The jute mills should adopt on pilot basis 1–2 villages and enter into legal agreement with the
grower in terms of price i.e., market prevailing price and minimum quantity off-take.
- The jute mills should assure higher of MSP or market prevailing price and ensure adherence of
the partnership agreement. The mills should also assist in obtaining financial assistance to the
grower to buy farm implements and crop loan.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
31
Section 3 – Recommendations
Supply chain – improvement opportunities
Operations
• Creation of a Jute Development Fund for R&D efforts
- A jute development fund may be created to fund the R & D efforts of technology development
and commercialization.
• Modernization and adoption of new technology
- Machines should be categorized and a higher subsidy can be decided for mills installing
technologically advanced machines.
- Mills have been installing machines without improving their process and quality controls.
They should improve processes by implementing Total Quality Management
• Skill development and up gradation of workforce
- Industry should take necessary steps to expand the talent base available with more attractive
compensation packages, better working environment etc.
- They may also play a bigger role in operating skill development programmes in collaboration
with Institute of Jute Technology.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
32
Section 3 – Recommendations
Supply chain – improvement opportunities
Marketing & Sales
• Protection of existing markets and development of new markets
- Regular market surveys, both for domestic and international markets should be conducted to
find new markets for existing products.
• Technical specifications
- Conduct collaborative research and field trials on end use applications of JGT with various
national and international research institutes and other agencies like IIT, IIM, BRO etc., and
draw out application wise specifications broadly to provide guidance to the manufacturers as
also to the users.
• Focal points for domestic and international market
- JGT showroom & sales depots in different parts of the country could be made the focal points
for promotion of JGT in India and Bangladesh.
- In the first place a knowledge repository needs to be created which would be equipped with all
basic materials like technical/promotion literature, case studies etc.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
33
Section 3 – Recommendations
Supply chain – improvement opportunities
Marketing & Sales
• Brochure on technical aspects
- The technical characteristic of JGT should be tested keeping in view the various enduse
applications
- The efforts to promote the uses of JGT should be designed in such a way as to capitalise this
favourable climate promoting environmentally sound project and the policies of importing
countries.
• Effective communication
- Eco-labeling of jute products is necessary to position jute products as environment-friendly,
economical and acceptable to developed countries.
- The development in the national and international market for geotextiles should be collected
and disseminated on a regular basis.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
34
Section 3 – Recommendations
Supply chain – improvement opportunities
Marketing & Sales
• Promotion
- A technically supervised documentary on application of JGT for different applications like
rural road construction, soil erosion control, landscaping, river bank and hill slope erosion etc.
may be produced in countries, where the products are employed widely with great success.
- Should partner with International/ national TV channels like Discovery Channel/National
Geographic Channel/BBC etc. to produce a documentary on JGT and its role in various
applications. This will help to provide JGT the much needed global exposure
• Events
- Campaigns and events should be organized with the objective of projecting the eco-friendly
nature of JGT which is a natural solution to the growing global problems connected with soil
erosion.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
35
Section 3 – Recommendations
Supply chain – improvement opportunities
Marketing & Sales
• Promotion
- A technically supervised documentary on application of JGT for different applications like
rural road construction, soil erosion control, landscaping, river bank and hill slope erosion etc.
may be produced in countries, where the products are employed widely with great success.
- Should partner with International/ national TV channels like Discovery Channel/National
Geographic Channel/BBC etc. to produce a documentary on JGT and its role in various
applications. This will help to provide JGT the much needed global exposure
• Events
- Campaigns and events should be organized with the objective of projecting the eco-friendly
nature of JGT which is a natural solution to the growing global problems connected with soil
erosion.
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
36
Section 3 – Recommendations
Strategy Plan
Government Thrust
• Govt Departments/Establishments like Irrigation, Roads and Highways, Port Trust
authorities, Water Works, Construction and land scape, hotels and resort projects,
Railways, Defence and other similar projects/ organisations should focus usage of JGT
for permanent eco-friendly solution to soil erosion and other civil engineering
problems.
• The Government in India and Bangladesh may make 10% JGT usage mandatory in all
government projects where it deems fit.
• NJB should come out with a draft model policy highlighting the direct and indirect
benefits of JGT, mainly looking at socio economic benefits, environmental benefits,
tax benefits from global exports
• JGT showroom & sales depots in different parts of the country could be made the focal
points for promotion of JGT in India and Bangladesh.
• These focal points can also put in persistent effort in educating the potential users the
advantages of JGT .
NJB - CFC/IJSG/21 • Market Need Analysis and Supply Chain Strategy for JGT
PwC
September 2013
37
Thank You
© 2013 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Private Limited
(a limited liability company in India), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a
separate legal entity.