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NJB - CFC/IJSG/21
Improving market presence of JGT Survey & observations
Strictly Private
and Confidential
March 2014
Submitted by PwCPL
Table of Contents
Section
Overview
1
Background
1
2
Detailed Methodology
3
3
Key Findings – Domestic & International Markets
5
4
Key future considerations
13
5
Appendix
19
Page
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Background
Section 1
PricewaterhouseCoopers Private Ltd
Section 1 – Background
Objective
• Identify the market need, assessment of supply chain of Jute Geotextiles (JGT) for three specific
uses
1. erosion control of river bank
2. erosion control of hill slopes and
3. construction of rural roads
• Identify improvement opportunities in the JGT supply chain to meet the market need
Acknowledgement
• Project financed by Common Fund for Commodities (CFC) - an inter-governmental financial
institution established within the framework of the United Nations
•
The project is supervised by the International Jute Study Group (IJSG)
•
The project execution agency is the National Jute Board (NJB) and has engaged PwC
(PricewaterhouseCoopers) to undertake this engagement
• The Nodal Agency Jute Diversification Promotion Centre (JDPC)
NJB - CFC/IJSG/21 • Improving market presence of JGT - Survey & observations
PwC
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Detailed Methodology
Section 2
PricewaterhouseCoopers Private Ltd
Section 2 – Detailed Methodology
Methodology of the research
• Data gathering targeted
- To understand the demand and maturity of supply chain of
Geotextile and to understand where Jute GeoTexties (JGT)
would be featuring in the universe of all Geotextiles
- To understand the competition threat from synthetic and
other natural Geotextile to JGT
Primary survey
Market potential
modelling data
- To compile local and International policies and their
relevance favouring JGT
- To gain insights into technical issues of supply chain of JGT
- To compile case-studies on previous experiences of JGT
applications and profile of the users
- To collect feedback on awareness and users perception about
JGT
Secondary
information
collection
- To prepare predictive demand analysis of JGT in India,
Bangladesh and other relevant countries in the three focus
sector
NJB - CFC/IJSG/21 • Improving market presence of JGT - Survey & observations
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Key Findings – Domestic & International Markets
Section 3
PricewaterhouseCoopers Private Ltd
Section 3 – Key Findings – Domestic & International Markets
Domestic demand assessment – India & Bangladesh
• If JGT captures 10-20% of the total potential market of India – yearly need will be 97
Million Sq. Mt. and 24 Million Sq. Mt. Totalling around 125 Million Sq. Mt. which
includes rural road, river bank erosion, hill slope erosion and railways embankment,
we would have
- Yearly savings valued at around USD 125 million and will benefit the Jute industry
and farmers.
- More focus on Local Demand and optimized supply chain
• Domestic demand will be sufficient to overflow the available capacity of jute mills and
would provide a steady demand which is around 25% on the average for Woven type of
627, 724, 760 gsm .
• Production capacity is available for 500, 600 & 700 gsm Open Weave but the
production needs to be diverted to get local usage
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Section 3 – Key Findings – Domestic & International Markets
Global demand
Item
Geotextiles Demand
Synthetic Geotextile Demand
% Share
Natural Geotextile Demand
% Share
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%
Data in Million Sq. Mt.
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Section 3 – Key Findings – Domestic & International Markets
Potential international markets
• For Erosion Control and estimated by 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
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Section 3 – Key Findings – Domestic & International Markets
Global demand
• 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.
• Although trade does exist in the global geotextile industry, most of the
production in the larger developed markets occur at local facilities. Primarily
due to:
- need for custom design and the corresponding close contact with
customers.
- Ability of suppliers also provide additional related services such as site
design and geotextile installation.
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Section 3 – Key Findings – Domestic & International Markets
Some points to ponder - Bangladesh and India local market
• Mills targets mainly export. Hence the internal requirement is not catered for to large
extent.
• Experimental projects which were undertaken in Bangladesh and India – have started
yielding value. We need to capitalize the result to popularize the product with
Government and executing Engineers
• Discussion with Policy makers would be helpful for better usage of JGT
• SGT is being used in all the focus areas – we would need to break into the market of
SGT to have at least 15% of the market of Geotextiles
• Coir and Straw based Geo textiles also is a strong competition for natural fibre based
Geotextile
• The supply chain between Farmer to Mill and Mill to End Customer need to be
properly established so that we can have a smooth movement of JGT and measure the
effectiveness
• India has initiated a mandatory % use of JGT in focus areas – Bangladesh may also
consider the same.
• A strong Industry – Academia – Government collaboration is needed
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Section 3 – Key Findings – Domestic & International Markets
International export potential of JGT
USA
• 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.
• Erosion control is the most relevant
market segment 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%
Erosion Control.
5%
Reinformcement.
6%
Drainage
Applications. 11%
Separation &
Stabilization. 28%
Lining Systems. Ashpalt Overlays.
26%
19%
• Two of the biggest contributors to
erosion are construction sites and urban
runoff – consumers are construction &
landscape companies
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Section 3 – Key Findings – Domestic & International Markets
International export potential of JGT
EUROPE
• 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 potential for Jute Geotextiles.
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Key future considerations
Section 4
PricewaterhouseCoopers Private Ltd
Section 4 – Key future considerations
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. Existing players are having great advantage
2
Substitute products like Synthetic Geotextiles is dominant and
reduces the demand for JGT. We may need to strategise to take over
part of existing SGT marktet.
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 as JGT gives low
contribution in terms of total product portfolio.
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 • Improving market presence of JGT - Survey & observations
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Section 4 – Key future considerations
SWOT of JGT
OPPORTUNITIES
Strengths
 The low labour costs in India and Bangladesh combined with the relatively high profit margins on
JGT
 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
 Ride on United Nations’ Sustainable Development Programme and Millennium Development
Goals for socioeconomic development, protection of environment and reduction of poverty.
 Increase in domestic opportunities provide JGT producers to establish a stronghold in the local
market and consolidate position by commencing imports
Weaknesses
 Inadequate R&D/ quality management facilities compared to SGTs
 Lack of appropriate storage and warehousing facilities impact 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 awareness & development activities undertaken at both domestic & international
level
NJB - CFC/IJSG/21 • Improving market presence of JGT - Survey & observations
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Section 4 – Key future considerations
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
Weaknesses
THREATS
 Jute industry suffers from new technology infusion
 JGT’s strength in the infrastructure sectors makes it reliant on government sector and state
agencies and hence is affected gov’t sector issues (e.g. margins, specifications, nominations)
 JGT does not provide a steady order
 Internationally recognised standard for JGT usage
 More stronghold of competition in the subject three areas.
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Section 4 – Key future considerations
Key considerations … 1
• More Primary Data: More primary end user data will provide more transparency into the
efficiency of supply chain
• Industry collaboration: Synergies between industry bodies of JGT to execute the key
functions of strategy, marketing, and sales as effectively to compete with synthetic geotextiles.
JGT manufacturers of India and Bangladesh needs to come together to form a professional
project management (PMO) team.
•
Standardization: We need to establish standard for all the focus areas in India and
Bangladesh – stabilize it – popularize with International standards. In parallel a set of standards
operating procedure to be defined for quality assurance of JGT according to the standard.
• Marketing awareness: Focused presence in fairs, events and seminars in US and EU to
propagate awareness about the eco-friendliness and cost effectiveness of JGT and thus impress
on such Government to specifically propagate usage of JGT as per the standard schedule. More
presence of manufacturers to show their strength and create a direct relation with end user,
which is very rare in this industry.
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Section 4 – Key future considerations
Key considerations … 2
• Government projects led growth: As the product is in its intial phase of “S” curve, continued
thrust on getting support from Govt Departments/Establishments like Irrigation, Rural Roads
and Highways, Port Trust authorities, Water Works, Construction and landscape, hotels and
resort projects, Railways, Defence and other similar projects/ organisations for focused usage of
JGT for permanent eco-friendly solution to soil erosion problems.
• Increased R&D: More R&D with the data available from the sample sites to establish benefits
beyond any doubt.
• Consumer centricity: Make JGT more nearer to the consumes. There are quite a number of
steps being followed by NJB and which is yielding benefits to JGT as a whole. Still the task ahead
to use the full potential of usage of JGT is a herculean one. Both apex bodies, manufacturers and
Government needs to create synergies and closely work together to achieve a situation where JGT
will capture 10% of market share of geotextiles in the focused sectors.
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Appendix
Section 5
PricewaterhouseCoopers Private Ltd
Section 5 – Appendix
Information sources
The key stakeholders identified for discussions were:
• Government agencies
• Manufacturers who are exporter too
• Exporters
• End Customers
• Research bodies
• Specialist and consultants
The primary research can be considered true and holistic considering the size of the JGT market in India and
limited domestic users.
Government supported organizations, which use geo-textiles, have been targeted as the first point of contact and
respective Governments have been taken in confidence to ensure good response from the target respondents.
For international market we have identified the various players across the value chain which has been submitted as
a separate excel sheet. The database covers Consultants, Contractors, Engineers, Landscapers, Manufacturers and
Suppliers
Secondary/ desktop research was conducted referencing numerous texts and resources. Details are available in the
paper.
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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.