Potential for industrial adhesives is very promising in India
Bostik, a part of French speciality chemicals company Arkema, provides adhesive technologies across a wide range of sectors including construction, automotive, aerospace, rail, packaging, tapes, labels, flexible lamination and footwear industries.
Bostik, a part of French speciality chemicals company Arkema, provides adhesive technologies across a wide range of sectors including construction, automotive, aerospace, rail, packaging, tapes, labels, flexible lamination and footwear industries. Present in India since 2001, Bostik has emerged as one of the leading players in the country’s adhesives market. In conversation with Rakesh Rao, M V Ganeshan, Managing Director of Bostik India Pvt Ltd, shares his insight into the emerging trends in the adhesives industry.
In Oct 2017, Bostik opened a new facility in India at Gujarat. What was the rationale behind this move?
The new adhesives production facility in Gujarat was opened primarily to expand our manufacturing capacities to serve the fast growing demand in India and export markets for industrial adhesives - particularly in the flexible packaging, transportation and footwear manufacturing sectors.
The new plant has enhanced our ability to serve customers in a market with significant growth potential and we can now provide the highest levels of service due to our proximity to strategic customers and suppliers.
Kindly brief us about Bostik’s business and its products. Which are the major end-user industries for your adhesives?
At a global level, Bostik serves end users and distributors in industrial, construction and consumer markets.
In the industrial market, our adhesives are used in a countless range of durable and non-durable goods. The strategic industrial markets that we prioritise are aeronautic, assembly, automotive, building components & woods, flexible packaging, general transportation, paper/board & consumer packaging and tape & label.
In the construction and consumer markets, our systems are used in new building and renovation projects for applications including flooring, sealing & bonding, tiling, waterproofing, insulation, decoration & repair.
In India, where we have had a physical presence since 2001, we are active in the development, manufacture and supply of adhesives and related products to the industrial and construction sectors.
How is the market for hot melt pressure sensitive adhesives (HMPSA)?
Hot melt pressure sensitive adhesives (HMPSA) is one of the fastest growing adhesive technologies in India. Demand is being driven by the growth and expansion of operations by manufacturing firms in India for domestic and export markets.
In general, there has been strong market growth in India across most markets and applications but the rates vary across different verticals. For example, HMPSA supply to the disposable hygiene segment is growing at a rate of approximately 20%, due to increased penetration levels of both baby diapers and feminine hygiene care products. The penetration of baby diapers is seen more in the cities but the growth in the feminine hygiene care segment is evident nationwide. This is partly explained by the campaigns and initiatives run by various state governments across India. Since the penetration levels are currently low, this segment is likely to maintain high growth rates for, at least, the next 5 years. Strong growth rates are also evident in the footwear and flexible packaging manufacturing sectors.
As a leading global player, how do you view the potential of industrial adhesives market in India?
The market potential for industrial adhesives is very promising as it is growing across virtually all segments.
For example, the growth rate for footwear adhesives is in line with the national GDP rate of approximately 7% per annum. The growth rate for flexible packaging adhesives is significantly higher at around 12%. With greater exposure, more TV and high profile brand campaigns, positive consumer perceptions of attractive and conveniently packaged goods have generated huge demand. The penetrations have gone deep into rural areas contributing to strong growth in this segment and the momentum is expected to continue for at least the next 5 years.
In the transportation sector, increased levels of travel, improved roads and infrastructure, more commercial vehicles and modern modes of transport such as luxury cars, buses and metros are all contributing to increased demand for transportation adhesives. Again, we see this trend continuing for the next 5 years and it is currently growing at approximately 10% annually.
What is driving the demand for industrial adhesives in India?
Adhesives play an important role in the manufacture and ongoing performance of countless durable and non-durable products. As a result, we see a number of direct and indirect influences driving demand.
In terms of direct influences, the expansion of manufacturing operations by domestic and global brands is increasing demand for materials, including adhesives. Similarly, the adoption of the latest innovations in adhesive technologies is having a positive effect. We see this through the ‘Leapfrogging’ which is evident among manufacturers. For example, when manufacturers add new lines, they are using modern production techniques which results in quicker migration to the most advanced product and adhesive technologies.
Indirect demand drivers that we see include demographic shifts such as increasing disposable incomes and a clear push by large consumer packaged goods companies to increase market penetration in India.
What are the emerging trends in adhesives industry?
At a global level, we see the following trends:
Shift from mechanical to chemical bonding: There is a growing adoption of chemical bonding methods over mechanical fixing in many industrial and construction markets and applications. Some of the reasons include advantages in terms of time savings, performance/strength and aesthetics as well as additional benefits including weight reduction which is important in markets such as transportation.
Globalisation: An obvious trend in the adhesives industry is where customers have firmly adopted a global outlook and are looking beyond domestic borders to develop new business and to improve operational efficiencies.
Sustainability: Driven by demand from distributors and end users alongside increasing levels of international regulation, sustainability is a growing trend. Topics such as Life Cycle Analysis (LCA) and Indoor Air Quality (IAQ) are contributing to the debate with products that are sustainable and safe to use being increasingly favoured.
Market consolidation: The global adhesives market is still highly fragmented so market consolidation will continue with many key players, including Bostik, extremely active on the acquisition front.
What are your plans to further consolidate Bostik business in India?
India is clearly high on our list of geographic priorities such is the market potential across all sectors. We have had a physical presence here since 2001 and have invested significantly in our manufacturing facilities and distribution centres in recent years.
Geographic expansion and participation in market consolidation are key elements of our global growth strategy. With its tremendous growth potential, India is an important market for us, especially when many of our strategic customers are expanding their operations here.
Against this backdrop, it is highly likely that we will expand our manufacturing and distribution footprint through greenfield development and/or acquisition in the coming years.