>RESPONSIVE INDUSTRIES LIMITED: Accreditations to help in exports demand

Presence in niche product segments within PVC market; competition primarily in global markets Responsive is a dominant PVC-based product manufacturer in India and manufactures wide varieties of PVC flooring, PVC leather cloth, PVC rigid blister pack, and PVC soft sheeting. PVC flooring and PVC leather cloth cumulatively formed around 91.8 per cent of the total revenues for the company on a standalone basis in FY11. Both these products find application in various industries. Responsive manufactures a wide variety of PVC flooring, which finds application in residential, commercial spaces, public transport, hospitals, theatres etc. The PVC leather cloth (or artificial leather cloth as it is commonly known) find application in railway and bus seats, automobile upholstery, three-wheeler canopy, hospital bed covers, soft luggage, footwear, etc.


With over 63.9 per cent of the standalone revenue from the international market, the key competition is from the international PVC flooring and PVC leather cloth manufacturers such as Tarkett Inc., Armstrong World Industries Inc., James Halstead Plc., Gerflor Group and LG Hausys Ltd. In India, the company has the largest PVC flooring and PVC leather cloth manufacturing capacities. Responsive had around 44,000 million tonnes per annum (MTPA) of PVC products capacity as at the end of FY11, which is scheduled to increase to 90,000 MTPA by the end of FY12.


Demand from railways, automobile sector to support growth in PVC flooring and PVC leather cloth 
Although, PVC leather cloth finds various end uses, it is commonly used in railways, public transport and automobiles as seat cover. PVC leather cloth is also used in three-wheelers for upholstery and canopy. Also PVC flooring is used as a floor covering in automobiles and public transports. Responsive is the preferred supplier for PVC leather cloth for Indian Railways, various State Transport Corporations and automobile and three-wheeler Original Equipment Manufacturers (OEMs). The company has around 85 per cent market share in the domestic surface transport and 95 per cent market share in the domestic three-wheeler upholstery and canopy market. The company also supplies around 98 per cent of Indian Railways' requirement for PVC flooring and artificial leather used in passenger coaches. 


We expect healthy demand for PVC products from both Indian Railways and Automobiles sector going forward. The Indian Railways is expected to add around 44,000 new coaches during FY13 – FY20 resulting in 5,500 new coaches per year as per the „Railway Vision 2020‟ report. This would result in sustained demand for the artificial leather seat covers and PVC floorings. Also, as per CARE Research automobiles sales is expected to grow at a CAGR of 9-10 per cent over the next 5 years. In addition, there is a strong demand expected from the replacement market too. Given the market leadership, we expect demand from railways and automobiles segment to fuel growth in demand for Responsive.


Shift to PVC flooring options and low penetration level of pucca flooring in domestic market to result in strong demand for PVC flooring from domestic market PVC flooring (or vinyl flooring) is more economical and relatively easy to install and maintain. Also, it offers durability and is more affordable than most other flooring options. While the international floorings market is estimated to be around USD 150 billion, the Indian flooring market is still relatively nascent. The penetration of pucca floorings in India is still low when compared to the world average. The growth in pucca floorings (marble, granite, ceramic, vitrified tiles) has been supported by the commercial, residential construction in last few years. Compared to conventional marble flooring which costs anywhere between Rs. 400-2500 per sq metres, or ceramic flooring (higher end) which cost around Rs.300-600 per sq metres, PVC flooring is a cheaper alternative costing around Rs. 200-300 per sq metres. Also, PVC flooring is more durable, provides more design options than other conventional flooring options and requires less time to fix resulting in savings in labour cost and wait-time, and is therefore emerging as a cost-effective alternative to conventional floorings both for new constructions and replacement market.


Axiom Cordages Limited (Axiom) to benefit from growth in shipping ropes demand Axiom, a subsidiary of Responsive, is a manufacturer of synthetic ropes with an annual capacity of 52,500 MTPA. The company manufactures a variety of synthetic ropes such as 3-strands, 4-strands, 8-strands and 12-strands ropes, from polymers such as polyester, nylon, and polypropylene. Exports formed around 61.1 per cent of its total revenues and 36.9 per cent of total production.


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RISH TRADER