Indian plastic pipe maker Astral Poly Technik Ltd. is making significant investments in new capacity, including setting up its first plant in South India, as it expects that the country's new government will dramatically speed up home building programs.
Astral said in its July 18 annual report that it opened a new PVC pipe extrusion plant in Tamil Nadu, is adding capacity at a plant in Gujarat and will focus on developing the market for pipe adhesives in a technical tie-up with U.S. additives maker IPS Corp.
It told the Bombay Stock Exchange that sales and profit after taxes for the year ending March 31 both rose just over 30 percent, with sales hitting 10.72 billion rupees ($175.8 million) and profit 772 million rupees ($12.65 million). Production in the year was 60,400 metric tons.
The Ahmedabad-based company also said it believes the election of Narendra Modi as prime minister in May 16 will be a boon to the plastic pipe sector, because the Modi administration says it wants to accelerate home building and infrastructure spending.
“[Modi's government] has already announced that they want to provide housing to each and every person in the country by 2022,” Astral said. “This clearly indicates that the next decade will have sizeable construction activity in the housing sector.”
The company told analysts in early May, before Modi's victory, that India faced a housing shortage of 22 million homes in urban areas, with the government at the time planning to add 2.2 million residences a year. It said Modi wants to create real estate investment trusts and reduce red-tape to speed up building.
“In the last 10 years infrastructure growth in the country was very poor because of log-jams in approvals of projects,” Astral said. “But now with the change of Government, top priority has been given to clearing of all such projects which will create vigorous construction activity in the country.”
Astral said India's plastic pipe industry is growing 15 percent a year, with sector GDP valued at 21,500 crore rupees ($3.52 billion).
It said its new plant in Hosur will be its fourth in India, and will boost production capacity by 20,000 metric tons to 97,000 tonnes. Astral expects to ramp up to full production there in the next 18 months.