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In the Press

Consolidation ahead in fledgling polymer dotcoms The Financial Express 30 June 2001

Gloom may be clouding the hopes of the players in the dotcom businesses after the crash of the technology sector on the domestic and overseas bourses. However, a handful players engaged in extending online polymer business and related services still hinge their optimism on good potential during the years ahead.

Currently, there are four polymer portals in the domestic polymer industry which analysts and observers say is of around Rs. 25,000 crore. These players are: Polymerupdate.com, plastemart.com, onlyplastics.com and satyamplastics.com. Promoters of these portals claim to have total paid subscribers of over 4,000-5,000.

At least two of the four promoters claim of better days ahead, as two of the four portals are said to be on the verge of closure or may get merged with other players.

The subscription rates for each of these portals are different, and depends on the type of services the subscriber wants. The annual fees however, range between Rs 2,500 to Rs 20,000 per user.

Given the exclusivity and the niche of highly selective players, the possibility and willingness of more number of players seem brighter, say market sources. Says Polymerupdate.com, CEO, Sajjid Mitha: "We are confident that sooner than later, more and more players in the fragmented polymer industry will conduct their business online".

According to Mr. Mitha, there are around 15,000 big and small processors in India. Due to the fragmented nature of the industry the owners were not getting vital information required for their business – commodity prices, availability, imports, exports, mergers acquisition among the major overseas players, the impact, thereof, etc. With the emergence of the online platforms, larger sections of the polymer community are interacting with the fewer polymers sites and get necessary if not all the vital information about this industry. Mr. Mitha said, currently, the quantum of domestic trading may be "very marginal". But the concept of online information and trading has emerged recently and is in its nascent stage. "hence it is very difficult to predict the volume of business done thorough this mode in India, but there remains a vast potential".

However, not every one has the same optimism. Says plastemart.com general manager (business development and marketing) Kavita Shah: "The industry has reached appoint where weak players and portal owners without strong business plans and commitments are forced to shut their operations". Adds Ms Shah, the fly-by-night operators and wannabe's are dying out and this is good for the online industry. Globally, a shakeout is taking place and there is a lot of consolidation that is currently transpiring the world over. The Indian plastics processors users who were keeping away from interacting with the net are getting net-savvy and discovering the benefits offered by this medium. They have graduated from using the net as an information highway to using it as a trading platform to gain an edge over competitors". Internet facilities are currently available for those in the western region of India. Ms Kavita Shah said "Mostly the concentration for trade enquiries on the portals is definitely more in the larger cities and more in the western zone, since about 40 per cent of the Indian plastics industry is concentrated in the western zone – Gujarat and Maharashtra".

Meanwhile, an international marketing consulting company, Frost and Sullivan's market report indicates that, in terms of the ratio of the value of transactions, the figure is in the third decimal percentages. The buyers and sellers are still at the stage of testing the waters before there is whole-hearted participation. According to leading polymers producers, Vijay Merchant: "To keep level with the competition in any field one must be able to walk fast even if you are ahead. Polymerupdate.com seems to be running with innovative services which will keep viewers coming to the sites which offer better information than others. Some of them have begun offering user-friendly services like the first user advantage with dial and update services (Daud), which hopefully it will continue to offer. Little wonder thereof, the survival in an online industry is not as easy as it appeared two years ago. Funds and supplying latest information is the key to survival, while combating with the constant fears of being usurped by bigger players still loom large.

Lastly, the Frost and Sullivan study predicts three emerging scenario in the domestic online polymer market:
1) Purely e-markets will have to contend with cash burns (initial expenditure) being faster than revenue generation;
2) Mergers and acquisitions will happen which will bring complementarily while sharing a common market or product characteristics
3) Strength in the offline model will reflect in the strength of online model too, unless alliances that add significant liquidity are built.