Harder than rock: Russian composites on their way to India

One of the first projects where Composite HC products can be used is much awaited fifth-generation T-50 PAK FA jet fighter the export version of which is jointly developed by Russia and India. Source: Sukhoi.org

One of the first projects where Composite HC products can be used is much awaited fifth-generation T-50 PAK FA jet fighter the export version of which is jointly developed by Russia and India. Source: Sukhoi.org

Russian Composite Holding Company is focusing on the Indian market for carbon fibre composites, super-strong and light material used in various industries from aerospace to construction and automobile.

Cooperation between Russia and India in strategic sectors opens up new markets for niche products. Having discovered the potential of Indian market for carbon fibre composites Russian Composite Holding Company (Composite HC) is taking its first steps to establish its presence in this niche market.

Composite materials are emerging as an innovative alternative for steel and aluminium. Composites are extremely light and strong , making them the perfect solution for industries where strength-to-weight ratio is vital - from aviation, wind energy, ship-building, automotive and construction industries to manufacturing of baseball bats and golf clubs.

Among various composites, carbon fibre is the most technically sophisticated material and thus most expensive in terms of price and production cost. It has been largely used in defence and aerospace industries by US, Western Europe and USSR since 1950s. Later most of the countries shifted towards the usage of carbon fibre in civilian industries while Russia still continues manufacturing composites solely for the defence industry. Left without investment in R&D and modernisation after the collapse of Soviet Union, today the Russian composites industry needs a giant stride to make up for lost time.

United efforts

Formed in 2009, Composite HC, a privately owned holding, incorporated both private and public sector companies, including the subsidiaries of Russia’s State Atomic Energy Corporation Rosatom. Vertical integration helps the company control the complete production cycle from the raw material PAN-precursor till production of prepregs (pre-impregnated fibre reinforcements) that are used to manufacture composites.

“We also have our own designing, engineering and R&D centres within the holding. That is very important as our product is not easy to sell like, for example, steel which everyone knows how to work with,” Sergey Pavlov, Marketing director, Composite HC says.

Pavlov estimates carbon fibre consumption in Russia stood at 250-300 tonnes in 2012 while global consumption accounts for about 40,000-45,000 tonnes per year and the market grows 10-12 per cent. According to Pavlov, only 30 percent of carbon fibre is consumed by the defence and space sectors globally while in Russia it is still more than 50 percent.

Among civilian industries that Composite HC eyes in Russia are bridge construction, building fortification and oil and gas infrastructure. “We will be able to grow in the Russian market from 300 tonnes to 1500-2000 tonnes within 5 years. This is a realistic scenario,” Pavlov says.

While the Russian market is still gaining momentum, Composites HC is eyeing European and Asian markets where composites are practically used in many civilian sectors. The holding is about to launch a new carbon fibre plant of 1500 tonnes per annum capacity in Elabuga SEZ, Tatarstan. The facility will serve both domestic and export markets. 

“From the beginning of 2012 we started developing exports as our current capacity is more than enough to cover both domestic demand and export up to 50 percent of the output. We can offer European quality carbon fiver priced lower than European or American equivalent,” says Pavlov. “Russia still won’t be able to beat the price of Chinese composites in term of pricing but the quality of Russian and Chinese products cannot be compared,” he adds.

The global carbon fibre market is estimated to grow annually at 17 percent over the next five years to around 118,600 tonnes and a market value of about $7.3 billion by 2017, according to Smithers  Apex research firm. The Asia-Pacific region accounts for about 24 percent of global consumption of various composite materials. Carbon fibre, however, has very a small share when compared to glass fibre and other composites.

Discovering India

After looking at its Indian operations, Evgeny Minaev, adviser to CEO, Composite HC says “India and Russia are quite similar in terms of composites market development and consumption patterns. India’s market has huge potential considering the cooperation between our countries in many areas.” More than 60 percent of carbon fibre in India is consumed by the defence industry, he adds.

According to Hyderabad-based research company Composite Insights, the Indian carbon fibre composites market is poised for dramatic growth and is expected to reach $53 million by 2018. Experts assume that glass fibre accounts for about 96 percent of the whole composites market while carbon fibre accounts for not more than 1 percent market share. Lucintel experts believe that the market will grow 12-15 percent in the next five years with increasing demand from automotive and wind energy markets apart from the current demand from aerospace and defence industries.

Russia is a late comer to India as all the global leaders have been present in its market for decades. US companies Zoltek, Hexcel and Cytec with offices in Pune, Bangalore and Mumbai respectively are very active in the Indian composites market. Japanese Toray Group established its subsidiary in India in 2011. Another Japanese company Toho Tenax Co. Ltd., the core company of the Teijin Group’s carbon fibres and composites business, established a subsidiary in Singapore in July 2013 aiming to strengthen group’s business in India and the ASEAN region.

It’s quite difficult to estimate both market value and the strength of market players as composite materials in India, similar to Russia, are used mostly in defence industry, so open data is not available. Lucintel analyst says Indian carbon fibre is mainly import driven, with major suppliers being Hexcel and Cytec .

Kemrock Industries and Exports Ltd. is the only Indian carbon fibre manufacturer which recently entered the market. Kemrock, India’s largest domestic full-cycle manufacturer of composites commissioned its first carbon fibre manufacturing facility of 400 tonnes per annum worth more than $32 million in Vadodara, Gujarat in May 2010.

Since 2011 Russian Composite HC have been actively participating in industry exhibitions in India and signed non disclosure agreements with leading composites consumers including HAL, Larsen & Toubro, Mahindra & Mahindra.  Evgeny Minaev explains that such an agreement will allow the Russian company to share its products and technologies specification and to get otherwise classified information on where and how carbon fibre is used by Indian counterparts.

“Indian market is quite established with all top players represented though JV or directly. It won’t be wise for us to enter the market directly. Moreover Russia is not yet well-known for its composites products, and our products being of very high quality are not very competitive in terms of pricing too,” Minaev notes. In his view Indian customers traditionally buy the lowest quality and thus cheapest composites, thus to offer Russian composites to Indian customers the company will have to create a market demand for better quality products.

Composites HC strategic plan is to establish cooperation with Indian companies first in R&D sphere and later shift to product supplies. Finally, after five years, Composites is planning to create a JV for production of ready-made composite components in India and initially eyeing the defence sector.

One of the first projects where Composite HC products can be used is much awaited fifth-generation T-50 PAK FA jet fighter the export version of which is jointly developed by Russia and India. Up to 70 percent in the body skin of the fighter and 40 percent of the entire structure are made of composites. It allows the T-50 to not only carry more weapons but be virtually invisible to radars. The export version of the T-50 fighter for which New Delhi has allocated almost $25 billion is expected to be ready in five years, the same period which Russia’s Composites HC is taking to secure its presence in the Indian market. 

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