Arun Jaitley may have delivered a dream budget for pipe makers

The union budget did not have any direct schemes for pipe industry, but several measures announced in the oil & gas, solar power, water and sanitation space are likely to drive domestic pipe demand.

Most significantly, the FM proposed to create additional 15,000 kilometre of pipelines using PPP (public-private partnership) model to complete the gas grid across the country and increase the usage of domestic as well as imported gas.

"The proposed pipeline infrastructure will lead to more demand for steel pipes in India. However, availability of gas is an important pre-requisite towards effective implementation of this proposal," Care Ratings said in a report.

Apart from this, investment linked deduction allowed to slurry pipelines for the transportation of iron ore is likely to boost investment in this sector and in turn demand for Submerged Arc Welded (SAW) pipes.

Companies like Welspun Corp, Man Industries and Jindal SAW which manufacture helical submerged arc welded (SAW) and longitudinal SAW pipes would be the key beneficiaries of these schemes.

"After so many months of a lull period, announcement of 15,000 km gas pipeline certainly brings cheers to steel pipe industry. While its positive, there is no definite timeline as these pipelines will be developed in PPP model," Akhil Jindal, director group corporate affairs, told dna.

The Care Ratings report noted that demand for SAW pipes would especially get boost following allocation of Rs 1,000 crore for irrigation via 'Pradhan Mantri Krishi Sinchayee Yojana' scheme, and also from the National Rural Drinking Water Programme, which has been allotted Rs 3,600 crore to provide safe drinking water in approximately 20,000 habitations affected with arsenic.

These schemes will also push demand for DI (ductile iron) and plastic pipes required for laying pipeline infrastructure for water supply to farms and houses, Care said.

Jain Irrigation Systems which is engaged in manufacturing of micro irrigation systems, PVC pipes, HDPE pipes and other agricultural inputs is likely to benefit from irrigation scheme.

The Indian pipe industry is one of the top manufacturing hubs globally with a presence across all categories of pipes, viz steel, cement and plastic. Also, owing to its locational advantage and quality of products, India has centered itself as a major steel pipe exporter to destinations like the US, Europe and West Asia.

The government also announced plans to cover every household with total sanitation by year 2019. As per census 2011 data, out of 25 crore households in India around 46% have sanitation facility within their premises.

Covering the remaining 54% households in the next five years will require huge pipeline infrastructure, leading to a robust demand opportunity for plastic and cement pipes in India. Indian Hume Pipe Co, which deals in cement pipes would be see surge in order for its products.

Dinesh Patidar, chairman and managing director, Shakti Pumps (I), said the pump manufacturing industry will benefit hugely from the budget proposals.

"The allocation of Rs 400 crore for funding a scheme of solar power driven pump sets for farmers is a huge positive as they will now be able to access power at lower costs. The push towards ultra mega solar power projects in Rajasthan, Gujarat and Ladakh for which an allocation of Rs 500 crore has been made is also welcome. This thrust on renewable energy has the potential to reduce enormous pressure on the grid," he said.

The allocation on irrigation and drinking water schemes of Rs 1,000 crore and Rs 3,600 crore, respectively will definitely give a fillip to the pumpset manufacturing industry. Also, the plan to install reverse osmosis systems at 10,000 railway stations announced has the potential to create demand for 20,000 reverse osmosis pumps, he said.