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“The current ban covers items that have low utility and high litter potential. These are not widely used by large consumer companies and will therefore have limited impact for now.” Kotak Institutional Equities Told.
Prohibited items include plastic straws used with low value packs of juices/beverages (eg by companies
) Switching to imported paper straws may see an increase in cost from Rs 0.25-0.30 to Rs 1-1.25 per unit.
Cigarette companies, on the other hand, have already switched to bio-degradable plastic wraps and hence no incremental impact can be seen.
“We believe that the share of plastics used for these banned SUPs (single-use plastics) is not less than a large (2-3%) and our interactions with industry experts show that polystyrene (PS) will have maximum impact. The major producers of PS in India are Supreme Petrochem and LG Polymers,” Kotak analyst Sandeep Gupta said in a report.
However, if the ban is applied to single-use plastics that are used for packaging, it could affect consumer companies that manufacture biscuits, instant noodles, tea, detergent powders, shampoos, milk, edible oils sell etc.
“We note that the price point of packs (less unit packs; is mainly plastic packaging) accounts for about 30%+ (for about 50-60%) of the total volume for companies. With eco-friendly options Replacement of plastics could significantly increase the cost of packaging, especially in case of pouches; thus, any broad-based restrictions on SUP in the medium term could impact volumes as well as profitability of the sector,” Kotak said. Told.
The list of potentially single-use plastic items of low utility and high litter, banned in India since July, includes plastic cutlery items, straws, cigarette packets, sweet boxes, etc.
After the ban came into effect from Friday, major companies including Parle Agro, Dabur, Amul and Mother Dairy have replaced plastic straws with paper-based straws and other alternative sustainable solutions.
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)
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