Supreme Industries

I recently watched a podcast of a senior analyst from Nuvama where she mentioned about the value chain of Pipes and fitting industries.
Insights I got:
Pipes and fittings is a bulk industry where the bigger player is getting and the smaller player is getting smaller. So the question comes in mind, why is this happening? The major raw material for pvc pipe is PVC resins and the major suppliers of resins are likes of reliance industries, Chemplast; and when big companies such as supreme or astral goes to procure resins from reliance, they have a bargaining power, incremently they can procure it at 2-3% discount. This reminds me of the moat of APL Apollo where they purchase raw material at a marginal discount rate from the Iron n Steel players. And on the other hand, small players lack this bargaining power, at first they can’t directly go to Reliance or Chemplast to procure resins, they have to procure via distributers and in this chain distributer wll have a cut of 3-4%.
Additionally being a bulk material, that needs to be transported from plants to the retailers incurs significant logistics cost. And only big player, Supreme has plants in various parts of the country, they can save on logistics supplying it to the retailers, on the other hand small players lack this scale. This reminds me of Ultratech where the company have various plants all across the country. PVC pipings industry is a commoditised economies of scale business, where the lowest cost and the most efficient manufacturer is poised to well.
Supreme and Astral are clear leaders. This industry has witnessed the significant value migration from unorganised to organised. Supreme is guiding to increase its revenue at 25% CAGR where all other players are downsizing their estimates. The next leg of growth in this sector can come from introduction of OPVC pipes as government wants to replace DI Pipes by OPVC. Additionally, in western countries usage of plastic doors and window panels are common (made up of UPVC) this segment may gather momentum. Additing to this, the pipes used in Fire control systems is also poised to do well.