Transcript Hindustan National Glass & Industries Ltd

Hindusthan National Glass & Industries Ltd. (HNGIL)
CORPORATE
PRESENTATION
July, 2010
1
Disclaimer
The Corporate Presentation (the “Presentation”) is based on management estimates and is being provided to you (herein referred to as
the “Recipient”) only for information purposes. The sole purpose of this Presentation is to provide preliminary information on the
business activities of the Company, in order to assist the recipient in understanding the Company. This Presentation does not purport
to be all inclusive or necessarily include all information that a prospective investor may desire in evaluating the Company. The
Company expressly disclaims any and all liability for any errors and/or omissions, representations or warranties, expressed or implied
as contained in this document.
This Presentation contains certain forward looking statements which are based on certain assumptions of future events over which the
Company exercises no control. Hence this involves number of risks and uncertainties which could cause the actual results to differ
materially from those that may be projected or implied by these forward looking statements. Such risks and uncertainties include, but
are not limited to: our ability to manage growth, competition, attracting and retaining skilled professionals, time and cost overruns,
regulatory approvals, market risks, domestic and international economic conditions, changes in laws governing the Company including
the tax regimes and exchange control regulations.
The Company does not undertake to update any forward looking statements that may be made from time to time by or on behalf of the
Company. This Presentation may not be photocopied, reproduced or distributed to others at any time without prior consent of the
Company. Upon request, the Recipient will promptly return all material received from the Company without retaining any copies
thereof.
In furnishing this Presentation, the Company do not make any obligation to provide the Recipient with access to any additional
information on the Company or its subsidiaries. This Presentation should not be deemed an indication of the state of affairs of the
company nor shall it constitute an indication that there has been no change in the business or state of affairs of the Company since the
date of publication of this Presentation.
Any clarifications / queries as well as any future communication regarding the Company should be addressed to the Company. “This
presentation does not constitute a prospectus, offering circular or offering memorandum or an offer, invitation, or a solicitation of any
offer, to purchase or sell or subscribe, any shares of the Company and should not be considered or construed in any manner
whatsoever as a recommendation that any person should subscribe for or purchase any of the Company’s shares.”
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Presentation Outline
PRESENTATION OUTLINE
 HNGIL Background
◊
◊
◊
◊
◊
About HNGIL
Inorganic Growth, Growth story, Pan-India Presence
Board of Directors
In – house group synergies
Shareholding Pattern
 Product offerings, Industry and Customer Outlook
 Expansion plans
 Expanding EBIDTA Margins
 Financial Highlights
 Financial Projections
 HNGIL’s ratings & rankings
 HNGIL – Strategic Moves
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About HNGIL
 Deep roots in Glass Industry for over 60 years.
 Growth from a small furnace of 30 TPD in 1952 to over 2800 TPD
currently. Present capacity over one million tonnes per annum.
 Continuous up gradation of technology by re-deployment of internal
accruals ensuring continually improved quality parameters.
 Market leaders (65% appx.) in Indian Glass Container Market.
 Strong Financials.
 Backward integration by way of having 100% Subsidiary – Glass
Equipment (India) Ltd., manufacturing Glass Bottle making equipments
and spares. HNGIL also has its own foundry, Mould shop and Bottle
printing division, giving substantial cost benefits.
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About HNGIL
 Due to capital intensive nature of the industry, high entry
barriers to new entrants.
 HNGIL’s Gross Fixed Assets in excess of Rs 16 bn as at 31st
March,2010
 Consolidation through acquisitions over last 8 years has helped
improve margins.
 Strong sustained relationship with customers and suppliers.
 Operating efficiencies and Quality comparable with the world
standards.
 Vast managerial pool
 Phenomenal Growth in Revenue & Margins over the years (FY
2007 to 2010) - Sales CAGR at 25% and PAT CAGR at 280%.
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Pioneering Vision
“To create a world-class glass
manufacturing plant that pursues
Quality, Cost Reduction, and
Productivity Improvement measures
in a truly holistic manner, leading to
Customers’, Shareholders’, Employees’
and Suppliers’ Satisfaction; this
integrated effort will result in the
Company becoming an Industry
Benchmark and a role model for
systems, processes and results.”
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INORGANIC GROWTH
 During last 9 years, HNGIL has made following 3 acquisitions of loss
making or sick and closed Companies/ industrial undertakings and
successfully turned them around within a short span of time :1.
January 2002 – Acquired Owens Brockway India Ltd. - having
Plants at Puducherry and Rishikesh with a capacity of 700 TPD.
Name of the company was changed to Ace Glass Containers Ltd..
2.
October 2005 – Acquired loss making Unit of L&T Nashik, having
a capacity of 350 TPD.
3.
October 2007 – Acquired the Assets of Haryana Sheet Glass’s
Neemrana Unit, revamped the plant and started commercial
production in record time – by March 2008
The Journey continues …………., there are several exciting business
opportunities both in India and abroad as of today.
 Today, all these acquired units contribute to wealth creation for the
Company and its stakeholders
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Growth – Organic & Inorganic
Expanded
2825
Acquisition of
Assets of Neemrana
Plant – Capacity
2585 TPD
Together constituted Ace
Glass Containers
Capacity at
L&T plant
acquisition –
Capacity at
Growth
TPD
2435 TPD
2150 TPD
Capacity at
1800 TPD
Expanded
Capacity to
Installed
Capacity of
post Owens’
acquisition
1100 TPD
30 TPD
1952
2000-01
2001-02
2005-06
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2006-07
2007-08
Present
Pan – India presence
Location
Capacity (TPD)
Furnaces
Rishra
805
3
Bahadurgarh
655
3
Neemrana
180
1
Rishikesh
425
2
Nashik
390
1
Puducherry
370
1
2825
11
Delhi
Kolkata
Mumbai
Hyderabad
Total
Bengaluru
Chennai
Plant Locations
Marketing Office
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Board of Directors
Mr. Chandra Kumar Somany, Chairman
Mr. Sanjay Somany, Managing Director
Mr. Mukul Somany, Joint Managing Director
DIRECTORS
▪ Mr. Kishore Bhimani
▪ Mr. Sujit Bhattacharya
▪ Mr. Ratna Kumar Daga
▪ Mr. Dipankar Chatterji
▪ Mr. Shree Kumar Bangur
▪ Dr. Indrajit Kr. Saha
▪ Mr. Ram Raj Soni
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In-House Group Synergies
 Glass Equipment (India) Ltd.
◊ A 100% subsidiary of HNGIL located at Bahadurgarh, produces world class Equipments and Spares
for production and handling of Glass Bottles at much lower cost and meets bulk of the
requirements of HNGIL.
 HNG Float Glass Ltd.
◊ Greenfield Float Glass Plant set up at Halol, Gujarat at a cost of Rs 600 crores (Debt Rs. 350 crores
and Equity Rs. 250 crores), has commenced production in a record time of 21 months and
products manufactured by the company have been very well received in the market. Within a short
span of 3 months, the plant has achieved Global benchmarks in production efficiency.
Contemplating setting up a second Float line (1050 TPD) in the same location.
◊ Also capable of manufacturing Glass to meet the needs of Auto sector.
◊ Also Planning a wider range to meet the Market demand for value added products.
HNG FLOAT
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Shareholding Pattern
Particular
% Shareholding
(as in June, 2010)
Promoters
69.98
Public Shareholding
30.02
Insurance Companies
0.37
Bodies Corporate
3.14
FIIs
7.27
Individuals & Others*
19.24
*Includes 16.76% held as treasury shares in the Company
Note: Total shares 873.39 lacs of face value Rs. 2 each, fully paid up
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Product offerings, Industry &
Customer Outlook
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Wide variety of products
 HNGIL Produces more than 15 million bottles per day
 Ranging from 5 ml to 3200 ml
 High quality – ISO 9001/2000
 Multifarious industries:
◊ Liquor & Beer
◊ Pharmaceuticals
◊ Beverages
◊ Processed Foods
◊ Cosmetics etc.
 Our Competitors in India – Piramal Glass, Hindusthan
Sanitaryware, Vitrum Glass, Haldyn Glass
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Revenue Mix
Segment-wise
Color-wise
Amber
Flint
5%
Green
Region-wise
East
15%
North
16%
South
20%
22%
80%
15
42%
West
HNGIL – Growth Trajectory
Segment
Net Sales (Rs. in crores)
CAGR
FY07
FY08
FY09
FY10
IMFL
327
503
679
645
25%
Beer
58
117
149
188
47%
Food
89
130
189
187
28%
Soft Drinks
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39
50
104
52%
145
162
179
166
5%
52
59
68
76
13%
700
1009
1314
1367
25%
Pharmaceuticals
Others
Total
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Liquor
 Indian IMFL market is pegged at around Rs.200 bn (US $4.5 bn)
 In terms of volumes, 236 million cases
 CAGR of 15% over last 5 years, expected to grow at least at the
same rate
 Market Growth rate of 12-13% per annum
Growth Drivers of the Liquor Industry:
 Low per capita consumption: India 1.83 liters, whereas global
average is 3.1 liters
 Demographics is going to change from 48% (2001) to 54% in
2011 comprising of youth and middle aged population.
 In Indian demographics, nearly 485m people are at the drinking
age and another 100m is likely to be added over the next 5
years.
 Increasing deregulation by state governments.
 Cultural change is adding consumption.
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Considering HNGIL’s market share of 60%,
total glass market supply is pegged at 95
million cases. Thus, HNGIL has huge
potential to capture re-used bottles market
Beer
Figures in million cases
 In terms of volumes, 191 million cases or 14.9 hectoliters
HNG Supply
Industry Volumes
 Double digit growth rate of 14-15%
 CAGR over last 3 years has been around 18-20%
191
174
Growth Drivers of the Beer Industry:
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 Lowest per capita consumption: India 1.3 liters,
whereas global average is 24 liters
 India has predominantly a warm/hot climate
 The beer-drinkers in the country are much younger
than the average beer-drinkers elsewhere in the
world.
 Increasing exposure to beer and wine drinking,
mainly due to media and consumer mobility.
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20
21
2007-08
2008-09
2009-10
Considering HNGIL’s market share of 75%,
total glass market supply is pegged at
28 million cases only.
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Food
 The Indian food market is estimated to total about Rs. 8,400 bln.
according to the ‘Indian Food Report 2008’ published by Research
and Markets.
 Processed food market is pegged at Rs. 3,200 bln or US $70 billions
 Industry has grown at 13.7% in only 4 years and is expected to
grow at a rate of 10% in next 5 years
Figures in MT - HNGIL
100625
66040
Growth Drivers of the Food Industry:
 Increasing health consciousness - with a move away from
traditional unpackaged formats to packaged, branded goods
 Changes in lifestyles of urban and rural middle class
 More women are entering the workplace, leaving less time for
them to prepare traditional home-made foods
 Increased salary levels of the huge middle income group
providing higher levels of disposable income
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FY07
FY10
Soft Drinks
 The Indian soft drink market is worth about Rs. 60 bln per annum.
Figures in MT - HNGIL
 Indian soft drink market is growing @7- 8% per annum
51852
Growth Drivers of the Soft Drinks Industry:
 The per capita consumption of soft drinks:
- India’s consumption amongst the lowest in the world – 5 bottles
19731
per annum.
 Humid climate conditions
FY07
20
FY10
Pharmaceuticals
 India's pharmaceutical industry is now the third largest in the
world in terms of volume and 14th in terms of value. The Indian
pharmaceutical market is likely to touch US$ 50 billion by 2020
 Indian market now is worth around Rs. 570 bln or US $12.3 billion
 The industry is typically growing at around 1.5-1.6 times the
country's gross domestic product (GDP) growth.
 Industry is growing with CAGR of 12-15% as against a global
average of 4-7% during 2008-2013 (as per IMS)
Figures in MT - HNGIL
95009
83460
Growth Drivers of the Pharma Industry:
 The Indian middle class, with its increasing purchasing
potential, is expected to become a major buyer segment.
 Expansion of healthcare facilities in the rural and far-flung
areas has enhanced accessibility.
 Increasing penetration of customized insurance plans would
drive affordability, influencing the consumption of medical
and healthcare products.
 The rise in chronic diseases
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FY07
FY10
Glass Bottle market has experienced
a de-growth of 5% CAGR due to
penetration of PET Bottles
Global Packaging Scenario
 The consumer market dominates the global packaging industry. It accounts for an estimated
70% of sales, with industrial applications taking the remaining 30% share.
 Average annual growth rate of global packaging industry is around 3.5% and the value is
expected to reach US $ 597 billion by 2014.
 Long-term growth in global packaging can be found in emerging markets and developing
countries of Asia-pacific, Middle East, Central and Eastern Europe.
 There is a strong correlation between general economic development and packaging. General
economic growth (which typically correlates well with packaging growth) over the past 10 years
have been on average as follows -World: 3-4 %
Europe: 2-3 %
Asia: 6-7 %
The economic growth figures points at a strong packaging market in large parts of Asia.
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Indian Packaging Scenario
 The market volume of the Indian packaging industry amounts to about Rs. 77,570 crores
(US $16.7 billion) and has constantly grown by approximately 15 percent year on year.
 The pace of growth will accelerate to between 20 percent over the next five years.
 The present share of about 6-7% of Glass Packaging in the total Indian Packaging industry
offers huge opportunities on account of health, hygiene and environment
 India constitutes a mere 3% of global packaging Industry, while population constitutes 16%
of global.
 The large growing middle class, liberalization and organized retail sector are the catalysts to
growth in packaging.
 Indian companies are now placing increasing emphasis on attractive and hygienic packaging.
This promises enormous potential for Glass container Industry in the future.
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Trends in Glass Packaging Industry in India
 Industry growth rate has been around 7 to 8 % per annum
 The growth of organized retail has acted as catalyst for glass
packaging industry
 Industry has succeeded in making light weight glass bottles, glass
bottles of fancy shapes, frosted finish, etc.
 Spirits & Beer has been fastest growing segment in terms of glass
consumption
 Exports of food applications have also been a growing
segment of late, as plastic packaging is coming under
environmental related sensitivities in several advanced
market.
 Organized retail boom.
 Increase in disposable income and customer aspiration.
 Increase in middle class population.
 Increase in working women population.
 Rapid urbanization.
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Expansion plans
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Ramp-up in capacity
 HNGIL has planned a capital expenditure of Rs. 896
Crores to further increase production capacity and
rebuilds within next two years.
◊ Greenfield plant in AP : at 490 Crs. (650 TPD)
(Land has been already allotted to HNGIL , Project
commencement date expected is July’10 and targeted
project completion date is Mar’12)
◊ New Furnace in Nashik : 115 Crs. ( 100 TPD)
◊ Maintenance Capex : 300 Crs. ( 120 TPD)
 HNGIL is also looking for further acquisitions in this
space, both nationally and internationally and would
be guided by the “ value buy” proposition, as in the
past.
Note : HNGIL capacity is planned to reach 3700
TPD in next 2 years from present 2825 TPD
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Expanding EBIDTA Margins
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Key Reasons for Improving Margins
 Switchover to natural gas in manufacturing process, by replacing Furnace Oil and LPG across all 6 plants.
Bahadurgarh
Already in place
Neemrana
Expected by July,2010
Nashik
Expected by March,2011
Rishikesh, Puducherry ,
Rishra
Expected by June,2012
 World class designing and mould manufacturing facility in the Company, with own Foundry. JV formed
with OMCO, which will further improvise on this head.
 Economies of scale in procurement of Raw Materials/Consumables
 Light weighting, while producing stronger bottles – Mutual benefit to customers and HNGIL
 HNGIL introduced NNPB (Narrow neck press & blow technology) for the first time in India, HNGIL is
exploring further strengthening of this technology.
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Key Reasons for Improving Margins
 Shrink film required for packaging is manufactured by ourselves. This part is continuously increasing for
the share of captive.
 Sand Mining – Bankura, Sand benefication plant for Rishra unit, exploring opportunities for other plants
as well. Assurance of long term supplies, economy and better quality
 Further increase in our own fleet of transportation – ensuring both economy and in time delivery.
 Waste heat recovery projects already initiated.
 Further rationalization of unskilled manpower through automation.
 EBITDA margin should be in the range of 28 to 30% on above measures implementation.
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Financial Highlights
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Financial Performance – P&L
All values in Rs. million
Particulars
FY08
FY09
FY10
10213
13110
13599
EBITDA
2147
2359
3163
EBITDA Margin
21%
18%$
23%
PAT
1207
1077**
1552
PAT Margin
12%
8%
11%
18.36
12.34
17.77
Net Revenue
EPS (Rs.)
$ dip in EBIDTA margin was due to unprecedented global crude prices and whereas only a partial passing of costs to customers
was done and that too, with a time-lag.
**Reasons for dip in PAT amount was, apart from Power cost as above, Forex derivative and other translation loss, otherwise
PAT margin was 11 %. Recessionary economic conditions prevailed in FY09.
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Financial Performance – Balance Sheet
All values in Rs. million
Particulars
FY08
FY09
FY10
Net Fixed Assets
8923
9885
11437
Investments
1146
1046
1471
Net Working Capital
2935
3912
3874
13004
14843
16782
Net Worth
8636
9352
10428
Secured Loans
2874
4152
5486
Unsecured Loans
1313
921
171
181
418
697
13004
14843
16782
Met by :
Provisions
 Key Highlights
- DE Ratio is 0.54 in FY 2010
- Book Value per share FY 2010 is Rs 119
- ROCE in FY 2010 is 20.23%
- Debt/EBIDTA in FY 2010 is only 1.8 times
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Financial Projections
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Financial Projections
HNGIL
Particulars
All values in Rs. million
FY11
FY12
FY13
FY14
FY15
EBITDA
3840
4758
6486
8549
9718
EPS (Rs.)
27.24
24.36
30.68
44.58
54.05
HNGFL ( Associate Company)
Particulars
EBITDA
All values in Rs. million
FY11
FY12
832
1408
FY13
1689
FY14
1856
FY15
2012
HNGFL = HNG Float Glass Limited, where Company owns Equity Stake
DISCLAIMER :“The projections disclosed above are merely indicative in nature and are purely based on management’s beliefs, opinions and estimates
as of the date of this Presentation and no obligation is assumed to update such forward looking statements if these beliefs, opinions and estimates should
change or to reflect other future developments. These projections are based on certain assumptions of future events over which the Company exercises no
control. Hence this involves number of risks and uncertainties which could cause the actual results to differ materially from those that may be projected or
implied.”
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HNGIL’s Rating & Ranking
 CRISIL Rating ( As on May ’10)
◊ On “Fundamental” side 4/5 means “Superior Fundamentals”
◊ On “Valuation” Side 5/5 means “Strong upside”
 Business Standard Ranking ( Out of 1000 top listed corporates, as on Feb ’10)
◊ In terms of Revenue – 299th
◊ On Operating Profit Quantum – 265th
◊ On Net Profit Quantum – 253rd
 The latest long term credit rating of the Company is AA
and it is PR1(+) for short term, both from CARE.
 Certifications : ISO 9001:2000 and also accredited with
HACCP .
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“HNGIL – Strategic Moves”

Synergistic diversification by setting up of Rs.600 Crores Float glass project at Halol near
Vadodara in Gujarat

Formed a JV with Omco, Belgium for designing and manufacturing of Moulds and Moulds
accessories.

Greenfield Plant at Naidupeta, Andhra Pradesh – for manufacturing both Container glass and
Float Glass already initiated and the site is supposed to be one of the largest single location
glass manufacturing site in the World.

Technology tie-up with Global majors also in place to further boost our technological deliveries.

Aggressive growth plans through acquisitions – Both in India and Overseas.

Continued initiative on Capital cost reduction through 100 % Engineering Subsidiary - GEIL
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Hindusthan National Glass & Industries Ltd. (HNGIL)
THANK
YOU
For any queries/to obtain more info, please
write at [email protected]
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