Transcript Hindustan National Glass & Industries Ltd

Hindusthan National Glass & Industries Ltd. (HNG)
CORPORATE
PRESENTATION
May, 2010
1
Presentation Outline
PRESENTATION OUTLINE
 HNG Background
◊
◊
◊
◊
About HNG
Turnaround specialist
Board of Directors
Group synergies
 Product offerings
 Expansion plans
 Improving efficiencies
 Industry & Peer comparison
 Financial Highlights
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About
 The tradition of manufacturing quality glass
 Constantly improving quality
 Using best in class technology
 Strong financials
 Fullest strategic support from promoters
 Accumulated business knowledge of last 60 years
 Commitment to 360° quality
 Vast managerial pool
 Widening global footprint
 Industry leadership
 Long profitable relationship with customers and suppliers
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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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HNG – A “Glass” Apart
 Largest Player (about 65% market share) in the Indian Glass
Container Market
 Manufactures Glass bottles for multiple segments and in multiple
sizes
 Installed Capacity of about 10 Lac MT/annum
 Has consistently invested in Technology (Gross Fixed Asset
stands at Rs. 1661 Crores as at 31st Mar, 2010)
 Gross Sales Revenues of Rs.1439 Crs. in FY09, Rs 1449 in FY10
 Number of people working in the Company: around 7000
 Phenomenal Growth in Revenue & Margins over the years (FY
2007 to 2010) - Sales CAGR at 25% and PAT CAGR at 280%.
 FY 2010 Exports at Rs. 77 Crores, with higher continued
exploration
 The latest long term credit rating of the Company is AA and it is
PR1(+) for short term, both from CARE.
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“Turnaround” Specialist
 HNG has successfully turned the albatross around the necks of
the old managements, into cash cows with its management
expertise
◊ Ace Glass Containers was acquired in the year 2002 from
Owens Brockway, in order to own Pondicherry and Rishikesh
Plants, which were sick units. The acquired Pune Plant,
unviable, was closed with fullest assets-recovery.
◊ Subsequently, the L&T plant in Nashik, another loss making
unit, was acquired in the year 2005
◊ Acquired the Assets of Haryana Sheet Glass’s Neemrana Unit
in Oct. 2007, revamped and attained Commercial Production
in a record short time – by March 2008
◊ After proving its metal on Indian soil, HNG is exploring similar
opportunities to be repeated on foreign soil, through its core
competencies, either through acquisition or greenfield (under
studies).
 Today all these acquired units contribute to wealth creation for
the Company and its stakeholders
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Growth – Organic & Inorganic
Expanded
2760
Acquisition of
Assets of Neemrana
Plant – Capacity
2540 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
2004-05
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2006-07
2007-08
Present
Pan – India presence
Location
Capacity (TPD)
Furnaces
Rishra
760
3
Bahadurgarh
690
3
Neemrana
180
1
Rishikesh
410
2
Nashik
360
1
Pondicherry
360
1
2760
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Total
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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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HNG - Accreditations
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In-House Group Synergies
(existing)
 Glass Equipments (India) Ltd.
◊ Glass Plant Machinery and spares manufacturer. Produces Global standards of technology at
much lower costs.
 HNG Float Glass Ltd.
◊ Greenfield Float Glass plant set up at Halol, Gujarat at a cost of Rs. 600 Crores (Debt Rs. 350
Crores : Equity Rs. 250 Crores), having achieved the commercial production and products
launched in the market. Also contemplating for second float line (800 tpd) in the same location.
HNGIL is considering to make HNG Float as its subsidiary.
◊ Would cater to the Realty, Automobile and domestic household sector.
HNG FLOAT
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Shareholding Pattern
Particular
% Shareholding
(as on 31st Mar, 2010)
Promoters
74.2
Public Shareholding
25.8
Insurance Companies
1.2
Bodies Corporate
2.8
Individuals
21.8*
*Includes 20.1% 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
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Wide variety of products
 Produces more than 15 mln. 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.
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HNG’s Blue Chip Customer base
Beverages: Non- Alcoholic
and Alcoholic
Pharmaceuticals
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Cosmetics & Processed food
Sector-wise supply
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Expansion plans
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Production Capacity
Figures in MT
Particulars
FY08
FY09
FY10E
FY11E
FY12E
FY13E
FY14E
FY15E
Rishra
720
720
760
760
825
825
825
825
Bahadurgarh
690
690
690
745
745
745
745
745
0
180
180
180
180
180
180
200
Rishikesh
410
410
410
410
410
410
430
430
Pondicherry
360
360
360
360
360
360
800
800
Nashik
360
360
360
360
460
460
460
460
-
-
-
-
-
650
650
650
2540
2720
2760
2815
2980
3630
4090
4110
Neemrana
New Facility
(AP)
Total
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Ramp-up in capacity
 HNG plans a capital expenditure of Rs. 905 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 HNG in-
principle,
Project commencement date expected is June’10 and
targetted project completion date is Mar’12)
◊ New Furnace in Nashik : 115 Crs. ( 100 TPD)
◊ Maintenance Capex : 300 Crs. ( 120 TPD)
 Margins expected to grow significantly with increase
in capacity, better operating efficiencies and
economies of scale and sharing of fruits of light
weighting and NNPB initiatives. Large savings also to
come from Plants switching to Gas – Neemrana
w.e.f. April, 2010 and Nashik w.e.f. April, 2011.
Company is seriously exploring earliest gas
connectivity in other 3 Plants. Company is also
examining ramping up its captive power generation
facility (present about 15MW in Bahadurgarh)
through use of Natural gas in other plants.
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Improving efficiencies
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Key to improved results
 High improvement in ‘Draw and Pack’ efficiencies – from ~75% in FY03 to 87-89% in FY09 has
resulted in higher margins
Going forward, constant R&D expected to help increase efficiencies further.
94
Effeciency % (Pack to Melt)

Rishra
B'Garh
92
Neemrana
90
Rishikesh
Pondi
88
Nashik
86
84
82
80
05 - 06
06 - 07
07 - 08
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08 - 09
09 - 10
Key Reasons for Improving Margins
 Installation of natural gas operated power generators and in
manufacturing process, as well as the well planned capital
expenditure
 World class designing and mould manufacturing facility in the
Company, with own Foundry
 Economies of scale in procurement of Raw
Materials/Consumables
 Light weighting, while producing stronger bottles – Mutual
benefit to customers and HNG
 HNG introduced NNPB (Narrow neck press & blow technology)
for the first time in India, HNG is exploring for transfer of
technology for NNPB with a foreign major.
 Neemrana & Nashik Units converting to Gas, Net saving of Rs
20 Crs. (approx) p.a. Other plants are also exploring arranging
gas connectivity to switch FO and LPG.
 Sand Mining – Bankura, Sand benefication plant for Rishra unit,
exploring opportunities for other plants as well.
 Entered into JV with OMCO of Belgium for Moulds – Technology
and manufacture
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Industry & Peer comparison
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Packaging Industry

US $ 15 bln. market size in India – expected to grow at
14% in the medium term

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.

Growth in allied industries: Food Processing, Retail, FMCG,
Alcohol and Beverages, Perfumes & Cosmetics,
Pharmaceuticals; is a major growth driver for glass bottles
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Down Stream Drivers
 Liquor - Indians consume 200 mln cases of IMFL and 220 mln cases of country liquor. Increasing
trend of social drinking, driving the sector growth at almost 13%.
 Beer - Shipments in 2009- 174 mln cases against 137 mln cases in 2007. Consumption has been
increasing by 15 to 20%.
 Food Processing - USD 70 billion industry has grown at 13.7% in only 4 years and is expected
to grow at a rate of 10% in next 5 years
 Pharmaceuticals - India is the fastest growing market, where average spending has doubled
over past decade. Increased consciousness for wellness leads to demand. Indian Pharmaceutical
market is expected to see a CAGR of 12-15% over the next 3 years (as per IMS research).
 Carbonated drinks - INR 6000 Cr. industry is expected to grow at 6-8% p.a.
 Cosmetics - Domestic cosmetics and toiletries segment is growing at 15- 20% and current
industry size is USD 950 million, which is expected to become USD 1.4 billion in 3 years time.
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Glass Industry
Per Capita Consumption of Glass (kgs)
89.0
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Japan
South Korea
China
Low Per Capita Consumption of Glass in India
- significant scope for growth
France
Brazil
10.6
27.5
USA
10.2
27.5
UK
5.9
19.5
Mexico
4.8
18.8
Argentina
1.4
Philippines
1.2
India
63.9
Indonesia
100
90
80
70
60
50
40
30
20
10
0
Growth through downstream Industries
 Per capita consumption of Glass in India is ~1.4 kgs, as against 27.5kgs in US and UK and 5.9 kgs
in China
 The low per capita consumption of beer in India (0.8 ltrs. v/s 22 ltrs. in China) leaves substantial
scope for increase in demand
 Indian Pharmaceutical Industry is valued at Rs. 250 bln, growing at 10% annually.
 Adoption of stricter government norms and rising industry standards in quality would further boost
glass packaging in the pharmaceutical industry
 Only 6% of all processed food in the country is packed in glass, which offers huge scope
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Glass – a preferred packaging medium

Environment friendly

Full recyclability

Lowest pollution (life cycle)

Totally inert to contents, heat and UV rays – Thus does not react with packed contents

Visibility of contents

Versatility of design
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Peer Set
 HNG’s peer group comprises of:
◊ Piramal Glass Ltd.
◊ HSIL Ltd
◊ Haldyn Glass Gujarat Ltd.
◊ Excel Glass
◊ Universal
 Though we are into business of container
glass, we consider following float glass players
as part of our extended peer group :
◊ Asahi India Glass Ltd.
◊ Gujarat Borosil Ltd.
◊ Gujarat Guardian Ltd.
◊ Saint Gobain India Ltd.
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Financial Highlights
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Financial Performance
All values in Rs. million
Particulars
FY07
FY08
FY09
FY10
Net Revenue
7016
10213
13110
13599
EBITDA
1175
2147
2359
3163
EBITDA Margin
17%
21%
18%
23%
28
1603
1077
1552
0.40%
16%
8%
11%
1.59
18.36
12.34
17.77
PAT
PAT Margin
EPS (Rs.)
31
Financial Performance
All values in Rs. million
Particulars
Net Fixed Assets
FY07
FY08
FY09
FY10
8342
8923
9885
11437
713
1146
1046
1471
2341
2935
3912
3874
11396
13004
14843
16782
Net Worth
7149
8636
9352
10428
Secured Loans
2546
2874
4152
5486
Unsecured Loans
1248
1313
921
171
453
181
418
697
11396
13004
14843
16782
Investments
Net Working Capital
Met by :
Provisions
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Financial Projections
HNGIL
Particulars
All values in Rs. million
FY11
FY12
FY13
FY14
FY15
EBITDA
4388
5315
8456
10851
12627
EPS (Rs.)
22.21
28.47
45.96
62.55
76.71
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 Feb ’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)
◊ Ranking in terms of Revenue - 299
◊ On Operating Profit Quantum – 265
◊ On Net Profit Quantum – 253
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“HNG – A Conglomerate”

Largest Player, about 65%, in the Indian Glass Container Market through organic and inorganic
growth measures in the last 8 years, more than doubling the capacity in this small period

Entered the Engineering business by acquiring AMCL Unit in Nagpur

Synergistic diversification by setting up of Rs.600 Crores Float glass project in the Gujarat at
Halol near Baroda
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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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Hindusthan National Glass & Industries Ltd. (HNG)
THANK
YOU
For any queries/to obtain more info, please
write at [email protected]
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