Transcript Hindusthan National Glass & Industries Ltd. (HNG) CORPORATE PRESENTATION March, 2010 Presentation Outline PRESENTATION OUTLINE  HNG Background ◊ ◊ ◊ ◊ About HNG Turnaround specialist Board of Directors Group synergies  Product offerings 

Hindusthan National Glass & Industries Ltd. (HNG)
CORPORATE
PRESENTATION
March, 2010
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
Private & Confidential
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
Private & Confidential
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.”
Private & Confidential
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 (WDV of Fixed Asset
stands at Rs. 1105 Crores as at 31st Dec., 2009)
 Gross Revenues of Rs. 1148 Crs. in FY08, Rs. 1439 Crs. in FY09.
 Number of people working in the Company: around 7000
 Phenomenal Growth in Revenue & Margins over the years (FY
2006 to 2009) - Sales CAGR at 47% and PAT CAGR at 64%.
 FY 2009 Exports at Rs. 58 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.
Private & Confidential
“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
 Today all these units contribute to wealth creation for the
Company and its stakeholders
Private & Confidential
Growth – Organic & Inorganic
Expanded
2760
Acquisition of
Assets of Neemrana
Plant – Capacity
2540 TPD
Together constitute Ace
Glass Containers
Capacity at
Growth
L&T plant
acquisition –
Capacity at
Capacity at
TPD
2435 TPD
2150 TPD
1800 TPD
Expanded
Capacity to
Installed
Capacity of
post Owens’
acquisition
1100 TPD
30 TPD
1952
2000-01
2001-02
2004-05
2006-07
2007-08
Present
Private & Confidential
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
11
Total
Private & Confidential
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
Private & Confidential
HNG - Accreditations
Private & Confidential
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.
◊ Would cater to the Realty, Automobile and domestic household sector.
HNG FLOAT
Private & Confidential
Shareholding Pattern
Particular
% Shareholding
(as on 31st Dec, 2009)
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
Private & Confidential
Product offerings
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.
Private & Confidential
HNG’s Blue Chip Customer base
Beverages: Non- Alcoholic
and Alcoholic
Pharmaceuticals
Cosmetics & Processed food
Private & Confidential
Sector-wise supply
Private & Confidential
Expansion plans
Production Capacity
Figures in MT
Particulars
FY08
FY09
FY10E
FY11E
FY12E
Rishra
720
720
760
760
825
Bahadurgarh
690
690
690
745
745
0
180
180
180
180
Rishikesh
410
410
410
410
410
Pondicherry
360
360
360
360
360
Nashik
360
360
360
360
460
-
-
-
-
500
2540
2720
2760
2815
3480
Neemrana
New Facility
Total
Private & Confidential
Ramp-up in capacity
 HNG plans a capital expenditure of Rs. 795 Crores to
further increase production capacity and rebuilds
within next two years.
◊ Greenfield plant in AP : 310 Crs. ( 500 TPD)
◊ New Furnace in Nashik : 125 Crs. ( 100 TPD)
◊ Maintenance Capex : 360 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.
Private & Confidential
Improving efficiencies
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
08 - 09
09 - 10
Private & Confidential
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
 Neemrana & Nashik Units converting to Gas, Net saving of
Rs 20 Crs. (approx) p.a.
Private & Confidential
Industry & Peer comparison
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
Private & Confidential
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.
Private & Confidential
Glass Industry
Per Capita Consumption of Glass (kgs)
89.0
Brazil
China
Japan
Philippines
South Korea
10.6
France
10.2
27.5
USA
5.9
27.5
UK
4.8
19.5
Mexico
1.4
18.8
Argentina
1.2
India
63.9
Indonesia
100
90
80
70
60
50
40
30
20
10
0
Low Per Capita Consumption of Glass in India
- significant scope for growth
Private & Confidential
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
Private & Confidential
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
Private & Confidential
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.
Private & Confidential
Financial Highlights
Financial Performance
** Not annualised
All values in Rs. million
Particulars
FY06
FY07
FY08
FY09
Net Revenue
4134
7016
10213
13110
9818
739
1175
2147
2359
2556
18%
17%
21%
18%
26%
PAT
240
28
1603
1077
1308
PAT Margin
6%
0.40%
16%
8%
13%
4.34
.32
18.36
12.34
14.98**
EBITDA
EBITDA Margin
EPS (Rs.)
9M FY10
Private & Confidential
Financial Performance
All values in Rs. million
Particulars
Net Fixed Assets
FY06
FY07
FY08
FY09
9M FY10
3482
8342
8923
9885
11097
9
713
1146
1046
1396
1432
2341
2935
3912
4154
4923
11396
13004
14843
16647
Net Worth
2017
7149
8636
9352
10623
Secured Loans
1566
2546
2874
4152
5235
Unsecured Loans
906
1248
1313
921
371
Provisions
434
453
181
418
418
4923
11396
13004
14843
16647
Investments
Net Working Capital
Met by :
Private & Confidential
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
Private & Confidential
“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
Private & Confidential
Disclaimer
This presentation may contain certain forward looking statements regarding the business
prospects of companies in the HNG Group, which are estimates and thus subject to a
number of risks and uncertainties and therefore the actual results could materially differ
from those in the said statements. The risks and uncertainties, relating to these statements
include, but are not limited to, risks and uncertainties regarding fluctuations in earnings,
ability to manage growth, competition (domestic and overseas), economic growth in India
and the target countries for exports, ability to attract and retain highly skilled professionals,
time and cost overruns on contracts, ability to manage international operations,
government policy and actions with respect to investments, fiscal deficits, regulations etc.,
interest and other fiscal costs generally prevailing in the economy. The company does not
undertake to make any announcements in case any of these forward looking statements
become materially incorrect in future or update any forward looking statements made from
time to time by or on behalf of the Group.
Private & Confidential
Hindusthan National Glass & Industries Ltd. (HNG)
THANK
YOU