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Hindusthan National Glass & Industries Limited

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• Incorporated in 1946, promoted by visionary entrepreneur late Shri C K Somany– Winner of International Phoenix award in 2013.

• Market leader in Container Glass Industry with over 50% market share in India.

• Caters to all end user segments- Liquor, Beer, Pharmaceuticals, Processed Foods, Cosmetics and Toiletries.

• Pan India presence with 7 container glass plants and 1 Float glass plant.

• Also had one container glass manufacturing unit in Germany. Taken over in 2011 and sold in 2016 after successful turnaround.

• State of the art manufacturing facilities with Exports to USA and Europe.

• Plant operations started with 30 TPD furnace at Rishra West Bengal in 1952. Current installed capacity ~4300 TPD.

• Acknowledged turnaround specialist in the Glass industry – Key strategy is to take over sick units and make them profitable.

• Listed company since 1995 with group turnover of more than $ 400 Million.

• ISO 9001: 2000 & FSCC 22000 certified Plant operation

HalolRishra

Rishikesh Bahadurgarh

Sinnar

Pondicherry

Neemrana

Naidupeta

HNG – Brief Introduction

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The Growth Path

Company laid the foundation stone First plant at Rishra 30 TPD

1952

Expansion of capacity to 1,100 TPD 2001

2005

Set up Float Glass plant in Halol

2007

2012-13

-Start up of 650 TPD furnace at Nashik , MH.-Start up of 650 TPD furnace at Naidupeta ,AP

Greenfield expansion

Brownfield expansion

2011

2002 Acquisition of Owens Brockway,

(US MNC) Plants in India

2005 Acquisition of L&T’s Nashik plant

2007 Acquisition of Haryana sheet

Glass Plant Neemrana ,

2004

2002

2011 Acquisition of Agenda Glass ,

AG Germany (# Sold in 16)

Late C K Somany

Sanjay SomanyChairman

Mukul SomanyVC & MD Late C K Somany – Founder & Chairman of HNGIL. Was CAPEXIL

Chairman and President of AIGMF. Awarded as “Glass person of the year 2013” by Phoenix Committee. First Indian to receive this prestigious award.

Sanjay Somany – 3 decades of experience in glass industry. Also the ex President of AIGMF .

Mukul Somany – 25 years of glass industry experience. Was Chairman of CII – Eastern region and President of AIGMF. Currently National Council member of CII.

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HNG : Growth Drivers

Think Glass,

Think HNG

End user segments expected to grow at ~10% over next 5 years

Expansion of capacity – 2 new plants in Naidupeta & Sinner• Capacity well poised to accommodate demand growth• Equally distributed capacity PAN India basis

Demonstrated track record of inorganic growth through turnaround of sick units with highly skilled manpower

1. Turnaround of Owens Brockway , Pondicherry and Rishikesh2. Successful closure of Pune unit of Owens Brockway3. Turnaround of Haryana Sheet Glass, Neemrana4. Turnaround of HNG Global GMBH , Germany

Use of best-in-class Technology with Captive Design and Manufacturing capabilities• State of the art GEIL facility – In house IS machine manufacturing• AMCL – Engineering products like Root blowers, VRPM, Tyre Press etc.

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HNG Competitive Landscape

HNG

AGI

PiramalFirozabad cluster

Canpack

• Only HNG has the Pan India presence.• Eastern India, there is no other player except HNG.• AGI - 2 plants based in Hyderabad• Piramal centered in Gujarat• Canpack in Maharashtra

Geographical spread

• Increased its capacity in Western & Southern India through brownfield & greenfield expansions to cater to high demand markets.

Scale

• HNG Serves all three colour segments. • Competitors cater to limited colour options.

Colour Spread

• Only HNG serves to all end-use segments. • AGI doesn’t make cosmetic & vials.• Piramal focuses on Pharma, C&P.

Segment Spread

1

2

3

4

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Our Strength ~State of art Manufacturing Facilities

No. of Furnace

Furnace Capacity (TPD) Colour IS/AIS

MachinesPrinting

Lines Other in house facilities

Rishikesh 2 440 Flint , Amber & Green 6 3

Bahadurgarh 3 860 Flint , Amber & Green 16 4 • 132 KV substation• Foundry & mould workshop

Neemrana 1 230 Flint , Amber & Green 3 • Maintained in good conditions so as to restart when required

Rishra 3 860 Flint , Amber & Green 14 3

Nasik 2 980 Flint , Amber & Green 10 4 • 132 KV Substation

Naidupeta 1 650 Flint 6 3 • 132 KV Substation• Sand Beneficiation & Pet coke Pulveriser

Puducherry 1 330 Flint , Amber & Green 4 • Sand Beneficiation plant• Foundry & Mould workshop

HNG 13 4350 59 17

On site printing facility at Bahadurgarh, Rishikesh, Nasik , Rishra & Naidupeta

Open Access power, Sand beneficiation & Pet coke pulverizers facilities at most of the plants.

Furnaces equipped to run all 3 types of fuel – solid (pet coke),liquid (Furnace Oil) & gaseous (LNG)

Long term Soda Ash purchase contract with Ansac & other global players.

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HNG : Technology partners

Batch house

Furnace distributors and Fore hearths

Hot end equipment

Cold end equipment

Utilities

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Batch House Forehearth & Distributors

State of art Manufacturing Facilities

Furnace

InspectionCold End Packaging

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HNG with its pan Indian presence & state of the art plants is the only company in India which can fully cater to the MNC customers

HNG supplies to all the global players in liquor, beer, food, soft drinks & pharma segments to fulfil their requirements

HNG : Equipped to supply to global customers

Homogeneous batch feed to the furnaceFlexibility in furnace firing for any colour conversion Automatic inspection machines

IS machines fully equipped with B & B, P & B and NNPB

Advanced mould manufacturing

Reliability , Repeatability and Reproducibility in making glass bottles.

NNPB & Advanced B&B process produce light weight glass bottles with increased strength.

Bottle of any size ( 3 ml - 3200 ml ) & colour can be manufactured as per customer need.

Controlled conditions with minimum manual intervention gives contamination free glass bottles.

What Technology gives

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HNG : Segment & Customers

PHARMA

BEER

LIQUOR

FOOD

SOFT DRINKS

54%

25%

9%

6%4%

2% 2% 1%Segment wise sales

Liquor Beer Food & Dairy PharmaSoft Drink Household Toiletries Vial

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Accreditations & Awards over the years

• Best Indian Company in the Glass & Ceramics category by Dun & Bradstreet in 2009 & 2010.• Business Today Ranking 227 (Out of 500 top listed corporates, in October’12).

• HNG Nasik got CII award for water & energy conservation in 2010.

• HNG Neemrana was awarded for CSR by Govt. of Rajasthan in 2012.

• HNG BGH won National Energy Conservation Award for the year 2011-12.

• CAPEXIL award for export performance in last 5 years.

• Certifications : ISO 9001:2008 and also accredited with HACCP.

• Certifications FSSC 22000.

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Safety • The company has witnessed 5 million safe

working hours without lost time accidents.

• To ensure safety , HNG ensures • Plant safety committee.• 100 % workforce to use PPEs.• Proper Lock out Tag out (LOTO) practices.• Extensive awareness of trip hazards.

• Strict Compliance to Air ,Water , Sound & Waste management systems.

• ISO 14000 & OHSAS 18001 certified plants.

Committed to Environment , Health & Safety

At 50% recycled glass in manufacturing : Removes 2.2 million MT of CO2 emissions = 400,000 cars off the road each year

Increase in cullet usage Recycling glass decreases amount of raw materials used, lessens

demand for energy, cuts CO2 emissions, extends furnace life HNG uses more than 35% cullet in its Indian plants & plans to

increase to 50% by 2016 , which will reduce carbon footprint by 22%.

HNG Germany uses close to 50% cullet & usage will go upwards in coming years.

LCA• The 1st ever LCA study on container glass in India recommends

light weighting of bottles. • Through NNPB/ABB technology , HNG has already lowered

weight of bottles by 15–20% resulting in Lower primary energy requirement , Reduction in carbon footprint & Lowering of toxicity – both for ecology & human beings.

• The study also clearly shows that Glass is by far the most eco-friendly packaging material & with 75% recyclability of glass , the toxicity potential gets further reduced by almost 40%

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HNG : Figures at a glance

EBIDTA

SALES

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY240

400

800

1200

1600

0

500

1000

1500

2000

2500

3000

3500

927 896 9331089 1169 1241 1275 1365 1388

1961 1850 18932227

24222609 2765

3046 3190

000 MT Rs Cr.

Volu

me

(‘000

MT)

Valu

e (R

s. Cr

.)

Capacity Utilization improvement going forward .

Strong push towards New market development

GST implementation will benefit Organized segment.

NSR to increase in by 6-8% in 2018.

High import price fuels domestic supply.

EBIDTA expected to improve every year.

Highlights

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY240

400

800

0%

5%

10%

15%

20%

25%

29 37 33 67 66 68 97 204 214 282 262 298

149 175 214 266 184 168

265 321 373 437 573 586

14% 15%13%

18%16% 16%

19%20%

16%

21%

17%16%

8%10% 11%

13%

10% 9%

12%13% 14%

16%

19% 19%

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Global Glass Packaging Market

The global production of glass containers in 2015 was almost 50.63 MMT and is estimated to reach 65.42 MMT by 2022,at a CAGR of 3.73%, while in terms of revenue, the market was worth $51.76 billion in 2015 and is projected to reach $70.86 billion in 2022, at a compound annual growth rate of 4.59%.

In 2016, with a market share of over 36%, EMEA (Europe, Middle East and Africa) emerged as the market leader in the global RGP market, followed by APAC (Asia Pacific) with over 34% and the Americas with close to 30%.

1. EMEA - The market is driven by the high consumption of alcoholic beverages in the region. Most European brewers are focusing on innovative glass packaging so that the product becomes more appealing to consumers. The market is expected to grow at 3.3% CAGR till 2020. ( source :ceramicindustry.com)

2. APAC - The major revenue contributors to this market are China and India. Rising disposable income, changing lifestyles, and westernization are some of the factors driving the alcoholic beverage packaging market in APAC. The increasing demand for spirits in this region is one of the major factors for the growth of the alcoholic beverage market.

3. Americas - The retail glass packaging market in the Americas will grow at a steady rate during the forecast period. One of the major reasons for the growth of the market in this region is the launch of innovative products by vendors in the market. Also, the growing number of breweries, wineries and distilleries in the Americas is driving the growth of the market. The market is expected to grow at 3% CAGR till 2020. ( source :businesswire.com)

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Indian Container Glass Industry –Demand , Supply Scenario

(source : KPMG,BDB)

FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 170

500

1000

1500

2000

2500

3000

3500

4000

0%

20%

40%

60%

80%

100%

82%88% 87% 88%

82%74% 75%

71% 69% 74%

Supply (‘000 Mt) Demand ( '000 Mt ) Demand Supply Ratio

Till FY 12, supply to demand was Matching.

Capacity addition by all key players between 2010 – 12 & sluggish demand have lead to low capacity utilization thereafter.

000

MT

per

ann

um

Surplus capacity & lower demand led to lower capacity utilisation

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Indian Container Glass Industry – Demand Scenario

FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 210

500

1000

1500

2000

2500

3000

3500

4000

Liquor Beer Beverages Food Pharma Others

1580

2240

2055

17251912

2199 2164

26002410

2260

2915

3625

000

MT

per

ann

um

3240

2205

9% CAGR 1% CAGR 10% CAGR

(source : KPMG,BDB)

Demand is again expected to rise due to steady economy & growing consumption by end users.

IndiaBrazil

TurkeyChina

USAGermany

FranceSouth Korea

1.84.85.5

927.5

50.563.9

89

Liquor;

50%

Beer;

15%

Food; 13%Pharma; 12% Others,

10%

Consumption of Container glass ( Kg/Capita )

Container Glass % Usage in End user Segment

INDIA CHINA Thailand BRAZIL RUSSIA AUSTRALIA0

20

40

60

80

100

120

4

35 40

70

95

110

Per-Capita Consumption of IMFL (Litres / per Annum / Person)

INDIA CHINA US POLAND GERMANY0

20

40

60

80

100

120

2

37

78

100110

Per-Capita Consumption of Beer (L-itres / per Annum / Person)

2005 2010 2011 20160

500

1000

1500

2000

2500

587

9231170

2120

Rising Disposable Income ( $/Capita)

Alco-Bev contributes 65% of Glass demand . Alco-Bev segment Per capita Consumption is

very low compared to other countries. Increasing urbanisation, high disposable

income and changing social ethos will boost growth opportunity end user segment.

Increased awareness of public about health & hygiene aspects-Glass-Eco-friendly.

Per capita glass consumption very low - Provide good upside potential possibility.

Reverse Migration in Pharma has began.

17Source:EIU Source:EIU

Source: BeeronomicsSource: Anand Rathi Research

India - Macro Fundamentals are Strong

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India – Alcobev market growing

(source : ET)

Problems faced

States like Bihar imposed restriction on sale of liquor. The sector has been excluded from GST, forcing companies

to continue to deal with a web of central & state agencies. Shifting regulations on sale near highways has hit the

industry hard.

Worst days behind

19 Mn new consumers enter the legal drinking age every year.

1 Billion consumers by 2027.

55 % consumption of alcohol increase between 1992 & 2012.

7.5 % CAGR growth rate for Beer market for next 5 years.

48 % of global Whiskey market in India.

From Rs. 1,47,500 Cr. in 2016, the Indian Alcohol market expected to increase to Rs. 1,75,400 Cr. by 2021

“The worst is behind us. We think this is a good time for ABD to focus on premium businesses and overseas expansion,”says ABD executive director Jeetendra Hemdev.

“To limit the negative impact of these regulations, players are looking at various strategies, including new product development, premiumisation and cost control.” Says Vignesh B, consulting analyst at Euromonitor International

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India – Glass bottle market growing

Segment 2016 – 20Expected CAGR

Positives

IMFL & CL 9% State Governments are using regulations on use of glass bottles for packing so that the revenue leakage is plugged ( like Tamil Nadu, Maharastra)

Beer 10% Beer manufacturers are using ~70% reused glass bottles

F & B 17% End users opined that glass bottles / jars provide good aesthetic looks and longer shelf life to product

Pharma 15% Government of India has proposed to ban use of Plastic and PET bottles in oral formulation

Soft drinks 2% Due to shifting to PET bottles, growth of glass bottles is declining.

Cosmetics 6% Adoption of latest trends from western culture led to creating demand for high quality and premium class products in India.

FY 2016 FY 2021

1270

1954

436

702

189

414

157

316

103

114

42

56

61

67

Market for glass bottles ( ‘000 MT)

IMFL & CL Beer F & B Pharma Soft DrinksCosmetics Others

2258

3624

10% CAGR

Other glass bottle manufacturers are also expanding

1. Haldyn – Rs.30 Cr. expansion in FY16 to increase its capacity from 320 to 390 TPD.2. Vitrum – Planning for capacity expansion in FY 17-18.3. Sunrise – Increased capacity from 220 to 360 TPD.

(source : BDB Market Research Report 2016)

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INDIA - Import – Export Data for Glass Bottles

Import1. Total import annually ~ 31,000 MT 2. Sri Lanka and China contributes to ~77 % of total imports by

weight and ~50 % of total imports by value3. ~ 98% of total imports from Sri Lanka were liquor bottles4. Glass containers having capacity of < 51 ml contributes to >

70% of total imports from China.5. High transportation time & freight cost make glass bottle

import highly unviable & uneconomic.

Export6. Total export from India ~ 2,85,000 MT7. Major exporting countries – USA & African countries.

Currently new glass bottle rate is ~ Rs. 29,000/MT in USA & Rs. 38,000/MT in Europe making import uneconomic & export lucrative for Indian glass industry.

More export will lead to increased revenue & full capacity utilisation.

(source : BDB Market Research Report 2016)

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