Corporate Presentation August 2012
Hindusthan National Glass & Industries Limited
Industry Overview
Global Packaging Industry
• As per World Packaging Organization, the global packaging industry is expected to be USD 597 billion by 2014
with ten year historical growth at ~ 3.1% CAGR
• Projected to grow at ~ 3.5% CAGR in the medium term mainly driven by growth in emerging markets (Asia
Pacific region)
34%
34%
27%
5%
Geography
Europe
Asia, Oceana, Africa & ME
North America
South & Central America
52%
15%
11%
9%
13%
End-User
Liquor
Beer
Food
Pharma
Others
Source: Owens-Illinois, Inc. - Investor presentation, March 2010
3
Packaging Industry - India
• At USD14 bn, Indian packaging industry has been
growing at ~ 15% over the last few years
• Expected to accelerate further with increasing
urbanization, growing middle class and
expansion of modern retail
• Indian glass container market is estimated to be
around USD 1.1 bn and is growing at the rate of ~10%
p.a.
• Entry barriers in Indian Container Glass industry is
owing to capital intensive nature
• Top 3 players are HNG, HSIL and Piramal Glass
• Low per capita glass container consumption of
1.5 kg in India as compared to other countries
(refer chart alongside).
• Strong economic drivers for end-user segments (liquor,
beer, pharmaceuticals, food, cosmetics etc.)
89
63.9
50.3
27.5
27.5
19.5
10.2
5.9
4.8
1.5
1.2
0 50 100
South Korea
France
Spain
UK
USA
Mexico
Japan
China
Brazil
India
Indonesia
World glass container per capita consumption Market Overview
4
5
IMFL – Volume CAGR 10% Beer Packaged Food – Volume CAGR 12%*
Beer – Volume CAGR 11% Pharmaceuticals – CAGR 13%
222 250
277 303
329 354
2010 2011 2012 2013 2014 2015
Region-wise Demand (Mn Cases)
195 219
250 280
308 329
2010 2011 2012 2013 2014 2015
North 20%
East 10%
South 45%
West 25%
Region-wise Demand
North 20%
East 10%
South 50%
West 20%
13 15
18
21
25
30
2010 2011 2012 2013 2014 2015
(US$ Bn)
North 29%
East 17%
South 25%
West 29%
Region-wise Demand
24 27
31 35
39
45
2010 2011 2012 2013 2014 2015
(US$ Bn) (Mn Cases)
* Assuming value growth of 7% out of overall growth of ~19% Source: ASSOCHAM study, Capital Market Estimates
Source: AM Mindpower Solutions Source: Datamonitor, Capital Market Estimates
Source: Datamonitor, Capital Market Estimates
End user Industry Overview
Company Overview
7
Company Overview
Incorporated in 1946, promoted by the C K Somany Group
Started operations with 30 TPD furnace at Rishra in 1952
Organic & inorganic expansion from 1,100 TPD in 2001 to ~4,300 TPD in
FY13
Market leader and the only pan-India player in the container glass
industry with a ~50% market share after current addition of 1,300 TPD
Existing market share of ~53% in North and ~95% in East
1,300 TPD expansion to help consolidate position in South & West
New plants at Nashik and Naidupeta (AP) of 650 TPD each to be
commissioned in Q1 FY13 and Q2 FY13 respectively
Catering to all segments – IMFL, Beer, Pharma & Vials, Foods &
Beverages (F&B), Cosmetics
Foray into global market through acquisition of assets of Agenda Glas
AG, Germany in May 2011
HNGIL
Glass Equipment (India) Ltd
Quality Minerals Ltd
HNG Global GmbH
HNG Float Glass Ltd
100% 47.4% 100% 99.7%
Manufacturer of
Float & Processed
Glass
320 TPD glass
container facility at
Gardelegen,
Germany
Capital Goods &
Spares Supplier to
Glass Industry
Mineral Supplier to
Glass Industry
Group Structure
Listed on BSE since Mar 1995 & on NSE
since Apr 2009
60 Years’ Experience in the Glass Industry
8
Shareholding Pattern as on 15th June 2012
Shareholding
Promoters 69.98
Public Shareholding 30.02
Insurance Companies 0.12
Bodies Corporate 3.58
Financial Institutional Investors 7.27
Individuals & Others* 19.05
Total 100.00
* Includes 16.76% held as Treasury Shares in the Company
Total 87.3 million shares
Listed at: National Stock Exchange (NSE) - HINDNATGLS
Bombay Stock Exchange (BSE) - 515145
Calcutta Stock Exchange (CSE) - 10018003
HNG Board
Chandra Kumar Somany Non-Executive Chairman
Sanjay Somany VC & MD
Mukul Somany VC & MD
Organization Structure
Neemrana Plant Head– K K Sharma
Bahadurgarh Plant Plant Operations –
Raman Poddar Commercial Head - S R Bansal
Rishikesh Plant Head – V K Chitturi
Rishra Plant Head – Pankaj Srivastava
Nashik Plant Head – C S K Mehta
Pondicherry & Naidupeta Plant Head –
K S Shetty
Naidupeta Plant – S Z Thomas
International Operations –
J P Kasera
North India Plant
Operations – R L Khandelia
Rest of India Plant
Operations – Animesh Banerjee
Domestic Marketing – Vinay Saran
CFO – L N Mandhana
Purchase – B K Kedia
Tech Centre – Pawan
Bhardwaj
Strategy & Management
Cell – Ajay Kr. Rai
Management Audit & SAP –
Somnath Sengupta
Human Resource – R L Kapur
Exports – Devdutta
Hoare
Finance & Accounts – B K Garodia
Pharma & Cosmetics – Sanjay Jain
9
10
Mr. C K Somany, 79, Non-Executive Chairman
Mr. C K Somany is an expert in glass technology, he provides policy guidelines for the management and administration
He holds an F.B.I.M (London) degree and a degree in Glass Plant Instrumentation from Honeywell Brown, Minneapolis, USA
Served as the President of the All India Glass Manufacturers' Association and is associated with various charitable and philanthropic organisations
Currently the Chairman of CAPEXIL, sponsored by Ministry of Commerce & Industry, GoI
Mr. Sanjay Somany, 54, Vice-Chairman & Managing Director
Has over 30 years experience in the glass industry and is closely involved in the technical and engineering aspects of the business
He is a commerce graduate and holds a diploma in diesel engineering
Served as the President of All India Glass Manufacturers' Federation (AIGMF)
Mr. Mukul Somany, 47, Vice-Chairman & Managing Director
Over 26 years experience in the glass industry
Led the acquisition, turnaround and integration of India business of Owens Brockway and glass business of L&T Ltd, re-engineered business processes across six units
Currently the President of AIGMF, Executive Committee Member of CII (Eastern Region) & Member of CII National Council
Mr. Dipankar Chatterjee, 64, Independent Director
Chartered accountant and senior partner of LB Jha & Co., Chartered Accountants and is a member of National Council of CII
Former Chairman of CII-Eastern Region, member of the Central Council of ICAI, Chairman of the audit practices committee of ICAI
Appointed member of the Padmanabhan Committee (set up to review RBI’s supervision over banks)
Mr. Kishore Bhimani, 73, Independent Director
Noted journalist, was the Senior Assistant Editor at The Statesman and wrote columns on sports, finance and the stock market
Associated with various environmental & social NGOs and authored several books
Graduated from St Xavier’s College, Kolkata and holds a BSc (Economics) from LSE
Board of Directors
11
Mr. Rakesh Kumar Sharma, 59, Executive Director
Over 36 years experience in general management, EPC contracts and business development across Indian corporate sector
Holds a graduate degree in Mechanical Engineering and masters in Marketing management
Prior to joining HNG, he held a senior position at L&T
Mr. Ratna Kumar Daga, 72, Independent Director
Vast experience in the fields of engineering and finance
Former Chairman of Indian Institute of Materials Management, Kolkata, President of Calcutta Junior Chamber, President of Federation of Small & Medium Industries
Holds PG degree in Business Management from the UK
Mr. Sujit Bhattacharya, 69, Independent Director
Former senior partner of Lovelock & Lewes, Chartered Accountants, advisory experience in accounting, audit standards, corporate governance, business valuation &
taxation
Fellow member of the Institute of Chartered Accountants in England & Wales, ICAI
Was nominated as the Special Director by the BIFR, Govt of India
Dr. Venkatesan Sridhar, 65, Independent Director
Chartered accountant with over 36 years experience in banking and finance
Ex-Chairman & MD of UCO Bank and National Housing Bank
Member of Chalapathi Rao committee and Muniappan committee appointed by RBI for recommendations on working of RRBs/NBFCs/FIs
Board of Directors
12
Over 5,000 TPD by 2015
30 1,100
2,935
5,015
30
105
150 350
650
650
780
700
320
180
1952 2001 2002 2005 2007 2008 2010 2012 Jun-12 Sep-12 2013-15 2015
Total Cap (TPD) Expansion (TPD) Acquisition (TPD)
Acquired Pondicherry & Rishikesh plants of Owens
Brockway
Acquired L&T’s Nashik Plant
Acquired Neemrana plant of Haryana Sheet Glass
Brownfield expansion at Nashik
Greenfield plant & Naidupeta, AP
Re-build of existing furnaces
Capacity Build-Up Through Organic & Inorganic Route
13
Technological Strengths Leading to Smoother & More Efficient Operations
SAP Implementation for Better Integration & Standardization of Business Processes
Accurate real-time information with enhanced visibility and operational controls
Automation of report generation & month-end reconciliation
Alignment of functional objectives with corporate business plan leading to better coordination across functions, manufacturing units & marketing offices
Higher productivity through automation
Improved customer service
Lower inventory levels, cost control and uniform material code data across locations
Online tracking of production and sales-related performance data
Diversified vendor base for raw material procurement
Captive sand beneficiation facilities
In-house furnace maintenance & refurbishment capabilities
Proven ability to run plants at high capacity utilization
Draw and pack ratios consistently among the best in the
industry
Processes for Maximizing Capacity Utilization & Sales
Market Leader in Container Glass
15
Think Glass,
Think HNG
Market leader in container glass with pan-India presence, ~50% market share (including new plants in FY13)
End user segments growing at ~12% over next 3 years
Newly commissioned plants to improve market share in underserved markets
Demonstrated track record of inorganic growth through turnaround of sick units with highly skilled manpower
Use of best-in-class technology with captive developmental capabilities
Margin expansion due to higher scale & efficiency
Robust financials, balance sheet strength
Growth Drivers
16
Largest Container Glass Player in ~8,600 TPD Indian Market
Presence Across Segments – Play on Indian Consumption Story High Entry Barriers due to Capital Intensity
4,235
1,550
860
320 240 220 220 220 130
605
HNG HSIL Piramal Haldyn MBDL Universal Excel Janta Vitrum Others
(TP
D)
Pan-India AP Gujarat Gujarat Gujarat MH UP & Guj Pondi. UP Kerala Presence
Mkt. Share
50% 18% 10% 4% 3% 2% 7% 3% 3% 3%
HN
G
HSI
L
Pir
amal
Hal
dyn
Jan
ta
Vit
rum
Exce
l
Un
ive
rsal
MB
DL
Liquor
Beer
Pharma
F&B
Cosmetics
Capital intensive business with recurring maintenance capex
High customer stickiness
Interdependence of output scale & timing
Customization / bottle printing as per specs
Significant economies of scale
Integrated value chain from raw material mining, glass equipment &
moulds to printing
Source: Company estimates
Source: HNGIL
Dominant Share of Container Glass Market with Presence in All Segments
17
Catering to Significant Share of Customer Requirements Pan-India Player; Competitors Mainly Regional Players
95%
70%
65%
60%
60%
55%
50%
40%
25%
Bajaj Corp
PepsiCo
United Breweries
ABD Distillers
SAB Miller
Pernod Ricard
United Spirits
Coca Cola
John Distilleries
HNG's Share in the Total Requirement of Each Customer in FY12(%)
Mumbai Hyderabad
HNG
Naidupeta
Kosamba
Jambusar
Piramal
Padra
Haldyn
HSIL
Bhongir
Vitrum
Janta
Vadodara
Universal
Excel
MBDL
Source: HNGIL Source: HNGIL
Ghaziabad
Alleppey
Pan-India Presence Enabling Superior Customer Service
18
Sales Volume Mix
52.1% 53.9% 50.0% 52.3%
47.0%
13.2% 12.6% 15.1%
14.9% 22.9%
16.2% 17.4% 19.6% 18.2%
16.3%
15.0% 12.5% 11.4% 10.3% 9.5%
3.5% 3.6% 3.9% 4.3% 4.3%
FY08 FY09 FY10 FY11 FY12
Liquor Beer F&B Pharma C&P
Volume (MMT)
0.70 0.77 0.78 0.84 0.91
Focus on High Volume Segments – IMFL & Beer Comprise of ~70% of Volumes
19
Overview of HNG’s planned expansion capacity
Location FY12 Operated Capacity (TPD)
FY15 Operated Capacity (TPD)
Expected COD
New furnace (N) / Rebuild (R)
Facility highlights
Sou
th Puducherry 360 550 FY15 R On-site printing facility with three decoration lines
Sand beneficiation plant, foundry & mould workshop
Naidupeta - 650 Q2FY13 N Power available at concessional rates under state incentive plan
We
st
Nashik 1 364 495 FY14 R Plant running on LNG
Nashik 2 - 650 Q1FY13 N
No
rth
Bahadurgarh 3 337 340 N.A - Plant running on RLNG
On-site bottle printing facility with four decorating lines
Produces amber and flint glass
Has foundry and mould workshop
Has captive multi-fuel power generating facilities
All furnaces have multi-fuel combustion system (FO/Gas/HSD)
Bahadurgarh 4 294 315 N.A -
Bahadurgarh 5 185 195 N.A -
Neemrana 195 300 FY13 R Plant running on RLNG
Dedicated power supply from 220KV S/S
Produces flint, amber and green glass
Rishikesh 1 290 325 N.A - On-site printing facility with three decorating lines
Green, flint and Georgia green glass
Excise exemption and tax holidays Rishikesh 2 140 170 N.A -
East
Rishra 1 200 280 N.A - On-site bottle printing facility
Produces amber and flint glass
Mould workshop facility at plant
Rishra 2 243 270 N.A -
Rishra 6 327 475 FY14 R
TOTAL 2,935 5,015
HNG’s expansion plan will improve market share and drive efficiencies in production
20
Acquisition of 320 TPD Plant at Gardelegen, Germany
Location Map
Germany is the largest market in EU with ~20% share
Annual demand in Germany of 3.8 million MT/year
Acquired assets of Agenda Glas AG, one of the most modern production facilities in Europe, in May 2011.
Agenda Glas had commenced production in Feb 2010
Production capacity of 120,000 MT per year
Currently produces flint glass of various SKUs
HNG Global GmbH, is located closed to the regional raw material suppliers with easy and economic access to
all key raw materials.
The Plant is ideally located for deliveries throughout Germany and to adjacent European Countries.
Company’s technological edge is planned to be back pedaled in HNG’s Indian operations, as Germany is always
considered ahead in terms of technology.
The Finished-ware quality in Germany is of superior standards than in India and it will help us embark the
upward quality journey in India.
International Operation - HNG Global Gmbh
Key Financials
22
Balance Sheet
Balance Sheet FY09 FY10 FY11 FY12
Shareholders Fund 935 1,043 1,166 1,158
Debt 507 566 640 2,058
Deferred Tax 42 70 71 95
Total Liabilities 1,484 1,678 1,877 3,312
Net Block 906 1,116 1,157 1,393
CWIP 82 27 228 1,157
Investment 105 147 178 181
Net Current Assets 391 387 315 581
Total Assets 1,484 1,678 1,877 3,312
All figures are in Rs. Crore and for HNGIL standalone
23
Profit and Loss Snapshot
Profit and Loss FY09 FY10 FY11 FY12
Net Sales 1,313 1,357 1,544 1,878
EBITDA 229 306 267 298
Margins 17% 23% 17% 16%
Other Income 9 14 6 8
Depreciation 77 89 103 119
Interest 43 47 51 92
PBT 118 183 120 95
Margins 9% 13% 8% 5%
Tax 10 28 33 4
PAT 108 155 86 91
Margins 8% 11% 6% 5%
All figures are in Rs. Crore and for HNGIL standalone
24
Financial Performance
1,313 1,357
1,544
1,878
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
FY09 FY10 FY11 FY12
229
306
267
298
0
50
100
150
200
250
300
350
FY09 FY10 FY11 FY12
108
155
86 91
0
20
40
60
80
100
120
140
160
180
FY09 FY10 FY11 FY12
12.3
17.8
9.9 10.5
-
2
4
6
8
10
12
14
16
18
20
FY09 FY10 FY11 FY12
PAT
Revenue EBITDA
EPS
All figures are in Rs. Crore and for HNGIL standalone
Thank You
For further information please log on to www.hngil.com or contact:
Laxmi Narayan Mandhana (CFO) / Bikash Kumar Sipani HNG Tel: 033-2254-3100 Email: [email protected]
Anoop Poojari/Dipti Yadava Citi gate Dewe Rogerson Tel: 022 6645 1211/1218 Email: [email protected]/[email protected]
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