hindusthan national glass & industries ltd. (hng) corporate presentation march, 2010
TRANSCRIPT
Hindusthan National Glass & Industries Ltd. (HNG)
CORPORATEPRESENTATION
March, 2010
Private & Confidential
HNG Background◊ About HNG◊ Turnaround specialist◊ Board of Directors◊ Group synergies
Product offerings
Expansion plans
Improving efficiencies
Industry & Peer comparison
Financial Highlights
PRESENTATION OUTLINEPresentation Outline
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.”
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
HNG – A “Glass” Apart
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
“Turnaround” Specialist
Private & Confidential
Growth – Organic & Inorganic
1952 2000-01 2001-02 2004-05 2006-07
Present
Gro
wth
InstalledCapacity of
30 TPD
ExpandedCapacity to
1100 TPD
Acquisition of Assets of Neemrana
Plant – Capacity
2540 TPD
Capacity at
1800 TPD post Owens’acquisition
L&T plantacquisition –Capacity at
2150 TPD
Capacity at
2435 TPD
Together constitute Ace Glass Containers
2007-08
Expanded
2760 TPD
Private & Confidential
Pan – India presence
LocationCapacity
(TPD)Furnaces
Rishra 760 3
Bahadurgarh
690 3
Neemrana 180 1
Rishikesh 410 2
Nashik 360 1
Pondicherry
360 1
Total 2760 11
Mr. Chandra Kumar Somany, Chairman
Mr. Sanjay Somany, Managing Director Mr. Mukul Somany, Joint Managing Director
Private & Confidential
Board of 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
DIRECTORS
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
*Includes 20.1% held as treasury shares in the CompanyNote: Total shares 873.39 lacs of face value Rs. 2 each, fully paid up
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*
Product offerings
Private & Confidential
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
Expansion plans
Figures in MT
Private & Confidential
Production Capacity
Particulars FY08 FY09 FY10E FY11E FY12E
Rishra 720 720 760 760 825
Bahadurgarh 690 690 690 745 745
Neemrana 0 180 180 180 180
Rishikesh 410 410 410 410 410
Pondicherry 360 360 360 360 360
Nashik 360 360 360 360 460
New Facility - - - - 500
Total 2540 2720 2760 2815 3480
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.
Improving efficiencies
80
82
84
86
88
90
92
94
05 - 06 06 - 07 07 - 08 08 - 09 09 - 10
Eff
eci
ency
% (
Pack
to M
elt
)
Rishra
B'Garh
Neemrana
Rishikesh
Pondi
Nashik
Private & Confidential
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.
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.
Industry & Peer comparison
Private & Confidential
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.
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Per Capita Consumption of Glass (kgs)
Low Per Capita Consumption of Glass in India - significant scope for growth
Private & Confidential
Glass Industry
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
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
Peer Set
Financial Highlights
All values in Rs. million
** Not annualised
Private & Confidential
Financial Performance
Particulars FY06 FY07 FY08 FY09 9M FY10
Net Revenue 4134 7016 10213 13110 9818
EBITDA 739 1175 2147 2359 2556
EBITDA Margin 18% 17% 21% 18% 26%
PAT 240 28 1603 1077 1308
PAT Margin 6% 0.40% 16% 8% 13%
EPS (Rs.) 4.34 .32 18.36 12.34 14.98**
Particulars FY06 FY07 FY08 FY09 9M FY10
Net Fixed Assets 3482 8342 8923 9885 11097
Investments 9 713 1146 1046 1396
Net Working Capital 1432 2341 2935 3912 4154
4923 11396 13004 14843 16647
Met by :
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
All values in Rs. million
Private & Confidential
Financial Performance
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.
Hindusthan National Glass & Industries Ltd. (HNG)
THANKYOU