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 OUTLINE Presentation 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 Crores as at 31 st Dec., 2009) Gross Revenues of Rs Crs. in FY08, Rs 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 Glasss 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 Present Growth Installed Capacity of 30 TPD Expanded Capacity to 1100 TPD Acquisition of Assets of Neemrana Plant – Capacity 2540 TPD Capacity at 1800 TPD post Owens acquisition L&T plant acquisition – Capacity at 2150 TPD Capacity at 2435 TPD Together constitute Ace Glass Containers Expanded 2760 TPD
Private & Confidential Pan – India presence LocationCapacity (TPD)Furnaces Rishra7603 Bahadurgarh6903 Neemrana1801 Rishikesh4102 Nashik3601 Pondicherry3601 Total276011
Mr. Chandra Kumar Somany, Chairman Mr. Sanjay Somany, Managing DirectorMr. 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 Company Note: Total shares lacs of face value Rs. 2 each, fully paid up Private & Confidential Shareholding Pattern Particular % Shareholding (as on 31st Dec, 2009) Promoters74.2 Public Shareholding25.8 Insurance Companies1.2 Bodies Corporate2.8 Individuals21.8*
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 HNGs Blue Chip Customer base Beverages: Non- Alcoholic and Alcoholic PharmaceuticalsCosmetics & Processed food
Private & Confidential Sector-wise supply
Figures in MT Private & Confidential Production Capacity ParticularsFY08FY09FY10EFY11EFY12E Rishra Bahadurgarh Neemrana0180 Rishikesh410 Pondicherry360 Nashik 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 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 mln cases against 137 mln cases in 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 % and current industry size is USD 950 million, which is expected to become USD 1.4 billion in 3 years time.
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
HNGs 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
All values in Rs. million ** Not annualised Private & Confidential Financial Performance ParticularsFY06FY07FY08FY099M FY10 Net Revenue EBITDA EBITDA Margin18%17%21% 18% 26% PAT PAT Margin6%0.40%16% 8% 13% EPS (Rs.) **
ParticularsFY06FY07FY08FY099M FY10 Net Fixed Assets Investments Net Working Capital Met by : Net Worth Secured Loans Unsecured Loans Provisions All values in Rs. million Private & Confidential Financial Performance
Private & Confidential HNGILs 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 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) THANK YOU