Hindusthan National Glass & Industries Ltd. (HNG) CORPORATE PRESENTATION March, 2010.

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


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


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.


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


“Turnaround” Specialist


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


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


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


HNG - Accreditations


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


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


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.


HNG’s Blue Chip Customer base

Beverages: Non- Alcoholic and Alcoholic

Pharmaceuticals

Cosmetics & Processed food


Sector-wise supply

Expansion plans

Figures in MT


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


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


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.


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


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


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.

1.2 1.4 4.8 5.9 10.2 10.618.8 19.5

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Per Capita Consumption of Glass (kgs)

Low Per Capita Consumption of Glass in India - significant scope for growth


Glass Industry


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


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.


Peer Set

Financial Highlights

All values in Rs. million

** Not annualised


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


Financial Performance


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


“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


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

Hindusthan National Glass & Industries Ltd. (HNG) CORPORATE PRESENTATION March, 2010.

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Transcript of Hindusthan National Glass & Industries Ltd. (HNG) CORPORATE PRESENTATION March, 2010.