hindusthan national glass & industries ltd. (hng) corporate presentation june, 2010 1
TRANSCRIPT
Hindusthan National Glass & Industries Ltd. (HNG)
CORPORATEPRESENTATION
June, 20101
HNG Background◊ About HNG◊ Turnaround specialist◊ Board of Directors◊ Group synergies
Product offerings
Expansion plans
Improving efficiencies
Industry outlook
Financial Highlights
PRESENTATION OUTLINEPresentation Outline
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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 for both Imports & Exports.
Industry leadership
Long profitable relationship with customers and suppliers
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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.”
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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 (Gross Fixed Asset stands at Rs. 1661 Crores as at 31st Mar, 2010)
Gross Sales Revenues of Rs.1439 Crs. in FY09, Rs 1449 in FY10
Number of people working in the Company: around 7000
Phenomenal Growth in Revenue & Margins over the years (FY 2007 to 2010) - Sales CAGR at 25% and PAT CAGR at 280%.
FY 2010 Exports at Rs. 77 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
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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
◊ After proving its metal on Indian soil, HNG is exploring similar opportunities to be repeated on foreign soil, through its core competencies, either through acquisition or greenfield (under studies).
Today all these acquired units contribute to wealth creation for the Company and its stakeholders
“Turnaround” Specialist
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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 constituted Ace Glass Containers
2007-08
Expanded
2760 TPD
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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
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Kolkata
Mumbai
Delhi
Hyderabad
Bengaluru
Marketing OfficesChennai
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
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HNG - Accreditations
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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. Also contemplating for second float line (800 tpd) in the same location.
HNGIL is considering to make HNG Float as its subsidiary.
◊ Would cater to the Realty, Automobile and domestic household sector.
HNG FLOAT
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*Includes 16.77% 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 in June, 2010)
Promoters 70.20
Public Shareholding 29.80
Insurance Companies
1.20
Bodies Corporate 2.82
FIIs 7.30
Individuals 18.48*
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Product offerings
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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.
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HNG’s Blue Chip Customer base
Beverages: Non- Alcoholic and Alcoholic
Pharmaceuticals
Cosmetics & Processed food
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Sector-wise supply
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Expansion plans
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Capacity – Tonnes per day
Production Capacity
Particulars FY08 FY09 FY10E FY11E FY12E FY13E FY14E FY15E
Rishra 720 720 760 760 825 825 825 825
Bahadurgarh
690 690 690 745 745 745 745 745
Neemrana 0 180 180 180 180 180 180 200
Rishikesh 410 410 410 410 410 410 430 430
Pondicherry
360 360 360 360 360 360 800 800
Nashik 360 360 360 360 460 460 460 460
New Facility (AP)
- - - - - 650 650 650
Total 2540 2720 2760 2815 2980 3630 4090 4110
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Ramp-up in capacity
HNG plans a capital expenditure of Rs. 905 Crores to further increase production capacity and rebuilds within next two years.
◊ Greenfield plant in AP : at 490 Crs. (650 TPD)
(Land has been already allotted to HNG , Project commencement date expected is June’10 and targetted project completion date is Mar’12)
◊ New Furnace in Nashik : 115 Crs. ( 100 TPD)◊ Maintenance Capex : 300 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. June,2010 and Nashik w.e.f. April, 2011. Company is seriously exploring earliest gas connectivity in other 3 Plants. Company is also examining ramping up its captive power generation facility (present about 15MW in Bahadurgarh) through use of Natural gas in other plants.
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Improving efficiencies
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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, HNG is exploring further strengthening of this technology.
Neemrana & Nashik Units converting to Gas, Net saving of Rs 20 Crs. (approx) p.a. Other plants are also exploring arranging gas connectivity to switch FO and LPG.
Sand Mining – Bankura, Sand benefication plant for Rishra unit, exploring opportunities for other plants as well.
Entered into JV with OMCO of Belgium for Moulds – Technology and manufacture
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Industry Outlook
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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
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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
Glass Industry
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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 bn, 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
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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
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Financial Highlights
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All values in Rs. million
Financial Performance
Particulars FY07 FY08 FY09 FY10
Net Revenue 7016 10213 13110 13599
EBITDA 1175 2147 2359 3163
EBITDA Margin 17% 21% 18% 23%
PAT 28 1603 1077 1552
PAT Margin 0.40% 16% 8% 11%
EPS (Rs.) 1.59 18.36 12.34 17.77
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Particulars FY07 FY08 FY09 FY10
Net Fixed Assets 8342 8923 9885 11437
Investments 713 1146 1046 1471
Net Working Capital 2341 2935 3912 3874
11396 13004 14843 16782
Met by :
Net Worth 7149 8636 9352 10428
Secured Loans 2546 2874 4152 5486
Unsecured Loans 1248 1313 921 171
Provisions 453 181 418 697
11396 13004 14843 16782
All values in Rs. million
Financial Performance
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All values in Rs. million
Financial Projections
Particulars FY11 FY12 FY13 FY14 FY15
EBITDA 4388 5315 8456 10851 12627
EPS (Rs.) 22.21 28.47 45.96 62.55 76.71
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HNGIL
Particulars FY11 FY12 FY13 FY14 FY15
EBITDA 832 1408 1689 1856 2012
All values in Rs. million
HNGFL ( Associate Company)
HNGFL = HNG Float Glass Limited, where Company owns Equity Stake
DISCLAIMER :“The projections disclosed above are merely indicative in nature and are purely based on management’s beliefs, opinions and estimates as of the date of this Presentation and no obligation is assumed to update such forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments. These projections are based on certain assumptions of future events over which the Company exercises no control. Hence this involves number of risks and uncertainties which could cause the actual results to differ materially from those that may be projected or implied.”
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
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“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
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Disclaimer
The Corporate Presentation (the “Presentation”) is based on management estimates and is being provided to you (herein referred to as the “Recipient”) only for information purposes. The sole purpose of this Presentation is to provide preliminary information on the business activities of the Company, in order to assist the recipient in understanding the Company. This Presentation does not purport to be all inclusive or necessarily include all information that a prospective investor may desire in evaluating the Company. The Company expressly disclaims any and all liability for any errors and/or omissions, representations or warranties, expressed or implied as contained in this document.
This Presentation contains certain forward looking statements which are based on certain assumptions of future events over which the Company exercises no control. Hence this involves number of risks and uncertainties which could cause the actual results to differ materially from those that may be projected or implied by these forward looking statements. Such risks and uncertainties include, but are not limited to: our ability to manage growth, competition, attracting and retaining skilled professionals, time and cost overruns, regulatory approvals, market risks, domestic and international economic conditions, changes in laws governing the Company including the tax regimes and exchange control regulations.
The Company does not undertake to update any forward looking statements that may be made from time to time by
or on behalf of the Company. This Presentation may not be photocopied, reproduced or distributed to others at any time without prior consent of the Company. Upon request, the Recipient will promptly return all material received from the Company without retaining any copies thereof.
In furnishing this Presentation, the Company do not make any obligation to provide the Recipient with access to any
additional information on the Company or its subsidiaries. This Presentation should not be deemed an indication of the state of affairs of the company nor shall it constitute an indication that there has been no change in the business or state of affairs of the Company since the date of publication of this Presentation.
Any clarifications / queries as well as any future communication regarding the Company should be addressed to the
Company. “This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer, invitation, or a solicitation of any offer, to purchase or sell or subscribe, any shares of the Company and should not be considered or construed in any manner whatsoever as a recommendation that any person should subscribe for or purchase any of the Company’s shares.” 34
Hindusthan National Glass & Industries Ltd. (HNG)
THANKYOU
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For any queries/to obtain more info, please write at [email protected]