Vinay Saran, Senior Vice President- Marketing, HNGIL, has over 23 years of experience in the field of consumer products and consumer durable marketing. He is a management graduate and has worked with reputed companies like Indo Rama Synthetics, Birla Corporation, Vardhaman Textiles and Garware Paints. Currently, he is also the key member of the governing body of the Indian Institute of Packaging panel, CII east- Marketing Committee, All India Management Association, Kolkata, Management Association, National HRD Network and the Indian Institute of Packaging, Kolkata. He has been with HNG for the past four years.
HNG was founded by Mr. C K Somany in 1946 following the commissioning of India’s first fully automated glass manufacturing plant at Rishra (near Kolkata). At present, it is the key player in India’s container glass industry with a pan India presence and its plants located at Rishra, Bahadurgarh, Rishikesh, Neemrana, Nashik and Puducherry. HNG has captured a large share of the Indian market and also has an increasingly satisfied client base in more than 23 countries.
Replying to Anil Mascarenhas of IIFL, Vinay Saran says, “We have robust expansion plans which would need a capex of around Rs. 25bn.”
Give us a brief overview of the industry. What are the changing trends? What is the industry growth rate and how has your growth been?
The Indian container glass industry has been growing at a steady pace over the last five years. The turnover of the industry is seen at around Rs. 45bn and has been growing at a healthy rate of 10-12% driven by demand from alcobev, food and pharmaceutical segment.
The industry witnessed significant changes over the past decade. It used to be once highly fragmented has now been dominated by top few players with a combined capacity of around 5000 tonnes a day. Among these, are Hindusthan National Glass & Industries (HNGIL), Gujarat Glass and Associated Glass Industries (AGI).
What is your market share in container glass segment? Liquor, food and pharma are the main consumers. What is the demand you are seeing here?
Today Hindusthan National Glass & Industries (HNGIL) has a market share of about 55% in the organized glass industry and an annual turnover of more than Rs 1700 Cr., as recorded in FY10-11. Our biggest customer base is the alcobev industry which contributes to 65% followed by the pharmaceutical (10%) and FMCG (12%) industry.
What are the opportunities and challenges in this industry?
We are very much optimistic considering the growth opportunities of the glass industries. All the segments being served by the industry are growing at a very healthy rate with double digit figures. At the same time, the increasing global awareness about health and hygiene among consumers would further create new opportunities for the glass industry as a whole. The biggest challenge in this industry is to do timely expansions in order to cater to the growing demands of the segments being served.
Walk us through the journey of your company and what are your future plans?
HNG group started with a capacity of 30 TPD way back in 1952. We have used our ability and managerial expertise over the period of six decades to become leaders of container glass in India. Our recent acquisition in Germany is just a small step in the international market to achieve our mission of becoming top global glass packaging solution provider.
What are the different products you manufacture and what is the demand for the same. Give us some idea about the size of the industry for each of them.
HNGIL possesses one of the widest portfolios for container glass ranging from 5 ml to 3200 ml across multicoloured bottles (amber, flint, green). We are producing around 15 million bottles a day for the segments mentioned below:
Segments
|
Market Share(in %)
|
Liquor
|
48
|
Beer
|
16
|
Pharmaceuticals
|
10
|
Food
|
12
|
Soft Drinks
|
9
|
Others
|
5
|
We have been increasing our capacity at regular intervals to meet the increasing demand of the segments being served by us. Our recent analysis and markets studies suggests that an increased demand is expected to come from Liquor and FMCG segments which would result into increased glass consumption in the coming few years.
What are your capex plans and how do you propose to fund the same?
We have robust expansion plans for which a capex of around Rs. 2500 crores has been set. These funds would be utilized for various new projects in the pipe-line which would be a mix of both Brownfield and Greenfield Projects. These funds would be mix of debt, equity and internal accruals.
What would they be utilized for?
As the company is growing, the expansion would be both in the form of organic and inorganic ways. We have come up a with a new furnace at Nashik plant (a Brownfield project) which is having a capacity of 650 tonnes per day. It is the single largest furnace in the South East Asia. In the first quarter of next financial year, we are coming up with a Greenfield project at Naidupeta in Andhra Pradesh with an investment of approx. Rs. 800 crores. It will also be a single furnace plant with a capacity similar to the new furnace at Nashik. There are many other projects in the pipe-line which will be announced very shortly to the public.
Brief us about your plants. What is your total production capacity? How much are you planning to scale up the same?
HNG today has become a global presence company. It is the only company which has a PAN India presence. All of the units are strategically located so as to cater to our customers located at various locations at competitive prices. Our plants are located at Rishra, Bahadurgarh, Rishikesh, Puducherry, Nashik and Neemrana in India, and Gardelegen in Germany. HNG has a huge clientele comprising the aces of the alcobev, pharmaceuticals, F&B and cosmetics industries and its products are available in more than 23 countries. Today, our total production capacity is 2930 tonnes per day and we plan to double our capacity in the next three years.
You were looking for a new location for a plant. Have you selected a state?
We are always on the lookout for the right opportunity. There many new locations at various place in and outside India which has been scouted to leverage our organic as well as inorganic growth. There are some locations under consideration but the things are not finalized as yet. Everything movement or decision of ours would be made public at the appropriate time.
Comment on your financials. What is your outlook?
HNGIL has shown at steady performance over the last few years with a CAGR of over 25% in terms of revenue. A positive growth rate has been maintained in terms of EBIDTA and PAT earnings also. We are very confident and optimistic about the profitability of the company which will scale new heights with every passing year. This is affirmed looking at the healthy growth rate of the glass container industry.
Which are some of the new verticals you are looking at catering to? Give us a revenue break-up from various segments?
At present, the major segments being served by us are liquor, beer, pharmaceuticals, food & soft drinks. All of them are growing at a steady pace and creating scope for the glass industry to cater the increasing demands of the segment. The breakup of the revenue generation from these segments is provided as under:
Segments
|
Revenue (In Rs. Crores)
|
Liquor
|
769
|
Beer
|
212
|
Food
|
184
|
Pharma
|
157
|
Soft Drinks
|
127
|
What is the latest promoter holding? Any plans to hike or dilute stake?
Currently, the promoters of HNGIL hold around 70% stake in the company and there are no plans to dilute or hike the stake in the near future.
Your message to shareholders?
We always strive to increase the net worth of the shareholders of the company. The aggressive future plans of the company are further going to boost the confidence and attract more investors.