Corporate Presentation Industry Overview Global Packaging Industry - - PowerPoint PPT Presentation

Corporate Presentation

Hindusthan National Glass & Industries Limited

Industry Overview

Global Packaging Industry

• As per World Packaging Organization, the global packaging industry is expected to be USD 597 billion by 2014

with ten year historical growth at ~ 3.1% CAGR

• Projected to grow at ~ 3.5% CAGR in the medium term mainly driven by growth in emerging markets (Asia

Pacific region)

34% 34% 27% 5%

Geography

Europe Asia, Oceana, Africa & ME North America South & Central America

52% 15% 11% 9% 13%

End-User

Liquor Beer Food Pharma Others Source: Owens-Illinois, Inc. - Investor presentation, March 2010 3

Packaging Industry - India

• At USD14 bn, Indian packaging industry has been

growing at ~ 15% over the last few years

• Expected to accelerate further with increasing

urbanization, growing middle class and expansion of modern retail

• Indian glass container market is estimated to be

around USD 1.1 bn and is growing at the rate of ~10% p.a.

• Entry barriers in Indian Container Glass industry is
• wing to capital intensive nature
• Top 3 players are HNG, HSIL and Piramal Glass
• Low per capita glass container consumption of

1.9 kg in India as compared to other countries (refer chart alongside).

• Strong economic drivers for end-user segments (liquor,

beer, pharmaceuticals, food, cosmetics etc.)

89 63.9 50.3 27.5 27.5 19.5 10.2 5.9 4.8 1.9 1.2 50 100 South Korea France Spain UK USA Mexico Japan China Brazil India Indonesia World glass container per capita consumption in Kg. Market Overview

4

5

IMFL – Volume CAGR 10%

B e e r

Packaged Food – Volume CAGR 12%* Beer – Volume CAGR 11% Pharmaceuticals – CAGR 13%

Region-wise Demand (Mn Cases)

195 219 250 280 308 329 2010 2011 2012 2013 2014 2015

North 20% East 10% South 45% West 25% Region-wise Demand North 20% East 10% South 50% West 20%

13 15 18 21 25 30 2010 2011 2012 2013 2014 2015

(US$ Bn) North 29% East 17% South 25% West 29% Region-wise Demand

24 27 31 35 39 45 2010 2011 2012 2013 2014 2015

(US$ Bn) (Mn Cases) * Assuming value growth of 7% out of overall growth of ~19% Source: ASSOCHAM study, Capital Market Estimates Source: AM Mindpower Solutions Source: Datamonitor, Capital Market Estimates Source: Datamonitor, Capital Market Estimates

End user Industry Overview

222 250 277 287 315 347 2010 2011 2012 2013 2014 2015

Company Overview

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Company Overview

Incorporated in 1946, promoted by the C K Somany Group

Started operations with 30 TPD furnace at Rishra in 1952

Organic & inorganic expansion from 1,100 TPD in 2001 to ~4,300 TPD in

FY13

Market leader and the only pan-India player in the container glass

industry.

New plant of 650tpd each to help consolidate position in South & West

Brownfield expansion at Nashik, Maharashtra commissioned in Q1 FY13. Greenfield expansion at Naidupeta, Andhra Pradesh commissioned in Q2 FY13.

Catering to all segments – IMFL, Beer, Pharma & Vials, Foods &

Beverages (F&B), Cosmetics

Foray into global market through acquisition of assets of Agenda Glas

AG, Germany in May 2011

HNGIL Glass Equipment (India) Ltd Quality Minerals Ltd HNG Global GmbH HNG Float Glass Ltd

100% 11.2% 100% 99.7%

Manufacturer of Float & Processed Glass 320 TPD glass container facility at Gardelegen, Germany Capital Goods & Spares Supplier to Glass Industry Mineral Supplier to Glass Industry

Group Structure

Listed on BSE since Mar 1995 & on NSE since Apr 2009

60 Years’ Experience in the Glass Industry

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Shareholding Pattern as on date

Shareholding

Promoters 69.98 Public Shareholding 30.02 Insurance Companies 0.10 Bodies Corporate 4.86 Financial Institutional Investors 7.27 Individuals & Others* 17.79 Total 100.00

* Includes 16.76% held as Treasury Shares in the Company Total 87.3 million shares Listed at: National Stock Exchange (NSE) - HINDNATGLS Bombay Stock Exchange (BSE) - 515145 Calcutta Stock Exchange (CSE) - 10018003

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• Mr. C K Somany, 80, Non-Executive Chairman
• Mr. C K Somany is an expert in glass technology, he provides policy guidelines for the management and administration
• He holds an F.B.I.M (London) degree and a degree in Glass Plant Instrumentation from Honeywell Brown, Minneapolis, USA
• Served as the President of the All India Glass Manufacturers' Association and is associated with various charitable and philanthropic organisations
• Currently the Chairman of CAPEXIL, sponsored by Ministry of Commerce & Industry, GoI
• Mr. Sanjay Somany, 55, Vice-Chairman & Managing Director
• Has over 30 years experience in the glass industry and is closely involved in the technical and engineering aspects of the business
• He is a commerce graduate and holds a diploma in diesel engineering
• Served as the President of All India Glass Manufacturers' Federation (AIGMF)
• Mr. Mukul Somany, 48, Vice-Chairman & Managing Director
• Over 26 years experience in the glass industry
• Led the acquisition, turnaround and integration of India business of Owens Brockway and glass business of L&T Ltd, re-engineered business processes across six units
• Currently the President of AIGMF, Executive Committee Member of CII (Eastern Region) & Member of CII National Council
• Mr. Dipankar Chatterjee, 65, Independent Director
• Chartered accountant and senior partner of LB Jha & Co., Chartered Accountants and is a member of National Council of CII
• Former Chairman of CII-Eastern Region, member of the Central Council of ICAI, Chairman of the audit practices committee of ICAI
• Appointed member of the Padmanabhan Committee (set up to review RBI’s supervision over banks)
• Mrs. Rita Bhimani, 70, Independent Director
• Noted Public Relations professional, Prolific columnist for mainline dailies and magazines.
• Nominated to the Hall of Fame by the Public Relations Council of India in Bangalore.
• Master’s degree holder from the University of Georgia, USA.

Board of Directors

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• Mr. Rakesh Kumar Sharma, 61, Executive Director
• Over 36 years experience in general management, EPC contracts and business development across Indian corporate sector
• Holds a graduate degree in Mechanical Engineering and masters in Marketing management
• Prior to joining HNG, he held a senior position at L&T
• Mr. Ratna Kumar Daga, 72, Independent Director
• Vast experience in the fields of engineering and finance
• Former Chairman of Indian Institute of Materials Management, Kolkata, President of Calcutta Junior Chamber, President of Federation of Small & Medium Industries
• Holds PG degree in Business Management from the UK
• Mr. Sujit Bhattacharya, 69, Independent Director
• Former senior partner of Lovelock & Lewes, Chartered Accountants, advisory experience in accounting, audit standards, corporate governance, business valuation &

taxation

• Fellow member of the Institute of Chartered Accountants in England & Wales, ICAI
• Was nominated as the Special Director by the BIFR, Govt of India

Board of Directors

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Pan India Capacity of ~4300 tpd

Acquired Pondicherry & Rishikesh plants of Owens Brockway Acquired L&T’s Nashik Plant Acquired Neemrana plant

• f Haryana Sheet Glass

Brownfield expansion at Nashik and Greenfield plant at Naidupeta, AP

Capacity Build-Up Through Organic & Inorganic Route

30 1100 2935 4235 30 105 1300 700 320 180 150 350 1952 2001 2002 2005 2007 2008 2010 2012 2013 2014 Total (TPD) Expansion (TPD) Acquistion (TPD)

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Technological Strengths Leading to Smoother & More Efficient Operations SAP Implementation for Better Integration & Standardization of Business Processes

• Accurate real-time information with enhanced visibility and operational controls
• Automation of report generation & month-end reconciliation
• Alignment of functional objectives with corporate business plan leading to better coordination across functions, manufacturing units & marketing offices
• Higher productivity through automation
• Improved customer service
• Cost control and uniform material code data across locations
• Online tracking of production and sales-related performance data
• Diversified vendor base for raw material procurement
• Captive sand beneficiation facilities
• In-house furnace maintenance & refurbishment capabilities
• Proven ability to run plants at high capacity utilization
• Draw and pack ratios consistently among the best in the

industry

Processes for Maximizing Capacity Utilization & Sales

Market Leader in Container Glass

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Think Glass, Think HNG Market leader in container glass with pan-India presence, ~50% market share (including new plants in FY13) End user segments expected to grow at double digit rate over next 3 years Newly commissioned plants to improve market share in underserved markets Demonstrated track record of inorganic growth through turnaround of sick units with highly skilled manpower Use of best-in-class technology with captive developmental capabilities Margin expansion due to higher scale & efficiency

Growth Drivers

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Largest Container Glass Player in ~8,600 TPD Indian Market Presence Across Segments – Play on Indian Consumption Story High Entry Barriers due to Capital Intensity

4,235 1,550 860 320 240 220 220 220 130 605 HNG HSIL Piramal Haldyn MBDL Universal Excel Janta Vitrum Others (TPD)

Pan-India AP Gujarat Gujarat Gujarat MH UP & Guj Pondi. UP Kerala Presence Mkt. Share 50% 18% 10% 4% 2% 1% 8% 3% 2% 2% HNG HSIL Piramal Haldyn Janta Vitrum Excel Universal MBDL Liquor

• Beer
• Pharma
• F&B
• Cosmetics
• Capital intensive business with recurring maintenance capex
• High customer stickiness

Interdependence of output scale & timing Customization / bottle printing as per specs

• Significant economies of scale
• Integrated value chain from raw material mining, glass equipment &

moulds to printing

Source: Company estimates Source: HNGIL

Dominant Share of Container Glass Market with Presence in All Segments

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Catering to Significant Share of Customer Requirements Pan-India Player; Competitors Mainly Regional Players

HNG's Share in the Total Requirement of Each Customer (%)

Mumbai Hyderabad

HNG

Naidupeta Kosamba Jambusar

Piramal

Padra

Haldyn HSIL

Bhongir

Vitrum Janta

Vadodara

Universal Excel MBDL Source: HNGIL Source: HNGIL

Ghaziabad Alleppey

Pan-India Presence Enabling Superior Customer Service

25% 40% 45% 50% 60% 60% 65% 70% 95% John Distilleries Pernod Ricard ABD United Spirit Pepsico SAB Miller United Breweries Coca Cola Bajaj Corp

17

Customer Base Across all Segments

HNG Customer Base

PHARMACEUTICALS BEER LIQUOR FOOD SOFT DRINKS

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Acquisition of 320 TPD Plant at Gardelegen, Germany

L

• c

a t i

• n

M a p

Germany is the largest market in EU with ~20% share

Annual demand in Germany of 3.8 million MT/year

Acquired assets of Agenda Glas AG, one of the most modern production facilities in Europe, in May 2011. Agenda Glas had commenced production in Feb 2010 Production capacity of 120,000 MT per year Currently produces flint glass of various SKUs HNG Global GmbH, is located closed to the regional raw material suppliers with easy and economic access to

all key raw materials.

The Plant is ideally located for deliveries throughout Germany and to adjacent European Countries. Company’s technological edge is planned to be back pedaled in HNG’s Indian operations, as Germany is always

considered ahead in terms of technology.

The Finished-ware quality in Germany is of superior standards than in India and it will help us embark the

upward quality journey in India.

International Operation - HNG Global Gmbh

Key Financials

Financial Details

Particulars 2014-15 2013-14 Change Y-o-Y Net Sales 199,771 179,742 11.14% Other Incomes 6,252 10,606

• 41.06%

Increase/(Decrease) in Stock (5,565) 1,635

• 440.79%

Total Revenue 200,458 191,983 4.41% Raw Materials 62,896 53,832 16.84% Power & Fuel 59,700 62,950

• 5.16%

Packing Materials & charges 17,769 16,008 11.00% Salaries & Wages 18,820 16,272 15.66% Stores & Spares 6,483 6,227 4.12% Overhead Expenses 7,114 10,258

• 30.65%

Interest 25,906 25,652 0.99% Depreciation 25,382 24,701 2.76% Total Costs 224,070 215,901 3.78% Amt in Rs./Lacs

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Particulars 2014-15 2013-14 Change Y-o-Y PBT (23,612) (23,917)

• 1.28%

Taxes 92 (2,099)

• 104.40%

PAT (23,704) (21,818) 8.65% PBT Margin (%)

• 11.46%
• 12.56%
• 8.79%

PAT Margin (%)

• 11.50%
• 11.46%

0.38% Cash Profit (PBT + Depreciation) 1,770 784 125.74% Amount in Rs./Lacs

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Financial Details

Particulars As on 31st March 2015 As on 31st March 2014 Share Capital 1,747 1,747 Reserve and Surplus (excluding Revaluation Reserve) 40,642 65,985 Long term Loans (LTT) 203,915 202,524 Short term Loans (STT) 65,744 53,565 Current Liabilities other than (LTT+STT) 63,527 62,392 Tangible Networth 42,388 67,732 Total Outside Liabilities 335,829 320,735 Fixed Assets (including CWIP) 242,790 265,066 Current Assets 126,205 111,112 Amount in Rs./Lacs

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Key Balance sheet numbers

Thank You For further information please log on to www.hngil.com or contact:

Bikash Kumar Sipani HNG Tel: 033-2254-3100 Email: bsipani@hngil.com