October 2011
2 Disclaimer Certain statements in this communication may be forward looking statements within the meaning of applicable laws and regulations. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forwardlooking statements. Important developments that could affect the Company s operations include changes in the industry structure, significant changes in political and economic environment in India and overseas, tax laws, import duties, litigation and labour relations. Hindusthan National Glass & Industries Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.
3 Table of Contents Company Overview Business Overview Industry Snapshot Operating and Financial Performance Annexures
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5 Company overview Dominant position Market share of ~ 55% in the container glass segment Installed capacity at 3,307 TPD; Planned capacity expansion to 5570 TPD by FY15 Consumption Ancillary Diversified end user segment including Liquor, Beer, Beverages, Food, Pharmaceuticals and others Pan India Presence Manufacturing facilities in 6 locations across India, 7 th facility will start by April, 2012 Additionally, international manufacturing footprint through its 100% subsidiary HNG Global GmbH, Germany Competent management Strong management with vast experience and domain knowledge Successful history of acquiring loss-making units and turning them around Well established customer relations Strong Balance Sheet Six decades of presence in the industry has enabled the Company to develop long standing customer relations In a capital intensive industry, the Company has been able to maintain a comfortable long term debt/ equity ratio
6 Corporate Milestones First 30 TPD plant commissioned in 1952 Second 90 TPD plant commissioned in 1964 Acquired 700 TPD facility from Owens Brockway India Ltd, a subsidiary of Owens Illinois, USA Ace Glass Containers merged with HNG Rated Best Indian Glass & Ceramics Company by Dun & Bradstreet Work on 7 th plant at Naidupeta (650 TPD) initiated operations to commence by Q1 FY13 1952 2001 2002 2005 2006 2007 2009 2010 2011 Capacities expanded to 1,100 TPD Acquired 320 TPD loss making glass division from L&T at Nashik Established float glass plant in Halol under HNG Float Glass Acquired 180 TPD Neemrana unit of Haryana Sheet Glass Nashik plant to add capacity of 650 TPD by Q4 FY12. Acquired assets of Agenda Glas AG in May 2011; 320 TPD facility at Gardelegen, Germany
7 Corporate Structure Hindusthan National Glass & Industries Ltd. - Consolidated net revenues: Rs. 1,553 cr. - Standalone net revenues: Rs. 1,543 cr. Glass Equipment (India) Ltd. 100% 100% Quality Minerals Ltd. 100% HNG Global GmbH 47.4% HNG Float Glass Ltd. (HNGFL) Net revenues: Rs. 24 cr. Net revenues: Rs. 0.9 cr. Net revenues: Rs. 305 cr. Capital Goods & Spares Supplier to Glass Industry Mineral Supplier to Glass Industry Acquisition of assets of Agenda Glas AG Manufacturer of Float & Processed Glass Note: 1. All revenue figures are for FY 2011. HNG Global GmbH was acquired after March 31, 2011.
8 Business Strategy Capacity Expansion Acquired and turned around five loss making units over the last nine years Planned organic expansion to ~ 5570 TPD by FY15 Expanding product portfolio Presence across key user industries liquor, beer, pharmaceuticals and food Capitalizing on opportunities in the high growth float glass industry Adapting new technology Backward integration Introduced Narrow Neck Press and Blow (NNPB) technology, first in India Sustained competitive advantage through product optimization and continuous innovation Increasing production of light weighted bottles to enhance margins Captive power plant to improve cost efficiencies (Existing and Proposed) Silica mining to support raw material supply chain (Proposed) Manufacturing of glass machines & spares in 100% subsidiary GEIL International Footprint Gained European presence, one of the largest markets for food and alco-bev industries Access to technological strength and production processes
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10 Pan India Presence HNG, the largest container glass manufacturer Bahadurgarh Neemrana Delhi Rishikesh in India has a manufacturing capacity of 2930 tonnes per day Multi-locational production facilities enable the Company to: Vadodara Kolkata Rishra Lower landed cost to customers Nashik Provide JIT supplies Mumbai Hyderabad GEIL Cater to key customers across India Float Glass Unit Bengaluru Naidupeta Chennai Container Glass Plant Locations Marketing Offices Puducherry Upcoming Greenfield Mega Project Upcoming Brownfield Mega Project (Nashik) Note : Through Greenfield and Brownfield expansions in India, Capacities expected to grow to 5,650 TPD by FY15
11 International Presence Gardelegen Plant location: Gardelegen, Germany Capacity: 320 TPD
12 HNG Global GmbH, Gardelegen, Germany One of the most modern production facility in Europe, with 320 tpd capacity. HNG Global GmbH, is located closed to the regional raw material suppliers with easy and economic access to all key RM s. Company s Plant is ideally located for deliveries throughout Germany and adjacent European Countries. Company have 147 FTE, with average age employees is 37 years, with 50% of the workforce is younger than 35 yrs. Germany is the largest market for Container Glass in Europe, with a share of ~ 20%. Company s technological edge can also be back paddled in HNG s Indian operation, as Germany is always considered as two step ahead in terms of technology, from rest of the World. Attractive Pay-back.
13 Expanding Scale Location Present Capacity Expanded Capacity To be Commissioned by New Furnace(N) / Rebuild (R) RSR Furnace 1 280 280 Already started R RSR Furnace 2 255 260 Already started R RSR Furnace 6 340 650 2012-13 R BGR Furnace 3 323 350 2012-13 R BGR Furnace 4 269 270 Already started R BGR Furnace 5 180 180 Already started R NMR Furnace 195 550 2013-14 R RSK Furnace 1 285 310 2012-13 R RSK Furnace 2 150 150 Already started R PDY Furnace 1 360 500 2014-15 R NSK Furnace 1 350 550 2013-14 R NSK Furnace 2 600 Q4 FY12 N Naidupeta - 600 2012-13 N Gardelegen 320 320 Already started Acquisition TOTAL 3307 5570 Present capacity of 3,307 TPD with proposed expansion to ~ 5570 TPD by FY15
14 Strong customer relationships LIQUOR BEER FOOD SOFT DRINKS PHARMACEUTICALS Caters to customers across segments
15 HNG s Share of Top 10 Customers HNG's Share in the Total Requirement of Top 10 Customers in 2010-11 (%) 100 95 90 80 70 60 50 40 60 65 55 60 80 40 70 80 50 30 20 10 0 United Spirits Limited United Breweries Limited Pernod Ricard India SAB Miller India Allied Blenders & Distillers Coca Cola India Pepsico India Bajaj Corp Limited Shiva Distilleries John Distilleries Limited
16 HNG Float Glass Overview Commenced operations in February 2010 Established a 600 TPD Greenfield Plant at Halol, Gujarat Accomplished 100% capacity utilization in the first year of operations One of the fastest growing Float Glass companies Achieved pan-india market share of 21% in clear glass and became industry leader in the west Indian market with 30% market share in clear glass in its first year of operations Extensive and expanding pan India dealer network Created a strong distribution base with over 928 dealers spread across India Diversification within the glass sector Leveraged six-decade experience in glass manufacturing Synergies in technology Significant part of float glass manufacturing process is similar to that of container glass Economies of scale achieved in raw material procurement
17 HNG Float Glass Overview Future growth plans Setting up of a Mirror line, High performance Low E glass, Two float lines at Halol (Gujarat) & South India Second Float Line at Halol for 1,000 TPD for architectural glass by FY14 Setting up additional 1,200 TPD float glass Capacity for architectural quality in South India by FY16 Plan to commission production facility for Soft coated High performance Low E Glass by start of FY14 Industry growth drivers low penetration of Glass and boom in the end user industry to drive growth Nascent industry in India with just 8 float glass lines compared with 246 in China Indian Float Glass industry has been growing at c.20% CAGR over the last three years India s total installed capacity for float glass is ~ 4,800 TPD which results into saleable production of 3,840 TPD Low per capita consumption of Float Glass in India of 0.8 kg as compared to 12 kg in China and 10.4 kg in USA
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19 Global Packaging Industry As per World Packaging Organization, the global packaging industry at present is estimated to be USD 425 billion in revenues, with ten year historical growth at ~ 3.1% CAGR, expected to be USD 597 billion by 2014 Projected to grow at ~ 3.5% CAGR in the next five years mainly driven by growth in emerging markets (Asia Pacific region) Geography End User 5% 13% 27% 34% Europe 9% Liquor Beer Asia, Oceana, Africa & ME North America 11% 52% Food Pharma South & Central America 15% Others 34% Source: Owens-Illinois, Inc. - Investor presentation, March 2010
20 Indian Glass Packaging Industry At US$ 14 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 stood at US$ 1 bn plus in FY10 with a growth of ~ 12% Entry barrier owing to capital intensive nature Top 3 players are HNG, AGI Glaspac and Piramal Glass Indonesia India Brazil China Japan Mexico World glass container per capita consumption 1.2 1.5 4.8 5.9 10.2 19.5 Low per capita glass container consumption of 1.5 kg in India as compared to 27.5 kg. in US and 10.2 kg. in Japan Strong economic drivers for end-user segments (liquor and beer, pharmaceuticals, food, cosmetics, etc.) USA UK Spain 27.5 27.5 50.3 France 63.9 South Korea (Kg) 89 0 50 100
Cases in Millions Cases in Millions 21 End-User Industry Overview Liquor Beer Food 300 250 200 190 265 250 200 150 157 214 66,040 93,703 150 100 50 0 49 65 2007-2008 2010-2011 100 50 0 19 26 2007-2008 2010-2011 2007 2011 HNG Supply IMFL Industry Volumes HNG Supply IMFL Industry Volumes Figures in MT HNG Glass bottles 19,731 Soft Drinks 58,788 Liquor and beer industries are the main users of glass containers with 60% share, followed by pharmaceuticals 20%, food 10%, carbonated drinks 5%, and cosmetics & others account for the remaining Pharmaceuticals 95,009 79,450 Favourable demographics and rising 2007 2011 disposable incomes driving consumption across end-user industries in India 2007 2011 * Figures in MT HNG Glass bottles Figures in MT HNG Glass bottles
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23 Operational Overview 850000 Production volume (MT) 8,29,374 850000 Sales Volume (MT) 8,42,246 800000 7,67,971 7,85,300 800000 7,65,478 7,82,584 750000 750000 700000 FY 2009 FY 2010 FY 2011 700000 FY 2009 FY 2010 FY 2011 18500 18000 17500 17000 16500 16000 15500 15000 Realization (Rs. / ton) 18,325 17,127 17,377 FY 2009 FY 2010 FY 2011 Key Highlights Firm domestic demand driven by growth in end user industries - liquor, beer, pharmaceuticals, foods and carbonated drinks Manufacturing facilities located across India provide an edge over peers who have regional presence Pan India distribution network Implementation of advanced technology enables improved cost efficiencies
24 Volume Mix -FY11 End user segment Geography 52% 15% 13% 9% 11% Others Pharma Food Liquor Beer 20% 29% 22% 44% South North West East Production - Capacities FY11-12 29% 13% South 12% 46% North West East 1 Others include soft drinks
25 Financial Performance 1600 1400 1200 1000 800 600 1,021 Net Turnover 1,311 1,360 1,543 350 300 250 200 150 100 EBITDA 23.3% 21.0% 18.0% 316 215 236 271 25% 20% 17.5% 15% 400 50 200 0 FY2008 FY2009 FY2010 FY2011 0 FY2008 FY2009 FY2010 FY2011 EBITDA Margins 10% 200 PAT 20% 150 15.7% 15% 11.4% 8.2% 100 10% 160 155 5.6% 50 108 86 5% 0 0% FY2008 FY2009 FY2010 FY2011 PAT Margins All figures stated in Rs. crore on a standalone basis 20 18 16 14 12 10 8 6 4 2 0 EPS (Rs. / share) 18.36 17.77 12.34 9.9 FY2008 FY2009 FY2010 FY2011
26 Balance Sheet Particulars (Rs. cr) FY2011 FY2010 Share Holders Funds 1166.1 1042.8 Loan Funds 639.5 565.7 Deferred Tax Liabilities 71.2 69.7 TOTAL LIABILITIES 1876.9 1678.2 Net Block + Capital Work-in-progress 1384.5 1143.8 Investments 177.5 147.1 Net Current Assets 314.8 387.4 TOTAL ASSETS 1876.9 1678.2 All figures stated in Rs. crore on a standalone basis
27 Key Balance Sheet Ratios 0.5 0.4 0.3 0.2 0.20 Debt/Equity Ratio 0.37 0.38 0.37 25% 20% 15% 10% 20.3% RONW 12.0% 15.7% 7.8% 0.1 5% 0.0 FY2008 FY2009 FY2010 FY2011 0% FY2008 FY2009 FY2010 FY2011 16% ROCE 15.1% 20 Dividend Payout 14% 12% 10% 8% 6% 4% 12.2% 11.8% 10.0% 15 10 5 7.0 8.7 13.1 13.1 2% 0% FY2008 FY2009 FY2010 FY2011 0 FY2008 FY2009 FY2010 FY2011 All figures stated in Rs. crore on a standalone basis
28 Q1 FY 2012 - Financial Highlights Profit & Loss Statement Snapshot Particulars (Rs.mn) Q1 FY2012 Q1 FY2011 Shift Q4 FY2011 Shift Total Income 4,318.1 3,647.4 18.3% 4,097.4 5.39% EBITDA 784.8 779.3 0.7% 442.5 77.4% Margins 18.1% 21.3% - 10.8% - Depreciation 261.2 242.3 7.8% 256.7 1.8% Interest 196.3 121.1 62.1% 141.0 39.2% Profit Before Tax 327.3 415.9-21.3% 44.7 632.2% Margins 7.5% 11.4% - 1.1% - Tax expense 66.4 102.5-35.2% 81.1-18.1% PAT (after minority interest) 260.9 313.4-16.8% -36.4 - Margins 6.0% 8.59% - - - EPS 2.99 3.59-16.7% - -
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30 Shareholding Pattern Particulars % Shareholding (as on June, 2011) Promoters 69.98 Public Shareholding 30.02 Insurance Companies 0.37 Bodies Corporate 3.22 Financial Institutional Investors 7.27 Individuals & Others* 19.16 Total 100.00 * Includes 16.76% held as Treasury Shares in the Company Total 87.4 million shares Listed at: National Stock Exchange (NSE) - HINDNATGLS Bombay Stock Exchange (BSE) - 515145 Calcutta Stock Exchange (CSE)
31 Ratings, Rankings & Accreditations Business Standard Ranking (Out of 1000 top listed corporates, as of Feb, 2010) In terms of Revenue 299 th On Operating Profit Quantum 265 th On Net Profit Quantum 253 rd Rating by CARE (Credit Analysis & Research Ltd.) Long Term credit rating of AA+(implying high safety for timely servicing of debt obligations and carrying very low credit risk). Short Term credit rating of PR1(+), being the highest grade (implying the lowest credit risk). Rated as the best Indian Company in the Glass & Ceramics category by Dun & Bradstreet in years 2009 and 2010 Accredited with ISO 9001:2008 certification, ensuring stringent quality standards and ISO 22000 for food and safety Rated at No.35, out of the best 500 companies by Inc.India (Comprehensive ranking of India s best performing mid-sized companies) in their Sep-Oct, 2010 issue.
Hindusthan National Glass & Industries Ltd. (HNG) For further information please log on to www.hngindia.com or contact: Laxmi Narayan Mandhana (CFO) Amit Agarwal (Manager Finance) HNG Tel: 033-2254-3100 Email: investor.relations@hngil.com 32 Anoop Poojari / Dipti Yadava Citigate Dewe Rogerson Tel: +91 22 6645 1211 / 1218 Email: anoop@cdr-india.com / dipti@cdr-india.com