The glass containers unit of Hindustan Sanitaryware & Industries Ltd, AGI Glaspac, plans to increase its capacity by 68% at an estimated cost of Rs210 crore, says its president Arun Kumar Dukkipati.
AGI says it expects an additional annual revenue of Rs200 crore because of the capacity expansion. The investment would be funded by about Rs150 crore in debt.
AGI manufactures glass bottles and jars for the liquor, beer, pharmaceuticals and food and beverages industries. It has a capacity of around 950 million containers per annum and the proposed expansion would add a capacity of 650 million containers.
Hindustan Sanitaryware itself is part of the Somany Group, which makes building products and glassware. Building products accounted for about 51% of annual revenues, or Rs267.1 crore.
The Indian glass container industry, estimated at Rs1,500 crore, has been growing at around 8% a year, while AGI posted a compounded annual growth rate of 21% for the last four years and has a market share of around 18%, which it says will go up to 25% once the new capacity comes on line.
The new facility, at Bhongir, some 45 km from here, is set to open before March.
The liquor and beer industry uses 45% of India’s glass container production, followed by pharmaceuticals at 22%, with soft drinks, cosmetics and food contributing the rest. AGI expects its exposure to the liquor and beer industry to rise substantially from 35% at present.
“Most of our key customers in this segment are ramping up their liquor and beer capacities... implying a steep rise in demand for our products,” says Kumar. Exports account for 20% of AGI’s revenue and are expected to be about 36% of the expanded capacity. “We are planning to tap the global cosmetics industry for our exports,” says Kumar. Hindustan Sanitaryware shares fell 1.76% on the Bombay Stock Exchange, to Rs 78.35.