Currently looking for acquisition only in India or Asian countries: RB Kabra
Published: 14th June 2012 02:18 PM
Last Updated: 14th June 2012 02:18 PM
Kabra, President, HSIL said "We have given guidelines for sales
growth of 25% and profit growth of 20% for HSIL for the financial
year 2012-13. So, that is the aim and we do see opportunities by
which we will be able to fulfill our targets."
HSIL has shown healthy sales 18.8% in Q4 FY"12. Do you expect
such growth would be maintained in next few quarters?
We have given guidelines for sales growth of 25% and profit
growth of 20% for HSIL for the financial year 2012-13. So, that is
the aim and we do see opportunities by which we will be able to
fulfill our targets.PAT witnessed a marginal growth of 1.3% in Q4
FY12 as the companyâ™s margins hit by rise in power
and fuel prices and dollar appreciation. Going forward, do you
think earnings performance will remain sluggish?
There is pressure on margins because of fuel prices going up and
rupee depreciation. We have increased prices for building product
division by 4% from June. 01,2012 which will take care of the
increased cost. If the rupee comes to normal level and the benefit
of international crude prices coming down is passed on to
industries by public sector oil companies, margins would be
Last year HSIL has completed various brownfield expansion
projects to expand capacities under Building Products and Container
glass divisions. How do you see contribution of incremental
capacity expansion to overall financials of HSIL in FY"13? Could
you elaborate on current and future expansion plans, if any?
HSIL has completed the following expansion in the last 12
>At Bhiwadi Faucet plant capacity was increased from 3 lacs
pcs p.a. to 5 lacs pcs p.a. in August, 2011.
>At Bibinagar, (A.P) sanitaryware plant capacity was
increased by 7 lacs pieces p.a. taking its total capacity to 20
lacs pcs p.a. from 13 lacs pcs p.a.
>Glass furnace of 475 ton per day has been commissioned at
Bhongir in A.P. with effect from 29.5.2012 taking capacity of glass
from 1,125 ton a day to 1,600 ton a day.
HSIL is working on the following expansion plans:
>Putting up a green field faucet plant in Bhiwadi extension
area having capacity 25 lacs pcs p.a. This will be operational in
Q2 of financial year 2013-14.
>Green field sanitaryware plant in Gujarat having capacity 12
lacs pcs p.a. which should be operational by March, 2014.
>With all these expansion plans the company should be able to
sustain revenue growth of 25-30% per year over next 3 years.
In 2011, HSIL acquired 100% equity stake in Garden Polymers, a
manufacturer of PET Bottles. How do you see outlook for this
HSIL is the second largest manufacturer of glass bottles in the
country (AGI Glaspac). Some of our customers were asking us to
supply PET bottles also along with glass bottles. We were exploring
the possibility of diversifying in this business and when the right
moment an opportunity came in, we acquired GPPL which was the
fourth largest manufacturer of PET bottles in India. This business
is not very capital intensive. This has synergy with our glass
business as the customer base to a great extent is same. We see the
revenue of around 2.5-3 billion coming from this segment in next
Are you looking for any acquisitions this fiscal? If yes, what
product line and geographies that you are targeting?
We keep on looking for acquisition in our business segments
which are building products and packaging. If the right opportunity
and right price comes by then we go for it. Looking to the world
scenario, we are currently looking for acquisition only in India or
Asian countries. However, if we are also open to buying some good
brands from Europe, we are also looking at it as well.
How do you see overall industry outlook for Sanitaryware and
Container glass segments?
Overall industry outlook for sanitaryware and container glass
seems very good as there is tremendous shortage of housing in India
and therefore we will continue to excel as a company. Similarly,
the glass is a packaging medium and consumption of packaged goods
in India is also growing at fast pace since current per capita
consumption levels are very low.
Building products revenue jumped 33% in Q4 FY"12. Do you think,
the company will continue to report such strong revenue growth
The 33% growth in building product division in Q4 was because of
additional capacity coming on stream. However going forward our
guidelines for annual revenue growth is 25% for company.
On the other hand, container glass revenue witnessed a moderate
pace of 6.9% in Q4 FY12. Are you facing any slowdown in this
business segment? Do you have any plan to accelerate demand for
container glass? What kind of performance should we expect for
The moderate growth in container glass in Q4 was because of lack
of capacity. For the last one year our glass capacity has been
running 100% and therefore there was no additional capacity
available and the growth percentage shown is also largely because
of product mix change and price increase.
As mentioned above, now we have commissioned a 475 TPD furnace
w.e.f. 29.5.2012, which is around 40% expansion on our existing
capacity and therefore the glass business should also see revenue
growth of 25-30% going forward.
What is your message to the shareholders and investors of the
HSIL is on a very strong footing in both the businesses segments
it operates in. In India, we are the largest in sanitaryware and
2nd largest in container glass. Both businesses have substantial
growth potentials looking to the shortage of housing, very low
level of sanitation, higher income bringing down the average age
for home buying, easy availability of housing loan and increasing
consumption of all packaged commodities. With the expansion plans
in hand, the company is poised for revenue and margin growths and
since there is no immediate plan for dilution, all this will be EPS