Hindusthan Glass expects margins to stay subdued for the next year

Date: 31 August 2012
Source: thehindu.co.in

Date: 31 August 2012

Kolkata-headquartered, container glass-maker, Hindusthan National Glass and Industries Ltd (HNG), expects its margins to be subdued for the next four-to-six quarters.

For the latest quarter ended June 30, HNG’s operating margin — calculated as a percentage of operating income to net sales — dipped to nearly 8 per cent, from 12 per cent in the same period last year.According to L.N.Mandhana, Senior Vice-President and CFO, input costs went up by over 30 per cent in the last two years.

But a corresponding increase in product prices has not happened.

“Pressure on margins is due to an increase in input prices, particularly, in power and fuel costs. Over the last two years margins were subdued by around 4-5 percentage points. Margin pressure is likely to continue for another 12-15 months,” Mandhana told Business Line. This apart, HNG incurred a capital expenditure around Rs 1,600 crore in setting up two 650 tonnes a day unit — one each at Naidupeta and Nashik.

“It will take another year for the new units to run at optimum capacity. Till then it will exert a pressure on margins,” he added.

HIKE IN PRODUCT PRICES

The company is also planning to hike product prices by 6-8 per cent by December to offset the rise in input costs. Product prices have been hiked by 25 per cent in the last two years, he said.

A steady demand, of around 12 per cent annually, will help ensure sales despite the price hikes. The Rs 1,900-crore HNG caters to various sectors such as alcoholic beverages, pharmaceuticals and perfumes.

COST-CUTTING MEASURES

Using natural gas to run its furnaces in two — Bahadurgarh and Neemrana — of its seven units will lead to cost cutting. About 30-35 per cent of HNG’s total sales are energy costs, Mandhana said. “We are using natural gas supplied by GAIL. This gives us cost arbitrage.”

He, however, could not state the exact amount of savings the company is likely to gain through the use of natural gas.

abhishek.l@thehindu.co.in

shobha.roy@thehindu.co.in
600450 Hindusthan Glass expects margins to stay subdued for the next year glassonweb.com

See more news about:

Others also read

MORE...

Wicona Curtain Walling for Glasgow Velodrome
The Emirates Arena and Sir Chris Hoy Velodrome have just been completed, creating a new world class sporting landmark for Scotland.
Construction Employment Declined in Most States in November as Anxiety Over Fiscal Cliff Causes Contractors to Hold Off on Hiring
Hawaii and Texas Top List of 20 States and D.C. Adding Construction Jobs Since November 2011 as Delaware and New York Trail; Vermont and Louisiana Led 19 States with One-Month Gain, D.
SAGE Electrochromics, Inc. Files Patent Infringement Lawsuit in U.S. District Court Against View, Inc.
SAGE Electrochromics, Inc., a world leader in the development and manufacture of dynamic glass, located in Faribault, Minn., today announced it has filed a lawsuit in U.S.
The American Scenario in The Glass Industry
The United States is honoring its role, to the best of its ability, as the world's locomotive, although despite the positive performance of the real estate market, America seems to be recovering slower than expected.
Turkish glass producer to expand operations at home and abroad with the help of EBRD loans
The EBRD is providing loans worth €110 million to Turkish glass manufacturer Trakya Cam A.Ş. that will expand its product range at home and in Bulgaria and also establish a presence on the Russian market, setting new standards in energy efficiency.
Wausau provides historically styled, blast-mitigating, hurricane-resistant window system for renovation of modernist federal buildings in Puerto Rico
Helping protect federal government offices and occupants in Puerto Rico, while preserving the Modern aesthetic, Wausau Window and Wall Systems provided high-performance systems for the Federico Degetau Federal Building and the Clement Ruiz Nazario U.S.

Add new comment