Hindusthan Glass expects margins to stay subdued for the next year

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.


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.


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.



600450 Hindusthan Glass expects margins to stay subdued for the next year glassonweb.com

See more news about:

Others also read

The Emirates Arena and Sir Chris Hoy Velodrome have just been completed, creating a new world class sporting landmark for Scotland.
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., 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 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.
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.
We sincerely thank all our members, friends and visitors for being part of GlassOnWeb and its success during 2012.

Add new comment