Revival in Real Estate Could Come as a Boon for Float Glass Industry
When
major sectors in the economy do well, it augurs well for several ancillary
industries that depend on them. A case in point is the Rs 5,500-crore Indian
glass industry, which has shown good growth in the past few quarters driven by
an uptick in demand from user-industries such as infrastructure, construction,
automobiles, food processing, beverages, pharmaceuticals and cosmetics, among
others. The past four quarters have seen a steady growth in the fortunes of
glass companies —with some of them swinging to profit.
For the
industry, FY09 was not particularly favourable. During the first half, when
demand was relatively buoyant, companies faced soaring prices of key inputs. And
during the second half, when commodity prices stabilised, demand stagnated due
to the economic slowdown.
In FY2010, with economy coming back on
track and input costs remaining benign, the industry is again witnessing a
revival as reflected by the improving financials.
Robust growth in
automobiles, infrastructure, liquor & other beverages, boom in building and
construction have enabled the companies in the glass sector to post healthy
results over the past four trailing quarters.
Hindusthan National
Glass, the market leader in packaging glass, has reported 4% Y-o-Y increase in
its revenues and flat growth in profit. With its prime customers in food
processing, liquor and pharmaceutical industry registering growth in volumes,
the company is already seeing signs of recovery in demand. It’s expecting
to close the fiscal with a 75% increase in profit and more than 20% increase in
revenues. Asahi India Glass, a major supplier of float and sheet glass to the
auto industry, has posted a 8% growth in its consolidated net sales over the
past four trailing quarters and significantly reduced its loss to Rs 5.5 crore
against Rs 58.3 crore a year ago. With auto sales growing at a healthy pace, the
prospects for this company also are bright.
Piramal Glass, an
export-oriented specialty glass player, has started showing signs of recovery
and swung to reporting profits since the past two quarters. Catering to the
packaging needs of the fast-growing cosmetics and perfumery sector, the company
is steadily gaining market share in the overseas market on account of being a
low-cost manufacturer. With crude oil prices remaining stable over the past
couple of quarters, the industry has seen an expansion in the operating profit
margins.
With stability on the cost side and good outlook on the
demand side, the packaging glass segment has good prospects. The float glass
segment, with its primary use in the real estate industry, is seeing good demand
pick-up from the residential real estate segment. With commercial real estate
sector showing signs of revival, the prospects of float glass industry are
likely to improve over the next few quarters.
Source: TheEconomicTimes
