Key Sector Data Market Cap (Rs. Crore) 4497 Market Cap (USD Million) 818 P/E 22.4 P/BV 1.9 Debt/Equity 2.2 ROA (%) 2.6 ROE (%) 8.6 EV/Sales 1.7 EV/EBITDA 9.9

	Sales	PBDIT	PAT	PBDIT margin	PAT margin
	% chg YoY	% chg YoY	% chg YoY	%	%
Dec-2011	16.0%	-10.0%	-54.0%	16.6%	2.8%
Mar-2012	14.0%	9.0%	10.0%	16.8%	5.0%
Jun-2012	17.0%	-17.0%	PL	14.8%	-0.04%
Sep-2012	7.0%	-21.0%	PL	14.0%	-2.6%
2011-12	19.0%	170.0%	34.0%	57.5%	6.0%
2012-13 (F)	14.0%	-61.0%	-26.0%	19.5%	3.9%
2013-14 (F)	12.0%	-9.0%	-38.0%	15.8%	2.1%

Indian Glass industry has been categorized into flat, container and other. Flat Glass or glass sheet is commonly used for windows, glass doors, transparent walls and windshields. Most flat glass is soda lime glass, produced by the float glass process. Flat glass segment comprises of float glass and rolled glass, which are mostly used in architectural and automotive applications. Container Glass is a type of glass for the production of glass container such as bottles, jars, drink ware and bowls. Container Glass stands in contrast with the flat glass. Container glass, which is the largest segment in the glass sector, comprises of glass packaging for consumer goods and pharmaceuticals. The other glass segment mainly includes glass used in optical and lens industry and in manufacture of cutlery, electrical insulation and various other sectors.

The glass industry in India is rapidly transforming. The consumption of processed glass in architectural segment is growing at a fast pace. In the past couple of years there has been a huge amount of investments in architectural downstream processing. A huge challenge in the industry in the coming years would be significant excess capacity. Till the domestic demand grows to be large enough to absorb this additional capacity, the industry needs to focus on exports. Saint Gobain glass India has a large international network for exporting all over the world and it would leverage it fully. Thus, the market will pose a challenge in the medium terms at least for the next three years.

The domestic production of Glass sheet after showing growth of 26% in October fell by 12% in November at 8,314 thousand sq. meters on YOY while, on sequential front also , it declined 15% in November followed by gain of 10% in October 2012.

On the other hand, fiber glass domestic production remained flat at 3,615 tonnes in November followed by an increase of 3% in October on YoY basis, while on sequential front, it eased by 1% in November after decreasing by 2% in October. Fiber glass is regularly used in protective equipment, such as helmets because of its light weight and durability. It is also used to make storage tanks, roofing laminate, door surrounds, chimneys and in pipe systems

The WPI index of fiber glass & glass sheet after showing continuously flat growth, it gained by 2% in December on MoM , while , it remained flat during the same period on YoY.

Trend in Glass Sheet Production in Thousand Square Meters
Month	2012 - 13		2011 - 12		2010 - 11
	Production	% Chg.	Production	% Chg.	Production	% Chg.
Apr	9250	14	8101	3	7870	-5
May	9649	10	8745	3	8454	21
Jun	9431	11	8499	2	8369	23
Jul	9463	2	9286	12	8304	11
Aug	8253	-13	9505	26	7522	0
Sep	8887	5	8480	18	7200	-12
Oct	9796	26	7796	1	7682	0
Nov	8314	-12	9403	30	7231	6
Dec	--	0	10845	24	8755	14
Jan	--	0	8445	2	8242	16
Feb	--	0	7775	3	7573	6
Mar	--	0	9264	-3	9567	27
% Chg : Year on Year Difference
Source : Central Statistical Organisation

Trend in Fiber Glass Production in Tonnes
Month	2012 - 13		2011 - 12		2010 - 11
	Production	% Chg.	Production	% Chg.	Production	% Chg.
Apr	3940	23	3195	5	3052	37
May	3858	14	3390	6	3194	77
Jun	3582	5	3418	8	3152	87
Jul	3533	1	3486	5	3305	75
Aug	3404	-2	3463	4	3315	76
Sep	3757	7	3498	9	3212	70
Oct	3667	3	3577	10	3247	72
Nov	3615	0	3598	3	3484	85
Dec	--	0	3583	5	3427	18
Jan	--	0	3636	9	3348	7
Feb	--	0	3713	18	3143	0
Mar	--	0	4115	23	3337	3
% Chg: Year on Year Difference
Source : Central Statistical Organisation

Toughened Glass is also made from float glass that has been specially heat treated. It is a type of safety glass processed by controlled thermal or chemical treatments to increase its strength compared with normal glass. It is commonly used for side and rear windows in automobiles. Toughened glass production in India showed a growth of 32% to 2,94,443 sq. meters in November following by gain of 28% in October on YoY while on Mom, it increased by 1% in November 2012. The WPI index of laminated glass and toughened glass remained flat in December both sequentially and YOY basis.

Trend in Toughened Glass Production in Square Meters
Month	2012 - 13		2011 - 12		2010 - 11
	Production	% Chg.	Production	% Chg.	Production	% Chg.
Apr	221726	3	215975	8	199794	32
May	222912	8	206411	3	199943	29
Jun	283849	37	206825	5	196198	27
Jul	220279	-4	229769	0	228953	46
Aug	313154	36	230027	-1	231185	37
Sep	284525	20	236899	7	222398	31
Oct	290168	28	227477	-1	229283	32
Nov	294443	32	223139	9	205051	9
Dec	--	0	240461	1	237474	26
Jan	--	0	225037	3	219533	17
Feb	--	0	213296	-1	214357	7
Mar	--	0	222947	1	220172	10
% Chg: Year on Year Difference
Source : Central Statistical Organisation

The demand for the container glass is driven by the growth in the user industry i.e. liquor & beer, pharmaceuticals, cosmetics & perfumery, food and beverages. The primary raw materials engaged in the manufacture of container glass are sand (silica and quartz), limestone (calcite), cullet (broken glass), soda ash, dolomite and feldspar. Indian glass container market is estimated to be around USD 1.1 billion and is growing at the rate of 10% per annum. The per capita glass container consumption is 1.5 kg in India lower compared to other countries.

Bottle glass production deplete by 8% in October and November 2012 on YoY while, it dropped by 3% in November after increasing by 4% in October 2012 on sequential basis.

The WPI index of glass bottles & bottle ware slipped by 1% in December on MoM while , it gained by 6% during the same period on YoY basis

Trend in Glass Bottle Production in Tonnes
Month	2012 - 13		2011 - 12		2010 - 11
	Production	% Chg.	Production	% Chg.	Production	% Chg.
Apr	108983	10	98907	2	96793	9
May	120754	18	102272	5	96995	7
Jun	119911	20	99757	9	91198	1
Jul	121525	23	99178	6	93784	-3
Aug	111571	4	107205	17	91850	-6
Sep	96884	-10	107348	14	93813	1
Oct	101033	-8	109669	14	96424	7
Nov	98440	-8	106834	11	96404	10
Dec	--	0	111360	11	100404	3
Jan	--	0	112499	9	102821	6
Feb	--	0	106158	19	89227	1
Mar	--	0	110733	3	107118	6
% Chg : Year on Year Difference
Source : Central Statistical Organisation

Soda ash is one of the major raw materials in the manufacturing of glass. Its cost constitutes about 30% in production of glass products. Major manufactures of Soda ash in India are Tata Chemicals, Gujarat Heavy Chemicals, DCW and NIRMA. They continue to rule the Indian market by fixing the prices of soda ash. Major portion of soda ash demand for glass sector is met through imports. Thus, domestic prices of soda ash are fixed based on the landed costs of imports.

Soda Ash prices dropped by 9% in December at Rs.25 per kg and further declined by 4% to reach Rs.24 per kg in January 2013 on sequential basis. Besides, the fall in soda ash prices accelerated to 29% in January 2013 on YoY from 19% decline in December 2012. On a quarterly basis, soda ash prices dropped by 18% to Rs.26 per kg for the December quarter on YoY basis. The decline in prices was on subdued demand in China with the over supply and gloomy economic conditions.

China PR, EU, Kenya, Pakistan, Iran, Ukraine and USA are the major sod ash producers, which constitutes around 80% of total world production. India's Ministry of Finance has imposed anti-dumping duty on import of soda ash from these countries during June 2012. The duty varies from USD 2.38 per tonne to USD 38.79 per tonne, depending on the manufacturer and the country of exports. The anti-dumping duty would last for five years.

Asahi India Glass (AIS), India's largest integrated glass company, manufactures a wide range of safety glass, float glass, architectural processed glass and glass products. AIS Auto Glass caters to around 72% of the passenger vehicles segment through the OEM route and has remained a market leader in the segment. AIS Auto Glass has recently taken fresh initiatives to remove some bottlenecks and raise its capacity. The same is aimed at bringing down the overhead and freight costs. The ensuing expansion involves enhancement of direct production and supporting equipment. Total project outlay, is estimated to be around Rs.125 crore. AIS Float Glass commands 25% share in the Float Glass market. AIS expects that the growth in Float Glass segment is expected to pick up once the interest rates start softening leading to increasing demand for real estate.

Hindustan National Glass (HNG), the largest container glass packaging solutions provider in India has commissioned its Glass container plants at Naidupeta (Andhra Pradesh) and its second line of operation at Nashik (Maharashtra) with a capacity of 650 MT per day during the September and June quarter respectively. Company has commercially commenced Naidupeta plant in Andhra Pradesh towards the end of Q2FY13. Further, company is in plans to expand to 5,015 TPD by 2015 from existing 4,235 TPD of capacity (including Naidupeta). HNG acquired assets of Germany based Agenda Glass (AG) with a manufacturing capacity of 320 TPD in May 2011 and commenced operations under HNG management in August 2011. HNG expects this company's overall operations to break even in FY2013. Hence, from the extended capacities and increased capacity utilizations, management expects the production and sales volumes to improve significantly. In order to optimize the cost, company is implementing various processes and systems across the manufacturing units. The company is sourcing power through IEX, and it has entered into long term tie ups with mine owners for captive processing and supply of silica sand. Therefore, company expects the margins to improve as the initiatives start yielding cost benefits in the coming quarters.

Hindusthan National Glass & Industries (HNGIL) together with other promoters of HNG Float Glass (HNGFL) signed a joint venture agreement with Turkey-based Trakya Cam Sanayii AS. With the JV agreement, shareholding of the company and other promoters of HNGFL shall reduce from 87.6% to around 45% and Trakya will become an equal shareholder by about 45% shareholding in HNGFL. IFC, Washington will continue to hold the balance stake (about 19% of the increased paid-up capital) in HNGFL. The shareholding of HNGIL, post the consummation of the proposed transaction , shall stand diluted from the present 47.4% to about 15% in HNGFL.

Outlook

Indian Glass industry as a whole has been impacted by the sharp rise in the cost of key raw materials accentuated by unprecedented depreciation of Indian rupees against the US dollars, a double blow on the cost front. Apart from the rise in the cost of raw materials, a sharp rise in the cost of power and energy has also impacted the industry. Even though the short term growth looks pale, the long term growth of the industry is intact backed by the expected revival in auto sector, real estate sector and in the retail sector due to the allowing of 51% FDI. Growth in Float Glass segment is expected to pick up once the interest rates start softening leading to increasing demand for real estate. Finally, players who have taken initiatives to control the costs will benefit with relatively better margins.

Glass consumption growth is expected to increase in all the major sectors such as consumer goods, pharmaceuticals, automotive and construction driven by up tick in demand. The lower per capita consumption of 1.5 kg in India as compared to the other countries and the strong economic drivers for end user segments (liquor, beer, pharma, food, cosmetics etc) will boost the demand for the industry.