The domestic production of Glass sheet grew by only 2% in July 2012 to 9463 thousand sq meters after reporting double digit growth for the past three months (April-14%, May-10% and June-11%) when compared to the corresponding month previous year. While on an m-o-m level, there was a slight increase in the production in July 2012 from 9431 thousand sq meters in June 2012, where it recorded a fall of 2% from 9250 thousand sq meters in April 2012.

Fiber Glass is a type of glass that is commonly used for boats, automobiles, water tanks, roofing, pipes and casts. The production of Fiber Glass has been witnessing a fall recently. During July 2012, the production inched up by just 1% at 3533 tonnes, after starting the new financial year 2012-13 with 23% growth in April 2012, which eased to 14% in May 2012, 5% in June 2012 and has further eased in July 2012.

Glass sheet and fiber glass WPI index grew by 2% in August 2012 over the same month last year, while on an m-o-m level, the index improved by 1% in August 2012 while remaining almost flat for the previous four months

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. As a result of its safety and strength, tempered glass is used in a variety of demanding applications, including passenger vehicle windows, shower doors, architectural glass doors and tables, refrigerator trays, as a component of bulletproof glass, for diving masks, and various types of plates and cookware.

According to the latest data from CSO, the toughened glass production declined by 4% to 220279 sq meters in July 2012, after reporting a growth for the previous four months when compared to the corresponding month last year. On an m-o-m level, also the production fell by 1% in July 2012. The WPI index of toughened glass has been witnessing a fall on a y-o-y level from the month of May 2012. The index fell by 1% in August 2012 over August 2011. While on an m-o-m level, the there has been a slight increase in the index in August 2012 from July 2012.

Asahi India Glass, India's largest integrated glass company and manufactures a wide range of safety glass, float glass, architectural processed glass and glass products. The profitability of Asahi India has been impacted despite the considerate rise in the sales due to the steep hike in the raw material cost coupled with a sharp rise in the cost of power and energy.

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. The company operates four Auto Glass manufacturing facilities at Bawal, Roorkee, Chennai and Taloja and three sub-assembly facilities at Bengaluru, Halol and Pune in Maharashtra. With all these units operating at full capacities, 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 crores.

AIS Float Glass commands 25% share in the Float Glass market. However, the profitability in Float Glass division was also mainly impacted by the surge in the raw material costs and hike in power and fuel costs. 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.

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.

Bottle gas production has been reporting a healthy growth when compared to the other glass products. The production grew by 21% to 119868 tonnes in July 2012 when compared to the corresponding month last year. From the beginning of the current FY12-13, the bottle glass have reported double digit growth on a y-o-y level and has been growing steadily from 10% growth in April 2012, May 2012-14%, June 2012-15% and has further increased in July 2012.

Bottle Glass and Bottle ware WPI index increased by 5% in August 2012 when compared to the corresponding month last year, while on an m-o-m level, the index dipped by 1% in August 2012. The WPI index of Glass Vials that are often used to store medications has been flat at 119.30 from June to August 2012, reporting a rise of 2% on a y-o-y level. The monthly WPI index of Glass Vials has been falling from February 2011 to February 2012 when compared to the corresponding month previous year but has been reporting a rise since then.

Hindusthan National Glass, the largest container glass packaging solutions provider in Indi occupying 55% market share, has been extending their capacities and expects the production and sales volumes to improve significantly from the extended capacities as the utilization level increases. The company is planning to take a price hike in Q3FY13 to offtake the cost increase for FY13. The management added that the long tern growth of the company is intact. The company has a current installed capacity of 4235 TPD in India (including Naidupeta) and 320 TPD in Germany. It has planned to expand capacity to 4775 TPD in India by FY14. The management expects the production and sales volumes to improve significantly from Q2FY13 onwards from the extended capacities as the utilization level increases.

Hindusthan Sanitaryware (HSIL) has planned capex of total Capex of Rs 200 for its two projects that is expected to be completed in 2013 and there is no Capex planned for the next two years sustainable 20-25% growth in the Container Glass business in Q2FY13 and expects the Container Glass business to grow at 22-25% for FY13.

Piramal Glass, whose new furnace of 160 TPD is operational since April 2012, going forward expects that as the new capacity stabilizes and improvement in product mix is achieved, they will witness improvement in profitability. Piramal Glass has a global market share of 6% in the C&P segment and will continue to focus on growing this share.

Outlook

The Indian Glass industry as a whole has been impacted by the sharp rise in the cost of key raw materials and massive unprecedented depreciation of Indian rupee against the US dollar. 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. Major players are taking price hikes to pass on the cost pressure to customers and are expanding their capacities to improve their margins. However, the short term outlook is uncertain due to demand uncertainnities and the possibilities of further pressure on margins, while the long term growth intact on the back of growing preference for glass products.

Float glass sector continues to be impacted by poor demand in auto and construction sector. However, the long term demand growth prospects of this segment remains strong, thanks to possible revival in real estate in the medium term, thanks to allowing 51% FDI in retail.

Glass bottles are recording healthy growth in production as well as prices. But higher input costs, spike in fixed costs (like salaries, depreciation, interest costs) on expanded capacities will continue to haunt them for a few quarters.

So, the sheen in the glass bottles or sheets is not going to be reflected in the producers' financial results any time sooner.