Indian Glass industry can be broadly classified into flat glass and container glass.

Flat Glass or sheet glass 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.

The domestic production of Glass sheet fell for the first time in the last four months in August 2012 when compared to the corresponding month last year due to the high input cost coupled with sluggish demand from its user segments-auto and construction sector. The production reduced by 13% y-o-y to 8250 thousand sq meters in August 2012. Glass sheet production grew by only 2% in July 2012 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 also, Glass sheet production declined by 13% from 9463 thousand sq meters in July 2012, where the production remained flat when compared to the previous month.

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. Toughened glass production declined for the second consecutive month by 3% to 222265 sq meters in August 2012 when compared to the corresponding month last year also due to the poor demand from the user segments. On an m-o-m level, also the production inched up 1% in August 2012 from 220279 sq meters in July 2012, where it fell by 1%. 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. Indian glass container market is estimated to be around USD 1.1 billion and is growing at the rate of 10% per annum. 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.

Bottle gas production grew by only 4% to 111706 tonnes in August 2012, after reporting double digit growth continuously for the last four months when compared to the corresponding month last year. While, on an m-o-m level also the production fell by 8% from 121525 tonnes in July 2012, where it reported a growth of 6% over June 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 India occupying 53% market share in north and 96% in east. With the new plant of 650 tpd each to help consolidate position in south and west. The company has carried out organic and inorganic expansion from 1100 tpd in 2001 to 4300 tpd in FY13. The brown field expansion at Nashik, Maharashtra was commissioned in Q1FY13 and the Greenfield expansion at Naidupeta, AP will be commissioned by the end of Q2FY13, according to the company.

Hindusthan Sanitaryware (HSIL), another largest manufacturer and distributor of container glass in India 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 year. The company expects the Container Glass business to grow at 22-25% for FY13.

Piramal Glass that manufacturers glass containers for the Pharmaceuticals, Cosmetics & Perfumery (C&P) and Speciality Food & Beverage (F&B) industry has a global market share of 6% in the C&P segment and will continue to focus on growing this share.

The price of Soda ash is a major cost in the raw material segment. Higher cost of input particularly Soda ash, which constitutes about 30% of cost of production of glass products, is one of the major factors contributing to the higher cost of glass and glassware. 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. Soda Ash prices since April 2012 on a y-o-y level. Prices reduced by 23% to 24 Rs per kg in October 2012 when compared to the corresponding month last year. On an m-o-m level, the prices have been stable at Rs 24 per kg for the past three months.

Outlook

Indian Glass industry as a whole has been impacted by the sharp rise in the cost of key raw materials clubbed with the 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. The glass production has been affected by the sluggish demand from the user segments viz auto, constructive. 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.

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.

Trend in Production of Glass Sheet