AGI Glasspac plans new greenfield plant

India“s AGI Glasspac, a INR 1.5 billion, strategic business unit (SBU) of Hindustan Sanitaryware & Industries Ltd, is looking to acquire glass production facilities in order to increase its market sh…

India“s AGI Glasspac, a INR 1.5 billion, strategic business unit (SBU) of Hindustan Sanitaryware & Industries Ltd, is looking to acquire glass production facilities in order to increase its market share in the INR 15 billion glass industry. AGI Glasspac is third among the six top players in the Indian glass industry. Bearing in mind the growing logistics cost as well as time disadvantages, the company is also planning to set up a new greenfield project to gain the advantage of multiple locations while also increasing its market share. Mr R K Somany, chairman and managing director of Hindustan Sanitaryware, said 11 September 2004 that the industry is growing at an annual rate of 5-6% and AGI Glasspac currently has a 9% share of the market. Mr Somany was in Hyderabad to announce the modernisation of a second glass furnace at the unit. “Keeping in mind the increased demand for the glass containers, particularly from the liquor industry, AGI Glasspac has decided to increase its capacity through inorganic route or setting up a new project to increase its share substantially over the years,” Mr Somany said. It has appointed a consultancy to carry out a market survey on the potential as well the right approach to increase its market share. “We expect to take a decision in the next few months,” Mr Somany said. The acquisition cost will be around INR 250 million to INR 300 million and a new plant may cost INR 1 billion, he added. According to AGI Glasspac president Mr Arun Kumar, the company has spent over INR 1 billion in upgrades including modernisation of two glass furnaces in the last few years. The second furnance modernisation, which was inaugurated on 11 September 2004, will cost INR 400 million, he added. Both the furnances are being replaced with state-of-the-art SORG Deep Refiner (SDR) furnaces, he added. “The modernisation and upgradation programme were done keeping in mind the increasing demand from quality conscious customers as well as to achieve a higher productivity at a much lower cost,” he said. “We expect to recover the entire expenditure in four years“ time,” Mr Kumar said. Of the total glassware industry output of 1.3 million tonnes per annum, the liquor industry alone accounts for 40%, the soft drink industry 25%, the pharmaceutical industry 20%, and food and cosmetics 15%, Mr Kumar said.