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Flat Glass
Industry
at a glance
Industry Analysis Project By
Mihir
Prabodh
Shaan FlatGlass-IndustryAnalysisMPE12
Executive Summary
Growth in flat glass demand is cyclical to economic growth
and, subsequently, is prone to economic fluct...
Table of Contents
• Introduction to FLAT Glass
• Scope
• Global Industry Perspective
• Indian Perspective
• SWOT
• PESTEL
...
Introduction to FLAT Glass
• The use of glass is of critical importance in
the present day when environmental
conditions a...
Global Industry Perspective
FlatGlass-IndustryAnalysisMPE12
5
 There are around 260 float plants worldwide with a combine...
Global Industry Perspective
FlatGlass-IndustryAnalysisMPE12
6
China Profile
At least 120 float lines currently in
operatio...
Indian Perspective
• FLAT Glass manufacturing is classified under Section C , Division 23,
Group 231, Class 2310 and sub c...
Indian Perspective
FlatGlass-IndustryAnalysisMPE12
8
Investments pouring in Glass Industry:
• Canpack, Polish MNC is putti...
SWOT
Strengths
• Innovative Research &
Development
• Huge Entry cost is a strength to
prevent Large number of player
enter...
PESTEL
FlatGlass-IndustryAnalysisMPE12
10
Porter’s 5 Forces Model
FlatGlass-IndustryAnalysisMPE12
11
Threat of New Entrants
Threat of new entrance in Glass
Manufact...
Strategic Group Map
FlatGlass-IndustryAnalysisMPE12
12
Low Medium High
IndustrySegment
Overall Market Cap
SOLAR
Architectu...
Flat Glass Production process
FlatGlass-IndustryAnalysisMPE12
13
Stage 1: Melting and refining
• Fine-grained ingredients,...
Flat Glass Production process
FlatGlass-IndustryAnalysisMPE12
14
Stage 3: Coating
• Coatings that make profound changes in...
Key Performance Indicators
FlatGlass-IndustryAnalysisMPE12
15
Innovation
Glass industries are investing significant resour...
Key Challenges for the Flat Glass
FlatGlass-IndustryAnalysisMPE12
16
Innovation is crucial for glass industries
Glass indu...
Key Challenges for the Flat Glass
FlatGlass-IndustryAnalysisMPE12
17
Fragmented nature of the industry:
It is no secret th...
Financial Analysis
Financial The Analysis is prepared with the purpose of sharing the experience gained
and lessons learne...
Financial Analysis Consolidated
Particulars ASAHI GLASS Gujrat Guardian Saint Gobain
Share Capital 24 157 74
Reserves and ...
Financial Analysis Consolidated
Particulars ASAHI GLASS Gujrat Guardian Saint GOBAIN
SALES 2,265 599 104
COGS 1,744 360 50...
Financial Analysis – Cash Flow
FlatGlass-IndustryAnalysisMPE12
21
60 27
171
90
114
-
50
100
150
200
250
Opening Cash Cash ...
Key Financial Ratios- ASAHI
FlatGlass-IndustryAnalysisMPE12
22
10.6
14.8
5.3
4.4
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Mar...
Operating Leverage and
Economic Plant Size
FlatGlass-IndustryAnalysisMPE12
23
100
250
500
1000
1500
FC
Interest
Depreciati...
Marketing
• Asahi India Glass has been investing in
the distribution channels over the
period of 30 years and traditionall...
Value Chain Analysis
FlatGlass-IndustryAnalysisMPE12
25
FlatGlass-IndustryAnalysisMPE12
26
Raw
materials
Cost
Type of Fuel
used and cost
incurred
Inbound Logistics
Inbound Logist...
27
FlatGlass-IndustryAnalysisMPE12
1.2 Fuel:
• The glass industry uses furnace oil and natural
gas as its fuel.
• The new ...
28
FlatGlass-IndustryAnalysisMPE12
Outbound logistics in glass industry value chain
mainly refers to the strong distributi...
29
FlatGlass-IndustryAnalysisMPE12
4.Brand Awareness
Despite being in the B2B market, Saint-
Gobain has invested heavily i...
30
FlatGlass-IndustryAnalysisMPE12
Flat glass industry offers a lot of opportunities in terms of services such as product
...
Profit Pool Analysis
FlatGlass-IndustryAnalysisMPE12
31
Profit pool analysis tells us about blocks and clusters in Industr...
Human Resource
• The organized glass sector is dominated by large players like ASAHI Glass India Ltd,
Hindustan National G...
Technology Trends
Innovation cycles have become drastically shorter, disruptive, cutting edge technology
trends do not lea...
Suggested Investment Arenas
34
FlatGlass-IndustryAnalysisMPE12
We are suggesting the potential Investment Areas in the Fla...
Latest Buzz in Indian Flat Glass
35
FlatGlass-IndustryAnalysisMPE12
Industry Attractiveness
Industry Growth Potential
There is a huge potential for growth for Glass industry both domesticall...
Conclusion
The Flat glass industry in India is poised for sustained growth, powered by long term
demand for construction. ...
Appendix
FlatGlass-IndustryAnalysisMPE12
38
Waste Products during Glass Manufacturing
Carbon Emmission
Appendix
FlatGlass-IndustryAnalysisMPE12
39
Appendix
FlatGlass-IndustryAnalysisMPE12
40
Bibliography
http://www.eurotherm.com/industries/glass/flat-glass/
http://www.nsg.com/en/about-nsg/whatwedo
Market Intelli...
Disclaimer
FlatGlass-IndustryAnalysisMPE12
42
This Report has been prepared for NMIMS MPE 12 as a part of Industry Analysi...
Prochain SlideShare
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Flat Glass Industry Analysis

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Comprehensive report of Flat Glass Industry Analysis done as part of our Ex MBA course in a span of 1 yr, spread over 3 trimesters. Report covers:
Industry overview and Indian market scenario
Porter's 5 forces
PESTLE Analysis
Key players & market shares
Strategic Groups,
Industry Attractiveness
Key performance indicators of whole Industry
Financial Analysis, Value Chain Analysis, Profit Pool Analysis
Regulatory issues and suggestion to govt
Marketing and HR
Growth & investment areas
Summary

Publié dans : Formation
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Flat Glass Industry Analysis

  1. 1. Flat Glass Industry at a glance Industry Analysis Project By Mihir Prabodh Shaan FlatGlass-IndustryAnalysisMPE12
  2. 2. Executive Summary Growth in flat glass demand is cyclical to economic growth and, subsequently, is prone to economic fluctuations within the Construction, Automotive and Solar Energy sectors which remain the biggest consumers of flat glass. Flat glass is poised to outpace GDP growth for the next 10 years; in continuation of historic momentum displayed. The Global Flat Glass market was worth $77.7 billion in 2013, and estimated to grow robustly over the next 10 years. Architecture-Flat glass plays a unique role in • Reducing greenhouse gas emissions, • Mitigating the effects of climate change, • Energy conservation by high-performance architectural glass products. Architects are now taking into account environmental factors and incorporating more energy efficient products into building new infrastructures, supported further by tougher government legislations, and building regulations. Automotive- Flat Glass market has also benefitted from volume growth in the automotive industry driven by; aesthetics, increased complexity and functionality - and will continue to do so in the next decade. Additionally, in the Automotive replacement market there is a greater demand towards laminated glass rather than toughened glass. Global concerns towards an acutely deteriorating environment, heavy depletion of natural energy sources, and the subsequent rising cost of energy have compelled modern society to search for alternative means to meet the modern world’s energy requirements. SOLAR- Technological advances in the solar energy market where glass is an integral component, harnessed through photovoltaic and solar thermal energy panel, is a niche, but growing market. Europe leads the innovation race in the solar energy glass market, with Germany being the market leader, followed by Italy. Other than the Solar Energy market for renewable energy, markets such as; electronics, telecommunications, optical, healthcare and aerospace, will continue to produce opportunities for glass consumption in both the public and private sector Architects are increasingly seeking to bring natural environmental factors into the interior of buildings by maximizing natural daylight. This has been achieved through the use of larger glazed areas in facades and roofs, and through entirely glazed facades where the glass is a structural component of the building box. FlatGlass-IndustryAnalysisMPE12
  3. 3. Table of Contents • Introduction to FLAT Glass • Scope • Global Industry Perspective • Indian Perspective • SWOT • PESTEL • Porter’s 5 Forces Model • Strategic Group Map • Flat Glass Production process • Key Performance Indicators • Key challenges • Financial Analysis Consolidated • Financial Analysis – Cash Flow • Key Financial Ratios- ASAHI • Operating Leverage • Marketing • Value Chain Analysis • Profit Pool Analysis • Human Resources • Technology Trends • Suggested InvestmentArenas • Latest Buzz in Glass Industry • Industry Attractiveness • Apendix • Bibliography • Disclaimer FlatGlass-IndustryAnalysisMPE12 ……………………………………….………4 …………………………………………………………… 4 …………….……………………… 5 ……………………………………………………… 7 …………………………………………………………… 9 ……………………………………………………………10 …………………………………… 11 ………………………………………… 12 ……………………………………… 13 …………………………………… 15 …………………………………………… 16 ……………………………… 18 ………………………………………… 21 ……………………………………… 22 ………………………………………………… 23 ……………………………………………… 24 ……………………………………………… 25 ………………………………………………… 31 …………………………………………………… 32 …………………………………………………… 33 ……………………………………… 34 ……………………………………… 35 ………………………………………………36 ……………………………………………………………37 ……………………………………………………………40 ……………………………………41
  4. 4. Introduction to FLAT Glass • The use of glass is of critical importance in the present day when environmental conditions are already a concern for protection of environment in the interest of human health and wellbeing. Glass which is made from all-natural, sustainable raw materials proves to be 100% eco-friendly. • Preference for Glass is due to its being chemically inert and pure nature. Key properties such as transparency and recyclability make glass the most suitable medium of packaging for liquors, pharmaceuticals, lifesaving drugs and food items. The perception of glass having high quality or premium image is also facilitating its growth. The majority of raw materials required by the industry are available locally providing excellent scope for growth and development. FlatGlass-IndustryAnalysisMPE12 4 • Our analysis shall include Float Glass also known as Flat Glass. The basic flat glass product is the first result of the float process. It is the common glass that tends to break into large, jagged shards. It is used in some end products -- often in double glazed windows. It is also the starting material that is turned into more advanced products through further processing such as laminating, toughening, coating, etc • Apart from its use in windows for residential and commercial construction it is also used in Automobile windshields, mirrors, instrumentation gauges and furniture such as tabletops and cabinet doors, solar cells • The float process, invented by Sir Alastair Pilkington in 1952, makes flat glass. This process allows the manufacture of clear, tinted and coated glass for buildings, and clear and tinted glass for vehicles. Scope
  5. 5. Global Industry Perspective FlatGlass-IndustryAnalysisMPE12 5  There are around 260 float plants worldwide with a combined output of about 800,000 tonnes of glass a week. A float plant, which operates non- stop for between 11-15 years, makes around 6000 kms of glass a year in thicknesses of 0.4mm to 25mm and in widths up to 3 metres.  A float plant typically costs €70 million to €100 million to build, depending on size, location and planned product complexity and takes usually 18 months to 30 months to start operations  Once built,it will operate non-stop for a ‘campaign’ of between 10 and 15 years, before requiring refurbishment.  The Global Flat Glass market was worth $77.7 billion in 2013 and the market will grow robustly over the next 10 years. China continues to dominate and will be driven by emerging economies namely; the BRICs (Brazil, Russia, India, and China) and the Southeast Asian nations. Russia will be the fastest growing market and Asia-Pacific the fastest growing region.  The global market for glass (2008) was approximately 46 million tonnes. At the level of primary manufacture this represents a value of around USD 25 billion (Rs. 1150 bn).  Of this tonnage, around 70 per cent is consumed in windows for buildings, 10 per cent in glazing products for automotive applications and 20 per cent used in furniture and other interior applications.
  6. 6. Global Industry Perspective FlatGlass-IndustryAnalysisMPE12 6 China Profile At least 120 float lines currently in operation. Majority are less efficient than “western” style lines. Produce more sheet and other lower quality glass. However, quality/efficiency improving. Market growing at an estimated 8% to 10% annually. Construction products represent 70% to 75% of total fabricated flat glass Europe Profile Overall a mature market. Implementation of stricter energy regulations, particularly in Germany, will benefit the flat glass construction (e.g., architectural glass) market. Annual construction growth estimated at 4% to 5% for the next three years. With an estimated combined 75% market share, Saint-Gobain, Pilkington and Glaverbel dominate the market South America Profile Latin America represents growth potential for flat glass. Flat glass demand increasing at an estimated 5% annually. Pilkington and Saint-Gobain are the dominant vendors. With roughly two-thirds of the flat glass capacity, Brazil is by far the largest flat glass market. Brazil’s flat glass market is also experiencing annual growth of about 5%. However, construction products such as architectural glass are growing at approximately 6% annually. North America Profile Growth estimated at 4% Construction accounts for between 55% and 60% of total demand, but will almost certainly decline with the slowdown in US residential construction activity. Low E-glass, solar control glass, impact resistant glass. Four manufacturers represent nearly three-quarters of capacity: Asahi (AFG): 20% PPG: 20% Guardian: 19% Pilkington: 14% market share (est.)
  7. 7. Indian Perspective • FLAT Glass manufacturing is classified under Section C , Division 23, Group 231, Class 2310 and sub class 23101 of CSO National Industry classification Indian Glass industry: Overview • Firozabad is known as glass city of India. Modern Indian glass industry is around 100 years old. The first glass plant was set up by Lokamanya Tilak at Talegaon, Maharashtra in Aug, 1908. Since then, Industry has made a steady progress since India’s independence. • Indian packaging industry is estimated to be $15 billion, projected to be growing at 14-15% CAGR in previous years. However, Flat glass industry is only 8% of India’s overall packaging industry. • With economic liberalization, increased consumer awareness about health, eco-friendly and energy conservative products, share of glass in packaging industry is projected to increase significantly. • The Indian glass industry is pegged at $2.7 billion. • The per capita glass consumption in India is 1.2 kg, compared with 8-9 kg in developed countries and 30-35 kg in the US. • The main drivers of India’s flat glass industry include: Real Estate, Automobiles and Manufacturing. • Flat glass consumer segment growth: The three major sectors that drive the demand of glass are: • Real Estate: The Indian real estate market size is expected to touch US$ 180 billion by 2020. Foreign direct investment (FDI) in the sector is expected to increase to US$ 25 billion in the next 10 years, from present US$ 4 billion, according to a latest industry body report. With a market size of USD 66.8bn, the Real Estate sector contributes around 5 % to the nation’s GDP. • Automotive Industry: Although economic vulnerability and lower sentiments resulted in market slowdown in 2012 and 2013, India is expected to regain strong growth trend under the present govt. and is poised to be 3rd largest automotive market by 2016 due to high demand and cost advantages in terms of manufacturing growing at a CAGR of 9.9%. • Manufacturing Industry: The Government of India has realized the significance of the manufacturing industry to the country’s industrial development and is taking necessary FlatGlass-IndustryAnalysisMPE12 7
  8. 8. Indian Perspective FlatGlass-IndustryAnalysisMPE12 8 Investments pouring in Glass Industry: • Canpack, Polish MNC is putting 750 TPD plant in Maharashtra. • Trakya Cam joint venture with HNG Float glass. • Oak tree capital has acquired 64% equity stake in Cogent Glass, Hyderabad. • 100% FDI in construction and India as manufacturing hub for automotive. • End user segment-beer-Molsoon coor, Cobra, Budweiser, Carlsberg etc has entered in Indian economy. • Liquor is the largest end-user segment and comprises over 50-55% of total volumes. • Diageo USL deal has been signed off. Diageo has signed off 25.2% equity stake. • Pernod Ricord is evaluating a JV takeover of ABD, Tilaknagar industries. • Radico Khaitan likely to sell stake to Suntory holdings Japan. • Rs 200-crore Cogent Glass unit owned by OAKTREE CAPITAL MANAGEMENT established at Mahabubnagar, Hyderabad Trends in Indian economy supporting glass industry demand:
  9. 9. SWOT Strengths • Innovative Research & Development • Huge Entry cost is a strength to prevent Large number of player entering. • Demand in Infrastructure projects and buildings • Demand in Automotive Segments [More people buying cars • Recyclability 90% Weakness • Diseconomies to scale • Over Leveraged Financial position • Capital Intensive Market • Poor Supply chain • Dominated Un-organised Industry • Surplus Capacity during Boom • Rising Input Cost • High Interest Cost • High Energy Cost FlatGlass-IndustryAnalysisMPE12 9 Opportunities • Asset leverage • Access to Financial Markets to raise money through Debt • Bright future of Innovation through R&D • Expansion of applicability into new Industries eg SOLAR • Increased acceptance of Green building concept • Positive Economy Changes • Positive Growth In GDP Threats • Demand Slowdown for Related Industry like Real Estate. • Interest Rate Risk as this industry is capital intensive • Exchange Rate Risk • Threat from Substitute products. Like Cement • Price Wars among players • Cheap Imports from outside Countries • Mass Rapid transportation system reducing Car usage • High Cost of Fuel for Cars • Devaluation Rupee – Dollar
  10. 10. PESTEL FlatGlass-IndustryAnalysisMPE12 10
  11. 11. Porter’s 5 Forces Model FlatGlass-IndustryAnalysisMPE12 11 Threat of New Entrants Threat of new entrance in Glass Manufacturing is comparatively low. The capital investment to start float glass manufacturing is very high. Float glass manufacturing Industry is highly technology intensive and requires highly skilled people hence new entrants may find it difficult to enter. Economies of scale created by large manufacturing companies is deterrent for new comers. Threat of Substitutes Threat of substitute for Float glass is comparatively medium. Major substitutes are Cement , Bricks, Steel, Wood, Fibre Plastic Bargaining Power of Buyers Bargaining power of buyers of float glass is medium. The oligopolistic nature of the industry ( Few Large players dominate the market) Over 95% of the trade happens through dealers to the institutional Buyers. Switching power of end customers like automotive manufacturers are low since there are no perfect substitutes for glass Bargaining power of Suppliers Key suppliers for float glass manufacturers are Sand miners , Soda Ash suppliers, Electricity and Gas suppliers and supplier power in float glass industry is high due to the availability of the raw materials. Typically to be cost effective the manufacturer needs suppliers from which is not far than 200 kms from the plant. This affects the bargaining power of the glass manufacturers The main raw material Sand is also a raw material for many other industries like construction industry. This industry is traditional Price Taker Degree of Rivalry in the Industry Although glass being a commodity, price plays an integral role in competition Major players like ASAHI Glass, Saint Gobain and Gujarat Guardian etc. have come up with their strong brands and aggressive branding strategies Strong dealer network established by the major players Hence, the Internal competition in the industry is very high Threat from Unorganized sector of local Manufacturers Competitive rivalry Threat of SubstitutesBargaining Supplier power BargainingSupplierbuyerThreatofNewEntrants Overall = MediumOverall = Medium Overall = Medium Overall = Medium Overall = Low
  12. 12. Strategic Group Map FlatGlass-IndustryAnalysisMPE12 12 Low Medium High IndustrySegment Overall Market Cap SOLAR Architecture Automotive ASAHI GLASS India Is the market leader at 70% of the market and caters primarily to the Architectural and Automotive Segment • ASAHI along with its Subsidiaries and Associates, offers a wide range of glass products and end to end solutions across the entire glass value chain to its customers, through their Strategic Business Units (SBUs • Will be focusing on SOLAR in coming years Gujrat Gobain • Maintains its leadership position in the domestic market has strong network of dealers and authorised retailers and “MODIGUARD” name enjoys strong brand image Saint-Gobain Glass • Specializes in float glass manufacture and magnetron coated glass • Tie up with mojor Car Manufacturer like Maruti and Hyundai
  13. 13. Flat Glass Production process FlatGlass-IndustryAnalysisMPE12 13 Stage 1: Melting and refining • Fine-grained ingredients, closely controlled for quality, are mixed to make batch, which flows as a blanket onto molten glass at 1,500ºC in the melter. • Today, Float makes glass of near optical quality. Several processes - melting, refining, homogenizing - take place simultaneously in the 2,000 tons of molten glass in the furnace. They occur in separate zones in a complex glass flow driven by high temperatures. • It adds up to a continuous melting process, lasting as long as 50 hours, that delivers glass at 1,100ºC, free from inclusions and bubbles, smoothly and continuously to the float bath. • The melting process is key to glass quality. Compositions can be modified to change the properties of the finished product. Stage 2: Float bath • Glass from the melter flows gently over a refractory spout onto the mirror-like surface of molten tin, starting at 1,100ºC and leaving the float bath as a solid ribbon at 600ºC. • The principle of float glass remains unchanged from the 1950s. • The product, however, has changed dramatically: from a single equilibrium thickness of 6.8mm to a range from sub-millimeter to 25mm; from a ribbon frequently marred by inclusions, bubbles and striations to almost optical perfection. • Float delivers what is known as fire finish, the luster of new chinaware.
  14. 14. Flat Glass Production process FlatGlass-IndustryAnalysisMPE12 14 Stage 3: Coating • Coatings that make profound changes in optical properties can be applied by advanced high temperature technology to the cooling ribbon of glass. • On-line chemical vapor deposition (CVD) of coatings is the most significant advance in the float process since it was invented. • CVD can be used to lay down a variety of coatings, less than a micron thick, to reflect visible and infrared wavelengths, for instance. • Multiple coatings can be deposited in the few seconds as the glass ribbon flows beneath the coaters. Further development of the CVD process may well replace changes in composition as the principal way of varying the optical properties of float glass. Stage 4: Annealing • Despite the tranquility with which float glass is formed, considerable stress develops in the ribbon as it cools. • Too much stress and the cutter will break the glass. To relieve the stress, the ribbon undergoes heat-treatment in a long furnace known as a lehr. • Temperatures are closely controlled, both, along and across the ribbon. Stage 5: Inspection • The float process is renowned for making perfectly flat, flaw-free glass. • To ensure the highest quality, inspection takes place at every stage. Occasionally a bubble is not removed during refining, a sand grain refuses to melt, and a tremor in the tin puts ripples into the glass ribbon. • Automated on-line inspection does two things. It reveals process faults upstream that can be corrected. • It enables computers downstream to steer cutters around flaws. Flaws generate waste. Customers press constantly for greater perfection. • Inspection technology now allows more than 100 million measurements a second to be made across the ribbon, locating flaws the unaided eye would be unable to see. The data drives 'intelligent' cutters, further improving product quality to the customer. Stage 6: Cutting to order • Diamond wheels trim off selvedge – stressed edges - and cut the ribbon to size according to computer- generated instructions. • Float glass is sold by the square meter. Computers translate customers' requirements into patterns of cuts designed to minimize wastage.
  15. 15. Key Performance Indicators FlatGlass-IndustryAnalysisMPE12 15 Innovation Glass industries are investing significant resources in intensive R&D programmes to develop new ways to use glass, to make available new products, to enhance recyclability and effective recycling, but also to improve the energy efficiency of manufacturing sites and therefore further improve the environmental performance of glass products throughout their life-cycles Energy utilisation Glass manufacturing is a high-temperature, energy-using activity which constitutes a constant economic and environmental challenge for the glass industries to keep energy use to a minimum. It provides a natural incentive towards finding the best innovative energy efficient manufacturing processes as energy accounts for a significant share of production costs Environmental Performance Glass making requires raw materials. The most important raw materials used in glass making are sand and recycled glass. The recycling of glass is already a reality in the glass industries although there are variances in the way glass sectors use recycled materials. Exchange of best practices and experiences on recycling are therefore key for glass industries to increase even further the recycling rates of our products. Production Efficiency Operational Efficiency in Production is the Key Performance Indicator. This includes reduction in wastage, breakage thus improving the capacity utlization
  16. 16. Key Challenges for the Flat Glass FlatGlass-IndustryAnalysisMPE12 16 Innovation is crucial for glass industries Glass industries are investing significant resources in intensive R&D programmes to develop new ways to use glass, to make available new products, to enhance recyclability and effective recycling, but also to improve the energy efficiency of manufacturing sites and therefore further improve the environmental performance of glass products throughout their life-cycles Using energy in the most efficient way Glass manufacturing is a high-temperature, energy-using activity which constitutes a constant economic and environmental challenge for the glass industries to keep energy use to a minimum. It provides a natural incentive towards finding the best innovative energy efficient manufacturing processes as energy accounts for a significant share of production costs Promoting recycling, ensuring access to raw materials and managing chemicals in the most responsible manner Glass making requires raw materials. The most important raw materials used in glass making are sand and recycled glass. The recycling of glass is already a reality in the glass industries although there are variances in the way glass sectors use recycled materials. Exchange of best practices and experiences on recycling are therefore key for glass industries to increase even further the recycling rates of our products. Access to raw materials is also a common challenge of glass industries when rare earths and / materials for which access is a source of fierce international competition, are used. Precisely because glass industries use very little quantities of such materials, securing supply of these can sometimes be very challenging. Surplus Capacity Lack or decline of demand for Float glass leads a surplus capacity of Glass Manufacturing units. This is a very crucial challenge since the investment in capacity has huge fixed / sunken costs. The only way to keep making money is to have units running on maximum capacity Low GDP Growth Low GDP Growth directly impacts the Glass industry growth. Consumer awareness: One of the important reasons for low volume of value-added glasses can be attributed to consumers. As glass has gained increased popularity in the last fifteen years, most consumers in India are not aware of types of value-added glass and their respective advantages. Consumers are not aware of the availability of various types of glass and what benefits each one gives. Most customers have the perception that glass is something that is transparent and very fragile
  17. 17. Key Challenges for the Flat Glass FlatGlass-IndustryAnalysisMPE12 17 Fragmented nature of the industry: It is no secret that the glass processing industry in India is much disorganized. Because of the fragmented nature of the industry, glass processors, wholesalers, glaziers, and all other participants are short-term driven. Almost no effort has been put into customer service, reducing costs, or systematically developing markets. Spiraling costs The glass industry is also weighed down by the spiraling cost of manufacturing. Energy costs are increasing, as are those of raw materials and infrastructure. The regulatory framework of building codes for safety and energy also needs to keep pace with industry growth and new glass uses. In case value-added glass has to make inroads in India at a scale and pace comparable to European countries, then prices will have to come down and in a hurry. Lack of technical knowledge among architects It may seem strange that many architects are not aware of the types of value-added glass available, and many turn to glass processors to suggest a type of glass for a particular application. Because glass is a relatively new product in building applications, those who use it are still learning about applications and benefits of various types of glass. Price sensitivity of Indian consumers Despite robust economic growth during the last decade, Indian consumers and the Indian market are very price sensitive. With a price differential between basic flat glass and value- added glass, consumers would rather opt for the basic glass types. Low penetration in the residential sector Use of value-added glass has gained popularity in commercial buildings to a large extent, but residential buildings, which are a major source of demand for these glass types, are not using much of these products. Value-added glass is finding application in only a miniscule number of residential units. Lack of codes Another dire problem facing the value-added glass industry is lack of any codes for the products. There are no government guidelines for the use of any particular types of glass. There was an initiative by one of the state governments to make the use of tempered glass mandatory in commercial buildings, but it has yet to see the light of the day. A drive to adopt a ruling similar to that of Germany’s for use of low E glass in windows can drive demand for value-added glass in India.
  18. 18. Financial Analysis Financial The Analysis is prepared with the purpose of sharing the experience gained and lessons learned during the financial and functional analysis for Flat Glass Industry and giving a glimpse of the key financial drivers influencing this industry. We have analyzed Financials and Strategies for 3 Company’s • Asahi Glass India • Gujrat Guardian • Saint Gobain This covered all the 3 companies’ common-size income statements and balance sheets, comparative income statements and balance sheets, various financial ratios such as liquidity, capital structure and solvency, return on investment, operating performance, asset utilization and market measures over period from year 2008 to year 2014. Conclusions are drawn from the stated financial analysis as well as areas for improvement and investment recommendations. Detailed Financials are available in the appendix FlatGlass-IndustryAnalysisMPE12 18 Asahi India Glass Ltd (AIS) • Incorporated in the year 1984, AIS is the outcome of the cooperative joint venture between the Labroo family, Asahi Glass Co. Ltd. (AGC) and Maruti Suzuki India Limited (MSIL). • Continues to innovate and add to its portfolio of comprehensive glass solutions. Gujarat Guardian Ltd. • Member of Guardian Industries Corporation (U.S.A), a world-renowned manufacturer of float glass and other allied products. • Maintains its leadership position in the domestic market has strong network of dealers and authorised retailers and “MODIGUARD” name enjoys strong brand image. Saint-Gobain Glass • The flat glass business provides a variety of solutions across architectural and automotive segments. At the very heart of the Flat Glass Division, Saint-Gobain Glass specializes in float glass manufacture and magnetron coated glass.
  19. 19. Financial Analysis Consolidated Particulars ASAHI GLASS Gujrat Guardian Saint Gobain Share Capital 24 157 74 Reserves and funds 238 409 - Borrowings 1,397 7 6 Deferred tax liability 79 38 - Current liabilities & provisions 666 73 18 Total Liabilities 2404 684 97 Net fixed assets 1,126 197 56 Capital work-in-progress 43 - 6 Investments 16 - - Deferred tax assets 193 - - Net Current assets 929 468 36 Loans & advances 96 18 - Total assets 2,404 684 97 FlatGlass-IndustryAnalysisMPE12 19 Below Table provides a comparison for some Key Financials Numbers Balance Sheet as on 31st March 2014 ` Crs • ASAHI Glass is dominant Player which has invested more than Rs.1000 Cr through Long Term Borrowings. Huge investment in plant capacity done. • Gujrat Guardian has infused its own capital and practically has no Debt. This has helped the firm to earn Net profits and plough back the Profits back into Business. • Saint Gobain is a world conglomerate in Glass and Ceramics and has this division focused on automotive segment. All the funding is business is through Capital. This company has minimal Debts
  20. 20. Financial Analysis Consolidated Particulars ASAHI GLASS Gujrat Guardian Saint GOBAIN SALES 2,265 599 104 COGS 1,744 360 50 Selling and ADMIN 233 87 24 Interest Paid 200 - - Depreciation 153 24 9 TAX (25) 28 0.5 PAT (40) 102 0.4 FlatGlass-IndustryAnalysisMPE12 20 Below Table provides a comparison for some Key Financials Numbers Revenue Account as on 31st March 2014 ` Crs • ASAHI is practically leading the industry with 70% of the market share. • Contribution margin is from 23% for ASAHI to 40% for Gujrat Guardian • Net profits are reported only by Gujrat Guardian when the industry leader is struggling to register profits • Variable costs differs to the extent of power and fuel efficiency • ASAHI GLASS incurs huge selling and Distribution expenses due to the high distribution setup • ASAHI incurs huge Interest payouts on its Long term Borrowings and has a huge depreciation on the huge Fixed Asset Base. • Power and Fuel cost consist of 27%. All types of available power sources like Electricity, Natural Gas, HSD, Furnace Oil, kerosene are used • Increasing Cost of Fuel is primarily due to high prices of Natural Gas. [CY RS.979/- per unit of MMBTU Vs Rs. 365/- per MMBTU in 2011] • However the companies looks for cheaper options in form of Furnace Oil/ HSD/ Electricity • Excise Duty, Direct labor & other manufacturing cost constitutes the remaining 34% of the COGS. • ASAHI has managed to grow net sales by 9%~ to `2,265 crores in FY14.
  21. 21. Financial Analysis – Cash Flow FlatGlass-IndustryAnalysisMPE12 21 60 27 171 90 114 - 50 100 150 200 250 Opening Cash Cash Flow from Operations Cash Flow from Investment Cash Flow from Finance Closing Cash ASAHI GLASS 256 347 106 22 37 - 100 200 300 400 500 Opening Cash Cash Flow from Operations Cash Flow from Investment Cash Flow from Finance Closing Cash Gujrat Guardian 1.3 0.4 2.9 3.4 0.4 - 1.0 2.0 3.0 4.0 5.0 Opening Cash Cash Flow from Operations Cash Flow from Investment Cash Flow from Finance Closing Cash Saint Gobain Amt in ` Crs • Asahi Glass have huge Interest outgo due to heavy borrowings. • Investments are made in new capacity when the existing capacity is worn out • Gujrat Guardian has huge Cash . There is no significant investment in capacity. • All cash generated from Operations is ploughed back in business • No payout for Interest since the company does not have any significant borrowings • Saint Gobain has very minimal Cash due its low sales. • Cash generated from Operations is used in investment of new capacity.
  22. 22. Key Financial Ratios- ASAHI FlatGlass-IndustryAnalysisMPE12 22 10.6 14.8 5.3 4.4 - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 Mar-12 Mar-13 Mar-14 Industry DEBT EQUITY RATIO • Huge Debts • Infusion of Rs.250 Cr in Equity has resulted a drop in this ratio 0.4 0.2 0.6 0.6 - 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Mar-12 Mar-13 Mar-14 Industry INTERST COVER RATIO • Since the profit before Interest is not sufficient to pay the Interest , this ration is less than 1 and is not satisfactory • Effect of this ration has an adverse impact on the Bond Ratings 57 60 63 116 129 121 Mar 12 Mar-13 Mar-14 Debtors (days) Creditors (days) DEBTORS AND CREDITOR’S AVERAGE PERIOD The receivable are settled within 60 days of invoice generation The Sundry creditors are paid within a period of 4 months. This could be due to the payment made for import of SODA ASH from other counties. INVENTORY TURNOVER RATIO 4.1 4.4 4.8 4.8 3.6 3.8 4.0 4.2 4.4 4.6 4.8 5.0 Mar-12 Mar-13 Mar-14 Industry Inventory Turnover Ratio is in Par with the Industry Standard. The inventory balance as compared to Sales has been reducing from 27% in FY 11-12 to 21% in FY 13-14 and thus improving this ratio
  23. 23. Operating Leverage and Economic Plant Size FlatGlass-IndustryAnalysisMPE12 23 100 250 500 1000 1500 FC Interest Depreciation Variable Cost 1,350 1,550 1,750 1,950 2,150 2,350 2,550 2,750 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Sales BREAK EVEN 800 UNITS Units are in lakhs and are measured in CSM [Cubic Square Metres] • The above chart depicts Operating Leverage at every Incremental units sold • The Red Line indicates the Losses the company is making. According to our estimate the company will make breakeven at once it sells 800 lakh Cubic Square Metres of Float Glass. • From the point indicated by a Green Spot, the Company is forecasted to make Profits at every incremental unit sold. • Currently ASAHI Produces only up to 82%~ of the installed capacity and sells only 73%~ of the finished goods. • Lack of Demand along with the Increase in the Raw Material prices have resulted into the Inventory increase * Indicative number taken from Asahi GLASS Production data as base
  24. 24. Marketing • Asahi India Glass has been investing in the distribution channels over the period of 30 years and traditionally we do not see any other form of marketing spends. This is due to the fact that ASAHI seems to have the First Mover advantage and has been able to establish itself successfully. Future spends will be to develop the Dealer networks and increase penetration into the explored market • Gujrat Guardian also has invested huge amounts in establishing a chain of dealer networks and limited Marketing spends in terms of Advertisements. The company continues this focus consistently which is evident from its consistent spends in Selling and Distribution expenses • Saint Gobain is probably the first company who understood the power of advertising and effective communication. The challenge for Saint-Gobain when it entered the Indian market in 2000 was to build a brand in a market that tended towards commoditization. Since building an unfamiliar and foreign sounding brand like Saint-Gobain was even more challenging. • It wasn't just the brand. Glass was considered a low-involvement product category and even glass-buying was considered a complex purchase process. In that context, the company realized that it had to target different sets of people with a single but powerful tag line for its brand, which reflected quality, future and the heritage of the hoary Saint-Gobain brand. It came up with `The future of glass. Since 1665.' FlatGlass-IndustryAnalysisMPE12 24 Two gentlemen sitting for a meal get a shock of their life when they see a lady trying to splash water on them, only to realize that she is actually cleaning a glass wall which is seems almost clear as invisible A Waiter carrying tea passes through a hall using his breath to locate whether there is a glass wall in front of him. This brings out the clarity of Glass Saint Gobain produced
  25. 25. Value Chain Analysis FlatGlass-IndustryAnalysisMPE12 25
  26. 26. FlatGlass-IndustryAnalysisMPE12 26 Raw materials Cost Type of Fuel used and cost incurred Inbound Logistics Inbound Logistics: The glass industry value chain analysis gives extremely interesting insights about opportunities in cost cutting, product innovation, joint ventures, backward and forward integration and economies of scale 1.1 Raw Materials procurement: • Raw materials and fuel, put together account for major chunk of cost incurred in flat glass production. Unfortunately, Glass Industry in India has been struggling in both areas. • One key feature of the soda ash industry is the fact that soda ash can be produced by two different methods – synthetically, which accounts for about three-fourths of global supply, or from natural mineral resources, which provides about one-quarter of global supply. • Trona is the primary mineral mined to produce soda ash, and the most exploited reserves are located in Wyoming in the U.S, although the most recent natural soda ash development is in Beypazari, Turkey. • Natural soda ash production costs are significantly cheaper than synthetic production costs. In fact, sharp increases in crude oil prices since 2005 mean that the delta between natural and synthetic soda ash production costs has widened significantly. Soda ash which contributes for nearly 30% of cost of production is not readily available in India. • Major manufactures of Soda ash in India are Tata Chemicals, GHCL (formerly Gujarat Heavy Chemicals), DCW and NIRMA (since delisted) and Saurashtra Chemicals (not listed). • A little over 80% of country’s soda ash making capacity is in Gujarat. • For every tonne transported from Gujarat to the southern and eastern markets, the logistic costs are $75-80 a tonne. Whereas for the Chinese and European manufacturers, the logistic costs are only $35-40 a tonne to these ports. • Recognizing the problem, the government has imposed anti-dumping duties on exporting countries from China PR, EU, Kenya, Pakistan, Iran, Ukraine and USA. Production of soda ash from these countries constitutes about 80% of the world production. • Prices of Soda Ash have increased by 20% during the last two years. Imposition of anti-dumping will result in further increase in the prices of imported soda ash and Akali manufactures will further jack up the prices of indigenous soda ash with a view to increase their profit margin. This weighs on Glass industry production costs Batch house High temperature furnace Refiners Float furnace Annealing Storage
  27. 27. 27 FlatGlass-IndustryAnalysisMPE12 1.2 Fuel: • The glass industry uses furnace oil and natural gas as its fuel. • The new government raised the natural gas prices by 33.33% to US $5.61 per million British thermal units [mmBTU] from 1st of Nov 2014. • This has severely impacted players like Gujarat Guardian that uses Natural gas compared to furnace oil by other players in industry. On the other hand, global furnace oil prices have dropped drastically and it has helped the glass industry. • As is evident, fuel prices are pivotal to the growth of glass industry because of unpredictable market, govt. policies and interconnected markets across globe each affected by various internal and external factors. Type of glass Production in 2011-12 Energy consumption per year Share Container 2.74 0.60 0.15 0.75 65% Float 1.74 0.24 0.06 0.30 26% Others 0.19 0.07 0.02 0.12 9% Total 4.66 0.91 0.23 0.17 100% [Million tonnes per year] 2. Operations: • The glass industry, unlike other manufacturing industry, has a unique dynamics and looking from the perspective of value chain, Supply Chain management forms the backbone of Operations for smooth execution of ongoing business processes and ERP system helps enable the decisions making system. • The supply chain management of leading flat glass players integrate primary processing (coating lines) with whole industry chain including inventory management, channel optimization, vendor managed inventory, distributor management, master production scheduling, capacity planning, warehouse replenishment and Supplier network planning and thus use the push and pull strategies to achieve high volume custom production, supply chain. • An ideal supply chain in flat glass handles lifecycle management, Data visibility, Supply Chain transparency and functional integration.
  28. 28. 28 FlatGlass-IndustryAnalysisMPE12 Outbound logistics in glass industry value chain mainly refers to the strong distribution networks of flat glass industry players. Over 95% of domestic float glass sales take place through dealers. Hence players have focused on building their own dealer network. Following chart gives a sneak-peek into the strong hold of major players in the industry and how they manage the business across India: Company North East West South Total Saint Gobain 195 75 210 279 759 Asahi 112 40 90 177 419 Gujarat Guardian 93 30 160 171 454 Gold Plus 68 10 48 20 146 Sejal 54 11 80 81 226 HNGIL 85 12 170 151 418 3 Outbound Logistics: Distribution network of Asahi glass: • Asahi India Map Auto Glass Limited (AIM), is a distribution company into distribution of “AIS” brand automotive safety glass, “ESSEX” brand adhesives all over India in replacement market. AIM is also a franchisee of M/S Windshield Experts (Retail fitment chain into repair and replacement of automotive glasses) and operates 14 WE centers all over India. • The Company is a Joint venture of M/S Asahi India Glass Limited and M/S Map Auto Limited Gwalior with 50% shareholding by each party. . As the distribution arm for AIS’ automotive glass product portfolio, Asahi India Map Auto Glass Limited (AIM) ensures that the aftermarket has quick and easy access to AIS Auto glass. • It started its operation as Welkin Auto Services in the year 1992 and was rechristened as Asahi India Map Auto Glass Ltd. in 2001. AIM is a joint venture between Asahi India Glass Ltd. and Jamna Auto Industries Ltd. It is head quartered at Gurgaon. • With a product range that includes tempered, laminated and processed glass, which is complemented by a wide distribution network, AIM is today leading the way in providing world-class auto glass products across the breadth of the country, serving an ever-increasing base of customers – from large dealers and retailers to the smallest of spare part retailers and garages.
  29. 29. 29 FlatGlass-IndustryAnalysisMPE12 4.Brand Awareness Despite being in the B2B market, Saint- Gobain has invested heavily in brand building and is a classic case of successful B2B brand. Till 2008, the brand had eight television commercials to its credit. These investments has enabled Saint- Gobain enormous advantages in terms of brand visibility which translates to better margins and market share. Construction Glass products are low involvement products and the purchase process is often complex that involves lot of people like architects, building contractors, investors etc. By investing heavily in the brand building, Saint-Gobain has tried to influence the key decision makers. The campaigns focus on two broad themes 1. To establish the brand as the leader 2. Highlight the quality of Saint-Gobain glasses. Saint-Gobain has the tagline: "The future of glass”. The brand takes pride in its rich heritage and wants to position itself as an innovation leader. The launch of sun- ban glass is in this direction. Although such products are available in the market, Saint-Gobain is the first brand to advertise such a product. By building a brand Saint-Gobain has achieved two advantages - a. De-commodize the market b. Emphasize on non-price attributes like quality Even in a B2B market like that of flat glass industry, brand awareness is increasing day by day with Saint Gobain selling its products under the “Saint Gobain” brand, Gujarat Guardian under the “Modi-Guard” brand and Asahi under “Asahi Float” brand.
  30. 30. 30 FlatGlass-IndustryAnalysisMPE12 Flat glass industry offers a lot of opportunities in terms of services such as product selection and installation, educating and helping people about eco-friendly designs, glass consulting etc. Most of the big players have tapped these opportunities by doing forward integration. AIS Glasxperts: Glasxperts is a full-service glass solutions brand of Asahi India Glass Ltd that brings an integrated approach and specialised knowledge to glass selection and installation for homes, offices and commercial spaces. It is India’s only glass lifestyle solutions provider that brings together an integrated approach and specialised knowledge to glass consultancy, product selection and installation to transform living spaces and commercial spaces. Glasxperts claims to meet need for modern, eco-sensitive aesthetics with a full spectrum of world class, high-quality, branded glass products, fittings and systems with assured safety and hassle-free services. Bringing together a team of experienced glass professionals and an unmatched portfolio of AIS products, Glasxperts delivers solutions that span, Privacy, Energy Efficiency, Aesthetic & Decorative, Strength & Safety, Acoustic, and Window Solutions. AIS Adhesives Ltd: The repackaging and marketing organisation for glass bonding adhesives of AIS, AIS Adhesives Limited (AIA) deals primarily with the sourcing, procurement and distribution of various kinds of adhesives employed in the sealing of windshields and other automotive glass. Over the years, AIA has established a robust distribution network that today caters to a sizable share of the auto glass aftermarket segment in India. It has a manufacturing facility at Baddi (Himachal Pradesh) and a network of retail outlets in Jaipur (Rajasthan), Jodhpur (Rajasthan), Agra (Uttar Pradesh), Chandigarh (Punjab) and Amritsar (Punjab). Saint Gobain’s Weber In India, Saint-Gobain Weber was incorporated in 2004 as a 100% subsidiary of Saint- Gobain Weber and commenced commercial operations in 2005. Saint-Gobain Weber India combines global expertise with deep local knowledge to provide solutions in tile and stone fixing, joint fillers (or grouts), masonry mortars, water-proofing chemicals, sealers and impregnators technical products and admixtures. They have manufacturing facilities at three strategic locations: Wada in Maharashtra, Palakkad in Kerala and Bhiwadi in Rajasthan. This enables them to provide a highly responsive and quick service to our customers, reducing carbon footprint. They also provide on-job site training to contractors and applicators to educating them on the most modern techniques of construction. The state-of-the-art plant in Wada is equipped with world-class R&D facilities to produce innovative technologies specifically created for the Indian environment. With a wide distribution of distributors and retailers, our products reach over 50 towns in India. 5. Maintenance, Services and Compliance:
  31. 31. Profit Pool Analysis FlatGlass-IndustryAnalysisMPE12 31 Profit pool analysis tells us about blocks and clusters in Industry where profit can be made and which, among those, will be most suitable for an investor or business man. The glass industry profit pool analysis is done using following methodology: Break up Cost structure for each activities as percentage of total revenue of Indian flat glass industry is taken from AIGMF magazine Dec 2011 edition. A similar break-up is taken from a report presented by Pilkington glass for the UK Glass industry which is considered matured. The UK cost structure is considered as benchmark and costs for Indian glass industry is compared. At each level, potential to earn profit is analyzed and proposals are made based on observations while doing research on glass Industry from secondary sources. 20% 7% 15% 20% 5% 5% 13% 5% 10% 25% 4% 13% 13% 6% 9% 13% 7% 10% Profit Pool India UK Opportunities for Indian Flat Glass Market: Backward integration to produce raw materials such as Soda Ash, Using advanced, high end, cutting edge technology for processing of raw materials Hire Skilled labors, train and increase productivity Explore alternative sources of energy. Scope for outsourcing it to someone and cut cost Plant wide automation, TQM initiatives to reduced SG&A costs Outsource transportation or use innovative methods on similar lines as cross- docking
  32. 32. Human Resource • The organized glass sector is dominated by large players like ASAHI Glass India Ltd, Hindustan National Glass & Industries Ltd, Piramal Glass, Saint-Gobain India, HSIL, Owen Corning, Triveni Glass, Borosil, Nippon Electric glass, Gujarat Borosil and Sezal Glass. The organised glass industry employs 30 lakh people directly and provides indirect employment to 5 lakh people whereas the unorganized sector employs around 5-6 lakh people. • In Dec 2012, Rajasthan Minister of Industries and Mines, Honorable Shri Rajendra Pareek announced a fund of Rs 10 crore for skill development in the Ceramic and Glass sector. Context: • Glass has come into its own in the building industry. Over Rs. 3,500-4,000 crore of glass is being used in building industry. However, while the glazing industry has grown very fast, there are gaps in skills in installation and glass processing which has led to poor quality of workmanship, delayed completion and additional costs arising from rework. Also, the more complex site operations are installation of facades and it requires a range of skills and knowledge that are not yet been recognized as specific skill or trade. It is now as essential as traditional materials such as cement, steel, sand and blue metal. But this also raises a concern for those in the industry — shortage of skilled manpower — for handling glass is not like handling concrete or brick laying. Glass Academy: • It is an inclusive non-profit organization, founded by Saint-Gobain, which works on knowledge dissemination amongst the various stakeholders in the Indian glass industry. Glass Academy is governed by an independent board comprising distinguished experts from academia and industry who have made significant contribution to the development of Indian glasscape. Glass Academy offers several training aids like online training modules (e-learning) on glass and glazing, skill institutes (building facade and processing) to facilitate quality workmanship, development of specific design tools, thematic workshops etc.With the advent of technology and availability of materials locally, buildings in India have started having extensive amount of glazing – either in the form of façade glazing or in the form of windows. Private and government infrastructure is also witnessing major growth in all parts of the country in which structural glazing plays a vital part of it. Owing to this boom, it is estimated that there are over 4,500 workforce in glass processing and 300,00 people employed in the organised and unorganized sections of the glass fabrication and installation industry Glass Academy Skill Institute: • The Gujarat Technological University, in association with the Glass Academy, has launched the Glass Academy Skill Institute in Gujarat to train and certify students, engineers and entry level semi-skilled workers in the building façade industry and glass processing industry, and create a bank of skilled workforce. Approximately 350 students are expected will benefit in the first year of the operations. To mark the occasion, a memorandum of understanding was signed by Dr. Akshai Aggarwal, Vice-Chancellor, Gujarat Technological University, and Padmakumar, Mentor – Skill Development Initiatives, Glass Academy, and Head of Human Resources for Flat Glass Business and Research, Saint-Gobain in India. FlatGlass-IndustryAnalysisMPE12 32
  33. 33. Technology Trends Innovation cycles have become drastically shorter, disruptive, cutting edge technology trends do not leave much time for companies to pick up with competition. Flat glass industry too has undergone a sea change not only in the way it is perceived and used but also the way it is manufactured and the opportunity that it offers in the entire value chain. There is a tremendous potential for innovation and R&D in India Flat Glass industry in following areas 33 FlatGlass-IndustryAnalysisMPE12 • Product Design, • Production planning and engineering • OEM, Refractories , • Software Applications and development , • Integrated Solutions • Digital factories , • Totally integrated automation • Financial services • Knowledge management • Packaging
  34. 34. Suggested Investment Arenas 34 FlatGlass-IndustryAnalysisMPE12 We are suggesting the potential Investment Areas in the Flat Glass Industry Investment Areas Required Cap in Cr Competition Operating Profit Margin Breakeven Second Hand OEM business 5 Sharma Transports 25% 2 years Safety & Risk 7 HEYE Speedline 10%-15% 4-5 years Flat glass Factory Maintenance Chemical Industry expertise 10 AIS Adhesives Ltd 10-15% 2-3 years IT Solutions like ERP, SCM, CRM etc Providing It Solutions & Domain expertise 10 Siemens 25%- 35% 3 Years Refractories, Flat glass Plant installation and Commissioning and Integrated Solutions 50 Tata Refractories, AIS Glassxperts 10-15% 4-5 years Specialised Glass Production 100 Triveni Glass Industries 12-20% 4-5 years Product design, R&D and Innovation 120 Saint Gobain R&D Center 25%-30% 7-8 years Warehousing Providing storage solution 150 Leo Pack, Fg Glass industries 10%-15% 4-5 years Raw materials procurement 200 Tata Chemicals, DCW, Nirma, Saurashtra Chemicals 12-20% 4-5 years In Bound & Outbound Logistics Providing Transportation 250 9% - 14% 6-8 years FLAT Glass Manufacturing 600 to 2400 ASAHI, Gujrat Guardian 20% Already profitable The above Assumption are made by observing into the various industry trends during our research while preparing this report. Inputs are taken from Industry Portals and Blog
  35. 35. Latest Buzz in Indian Flat Glass 35 FlatGlass-IndustryAnalysisMPE12
  36. 36. Industry Attractiveness Industry Growth Potential There is a huge potential for growth for Glass industry both domestically and internationally. Hence it is attractive for the investors for investing. Domestic Glass industry is suppose to grow in the near future by 14%. Competition and Profitability Competition by the domestic players may not be a great concern. However, competition from foreign players may be a cause of concern. Foreign players especially from UAE, China and Pakistan enjoy huge subsidies from governments. Which considerably reduces their cost of production and unfavorable for Indian players Potential of the Company to tackle Unattractive Factors Glass industry is capital intensive and the return of the investment is comparatively slower. Also the demand side of glass industry depends on the economic growth of the country. If Economic growth is slower it may directly affect the players. Hence, companies which is debt funded would find it difficult to be profitable in the short rum Degree of Risk and Uncertainty Though the overall Indian glass industry looks favorable for investment. Some of the key risks and uncertainty faced by the industry involves • Fluctuating Fuel Prices • Increased cost of raw material e.g. Soda Ash • Mining related scams • Labor issues Problems faced by the Industry • Low GDP growth • Lack of Demand • Raising Input cost 36 FlatGlass-IndustryAnalysisMPE12
  37. 37. Conclusion The Flat glass industry in India is poised for sustained growth, powered by long term demand for construction. In India, the construction sector is expected to do well mainly due to the fiscal incentives given to infrastructure development. Increase in income levels and availability of a range of financing options for housing is enabling rapid growth in housing construction. At the same time, industry players are gearing up for growth through building capacity and focusing on technology and process improvements. Improving capability of Indian players is getting reflected in increasing exports across both ceramics and glass. The industry offers a bright picture for existing players, as well as potential investors The glass industry looks optimistically towards a bright future. The industry will supply its customers with products that exceed the performance of existing products and do so at lower cost, and will also introduce new classes of products - thereby providing exceptional value and service to its customers. The industry must be aggressive in its commitment to invest in technology, create innovative products, and collaborate where needed. By moving decisively to improve its future, the glass industry intends to survive and prosper in the intensely competitive and challenging global marketplace FlatGlass-IndustryAnalysisMPE12 37
  38. 38. Appendix FlatGlass-IndustryAnalysisMPE12 38 Waste Products during Glass Manufacturing Carbon Emmission
  39. 39. Appendix FlatGlass-IndustryAnalysisMPE12 39
  40. 40. Appendix FlatGlass-IndustryAnalysisMPE12 40
  41. 41. Bibliography http://www.eurotherm.com/industries/glass/flat-glass/ http://www.nsg.com/en/about-nsg/whatwedo Market Intelligence report 2013 http://www.glasstec- online.com/cipp/md_glasstec/custom/pub/content,oid,2880/lang,2/ti http://npcs.in/profiles/profile/216/glass-manufacturing.html http://www.glasstec- online.com/cipp/md_glasstec/custom/pub/content,oid,2880/lang,2/ti http://npcs.in/profiles/profile/216/glass-manufacturing.html http://www.reuters.com/article/2012/10/31/idUS135632+31-Oct- 2012+BW20121031 http://www.reportjunction.com/CompanyProfile/Gujarat-Guardian-Ltd- G0446.htm http://profit.ndtv.com/stock/asahi-india-glass-ltd_asahiindia/reports http://www.emt- india.net/process/glass/pdf/FloatGlassProductionProcess001.pdf http://www.glassforeurope.com/en/issues/life-cycle-analysis.php http://www.glazette.com/Glass-Knowledge-Bank-60/Glass-history.html FlatGlass-IndustryAnalysisMPE12 41
  42. 42. Disclaimer FlatGlass-IndustryAnalysisMPE12 42 This Report has been prepared for NMIMS MPE 12 as a part of Industry Analysis project in Bangalore under the guidance of Prof Narayani R. All rights reserved. All copyright in this report and related works is owned by NMIMS. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of NMIMS This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of our knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. NMIMS neither recommends nor endorses any specified products or services that may have been mentioned in this publication and nor does it assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication. NMIMS shall, in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this publication. For more Information on Flat Glass Industry please contact Mihir Jha mihirjha27@gmail.com Shaan KK kk.shaan@gmail.com Prabodh P patilprabodh30@gmail.com

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