Sandeep Sikka, Group CFO, Somany Impresa Group (HSIL)

16 Feb 2022 , 01:57 PM

In an interaction with Mamta Maity, indiainfoline.com, Mr. Sandeep Sikka, Group CFO, Somany Impresa Group (SHIL) said, “we are expecting incremental growth from the high-value products segment as we will soon operationalize our specialty glass manufacturing unit at Bhongir, Telangana, capable of producing 154 tonnes of premium flint and other different colours of glass per day.”

HSIL reported a total income of Rs645 crore in Q3FY22 as compared to Rs548 crore in the same quarter last year, registering a growth of 18% on a YoY basis. What factors have contributed the most to help you outperform?

HSIL delivered strong Revenue growth driven by increased demand for glass bottles in the beer and wine industries in the Packaging Products Division. Our Glass container business continues to see good traction owing to improved realizations, better product mix, and increased sales volume. With the completion of relining of the furnace, Glass container capacity utilization during the quarter was 92% as compared to 83% in the same quarter last year and 66% in the previous quarter. This further helped in sales.

In Q3 FY22, Revenue from Operations of Building Products was Rs243 crore, registering a growth of 35% on a YoY basis.  Revenue growth was primarily due to sustained demand in the real estate sector with supportive interest rates.

Currently, we are under the process of completing the slump sale which is expected to close with customary closing date adjustment on or before 31st March 2022 and subject to necessary approvals. Building Products Division operations post slump sale will be part of Brilloca Limited (a wholly-owned subsidiary of Somany Home Innovation Limited-SHIL).

What are your expectations from Q4 FY 2021-22?

Over the past few years, HSIL has emerged as the most profitable glass packaging company in India. Our current market position and a well-defined growth strategy will help the company to unlock value for all the shareholder stakeholders.

What are your expansion plans?

We are expecting incremental growth from the high-value products segment as we will soon operationalize our specialty glass manufacturing unit at Bhongir, Telangana, capable of producing 154 tonnes of premium flint and other different colours of glass per day.

Please share details about your recent divestment and corporate restructuring

The Board of Directors approved the slump sale of assets & liabilities of the BPD division of HSIL to Brilloca Limited, a wholly-owned subsidiary of Somany Home Innovation Limited, for a cash consideration of Rs630 crore (subject to closing date adjustment). Sales proceeds will be utilized towards pre-payment of existing bank borrowings and will enable headroom for accelerated growth.

This transaction has been carried out with the objective that HSIL shall completely focus on the growth of its packaging business and capitalize on both organic and inorganic opportunities. After the sale of the BPD building division, HSIL will emerge as a focused packaging company, well-positioned to implement its strategic plans to drive the packaging business and continue to unlock value for all stakeholders

What are the Packaging sector scenario for the year 2022? 

When we look at the global scale of the packaging industry, it is a massive economic generator. Statistics indicate that the demand for the world packaging industry will reach USD 1.05 trillion by 2024. However, when we focus on India, the Packaging Industry is expected to register a CAGR of approximately 26.7% during the period (2021-2026). The demand for packaging is growing due to the rising population, increasing income levels, changing lifestyles, increased media penetration through the internet, and growing economy, making it the strongest growing sector in the country.

Another strong focus for the packaging industry in 2022 and beyond, is on providing sustainable packaging solutions for various sectors. Every company that deals with packaged goods is now actively considering joining the green wave as the consumers are more conscious and deliberate about their environmental footprint today. FY22-23 will be another strong year for the sector with a special focus on transitioning towards sustainability and smart packaging solutions.

What is the growth of the Packaging sector as compared to the other manufacturing sectors?

The packaging industry plays a crucial role, adding value to various manufacturing sectors including agriculture, pharma, retail, FMCG, to name a few. It is the fifth-largest sector in its economy being the highest growth sector in the country and the only industry that complements every single product produced in any economy. The aggressive growth of the market is largely driven by the pharmaceuticals and foods & beverages industries.

The growth of these sectors in the coming decade will have a combined effect to take this sector to new heights. The industry, which employs about 5 million people directly and three times more indirectly, will continue to grow due to rapid change across the industry. The organized retail and e-commerce boom, which offer huge potential for future growth of retailing, will continue to support the packaging industry. The increased presence of global and leading Indian companies, consumer brand awareness, and products with ‘clean-label’ messaging will augur well for the industry.

What is the Packaging sector scenario for the year 2022?

When we look at the global scale of the packaging industry, it is a massive economic generator. Statistics indicate that the demand for the world packaging industry will reach USD 1.05 trillion by 2024. However, when we focus on India, the Packaging Industry is expected to register a CAGR of approximately 26.7% during the period (2021-2026). The demand for packaging is growing due to the rising population, increasing income levels, changing lifestyles, increased media penetration through the internet, and growing economy. Moreover, it is one of the strongest growing sectors in the country. Another strong focus for the packaging industry in 2022 and beyond, is on providing sustainable packaging solutions for various sectors. Every company that deals with packaged goods is now actively considering to join the green wave as the consumers are more conscious and deliberate about their environmental footprint today. It looks like 2022 will be a year of revival and turnaround with special focus on transitioning towards sustainability and smart packaging solutions.

What is the growth of the Packaging sector as compared to the other manufacturing sectors?

The packaging industry plays a crucial role, adding value to various manufacturing sectors including agriculture, pharma, retail, FMCG, to name a few. It is the fifth largest sector in its economy being the highest growth sectors in the country and the only industry that complements every single product produced in any economy. The aggressive growth of the market is basically driven by the pharmaceuticals and foods and beverages industries. The growth of these sectors in the coming decade will have a combined effect to take this sector to new height. The industry, which employs about 5 million people directly and three times more indirectly, will continue to grow due to rapid change across the industry. Organised retail and e-commerce boom, which offer huge potential for future growth of retailing, will continue to support the packaging industry. The increased presence of global multinational companies, consumer brand awareness and products with ‘clean-label’ messaging will augur well for the industry.

*Somany Impresa Group is the holding group with three companies under its preview- HSIL Ltd, Brilloca Ltd, SHIL Ltd*