The year 2012-13 marks sixty years of HNGs manufacturing operations. It was in1952 that our first plant at Rishra rolled out the first bottle, which it continues to doeven today. It has been an eventful six decades during which India and the world has changed dramatically. So has the way of running business.
Some things however remain the same and among the most enduring paradigms is thecyclical nature of the economy and industry. In the last twenty years alone businesses inIndia have faced several roller-coaster ups and downs, starting with the liberalization ofthe early nineties when the proverbial Hindu Rate of Growth broke the shacklesand crossed 7% (1995-97). It then averaged below 5% (2001-03), skyrocketed past 9%(2006-08) before falling again in the last two years. And every swing of revival andretreat has seen accompanying moods of hope and fear.
It is well known that for the Indian industrial economy FY 2012-13 has been one of theworst in recent memory with high inflation and interest rates coupled with sluggishgrowth. Through most of the year indices of industrial growth remained flat, or evennegative, as demand stalled and costs spiraled. In particular companies that had bet onthe Indian Growth Story during the last decade found themselves badly hit as capexcommitments and expanded capacities raised costs without commensurate revenue due to weakdemand. Many companies were forced to find ways of cutting expenses and since onecompanys expense is another companys income this had a domino effect.By Q4, with burgeoning deficits, falling rupee and a government mired in policy paralysis,the entire India Growth Story was being held in doubt by the skeptics.
However, as the decades have shown, both the optimism and pessimism tend to beoverdone. If we take the entire time horizon since 1991, the average Indian today earnsnearly 4 times more than two decades ago in real terms. The difference is even more markedin the middle class and above. For example, there are almost 20 times as many cars on theroad today as compared to 1991. Most consumer industries have been averaging double digitgrowth despite slowdown in other sectors and even at 5% India is growing faster than mostother countries. If issues of policy and implementation can be sorted out I have no doubtthat a decadal growth average of 7%+ will be maintained through the 2010s.
In my view, for established companies and market leaders like HNG, what matters is notthe booms and blips of short economic cycles but the ability to build enduring assets thatcan best leverage decadal trends. In this regard I believe we are well placed to take on abuoyant future as well as withstand the intermittent dips. We are one of the few companiesinternationally to have an in-depth understanding of glass making. We are also the marketleaders in India with an enviable reputation for quality. We have aligned our productionto the Indian Growth Story by nearly quadrupling our capacities since 2000. At the sametime we have continued to deliver highest standards of quality products to our clientsthrough consistent investments in world-class equipment and deep-rooted culture ofquality. Our cost structures have been fine-tuned by our constant efforts to go beyond theestablished norms and ensure maximum utilization on resources. These factors havetranslated into an ability to offer quality products at competitive prices, which hasenabled us to win customer confidence.
Apart from being an opportunity for improving business efficiencies, adverse situationsalso bring about a need to introspect and look at business plans without the tints of rosyoptimism. A result of this introspection has been our decision to divest our majoritystake in HNG Float Glass Limited in favour of a strategic international partner, TrakyaCam Sanayii A.3. The partnership brings in strong technological knowhow for value-addedfloat glass and automotive grade glass segments, both of which have considerable growthpotential in India. Further, in the automobile glass the entry of Trakya Cam into theIndian market will open up significant opportunities in OEM markets on account of theirglobal reputation and tie-ups. International management skills and global industryexpertise can also be expected to positively impact efficiencies. Trakya Camstechnical, financial and manpower strengths, coupled with HNGs strength inIndias glass industry are sure to result in much better and deeper inroads in themarkets going forward.
Before I conclude I would like to touch upon another long term aspect that businessestoday need to take cognizance of. These are issues that pertain to the environment andsociety at large which are becoming essential for sustainable growth. Increasingly andglobally there is pressure to ensure that production and consumption do not cause longterm damage to environment and communities. We are proud to manufacture an eco-friendly,recyclable product that has no substitute in many packaging applications. Internationally,the trend today is in favour of a greener future. At home, we are also proud to play anactive role in the betterment of environments and societies around our manufacturingunits. We recognize that sustainable development is the only way forwards and that ourbusiness has prospered and will continue to prosper because we work inharmony with the future.
Chandra Kumar Somany