HNG enters into JV with Belgium firm

Written by fe Bureau | Kolkata | Updated: May 1 2010, 05:02am hrs
Hindusthan National Glass & Industries Ltd (HNGIL), the Rs 1,500 crore container glass manufacturing company, has entered into a 50:50 joint venture with Belgiums euro 80 million OMCO International NV for setting up a mould manufacturing plant entailing an initial investment of Rs 35 crore.

HNGILs joint managing director Mukul Somany said the joint venture was basically a backward integration for his company through which it could become a complete glass packaging solution provider.

For making container glasses, HNG at present has to source 40% of its 3,500 moulds and 5,000 neckrings requirement per month. This would become a complete captive production once the JV, OMCO HNG Engineering Ltd, sets up its first facility at Puducherry by September this year.

Somany said initially the JV company would produce 1,600 moulds and 2,000 neckrings per month, which would be soon ramped up to 3,500 moulds and 5,000 neckrings a month.

In fact, the HNG facilities currently make around 2,100 moulds and 3,000 neckrings a month for in- house consumption. Once the JV attains the capacity of making 3,500 moulds and 5,000 neckrings a month, the HNG facilities would stop production of neckrings and moulds, Somany said. The usable mould and neckring making machines will be transferred to the JV facilities, Somany added.

OMCO HNG Engineering Ltd would also put another mould and neckring making facility at Bahadurgarh in Uttar Pradesh entailing an investment of a little over Rs 35 crore with an initial capacity as same as that of the Puducherry unit. The Bahadurgarh facility would mainly cater to the export markets of Asia Pacific, Middle East and Africa.

JC Seynaeve, OMCs managing director and chief executive officer, said that OMC with 9 facilities across the globe caters to the US, European, Russian and Turkish markets but it has little presence in Asia Pacific, Middle East and African markets. The JV with HNG would help it in having a footprint in these markets.

Somany said while the JV would bring about quality upgradation and cost cutting for every thousand bottles manufactured, it would also give HNG an overseas exposure.

HNGs business prospects, Somany said, was riding on the Indian glass packaging industries growth of 7-8% annually driven by the high volume requirement of the liquor and beer segment.