Buys 50 acres for factory of capacity put at 12 lakh pieces

Sanitary ware maker Hindustan Sanitaryware and Industries Ltd, flagship company of the Somany Group, plans to invest nearly Rs 500 crore to set up a greenfield plant in Gujarat, expected to go on stream by the end of 2013.

HSIL Ltd has bought 55 acres from the Gujarat Government near Dahej in Bharuch district for the new plant that would have a capacity to manufacture 12 lakh pieces annually. Initially, the company would invest nearly Rs 170 crore and slowly scale up investments up to Rs 500 crore to achieve a capacity of 25 lakh pieces, Mr Sandip Somany, Joint Managing Director, told Business Line on Thursday.

The 50-year-old HSIL, currently India's largest sanitary ware manufacturer with a 40 per cent share in building products market in the country, has six plants of sanitary ware in as many states, with a total capacity of 28 lakh pieces per annum. During the last 18 months, it introduced more than 250 new brands. In addition, it also has marketing tie-ups to market two leading European brands in India.

Mr Somany said the company's container glass segment (AGI Glaspac) is the second largest in India, and market leader in South India with 70 per cent market share. Apart from sanitary ware and glass, they are also present in categories such as wellness products, kitchen appliances, faucets, tiles and home retail.

Hindware has a marketing network of 1,550 distributors and, a retailer network of 12,000. The company's brownfield sanitary plant expansion in Bibinagar, Andhra Pradesh completed in September 2011 is commencing production shortly. Besides, HSIL has also commenced production last month after capacity expansion at its plant in Bhiwadi, Rajasthan, with a new faucet capacity of two lakh pieces annually.

In the second quarter financial results of 2011-12, announced on Thursday, HSIL reported sales of Rs 318 crore (Rs 230 crore), an increase of 39 per cent, and net profit of Rs 23 crore (Rs 13.93 crore), up 65 per cent, compared to the corresponding quarter of the previous fiscal. On Thursday, its share price at the BSE closed 7.33 per cent down at Rs 189.65.

Mr Somany attributed the company's good showing to the full utilisation of capacities and successfully selling out the entire output, besides product mix for better profitability and improved price realisation. Replying to a question, he said although the current economic scenario was not very encouraging due to various uncertainties prevailing in India, HSIL hoped to increase its revenues by 25 per cent this fiscal.

(This article was published on October 20, 2011)
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