Hindustan Sanitaryware to Expand Glass container capacity by 68% at Rs.210 crores investment

Hindustan Sanitaryware & Industries Ltd on September 15, 2007 has announced the expansion of Class container capacity by 68% at a projected invest of Rs 210 crores.

The division, which manufactures glass bottles and jars for liquor & beer, pharmaceuticals, food and beverages segments, has a current capacity of around 950 million containers per annum and has been operating at full capacity for sometime. Given the buoyancy in the economy and the consequent demand for high value food, pharmaceuticals and liquor and beer bottles, our customers are experiencing excellent growth rates and are very bullish on the future prospects. As a result, the Company has decided to expand its capacity by 425 tpd in a green-field location in central Andhra Pradesh, close to the inputs and the markets. Most of the state-of-the-art plant & machinery and designs will be imported from European suppliers providing the capability to produce very high-quality products.

The expansion is a phased program to move Company's glass container manufacturing operations from its current location in Hyderabad to the new location. This move will not only help reduce the costs of production as the new location is expected to have access to natural gas, which is cheaper fuel than heavy fuel currently used by the Division, but will also free up the approximately 33 acres of land in prime real estate of Hyderabad city that it currently uses for other more profitable uses.

The project will be funded through additional debt, as the Company is highly under-levered, and internal accruals. The project is expected to be complete by the 1st quarter of calendar year 2009. The decision to expand capacity was taken by the Board of Directors at its meeting held earlier today.

The Stock was trading at Rs.78. The stock hit an intraday high of Rs.81.90 and low of Rs.78. The total traded quantity was 7727 compared to 2 week average of 21147.

Source : Equity Bulls

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