AGI GREENPAC

A-Z of glass packaging

Hyderabad-based AGI Greenpac is a leading glass container packaging company. The company manufactures glass packaging containers ranging from 5 ml to 4,000 ml and has an average capacity of meeting 1,600 tonnes of glass per day. The company has two strategically located state-of-the-art manufacturing plants, one in Hyderabad and the other at Bhongir (Telangana). The company continues to implement new and customized products to cater to the everevolving needs of customers and leads the sector in adopting sustainable practices. AGI is doing quite well on the financial front, and its consolidated sales during the last five years have grown at a CAGR of 7 per cent and operating profit at a CAGR of 13 per cent. What is more, prospects going ahead are all the more promising. Consider:

• The past decade has witnessed significant changes in the packaging products industry, driven by a host of factors such as new market penetration, the emergence of contactless delivery and changing ownership dynamics across the world. Glass packaging is a premium variety and one of the most trusted forms of packaging for health, taste and environmental safety. This ensures its continuous usage worldwide, across a range of end-user industries, despite the heavy competition from other packaging segments like plastics. In India, the packaging industry is estimated to report a CAGR of 26.7 per cent during the 5-year period from 2022 to 2027. The factors driving the demand for packaging can be attributed to the rising population, growing income levels, changing lifestyles and increased internet penetration.
• AGI’s glass bottles are widely used in pharmaceuticals, foods and beverages, and wine, as well as other hard drinks segments. Almost all leading companies in these sectors use the company’s bottles on account of their quality, regular and easy supplies and reasonable pricing policy. Little wonder that by now AGI has become the second largest glass container company in India and its products are widely exported to several countries.
• The company has set up a most modern state-ofthe-art plant at Bhongir in Telangana to manufacture speciality glass with an annual capacity of 154 tpd. The plant, set up in line with the ‘Make in India’ and ‘Atmanirbhar Bharat’ vision of the government, will reduce the dependence on imports and promote sustainability. The plant will focus on clear glass products such as cosmetics and perfumery, water bottles, candle jars, and food and beverages, as well as the premium spirits segments. According to Rajesh Khosla, President of the company, “This is a one-of-its-kind speciality container glass plant and will generate additional annual revenue of Rs 250 crore at a CAGR of 10 per cent year-on-year. This plant symbolizes our vision for the future where we are committed to producing world class, innovative products using globally benchmarked manufacturing systems and practices.”
• The company is steadily growing on the financial front. During the last 12 years, its consolidated sales turnover has expanded from Rs 1,028 crore in fiscal 2011 to Rs 2,250 crore in fiscal 2018 but the Covid-19 pandemic reduced its pace of growth and sales declined to Rs 1,605 crore in fiscal 2019 and further to Rs 1,430 crore in fiscal 2022. Likewise, the operating profit has inched up from Rs 213 crore in 2011 to Rs 324 crore in 2016, before declining to Rs 265 crore in fiscal 2022. However, the profit at net level has shot up from Rs 87 crore in 2011 to Rs 193 crore in 2022. Prospects ahead are highly encouraging — sales in the current year are expected to touch the Rs 2,000-crore mark and net profit to reach the Rs 300-crore mark. With the speciality glass plant going on stream, sales are very likely to cross the Rs 5,000-crore mark and net profit to touch Rs 500 crore within the next five years.
• The share price is quoted around Rs 309. Investors can buy these stocks with a long-term perspective to reap a rich harvest.

CONSOLIDATED PERFORMANCE INDICATORS (Rs. in crore)

SOUTH INDIAN BANK

Strategising to speed up growth

Thrissur-based South Indian Bank, which is going to celebrate its first century five years hence, is a leading private sector scheduled bank of south India. Though chiefly a regional entity, the bank has spread its footprint throughout the century with 933 branches, 53 extension centres, 4 service branches, 18 regional offices and 1,400 ATMs. The bank’s business is largely skewed towards the southern states, with half of the branches located in Kerala. It has established a strong brand recall among the Keralite NRI diaspora.

With no identifiable promoters, the bank is run by a team of 9 professionals. It was the first Indian private sector bank to open an NRI branch in 1992, and an industrial finance branch in 1993. Though the CAGR of the bank during the last 10 years is of 6 per cent, in terms of profit, it is 20 per cent negative. However, prospects for the company going ahead are quite encouraging. Consider:

• Having suffered from its erstwhile policy of concentrating on corporate loans, the bank has now decided to focus on the retail, MSME and agri segments. The bank’s retail portfolio growth is now largely driven by the LAP (58 per cent yoy) and gold loans (53 per cent yoy) segments. The bank is also focused on increasing its CASA and NRI deposits. The outcome of these steps was remarkable and is well reflected in the Q2FY2023 performance. Interest income (NII) during Q2FY2023 (July to September 2022) stood at Rs 726 crore — the highest quarterly NII ever in the last 20 quarters. And net interest margin improved by 12 bps yoy to 3.21 per cent as compared to 2.49 per cent in the corresponding quarter.
• An analysis of the bank’s financial performance reflects that it has turned the corner from the current year. Though during the last 12 years, the bank’s revenues expanded from Rs 2,446 crore in fiscal 2011 to Rs 6,587 crore, its profit at the net level has slumped from Rs 293 crore to Rs 45 crore, pushing down its EPS from Rs 1.94 to Re 0.21. However, the bank has staged a remarkable in the current year, with the actual disbursement in the first half (April to September 2022) shooting up to Rs 8,809 crore and a net profit of Rs 223 crore in striking contrast to a loss of Rs 187 crore in the corresponding first half last year. If the working in the second half so far is any indication, the bank is going to put up a heartwarming performance in the current fiscal ending March 2023.

FOCUS ON 6Cs

• With a view to revamping the bank to remain competitive, the management headed by Murali Ramakrishnan, MD and CEO, has devised a strategy for the near- to longterm with a focus on 6Cs. The bank aims at launching new products, creating a robust operational team supported by a technology platform and revamping credit policy with a focus on quality, leveraging the existing and new talent pool to improve underwriting through training, building strong analytical tools for portfolio and improved collection through analytics, managing NPAs through a focus on recoveries, and rationalisation of branches and ATMs. The bank has set its vision for 2024 with philosophy of ‘Fair to Customers, Fair to Bank’.
• As per the strategy, the bank will focus on 6Cs for the next three years. these 6Cs are: ((1) Capital (the bank will be raising capital — equity plus debt — amounting to Rs 1,250 crore in tranches), (2) CASA (building a low-cost CASA book by building relationships at the branch level while on the NRI front it will expand its horizons to target NRIs around the world), (3) C/I ratio (the bank will reduce C/I by increasing income or reducing cost), (4) Competency Building (the bank will strive for reorienting the organizational structure by leveraging existing talent), (5) Customer Focus (the bank will be focusing on adherence to higher integrity standards and zero tolerance for internal and external non-adherence). The management hopes that this strategy will change the shape and size of the bank.
• The bank will continue to focus on retail, MSME and Agri, and will adopt a calibrated approach towards corporates. Plans have been drawn to revamp existing products and launch new retail products like LAS, SBL, IPO funding, dealer funding, tractor funding, etc. The bank will also focus on improvement in the yield of products and strong product growth.

EXPERTS BULLISH

All these new strategies, if properly implemented, will go a long way in transforming a hitherto weak bank into a strong entity with a steady pace of growth ahead.

Little wonder, several experts, including Rajen Shah of Angel Stock Broking, Renuka Ramanth of Multiple Equity, Ramdeo Agarwal of Motilal Oswal, and Yusuf Ali, a prominent HNI, strongly recommend South Indian Bank for investment.

PERFORMANCE INDICATORS (Rs. in crore)