Trakya Cam Sanayii A.S. which was founded by Şişecam in 1978 is the leading company of the flat glass market in Turkey and a pioneer in the region.

Trakya Cam engaged in production of

  •  Architectural Glasses
  •  Automotive Glasses
  •  Processed Glasses

Trakya Cam is the first company to deploy the “float technology” among the East European, Balkan, Middle Eastern and North African countries with its first float line that became operational in 1981. Trakya Cam has pioneered the development of the flat glass industry in Turkey and in the region with its investments of float glass, automotive glass, processed glasses and through its wide range of product portfolio

Trakya Cam ranks among the top six flat glass companies in the world and top four companies in Europe by its production capacity in seven float lines.

Trakya Cam took a strategic step in 2009, developing its flat glass activities with Saint-Gobain , which is one of the biggest companies in the industry, in Egypt and Russia and acquired 14.87% stake in the project in Egypt.

Turkey’s Trakya Cam Sanayii acquired 45% stake in Hindustan National Float Glass Ltd to manufacture automotive glasses

Acquisition

Turkey’s Trakya Cam Sanayii announced to acquire the stake of 45% in Hindustan National Float Glass Ltd (HFG) to manufacture automotive glasses as well as set up more float glass facilities in India.  The deal began in October with the signing of a Memorandum of Understanding.

HNG Float Glass Ltd is promoted by Somany family and Hindusthan National Glass in 2006, engaged in the business of manufacturing float glass and related value added float glass products in India. HNG Float Glass Ltd has a plant in Gujarat which has a capacity of 600 tonnes per day. To set up a plant it incurred a total project cost is approx Rs.550 crores in 2009 and the project was completed in just 22 months against a normal time of around 30 months.  It tied up with M/s Toledo En M/s Toledo Engineering Company (TECO), the USA  for design, equipment, and installation. TECO has  more than 55 float plants around the world. HNGIL commands 60% market share of Indian Market with an annual turnover of around Rs. 1500 crore. HNGIL has 6 manufacturing locations with 2800 TPD capacity

Hindusthan National Glass & Industries Limited (HNGIL) has entered into a JV agreement with Turkish glass maker Trakya Cam Sanayii AS. According to JV, HNGIL and promoter of HNGIL i.e Somany family which promoted HNG Float glass will divest its stake and Trakya will become the equal shareholder (45%).Currently, HNGIL and Somany Family hold around 47.4% and 40.2% stake respectively and remaining 12% is held by IFC Washington. Post JV, Shareholding Company and the promoter of HNGFL will reduce from approx.87.6% to 45% and Trakya will become an equal shareholder by about 45% stake in HNGFL.IFC Washington will continue to hold 10% stake. The shareholding of HNGIL will stand diluted from present 47.4% to 15% stake in HNGFL.

Shareholding Before Stake

Shareholding After Stake

Opportunities

Trakya’s strategy to enter into  Indian market  will offer high growth potentials. Trakya’s will get well established in the market . As per the market survey of 2010 Industry Share of Float glass and demand break up of product mix during the year are:  

Float glass market has 50% demand and there is scope for Turkey to expand its share in Indian Market with well set up projects. The per capital glass consumption in India is 1.2 kg, compared with 8-9 kg in developed countries and 30-35 kg in US. Glass Industry mainly consist of 4 segments Container glasses(consist of consumer goods and Pharmaceutical Industry), Speciality glasses(Consist of electronics and engineering ), Flat glass and Fiberglass. Flat glass consists of float glass and rolled glass which is mostly used in the architectural and automotive application.

The overview of Global Glass Market- The world’s flat glass market has reached about 60 million tonnes in 2011 up from 52 million tonnes in 2009. Demand for the Float glass is growing at over 5% p.a. This growth is largely driven by demand for building glass and automotive glass. Over last 20 years, float demand growth has outpaced real GDP growth and global float capacity utilization ranged between 90 and 95%. Expected flat glass demand will rise 65 annually through 2014. This growth will be driven by Asia/Pacific  region. Also by the recovery in building construction and motor vehicle industry of North America and Western Europe.

Comparison with peers

Sezal Glass limited had sold its 550 tonnes capacity of the plant for Rs.686 crores  in May 2011 to Saint-Gobain. As mentioned above, Saint-Gobain and Trakya Cam are working together in Egypt. It means HNG float glass having plant capacity of 600 tonnes with a plant value of Rs 816 Crore applying the same price per tonne. Therefore, Trakya Cam must have acquired 45% stake for around  Rs 367 crore.  So one may not rule out possibility of their taking stake in each other’s Indian operation

Conclusion

The Indian market has a huge growth potential and every significant player wants to have its presence in India. Trakya Cam being one of the important players in world float glass market, its decision was unavoidable. As deal price is undisclosed so valuation at which they acquired substantial minority stake is not known but most likely it will be at a premium akin to Saint Gobin and Sezal. Considering further consolidation possibility and its strong technology backing, it will be one of the largest manufacturers of clear float glass for the construction industry.

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