Borosil Glass Works Q2FY18 Concall Summary


Financial Highlights


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  • The revenue for 1st half was at Rs 204 Cr including Klasspack and Hopewell acquisitions, which was up by about 19% over last year
  • The P&L does not include Vyline numbers and will be included forward after the amalgamation


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  •  EBITDA from operations was up by about 52% and the margin itself expanded from 12.9% to 16.4%
  • Borosil expects to see further leverage of fixed costs
  • Some of these improved margins will be deployed towards investing in brand building as well as new product introductions
  • For Hopewell, the EBITDA margin last year on sale of INR 44 Crores was INR 6 crores, roughly 14%
  • This year for sales have gone upto INR 57 Crores in the same period and the EBITDA has gone upto 10.5 Crores, so margin has gone up from 14% to 18.5%
  • There has been a lot of effort on improving quality and also increasing the quality of customers; so therefore, these are sustainable goals which will continue in the future
  • The margins will further increase once the efficiency of plant improves, which should come in from January 2018
  • EBITDA for Vyline is around INR 5 Crore for the 1st half-year


  • Including Klasspack and Hopewell Borosil registered a PAT of Rs 26 Crore at a growth rate of 32% over the same period last year
  • PAT for Hopewell is around INR 2 Crores


  • The company has a cash surplus of about INR 180 Crores
  • The company expects to retain a about INR 200 crores of cash in surplus which can be used for future growth including acquisitions
  • As a strategy from cash management point of view, company has decided to reduce its exposure to equity
  • As end of September 2017, all equity investments have been sold out
  • The company is trying to become a more classic corporate treasury with virtually all the surplus funds invested in debt

Impact of Klasspack Acquisiton 

  • Klasspack was acquired in late July last year, so the base quarter has only two months from FY’17, but on a like-to-like basis, Klasspack grew by 18%
  • Growth in laboratory division including Klasspack was 17%
  • The base case for acquisition was that Borosil would be able to sell to the new product offering to the existing customers
  • This case seems to be kicking in the moment and the business was able to add 16 new customers to the Klasspack

Consumer Product Division:

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  •  This division has seen a very encouraging traction with the storage product range
  • Borosil have the glass tiffin boxes with bag which are supported with anew TVS campaign and Borosil expects for this and other storage products, there is a strong proposition of a healthy choice in switching from plastics to glass
  • Larah also had a strong performance with a 28% growth year on year
  • For the 1st half the revenue is about 57 crores and the integration in the frontend has increased retail reach by few thousand retail outlets
  • The business is in middle of furnace rebuild in Larah, and there will be a fresh production come in from December
  • The profitability in terms of efficiencies of the new furnace to kick in from the 4th quarter of this financial year
  • The investment in the centralized warehouse to optimize freight, the work has already started and the full benefit of that should accrue from July or August of next year

Ad Spend:

  • The Ad spend have been budgeted at INR 25 Crores for the whole year
  • Between Larah and glassware the spending is based on where there is more bang for buck
  • Kerala is a very good market for Opal crockery, so in that area the Ad spending would be more on Larah
  • In North India the spending would be more on Glassware


  • For upgrading and capacity expansion at Larah INR 110 Crore is being investe
  • 50% of that amount has already been invested
  • In FY’17 company’s non-core real asset of INR 90 crores was realized and has further non-core assets of INR 62 Crores and the intent is to release them as early as feasible
  • India has imposed anti-dumping duty on Chinese solar glass and the company plans to invest more than INR 200 crores to more than double its capacity
  • INR 50 Crore has already been invested and Borosil launched worlds 1st 2mm solar tempered glass, which can increase solar module efficiency by about 30%

Impact of GST:

  • The organic growth in scientific products division was flat due to the slowdown post GST
  • There had been some destocking in trade channels in the scientific division, but the Jan-March is typically the largest for the divisions business,hence Borosil expects to meet its revenue targets for the year as a whole
  • In Consumer division,Borosil had a temporarydrop post GST especially in the months of June and July
  • Due to early festive season this year, the growth numbers are little overstated in the sense that last year October was much bigger than October this year
  • Last year Diwali was around in November, so the growth numbers will be a little bit lower than this going forward

Share Value:

  • The shares have been subdivided from INR 10 per share to 10 shares of face value of Re 1 each and the trading has commenced on September 14,2017
  • The board has proposed an amalgamation for which statutory approvals are awaited
  • On November16, there is a meeting of shareholders to approve the scheme of amalgamation
  • The company also in the board meeting today given the final go-ahead for the ESOP plan for some of the key senior employees to align management incentives with long-term shareholder value
  • As part of the scheme of amalgamation, the company will own 58.38% of Gujarat Borosil after the amalgamation is through
  • Gujarat Borosil’s Q2 results will be announced on November 13
  • Preferential shares of Borosil has not been paid out and still in the books

2mm glass:

  • In 2 mm glass vs 3.2 mm glass, the main impact is it is 40% lighter
  • When it is made into glass-to-glass module the life time increases from 25 years to 40 year
  • Glass-to-glass module has an efficiency which can be approximately 30% higher than the regular solar module
  • The higher energy and higher efficiency will reduce ownership cost per watt drastically
  • This product has already got traction in Germany and in European countries
  • In 15 to 18 months the new project will allow Borosil to increase capacity from 1 to 2.4 gigawatts, so it is expected that revenues increase by roughly by 2.5 times over the period of the time

Effective Tax Rate:

  • In the last year the income from investments were tax-free that means the business was generating dividend income from sale of investment on which the tax rate was 0 or very low
  • This year such income have come under full tax bracket which lead to a higher ETR of 32% on quarter on quarter basis

Employee Expense:

  • The employee expense has seen a growth of 17% QOQ due to some senior level additions to the team