Piramal Glass Ltd, largest manufacturer of flacconage glass for the pharmaceuticals industry in the country has an installed capacity of 1,115 tonnes per day and sales of more than $200 million worldwide. It has bagged the ‘Best packaging vendor’ honour instituted by OPPI for the sixth time since the inception of the award. It has invested over $110 million in creation of new capacity. The company has achieved a major financial turnaround where from a debt ratio of 15:1, it saw a turnaround of an equity debt ratio of 2:1. Vijay Shah, Managing Director, Piramal Glass, in an email interaction ,provides an insight on the prospects of the sector to Nandita Vijay. Excerpts:

How would you describe the current scene of glass manufacturers in the pharma space in India?
In the glass manufacturing space, in the pharmaceuticals sector in India ,currently there is an excess capacity partly due to conversion of some of the markets to PET. Fortunately, the amber capacity is fungible and several of the manufacturers can easily switch to beeter bottle manufacturing.

What according to your are the visible trends in the space?
We feel that the market for amber glass, which is primarly used for oral formulations in the domestic market will shrink in the near future due to conversion to PET. However, there is tremendous opportunity for exports to neighbouring as well as developed countries like USA & Western Europe. On the other hand, the injectable market should actually grow in India as more and more injectable manufacturers obtain US FDA approval for exports.

What are the challenges before companies like yours to succeed in the business?
A major challenge facing us is the volatile exchange rate scenario. Other than that, we are very well placed to grow as leaders in the global flacconage business.

What are the latest developments at Piramal Glass?
Piramal Glass has turned around in FY-10. From a loss of Rs 107 crores in FY-09, the company made a profits of Rs 3.3 crores in FY-10. In FY-10, company clocked an operating EBDITA margin of 21.6 per cent , compared to 14.7 per cent in FY-09, an improvement of 600 bps. The borrowing came down from Rs 1357 crores in FY-09 to Rs 982 crores in FY-10. This year also marks turnaround of USA operations, which was acquired about four years ago as also stabilization of our Sri Lanka operations where we doubled our capacity.

What are the unique features of flacconage glass? What is the market share of your company?
PGL caters to three segments i.e. Cosmetics & Perfumery (C&P), Pharmaceuticals and Speciality Food & Beverages (SF&B). Within this, PGL is one of the few players from Asia to have a global presence in the C&P and SF&B segments.

The estimated market share of PGL in C&P is about five per cent and products are sold across 50 countries. Within C&P, certain segments like nail polish and low mass perfumery, the company enjoys global leadership position with 33 per cent and nine per cent markets share respectively.

What are the key factors which are driving the business in the pharma sector?
The packaging for our pharmaceutical sector is driven by the growth particularly in the domestic pharmaceutical industry. In the recent past, there has been a trend towards creating US FDA approved formulation facilities in India. This has led to an enhanced growth in high value USP Type I Borosilicate glass vials for injectables and infusions. On the other hand, there is a degrowth in the market for oral dosage syrups due to some shifts towards PET packaging.

How viable is glass as a packaging option for medicines? Is there any regulatory requirements for use of glass for certain pharma products?
Glass is an important option for packing of liquid pharmaceuticals particularly injectables and infusions. The choice of the packaging material is dictated by the requirement of product stability within a particular packaging mode. Within glass itself, there are three categories of glass dictated by US Pharmacopoeia for packaging namely USP

Type I, II & III. These are differentiated based on their degree of neutrality with the content. Hence, for certain pharmaceutical products, it is mandatory to pack in glass and within that in a particular type of glass e.g. : USP Type I.

Are there any plans to expand the installed capacity of your company?
We have an installed capacity of 1115 tonnes per day. In fact, almost 45 per cent of the capacity has been enhanced in the last two years partly through acquisition of facilities in US and balance through expansion in India and doubling of capacity in Sri Lanka. The next two years is a period of consolidation and of “Sweating the assets” by expanding to the appropriate product mix, for which a capacity was created and hence focus a lot more on profit enhancement.

Which are the fastest growing markets for the company?
While the fastest growing market in cosmetics & perfumes industry are the emerging economies like Brazil, Russia, India and China for the company, the fastest growth markets are beyond these basic countries particularly the developed markets like USA & Western Europe because the strategy of the company is to gain market share.

Are there any investments forth coming for plant expansion?
The  company does not have any plans for greenfield expansion. However, it  is ready for a capital expenditure of about Rs. 160 crore spread over the next three years which would be for inorganic growth efforts. In this regard, we are looking out for acquisitions to increase the opportunities in  the future.