This story has been modified. Please read the clarification at the end.
World’s largest glass mould maker says Indian market is ‘exploding’ enough for a JV.
As a country becomes richer, one of the first sectors to register a spike in demand is that of glass bottles and containers, explains Jean-Christophe Seynaeve, the CEO of Belgium-headquartered Omco, the world’s number one manufacturer of glass moulds.
Glass jars, bottles and flasks are used for food, beverages and the pharmaceutical industries, and their consumption is closely linked to increasing wealth.
Unsurprisingly, the glass container market is “exploding in India,” says Seynaeve, making it Omco’s current number one priority.
Omco accounts for a fourth of the global market for glass moulds, in what is a very fragmented and localised industry. Part of the Belgian BMT group, the company has mould manufacturing shops in seven countries — Belgium, Britain, Austria, Croatia, Turkey, Romania and America.
India had so far eluded its net, but Seynaeve revealed this is about to change. Omco is currently in talks with Indian glass container heavyweight HNG (Hindustan National Glass and Industries Ltd), regarding the setting up of a joint venture that would entail a 50 per cent strategic partnership for the Belgian company.
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“We would provide our technology and designs, which are at present unavailable in India,” says the Omco CEO, adding his company was also sharing its furnace technology with HNG’s new flat glass venture in Gujarat.
The glass container market in India is forecast to grow at 12-15 per cent yearly over the next 10 years, building on a decade-long boom. Between 1998 and 2008, glass container production in India nearly doubled from around 800,000 tonnes to 1.4 mt. The industry is currently estimated to be worth Rs 4,500 crore.
HNG, which registered net sales of Rs 1,311 crore in the previous financial year, despite the economic downturn, is targeting 20 per cent growth in 2009-2010 to help it cross the Rs 1,500-crore milestone.
Interestingly China, where the demand for glass containers outpaces India, is not an immediate target for Omco. Seynaeve explains that the Chinese market is far more fragmented and regional than in India, making it a tougher nut to crack. In India on the other hand, HNG alone accounts for over 65 per cent of the glass container market. By partnering with them, Omco will have an immediate reach that would elude it in China.
What Omco can bring to the already existent glass container business in India is specialised design. “All the big brands want to market their products in India in a big way,” explains Seynaeve. “So, they want specially designed containers that will make an impact.”
Syenaeve gives the example of the wine and spirits multinational, Diageo. “If Diageo wants to make a splash in India, they need a container that’s just right. We can provide that.” And, since glass containers cannot be transported across continents, the necessity of manufacturing products locally arises. “If the big brands go to India, we need to be there locally, for them.”
Currently the liquor and beer industry account for 65 per cent of India’s glass container production, followed by food at 20 per cent. Soft drinks, cosmetics and food make up the rest. Immediate growth is expected most substantially from the alcoholic beverages segment.
Seynaeve will be visiting India later in March, as part of a 300-plus Belgian economic mission to the country.
But, glass will not be the only matter on his mind. The BMT group, of which Omco is a part, has another niche engineering division, IG Watteeuw, this one focusing on the manufacture of gears and gearboxes.
The Delhi Metro Rail Corporation already uses BMT’s gears. “So, every time you ride the metro in Delhi, you have an experience of our product,” smiles Seynaeve.
With major expansion of both railways and metros planned across the country, for Seynaeve, India’s air is scented with new opportunities at every sniff.
CLARIFICATION
It was inadvertently mentioned that Omco was the world’s largest glass maker. It is the world’s largest glass mould maker. The error is regretted.