Set up in 1960 as Hindustan Twyfords Ltd, with a technical collaboration with Twyfords UK, to introduce vitreous China sanitaryware in India. The company was subsequently renamed Hindustan Sanitaryware and Industries Limited in 1969 and HSIL Limited in 2009. Over the decades, the flagship brand ‘Hindware’ has emerged as a leading Indian sanitaryware and faucet brand driven by consistent innovations. In FY2015-16, the company decided to enter into the synergic domain of plastic pipes and fitting under the brand name ‘TRUFLO by Hindware’ in agreement with USD 10billion Japanese conglomerate Sekisu Chemical Co Ltd, to provide end to end bathroom solution to its customers. Leveraging the brand equity and vast distribution network, the company diversified into the consumer products space by introducing kitchen appliances under the brand ‘hindware Kitchen Ensemble’. The product portfolio was expanded by launching water heaters, in collaboration with Euro 1.6 billion group Atlantic of France, the global leader in heating solutions. With both these categories performing exceptionally well, purification products under the brand ‘Moonbow By Hindware’ to offer air and water purifiers and air coolers under the brand ‘Hindware Snowcrest’ was launched. The company has recently done agreement with Formenti E Giovenzana of Itlay for the distribution of furniture functional hardware fitting products in India. The products offerings were further expanded to include home furniture, soft furnishing, home décor, and accessories, wall fashion, modular kitchens and modular wardrobes by launching a chain of large retail format stores under the brand ‘EVOK’. The company acquired Associated Glass Industries Limited (AGI) in 1981 and entered the packaging product business. PET bottles business was added through the acquisition of Garden Polymers Private Limited (GPPL) in 2011. Packaging products division further expanded its business and launched counterfeit- resistant caps and closures under the brand ‘AGI Clozure’. HSIL Limited is among India’s top 500 companies as listed in the Fortune India 500’ 2018 list. Currently, HSIL has four distinct business segments, namely Building Products Division (BPD) which includes Sanitaryware, Faucets, Pipes , Consumer Product Division (CPD) which includes kitchen appliances, air coolers etc, Retail Division which includes furniture and Packaging division (PPD) which includes glass materials. Indian sanitaryware segment’s current market size is estimated at Rs 4,800 crore and its growing at steady pace of CAGR 8-10% over FY 2018-21. This growth will be propelled by improving standard of livings, evolving consumer preferences, increasing disposable incomes and rising awareness surrounding sanitation. Around 60% of sanitaryware manufacturers are in the organized sector and these players leverage best in class technologies and differentiated designs to address the varied needs of the market. Faucets were considered functional products for years, but this perception is undergoing change. Now, they serve as style statements leading to an increase in its industry. The domestic faucet industry is about Rs 8,800-9,000 crore and is expected to grow at a CAGR of 10-12% over FY2018-21. The share of organized players is gradually increasing and currently they constitute more than 50% of the market. The number of unorganized players is set to further decrease in the coming years, as these players manufacture faucets using conventional technologies and carter mainly to the mass market and low income group. Additionally, increasing brand awareness and change in end consumers preference will help to increase the pie of organized players like HSIL. Plastic pipes and fittings market comprising Polymerizing vinyl chloride (PVC), unplastticized polyvinyl chloride (UPVC) and chlorinated polyvinyl chloride (CPVC) has reported double digit growth in the past decade and a half. This is due to increased demand from the building and construction industry, along with the rising technology advancements in the irrigation sector. The market size of Indian’s plastic pipes and fittings industry is around Rs 30,000 crore and its likely to grow at a CAGR of 14% . within this, the market size of plastic pipes and fitting business catering to plumbing and sanitation in the building and construction industry is estimated at Rs 9,500 crore. The share of organized players is currently pegged at 65-70%. CPVC pipes and fittings are the fastest growing segment of India’s plastic pipes and fittings industry owing to their unique selling points such as corrosion resistance, cost efficiency and flame resistance. The replacement market is fuelling the demand for pipes to the adverse water quality of the country. Bathrooms have come of age and now represent one status quotient. Today, a bathroom is as importsnt as any other room in the house and is seen as ‘personal space’. This change in perception and enhanced consumer lifestyle are increasing appetite for aesthetics and novel designs, which, in turn is pushing the demand for quality sanitaryware products. Technologically advanced and innovative products such as water saving European Water closets, electronic flushing systems, sensor operated flushing systems and decorative ceramic accessories, among others are helping to drive the shift towards premium bathrooms, encouraging company to increase their average realization per piece. With consumer increasingly becoming brand conscious, the home renovation market is expanding . The PVC, CPVC, UPCVC and SWR pipes have acquired increasing significance due to better functional efficiency in comparison to metal pipes, which is why they have great potential to replace latter. The consumer durables sector in India is expanding rapidly, fuelled by innovations and digital penetration. With an improvement in domestic consumption, the industry witnessed a growth of around 7-8% in FY2018-19. The Indian appliance and consumer electronics (ACE) market is likely to axpand at 9% CAGR to reach 3.15 trillion in 2022. By 2025 India is set to become the world’s fifth largest consumer durable market. Technological advancements, such as connected devices and smart homes are changing the way consumers and the industry look at consumer durable products. Consumers are becoming more technology-savvy and manufacturers are responding to this need by attaching greater importance to technology innovation to offer sophisticated products. The consumer durables sector is revisiting the overall channel mix and is invested in capitalizing on growing e-commerce, optimising supply chain and consolidating traditional sales channels. In India, the population of people living in tier II cities is growing across the country. According to the United Nation World Urbanisation prospects 2018 report, 34% of India’s population now lives in Urban areas. Such a rise in urbanization is expected to result in a large number of modern household , this will increase the demand of consumer durable products. with the advent of new age technologies HSIL have already embarked upon an ambitious programme to be the frontrunner in introducing internet-of-things (IoT) based products in the market. HSIL plan to launch first IoT based water purifier in FY2019-20. During the year under review, HSIL R&D initiatives received considerable impetus and company expect to launch a wide basket of breakthrough projects in the impending financial year. Over the next few years, Moonbow by Hindware will launch advanced water purifiers with hot water tank and IoT enabled technology that can be controlled from anywhere and at anytime by means of an application. The global production of glass containers in 2018 was 55.66 million metric tonnes and is expected to reach 70.15 million metric tonnes by 2025, growing at over 3% CAGR. The demand for glass bottles is likely to steadily rise and reach a value of US$ 72.57 billion by 2025, growing at CAGR of 3.81%. The Asia Pacific region was the leader in the global glass industry with almost one-third market share in 2018, followed by Europe with a 30% share during the same period . India’s container glass business is expected to grow by 7% CAGR from FY2019-20 to FY2026-27. The food and packaging product manufacturers are increasingly adopting glass bottles as their packaging solution owing to their favourable properties. Additionally glass bottles are non-porous, impermeable, hygienic, eco-friendly and aesthetically pleasing . In India, rising beer and liquor consumption and the growing pharmaceutical market are further expected to drive the demand for glass bottles and containers. Polyethylene Terephthalate (PET) products are growing at a steady space due to unique selling propositions such as sustainability, long shelf- life, light weight and favourable technical performance and aesthetics. In addition to this, the rise in consumption of ready to eat products and demand for packaged water and personal care product are few factors propelling this growth. The global consumption of PET packaging is likely to reach 21.1 million tonnes by 2021 and the world’s PET packaging market is expected to grow at 4.03% CAGR over FY2018-23. Increasing demand for convenient packaging and growing concerns about product safety are acting as driving forces for security caps and closures market. The plastic caps and closure market is expected to grow from US$ 40.52 billion in 2018 to US$ 51.67 billion by 2023 at 5% CAGR. End-use industries such as liquor, pharmaceuticals, bottled water, food, home and personal care are boosting growth. All these shows HSIL has huge opportunity to expand its packaging sector. The furniture sector is still largely unorganized in India, but the implementation of tax reforms is acting as a facilitator to transit this sector into becoming an organized business segment. India’s woodworking industry is one of the fastest growing sectors of the economy. According to a study by world bank, India’s organized luxury furniture industry is expected to be at US$27.01 billion by 2020, registering a CAGR of 4.1% during the forecast period between 2015-20. In this context, it is pertinent to mention that as the sector becomes largely organized , high brand salience will play a significant role influencing buying decisions. For this HSIL plans on opening more franchises name EVOK in the rapidly growing Tier II and III cities as well as increasing its range of products to make them more relevant for the local markets. Besides driving e-commerce growth, HSIL is also working to consolidate its position in brick and mortar retail. Through its scientific range of planning and revamped stores layout, HSIL is redefining its merchandising strategy in line with changing consumer preferences and to enhance consumer shopping experience. HSIL also ventured into new sourcing locations such as Brazil, Turkey, and Malaysia to improve the sourcing capability and credit terms. Swach Bharat Mission, the largest behavioral change campaign ever attempted in the field of sanitation in the world, entered its final year of implementation in October 2018. The mission aims at making India free from open defecation and achieving 100% scientific management of municipal solid waste. Under this mission’s urban wing, more than 56.6 lakh individual household toilets have already been constructued till February 2019 and 6.33 lakh toilets are currently under construction. This initiative will further encourage demand for entry level sanitaryware products of HSIL, expanding the market size of this segment. To boost affordable housing, the government of India launched Housing for all by 2022 initiative. In addition, several other measures have been undertaken such as Pradhan Mantri Awas Yojana, among others which aims to build one crore homes in urban and rural India by 2022. This will help to boost furniture, sanitaryware, pipes and consumer durables business of HSIL. Prime Minister Narendra Modi, during his Independence Day announced an outlay of Rs 3.5 lakh crore for Jal Jeevan mission for centre and stated working together to provide water to every household. Half the households in India have no access to drinking water. Half their day is spent in getting water. Therefore government gave a thought on ways to provide drinking water to all. This will help to boost the pipe business of HSIL. HSIL building product division revenue grew by 18.8% to Rs 1,22,322 lakh in FY2108-19 as against 1,02,945 lakh in FY2017-18. The revenue of Packaging Product Divison increased by 19.2% to Rs 1,09,715 lakh in FY2018-19 as against 92,020 lakh in FY2017-18. EBIT increased by 35.8%. The revenue of consumer product division grew by 47.2% to Rs 30,574 lakh in FY2018-19 from 20,769 lakh in FY2017-18. The division achieved EBIT of Rs 79 lakh as compared to previous year EBIT loss of 1,675 lakh. The revenue of the retail divison for FY2018-19 is Rs 9,101 lakh as against last year of 9,618 lakh. The retail furniture business continues to face stiff competition from various e-commerce platforms on account of aggressive pricing. On consolidated bases company’s total income from operation grew to Rs 2,712.37 crores in FY2018-19 from Rs 297.11 crore in FY2004-05. Between this period company did not posted any loss in any financial year. But HSIL is being split into three companies including HSIL. The packaging division remains with HSIL. The consumer products distribution and marketing business have been demerged to create a new entity called Somany Home Innovation Ltd (SHIL). It also demerged its furniture and home décor retail business EVOK into SHIL as also the distribution and marketing business relating to building products division into new entity called Brilloca which is a wholly owned subsidiary of SHIL. HSIL will continue to have manufacturing of building/consumer products and packaging products. But since all distribution and supplying of HSIL products have transferred to SHIL , SHIL will have faster growth than HSIL because HSIL is only left with manufacturing . Company is strong in both fundamentals and financials but due to demerger I prefer not to buy HSIL but buy SHIL when it gets listed in next 2-3 months.