The Year Hindusthan National Glass & Industries Came Back

Most Indian bankruptcy stories end the same way. The lenders take a beating they have long since learned to expect, the buyer walks away with some land and a brand, and the factory gates stay shut. Hindusthan National Glass & Industries (HNGIL) did not follow that script.  

The company went under in October 2021. The fight over who would get it ran four years and ended only when the Supreme Court settled it. INSCO won and paid Rs 2,250 crore. The lenders got back sixty paise in the rupee, considerably more than such contests usually deliver, and the courts noted that the price beat what the company would have fetched had it been broken up and sold off. The striking part, though, is not the money. It is that after four years of argument, the furnaces were still lit and the men who ran them were still on the payroll.

INSCO belongs to the Uganda based Madhvani-Turner Group and was backed in the bid by Cerberus Capital Management and the International Finance Corporation. The group had never made a bottle in India before this. It bought HNGIL as a business it meant to run rather than as money to be got back out, put in a new board after a forty five day handover and built its plan around the people already on the shop floor.

That is not the profile of an opportunistic buyer. The reason lies in what the group has done elsewhere for six decades. In the bottle trade the family goes by the Turner name and has run container glass plants since 1966. It started in Kenya, Tanzania and Uganda to supply its own breweries, and for some years also ran plants in West Asia. Its Tanzanian works is still the biggest container glass maker in east and central Africa. Shrai Madhvani, who now chairs HNGIL, and Kamlesh Madhvani, Board member, have spent their working lives building such plants and putting modern technology into them across five countries.

The family's record on rebuilding is older than any deal and harder won. Muljibhai Madhvani, who left Gujarat as a boy, started the business in Jinja in 1914, and by the time his sons ran it, some years after his death in 1958, it was Uganda's largest private employer and accounted for close to a tenth of the country's output. In 1972 the dictator Idi Amin expelled the Asian community, the companies were seized and the family went into exile. They returned in the 1980s to plants that had been stripped and left to rot, and put them back to work. A house that has rebuilt a business after the state took it away is unlikely to find four years in court unusually testing. 

The India move has a longer history behind it than the sale papers suggest. PM Narendra Modi went to Uganda in July 2018, the first such visit by an Indian Prime Minister in about two decades, and travelled to the family's sugar complex at Kakira, where he encouraged them to take part in India's growth. Seven years later Shrai Madhvani called on him in Delhi, days after the Supreme Court cleared the path to HNGIL, and set out an intention to invest up to Rs 10,000 crore in the country over five years. For a family that traces itself to Porbandar and built its fortune across the Indian Ocean, it reads less like a market entry than a return.

The year since will decide the story. HNGIL completes twelve months under Madhvani ownership on 26 September. At the time of the handover, operational capacity was close to 300 tonnes a day against installed capacity of 4,300. A year on, total operational capacity stands at around 2300 tonnes a day. Puducherry was re-commissioned in February after nearly a decade cold and runs at about 330 tonnes a day. A second furnace was fired at Rishra in August with a third due before December. Naidupeta was restarted the same month at 650 tonnes a day, making it the largest single furnace container glass plant in Asia, and has been marked out as the export hub. Bahadurgarh is being doubled from 300 to 600 tonnes a day. The recommissioning of plants, adding furnaces and doubling of capacities will only add to employment generation in these states.

The gain that never shows up in the arithmetic is the one on the shop floor. Bahadurgarh employs 1,300 people, Rishra about 900, Rishikesh 603, Naidupeta around 580 and Puducherry 400. None of that employment had to be created afresh, because the workforce was carried through the insolvency rather than shed on the way in. Increments have gone through after several years without them, long term settlements have been signed, and the canteens and washrooms at Rishra have been rebuilt.

Whether the turnaround holds will be known over the next few years. But the entry point is a reminder that a long fight in court and a preserved going concern are not always alternatives.