Mr. Atique Ahmad Khan is the Chief Executive Officer of Ghani Global Group and Ghani Gases Limited, and the Chairman of Ghani Global Glass Limited. He is qualified mechanical and electrical engineer by profession.
About 25 years back Mr. Atique joined Ghani Textile Limited (a family business company) as General Manager and took the responsibility of production and marketing. Thereafter the company changed its name to Ghani Automobile Industries Limited.
BR Research recently met with Mr. Atique Ahmed Khan; following is the edited excerpt of a very informative discussion with him
BR Research: Walk us through the history of the Ghani Global Group
Atique Ahmad Khan: Ghani Global Group was incorporated in 2007 and the company started its operations in 2008 through Ghani Gases Limited. Ghani Gases Limited became a public limited company in 2008; it deals in industrial and medical gases manufacturing. In 2009 it set up a state-of-the-art 110TPD ASU plant for manufacturing of liquid industrial and medical gases in Lahore with production of 100 tons a day. In 2014, the Group incorporated Ghani Gases' second plant at Port Qasim Karachi with around the same volume but slightly higher capacity of around 110 tons per day. Ghani Gases Limited right now is meeting around 45 percent of the country's requirement staring from south to north and north-west.
Meanwhile in 2007, we entered the glass business. The company has been setting up a State-of-the-Art fully automated glass tubing manufacturing plant. The installed capacity of the plant is up to 24 tons / per day. Plant and machinery have been imported from world's renowned manufacturers of glass manufacturing machinery from Italy, Japan, Germany, UK and China. We hope to commence production in the first week of September. But it will not stop there; we plan invest more in the glass business in the near future.
We have also formed a new company in the name of Ghani Chemicals. The land has been acquired and the company is registered. This venture is a result of our constant search for cheaper energy solutions; the core business of this set-up will initially be production of ethyl alcohol followed by industrial CO2, energy from biomass and wastes like potassium based fertilizer and nitrogen based fertilizer. We plan to set up a state-of-the-art chemical plant in Phool Nagar K District Kasur, and the project will be a key in meeting the firm's electricity need and gas requirement in times of sheer shortages in terms of timely supply, discounted rates, and increased revenues. It is important to point out that we have to restrict ourselves to low pressure gas or any kind of methane based gas because of our technical configurations. We are looking to commission the new project before June 2016. The technology used will be mainly from Germany, Spain and other European countries like Denmark.
BRR: What are your industrial gases and glass business products?
AAK: Ghani Gasses Limited has all the industrial gasses like Liquid Oxygen and Liquid Argon for hospitals, chemical process, general engineering, fabrication, steel manufacturing, motorcycle and steel cutting and welding industries, and ship breaking industry. Then we have Calcium Carbonate and Liquid Nitrogen used for chemical processes, oil and gas exploration, dairy products, packaging and food preservatives. There are around four to five producers of such gases in the country; the demand for the products in the country is around 450 tons per day. We are producing 200 tons per day. Our raw material is air and fuel is electricity and gas.
Ghani Global Glass is into the manufacture of glass tubing, which is produced in clear transparent and amber colored versions. It is light weight glass with high chemical resistance used particularly in medical and pharmaceutical industries like the manufacture of ampoules and vials. Currently these tubes are being imported from Italy, Germany, Japan and mostly China in the country. Our production will serve as the import substitution for these tubes. The country's requirement is around 8000-9000 tons per year; our focus is to bring in a capacity of around 12000 tons divided into two 6000 tons phases over the next 2.5 years.
BRR: How much do you plan to generate from your captive power plants? And how much will you be saving in energy costs? What will be the investment size?
AAK: We are planning to add two 6MW plants that run on biomass. Not only will cost us 35 percent less than what we are paying today, the continuous supply of fuel is what we are aiming for. Every industry has its own configuration and dynamics, e.g. Cement industry uses coal and has moved to heat recovery plants as its raw material is its waste gas. What we are talking about in Ghani Chemicals is not any of the conventional sources of energy like coal, diesel, gas, and furnace oil. Our industrial requirement is based on continuity and biomass can really fill that gap.
The investment will be of around Rs2.4 billion for a 6MW biogas plant plus the synergy of CO2, ethyl alcohol, raw fertilizer, sulphuric acid etc. Apart from the biogas energy, one plant will additionally produce 50 tons per day of CO2 production, 60 tons per day of ethyl alcohol, and around 20 tons per day of concentrated 100 percent sulphuric acid. Ethyl alcohol will be marketed while the other products will be used in-house.
BRR: Tell us about the Group's synergies and integration in terms of revenues.
AAK: Revenues of Ghani Gases right now are almost Rs2 billion; we are looking at almost Rs2.8 billion next year. Right now Ghani Chemicals is a standalone company. We haven't decided what course our new venture will take. Maybe Ghani Global Glass or Ghani Gases will take over Ghani Chemicals eventually because these two are the direct users of the product coming out of Ghani Chemicals. The management will decide.
If we add Ghani Chemicals to Ghani Gases, the revenues will go up to Rs5.5-6 billion during the first year, which will go up to Rs10 billion by 2019-2020. This will be if and when the two companies can decide upon a good working arrangement. In essence, the management will decides whether Ghani Gas will take-over, be the key sponsor or let Ghani Chemical be a standalone entity, which will change the scenario for the revenues and the bottomline in the next four to five years. We are anticipating earnings of Rs4 per share for Ghani Gasses next year. Adding Ghani Chemicals, the EPS could go up to Rs6.5-Rs7.0.
On a standalone basis, Ghani Chemicals will have revenues of Rs3 billion, while the profits will be of around Rs400 million. Our capital for this company will be approximately around Rs750 million, while the remaining will be covered through financing.
BRR: How do you see the industrial gases market expanding?
AAK: Since energy is kind of a raw material for the industry, cheaper energy sources will be the driving force behind this segments growth. The availability of cheap energy will increase this industry's local demand twice in the next five years. Along with that, the industry is bound to grow with increasing globalization, awareness, competition. The growth prospects are immense.
BRR: Do you have any export plans? And will you be able to compete on prices?
AAK: We have immediate plans for our glass business. The market is huge out there; the gulf region and the SAARC countries are key markets for us. China is leading but it has substandard tubes. We see immense potential to compete in the global market.