Case Study – Impact of Leadership on Company


HIL Ltd is the flagship company of CK Birla Group and is the market leader in Asbestos fibre cement roofing sheets for more than 5 decades with ~20% market share.  Innovative products, deepening distribution reach, operational efficiencies and strengthening of critical capabilities have anchored HIL’s faster-than-industry growth pace over the years.

Click the image to see the product portfolio of company.

With over 3,950 employees, 20 manufacturing facilities, and ~6500 dealers’ network group HIL today is a leading manufacturer and seller of building material solutions products like Fibre Cement Sheets (Roofing business), AAC Blocks, Boards & Panels (Building Materials) and Pipes & fittings (Polymer Solutions) in the country.

HIL is trend setter in the Indian Building Materials Industry with a 70 years legacy. They were the 1st to introduce AAC blocks (Fly-ash bricks) and panels replacing the traditional bricks culture in the country with the help of a strong R&D team. The company has the largest research centre in the industry which has resulted in the company obtaining 22 patents registrations in 7 countries. Also, through its R&D activities, the company has successfully developed its non-asbestos fibre cement sheets (which are environment friendly compared to traditional asbestos sheet) brand ‘Charminar Fortune’. Company also owns 2 popular “Consumer Super brands” namely “Birla Aerocon” and “Charminar”.

Turning Point – Appointment of Mr. Dhirup Roy Chaudhary in year 2017

Good Business leaders create a vision, articulate the vision, passionately own the vision and relentlessly drive it to completion”. – Jack Welch

Mr. Dhirup Roy Chaudhary

He is a multi-lingual speaker, an eminent scholar with engineering from Birla Institute of Technology and post-graduation from IIM-Ahmadabad. He has 29 years of hands-on experience in Leading Businesses.

In his past experience, Dhirup was associated with ABB Ltd and in his 14 years at ABB he became the Youngest Business Head of the company.  Then he joined Crompton Greaves India as the youngest General manager – head of their Power Transformers and was able to turn around plant in a few months and grow their profitability at an exponential way. He was also part of Bagri Group, Malaysia where he was the Global Head and President and was able to grow the company to 6x Equity in 7 years of his time.

Dhirup went about making HIL’s strengths stronger and their weaknesses weaker. After his appointment he improved the profitability through optimization. Re-energized the loyal dealership network and spent a lot of time and money on advancing the existing products and innovating new ones to make the society a better place.

Biggest threat roaming around the company of ban on Asbestos was tackled very innovatively by Mr. Dhirup as he introduced India’s first Non- Asbestos Roofing Sheets under the brand name “Charminar Fortune” on back of its its R&D expertise.

“This is a bomb of a product, and according to Dhirup Choudhary as he himself is willing to place his own personal money on the product.”

He was awarded as “The Most Promising Business Leader of Asia 2018 & 2019” by the Economic Times.

Initiatives of new leadership and its impact on business: –

  • He 1st started with improving efficiency and rationalising costs which improved EBIDTA margins from 10% in FY17 to 15% in FY19. His focus on higher dealer engagement and higher ad spent via IPL sponsorship (with likes of MS Dhoni as Brand Ambassador) resulted in market share gains as well as faster ramp up for new segments like Pipes and Fittings (Polymer Solution).
  • With an aim to safeguard itself from any risk arising from ban of asbestos fibre (Chrysotile fibre which is least harmful asbestos) as well as cater to institutional segment (40% of roofing market) where they were not present, the company through its in-house R&D developed non-asbestos cement sheet namely ‘Charminar Fortune’.
  • Strong execution: Company entered Pipes division in 2013 with 1st plant and even after 3 years in 2017, they had achieved around 40 Cr of revenues. Mr. Dhirup after taking over set up an ambitious target of achieving 400 Cr sales in next 4-5 years and has followed up on its promise with strong execution and in 2021, they will be crossing a turnover of 200 Cores.
  • Parador acquisition will help HIL enter the flooring segment, a segment which is highly complementary to HIL’s current product portfolio along with enabling the company’s transition into a global player in the building solutions marker. This also resulted in reducing contribution from fibre cement sheets to ~33% from 80%+.
  • Focus on profitable growth: With FY20 being a tough year for the industry due to elections impacting Q1’20 (major quarter) for the fibre cement sheets, other major peers reduced prices significantly inspite of rising input costs in a bid to increase revenue growth. However, HIL maintained its pricing discipline and let go of some volumes in order to protect margins (18% EBIT margins for HIL in FY20 vs 8% for 2nd best player). Currently they have already become market leaders in almost every product that they sell.

Impact on Business

A comparision of business numbers before and after appointment

 ParticularsAverage Growth
Average Growth
EBIDTA Margins (%)9.09% (2016)13.34% (9M’21)
Net Debt158 Cr (2016)150 Cr (9M’21)
RoCE (%)11.88% (2016)15%+
Fibre Cement (% of sales)85-90%30%

Acquisition of New company – A game changer of company – Parador Holdings GmbH, Germany.

Parador is vertically integrated, full-range supplier which designs, manufactures and distributes a wide range of flooring solutions including resilient flooring, laminate and engineered wood flooring, wall and ceiling panels, and related accessories.

As part of its 1st step, the company introduced a Six Sigma approach to make the operations further effective and lean. This along with continuous product innovations (Parador changes 50% of its product portfolio every 3 years) and benefits of operating leverage resulted in EBIDTA margins improving from 7-8% levels at pre-acquisition term to 12%+ levels in just 1 ½ year and that too in a year which was disrupted by COVID across the globe.

Parador is amongst the very few flooring companies in the world which have managed to grow during the pandemic due to efficient migration from 3-layer distribution system to DIY (Do it Yourself) and then further to e-commerce and online stores.

Going forward, once COVID situation settles, the company plans to further expand its distribution and reach in other countries which should increase capacity utilisation from 70% currently to 90%+ which should thereby result in EBDITA margins crossing 15% in 2 years’ time.

Price movement of Company

Growth Journey for company has just begun: –

As we see the robust performance of company in various productline, see below the projected numbers for next 3-5 years which makes us believe that, the growth journey of a company has just begun:-

  1. Fibre Cement Sheet should do very well in the short-term due to strong monsoon and rising farm income. Asbestos fibre cement sheet should grow in low single digit. However, Charminar Fortune should be the growth driver for this segment in the next 2-3 years and should help the segment maintain 8-10% growth.
  2. Polymer and Building Solutions divisions should cross Rs 1000 Cr revenue each (double vs FY21) by FY25. Margins in Polymer solutions should also improve and touch 15% levels as they achieve scale.
  3. Parador should cross 2000 Cr revenues in next 18-24 months and should also report better margins – 15% levels due to higher operating leverage.
  4. Company plans to enter new segments in Building Materials like adhesives which will propel its journey towards FY25 target of USD 1 billion revenues.

Care PMS Edge in Identification of this investment opportunity in early 2018

We at Care PMS was tracking this company from year 2015 and have not seen this encouraging growth numbers till year 2017. However, the business in which company operates was always of our interest and hence we always kept our eye on their performance. In early 2018, we seen some upward trend which caught our attention and hence we started our coverage in order to identify the developments. We have narrated notable changes in business which was highly attributed to leadership.

We have met the management in order to understand their vision for next 10 years for their company and came to know they are looking at multi-fold growth opportunity and are gearing up to take maximum share of the same which was clearly visible by new launches, branding activities, acquisition, etc.

We have decided to invest in this company in year 2018 and from that day till today, company had grown their revenue by ~100% and earnings per share by ~115% and their market price has also grown by ~80%.

We strongly believe, company has huge potential to grow from this level and can multiply its earnings in next decade considering their execution capabilities backed by strong leader.

About Care PMS:

Care Portfolio Managers Private Limited (‘Care PMS’) is an investment advisory firm licensed as a portfolio manager by Securities and Exchange Board of India (Regulatory body in India). Care PMS, with its dedicated and strong research, endeavours long-term wealth creation for its clients by investing exclusively in listed Indian equities with deep growth potential which can give good return over a period of 2 – 3 years.


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