Budget Bytes 2013-14

Indian Packaging Industry Expected to Become the Fourth Largest Global Market

Packaging Industry plays a crucial role, adding value to the various manufacturing sectors including agriculture and FMCG segments. In recent times, with changing consumer preferences, the packaging industry has faced numerous challenges and adopted various upgraded technologies such as aseptic packaging, retort packaging and biodegradable packaging to enhance the shelf life of food products.

As per a recent report by Indian Institute of Packaging (IIP), Indian packaging industry is expected to grow at a compounded annual growth rate of 12.3 percent over the next 4 to 5 years. There are roughly 22,000 packaging companies in the country - from raw material manufacturers to machinery suppliers to ancillary material and nearly 85 percent of them are MSMEs.

“With sales of USD 24.6 billion, India was the 6th largest packaging market in the world in 2011. However, in next few years, it is expected to grow at CAGR of 12.3 percent that will make it the 4th largest global market in packaging industry, with sales of USD 42.7 billion,” said D Purandeswari, Union Minister of State for Commerce during Indiapack-2013 exhibition.

India's per capita consumption of packaging is only 4.3 kg per person per annum, as against Germany's 42 kg and China's 20 kg, which is very low as compared to the global standards. This presents a huge scope for innovation, entrepreneurship as well as logistical advancements for industry’s key players to take initiatives needed to convert the large unpacked commodities into processed and packed and well-presented commodities.

Given the rate at which the Indian packaging sector is growing, country’s largest flexible packaging company Uflex Ltd., is gearing up with innovative packaging ideas and a host of value added packaging materials and sophisticated products for the market. The packaging giant is expecting a 30% growth in the revenue this year.

UFLEX Ltd Q3 FY 2013 Net Revenue Up 15% at Rs. 1295 crores

New Delhi:- Uflex Ltd, the Bombay Stock Exchange (UFLEX: 500148) and NSE listed, India's largest flexible packaging company, has registered a growth of 15% in its consolidated revenue for the quarter ended December 31, 2012 at Rs. 1295 crore as against Rs. 1129  crore for the same period last year. Its consolidated net profit for the Dec. quarter of FY 2013 stood lower at Rs. 36 crore, against Rs. 51 crore for the same period last year.

For the nine months period ended December 31, 2012, UFlex recorded lower net profit of Rs. 149 crore against Rs. 205 crore in the corresponding period last year, while net revenue of the company for the nine months ended Dec.. 31, 2012 stood higher by 19% at Rs. 3940 crore compared Rs. 3320 crore in the same period in previous fiscal. 

The higher revenue growth is attributed to new capacity expansion globally and increased uptake of innovative flexible packaging solutions offered by the company across sectors. Uflex completed the expansion in Poland successfully during July, 2012 and in Kentucky, USA during January 2013. Collectively the two facilities involved investments of about $ 150 million.    

According to Mr. Ashok Chaturvedi, Chairman and M.D. of UFLEX Ltd, “The market conditions for the plastic film have been unfavourable during the current financial year, causing having downward pressure on prices & margins thereof.  However, conditions have started showing some improvement from February, 2013 and there are hopes that it will show up better in the coming time.  We are quite confident that FY 2013-14 would witness far better results.

Our three pronged strategy of growth with Innovation, proximity to customers with focus on operational excellence and better quality & quick service and deliveries to customers is the key to our success story that also reflects in the company’s top line growth. We will continue with our endeavors to become one of the largest packaging companies in the globe delivering value to our customers with best-in-class products and services; and incremental return on investments to investors.”

Uflex's strong manufacturing base in India, Mexico, Dubai, Egypt, Poland and USA caters to global markets spanning USA, Canada, South America, UK, Europe, Russia, CIS countries, South Africa and other African countries, the Middle East and the South Asian Countries.

Expansion Plans

UFLEX’s agenda of global expansion and consolidation of its position as a truly Indian MNC (Multinational Corporation) is reinforced with its strategy of capacity expansion and adding manufacturing lines for various product categories across existing and newer locations to increase proximity to the markets, but also to bring broad portfolio of value added products to its clients at competitive price points.

The company offers its flexible packaging products and solutions globally to clients including Unilever, Pepsi, Wrigley, Procter & Gamble, Colgate, Palmolive, Nestle, Gillette, Ranbaxy, Perfetti, Joyco, Monsanto, ITC, Godrej Pillsbury, Tata Tea, Hindustan Petroleum, Indian Oil, Britannia, Dabur, Haldiram, Wockhardt, HUL, Parle Biscuit, Birla 3M, among others.