In an interaction with IIFL, Rajesh Bhatia, said, “Innovation to create value-added differentiation and Research & Development is the topmost priority.”
How do you see packaging industry grow in the coming years?
Globally, the flexible packaging industry is growing between 5-6% on an average. In India, in value terms, this sector is pegged at $12-$15 billion (out of the total packaging industry which stands at $30- $35 billion). The packaging sector as a whole in India is growing at around 15-16% while the flexible packaging segment is growing clearly in excess of 20%.
The penetration of packaging in our country is very low with almost 90% of consumer goods particularly food products being sold unpackaged or loose. The per capita packaging consumption in India is as low as 4.5 kg currently, while that in Taiwan, Germany and the US is around 19, 50 and 71 kg respectively. But as our economy grows, consumerism will be boosted, retail will prospers; and the gap will decrease. For the myriad benefits that are derived by flexible packaging in terms of light-weighting/ down-gauging, sustainability, reduction at source, high product to package ratio, lesser energy utilization at all the three stages of the product lifecycle i.e. manufacturing, transportation and disposal, there is no stopping for the flexible packaging industry hereon so to speak.
At Uflex, what is the expected earnings growth in the coming two to three years?
As of now considering the recent commissioning of our aseptic liquid packaging material manufacturing plant at Sanand, Gujarat; current investments already made towards enhancing manufacturing processes and capacity utilization; ongoing R&D initiatives that are underway towards offering fully integrated innovative end to end flexible packaging solutions, we could look at a consolidated top line of around Rs 9000 crore in the FY 2020.
Any additional investments made towards the aforesaid activities will further give a boost to the top line over and above what has been projected and estimated currently. All our businesses i.e. Films (at all locations i.e. India, UAE, Poland, Egypt, Mexico, and the USA); Packaging Material Manufacturing; Engineering; Holography; Chemicals and Cylinders are heading towards optimal capacity utilization. We are serving to all top of the line brands and clients globally and this relationship is only improving by the days which further brightens our business prospects in the years to come.
We are also planning to gain some stronghold for our value-added flexible packaging products overseas, which will further strengthen our export position thereby positively impacting sectoral leadership and growth.
What would be your focus area when it comes to improving revenues? What shift in strategy can be expected at Uflex in order to gain market share?
Innovation to create value-added differentiation is our raison d'être. This is achieved from the special and highly bespoke flexible packaging solutions that we come up with for our clients globally. The level of customization in our business is very high and that’s what commands higher revenue in the market both nationally as well as internationally. Differentiation is the name of the game even in the highly commoditized polymeric film segment these days. The films that we are manufacturing after immaculate R&D are specialty substrates that are down-gauged adding immense value to the ensuing packaging both in terms of functionality and sustainability.
We are a fully integrated multinational flexible packaging materials and solution company and therefore stand in a very good stead to service the entire realm of the industry. This makes us a preferred supplier for the whole gamut of flexible packaging solutions. Just to cite an example; owing to our cutting-edge holographic capabilities and top of the line brand protection solutions’ range we have been able to demonstrate to some of our clients by enhancing their throughput in the market by almost 15% which otherwise was being eaten up by counterfeiters. This is significantly tangible to tilt the customer predilection towards a fully integrated flexible packaging solution company like Uflex.
Going forward, we will also look at a focused product based expansions across geographies that will add value to the businesses of our clients' world over.
We have a high speed to market reach which further help us reaping the first mover advantage hence has a positive bearing upon our earnings.We always believe in staying ahead of the curve in terms of product innovation that creates the real differentiation in the market thereby positively enhancing our clients’ businesses globally.
We have commissioned state-of-the-art aseptic liquid packaging material manufacturing plant at Sanand in Gujarat which will have annual production capacity of 7 billion packs/cartons. We had unveiled the liquid packaging brand Asepto earlier in January 2017. This is poised as a pleasant second alternative in the Indian market for the manufacturers of non-aerated liquid products.With over three decades of gratifying experience in flexible packaging, we have long-standing relations with almost all the food and beverage manufacturing companies in India. For Asepto it is like extending this already existing relationship of faith and trust to the liquid packaging space. This is a natural and logical progression of our business which will further add value to the business of our clients.
Our focus will be to achieve about 60% capacity utilization of our Sanand plant by FY 2019 and then attempting for around 80% after which we may consider for further capacity expansion for the aseptic liquid packaging material manufacturing. The plant at Sanand as you know has a tremendous scope of expansion. We have 72 acres at Sanand, out of which 21 acres have been utilized thus far in the first phase of setting up the aseptic liquid packaging material manufacturing plant.
What are the top three strategic priorities for Uflex currently?
Innovation to create value-added differentiation and Research & Development is the topmost priority.
Our priority equally would be to move our revenue mix towards value-added flexible packaging products. You will appreciate that a technologically enhanced and innovative flexible packaging material manufacturing company commands a very different valuation perspective from a commoditized product-driven organization posing low entry barriers. That’s where we are actually headed to get on to the next level under the leadership of our Founder and CMD Ashok Chaturvedi who personally spearheads the R&D and Innovation stream of our organization.
Another priority for us is to ensure effective existing capacity utilization which has been optimally and progressively increasing over the last several years. This trend will continue in our endeavor towards attaining overall operational excellence.
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