ABOUT HUHTAMAKI INDIA LIMITED
Huhtamaki India Limited (Huhtamaki India) is Indias leading manufacturer of flexible
consumer packaging and labelling solutions. Backed by the parentage of Huhtamaki Oyj -
with a rich Nordic heritage and an established legacy of over 100 years - we are at the
forefront of leveraging innovation and our packaging solutions expertise to emerge as the
one-stop shop for all packaging needs.
Our ambition is to be the first choice for sustainable packaging solutions. We strive
to earn this position every day with our leading innovative products that ensure hygiene
and safety. We believe in protecting food, people and the planet, and enable affordability
and accessibility to food and everyday necessities for people around the world.
ECONOMIC OVERVIEW
Global economy
Over the year 2023, the global economic landscape showed signs of stabilisation. This
stability was catalysed by a fast-recovering US economy and the resilience of large
emerging markets. The other factors facilitating this revival were the
faster-than-expected decline in inflation to 6.9% in 2023. This was largely due to the
easing of supply-side issues and stringent monetary policies. Inflation is set to further
reduce to 5.8% in 2024 and 4.4% in 2025, signalling a turn towards more stable global
economic conditions.
The receding threat of a global recession was accompanied by a combination of
favourable factors that have collectively facilitated global growth - the resilience of
labour markets, an uptick in household consumption demand and the vigour of emerging
economies. The strength of the job market also played an important role in creating a
conducive environment for growth. There was a noticeable relaxation in labour markets and
wage growth remained moderate, providing consumers with greater financial stability and
boosting discretionary spending. However, the period also saw challenges such as high
borrowing costs and increasing government debts in some advanced and emerging market
economies.
Global GDP growth
(in %)
| Country/Region |
2023 |
2024 (P) |
| World |
3.1 |
3.1 |
| Advanced Economies (AEs) |
1.6 |
1.5 |
| Emerging Markets and Developing Economies (EMDEs) |
4.1 |
4.1 |
| United States |
2.5 |
2.1 |
| Euro area |
0.5 |
0.9 |
| United Kingdom |
0.5 |
0.6 |
| China |
5.2 |
4.6 |
| India |
6.7 |
6.5 |
| Russia |
3.0 |
2.6 |
Source: World Economic Outlook, January 2024, IMF Note: P stands for projected
Outlook
The near-term global economic landscape is characterised by an array of risks and
potential uplifts. The intensifying geopolitical situation in certain regions can have
major repercussions for the global economy. At the same time, multiple countries have
tightened monetary policies to tame inflation, thus denting the demand for consumer and
business products. According to the International Monetary Fund (IMF), global growth is
projected at 3.1% in 2024 and is expected to slightly increase to 3.2% in 2025. Advanced
economies are expected to experience a slight dip in growth this year, followed by a rise
in 2025, driven by the recovery in the euro area and a moderate growth in the United
States. The US, in particular, is projected to see a slight decrease in growth rates, from
2.5% in 2023 to 2.1% in 2024, influenced by the delayed effects of monetary and fiscal
policies. The euro area, recovering from low growth, is anticipated to see a rise from
0.5% in 2023 to 1.7% in 2025.
Emerging markets and developing economies are expected to maintain a steady growth in
2024 and 2025, as per IMF. In Asia, Chinas growth is projected at 4.6% in 2024 and 4.1%
in 2025, while Indias remain robust at 6.5% for both years. Latin America is forecasted
to see growth fluctuations with a slight decline in 2024 followed by an increase in 2025.
The Middle East and Central Asia, as well as sub-Saharan Africa, are projected to
experience growth recovery in the coming years. World trade is expected to maintain a
steady pace of 3.3% in 2024 and 3.6% in 2025. This reflects the resilience of global trade
despite restrictions and geopolitical fragmentation.
Inflation is set to further reduce to 5.8% in 2024 and 4.4% in 2025, signalling a turn
towards more stable global economic conditions.
Source: World Economic Outlook, January 2024, IMF
Indian economy
India has emerged as the 5th largest global economy, with its GDP estimated
at $3.7 Trillion in FY2024. As the fastest growing major economy in the world in a
challenging environment, the countrys strength lies in domestic consumption, driven by
favourable demographics and rising disposable income. A combination of factors including
government reforms, significant investments in building physical and digital
infrastructure, and boosting manufacturing through the ‘Make in India initiative and
production-linked incentive scheme (PLI) have catalysed its growth, resilience and
self-reliance. According to a report by the National Statistical Office (NSO), based on
the First Advance Estimates of National Income, Indias real GDP is likely to grow at 7.3%
for FY2024. This rise in growth is backed by a broad-based strengthening of the industrial
sectors, particularly manufacturing, and buoyed by easing input costs and surging
profitability. Manufacturing PMI remains above the 50-mark threshold, driven by a healthy
growth in steel, cement and automobile manufacturing, among others. At the same time,
infrastructure, real estate and construction sectors recorded impressive growth.
In addition, inflation had eased in the third quarter of FY2024 to a four-month low of
4.9%. The Reserve Bank of Indias (RBI) hawkish stance on inflation without jeopardising
growth, has led to a stability in the interest rate environment, creating space for
long-term investment and spending. Even though there was a surge in prices for commodities
like cereals, fruits, vegetables, pulses and spices, the food and beverage sector adapted
well to the inflation challenge. This was evident in increased household consumption and
consumer confidence. In terms of the big picture, the Indian economy is navigating three
major trends: the end of hyper-globalisation in manufacturing; the impact of Artificial
Intelligence on services, trade and employment; and the imperative of energy transition
amidst the need for economic growth. The governments response to these challenges
includes a shift towards onshoring and friend-shoring of production, balancing the effect
of AI on cost competitiveness in digital services and exceeding non-fossil fuel power
generation targets while sustaining economic growth.
Share of private final consumption expenditure in GDP
Source: NSO, MOSPI : Note: RE stands for Revised Estimates, PE for Provisional
Estimates and FAE for First Advance Estimates
Outlook
The Indian economy is expected to sustain real GDP growth above 7% over the next few
years. With inflation likely to gradually align with targets by 2025, the economy will
likely benefit from eased monetary policies. The public policy emphasis on infrastructure
is set to drive gross fixed capital formation. Additionally, a boost in rural demand,
supported by government initiatives like the PM Garib Kalyan Anna Yojana will further fuel
consumption.
Manufacturing enterprises will be critical in fostering functional ecosystems –
creating jobs, enhancing income generation and developing opportunities for consumption
and infrastructure investments. By streamlining policy reforms and cultivating vertical
markets, India is enhancing its participation in global value chains.
The rise in foreign direct investment (FDI) inflows, coupled with the expansion of
digital infrastructure, has created a strong foundation for top-tier global tech and
e-commerce companies to enter India. This is expected to reshape the retail consumer
market landscape in the coming decade. With continued reforms in key areas like skilling,
health, energy security, MSMEs and gender balance in the workforce, India remains on
course to become a $7 Trillion economy by 2030.
INDUSTRY OVERVIEW
Global packaging industry
The global packaging industry has grown rapidly over the last few decades. The
significant factors governing the global packaging market are changing consumer
preferences, technology breakthroughs, environmental concerns and a rapidly growing
e-commerce market. Further, the provisions of Extended Producer Responsibility (EPR) have
made producers legally and financially responsible for mitigating the environmental
impacts of their products and packaging. This has led to the evolution of high quality,
convenient, and sustainable packaging materials and processes. The packaging industry is
estimated to be worth $1.1 Trillion in 2024 and is expected to grow to $1.4 Trillion by
2029, according to Mordor Intelligence. Between 2024 to 2029, the industry is expected to
grow at a CAGR of 3.9%.
Packaging market ($ in Trillion)
Source: Mordor Intelligence
Growth drivers
Rapid urbanisation
In developing nations like India and Brazil, the demand for packaged goods is growing
due to rapid urbanisation and rising income levels. The World Bank reports that urban
population growth for these nations is substantially faster than the global average, which
raises the demand for packaged goods.
Change in consumer demographics
The global demand for easy-to-transport packaging solutions is driven by shifting
consumer demographics - an increasing share of working professionals and a growing middle
class. As per the OECD, the number of middle-class individuals worldwide is expected to
reach 4.9 Billion by 2030 from 1.8 Billion in 2009.
Prevalence of sustainability concerns
Stakeholders are progressively exerting pressure on businesses to embrace
environmentally friendly practices. 73% of global consumers say they would change their
consumption habits to lessen their impact on the environment, according to a Nielsen
report.
Enterprises are allocating resources towards recycling infrastructure and creating
materials with lower ecological footprints. Biodegradable and recyclable materials are
being adopted by the industry at an increasing rate.
Innovation and product development
Personalised and smart packaging solutions are now a reality, thanks to technological
advancements. The use of IoT to improve customer engagement and traceability is becoming
increasingly common. With a CAGR of 6.2%, the size of the global smart packaging market is
predicted to increase from $25.7 Billion in 2023 to $46.9 Billion by 2033 according to a
research report published by Spherical Insights & Consulting.
• The use of Radio Frequency Identification (RFID) for electronic tagging and
tracking is also increasing, especially as RFID costs decrease.
• Stand-up pouches are becoming popular as they offer the benefits of portability,
resealability and the ability to stand upright on shelves for better visibility and space
utilisation. They are much lighter than glass bottles and cans.
Increased demand for flexible packaging
• With over 60% of the market share in the food packaging industry, flexible
packaging is transforming the industry landscape. This change is spurred by the consumer
preference for convenient, resealable and long-lasting packaging as well as the
adaptability and effectiveness of these solutions. The global market for flexible
packaging is projected to grow from $160.8 Billion in 2020 to $200.5 Billion by 2025, at a
CAGR of 4.5% between 2020 and 2025.
• More adaptable and sustainable substrate options are replacing traditional rigid
formats in the packaging industry. For instance, high-barrier films minimise food waste
and provide a longer shelf life. Compared to more conventional rigid pack formats like
glass jars and metal tins, high-barrier films are more economical and possess better
barrier qualities.
Market size by region
With their sizeable food and beverage markets, nations like China and India are driving
demand for the packaging industry – making Asia-Pacific a significant growth region.
At the same time, recyclable and sustainable packaging options have become the subject of
significant policy changes.
The industry is being shaped by sustainability initiatives and regulatory changes as
businesses place a greater emphasis on planet-friendly packaging options.
Global packaging market - growth rate by region (2022-27)
Indian packaging industry
The Indian packaging industry is being shaped by a host of growth drivers. With an
estimated market size of $84.4 Billion in 2024, it is projected to reach $142.6 Billion by
2029, growing at a CAGR of 11.0% during the forecast period (2024-2029).
Packaging market ($ in Trillion)
Source: Mordor Intelligence
Growth drivers
Rising disposable income and consumer demand
• Increased disposable income of Indias large and growing middle class is
boosting consumption. Consumers are also willing to spend more on products that offer
additional value, including better packaging.
• Indian consumers are also focusing more on health and hygiene, post-pandemic.
This awareness has created a demand for packaging that ensures product integrity, safety
and extended shelf life.
Multinational investment
Multinational corporations are progressively investing in sectors like food, beverages,
cosmetics, toiletries and pharmaceuticals in India. These investments are contributing to
the growth of organised retail, which, in turn, supports the packaging industry.
Rise of e-commerce
E-commerce and online food services industry require packaging solutions that can
withstand the rigours of transportation, enhance the unboxing experience and maintain the
quality and hygiene of the contents.
Indias leadership in the pharmaceutical industry
India has emerged as a global leader in the pharmaceutical industry. The industry
demands highly regulated and safe packaging. This is because packaging plays an important
role in ensuring the efficacy and safety of pharmaceutical products during storage and
transportation.
Indias flexible packaging industry
The flexible packaging industry is expected to grow at a CAGR of 12.7% from 2023 to
2028. The industry is projected to increase by $15.57 Billion during the forecast period.
Growth drivers
Growing retail sector
The retail sector is developing rapidly in tier-1 and tier-2 cities, leading to a
growing demand for flexible packaging. The food and grocery retail market is a major
driver for flexible packaging in India. Nearly 70% of total retail sales in this sector
necessitate reliable and quality packaging solutions.
Industry-wide collaborations
The industry is witnessing collaborations and partnerships with the goal of developing
new materials and recycling technologies. These collaborations span the entire value
chain, involving material suppliers, packaging manufacturers, brand owners and recycling
companies.
Ease of transport
High logistics costs in India are prompting a shift towards more cost-effective
packaging solutions. Flexible packaging involves lower transportation and storage costs
compared to rigid packaging, thus becoming the preferred choice for businesses.
Customisation
The demand for digitally printed packaging is increasing as it offers design freedom,
customisation, flexibility, and faster turnaround times, especially for smaller batch
sizes.
Overview of end-use industries
Food and beverage industry
The FMCG market is Indias fourth-largest sector and one of the main drivers of the
economy. The food and beverage (F&B) industry, a major component of the FMCG sector is
the principal consumer of packaging solutions. The F&B industry is witnessing a shift
toward creative packaging solutions, effected by a change in consumer preferences and
rising demands for sustainable and convenient options. As the F&B industry grows, so
would the food packaging market. According to All India Food Processors Association, food
packaging is growing by 14.8% annually and expected to reach $86 Billion in 2029.
Pharmaceutical industry
The need for safe and compliant packaging is being driven by an expanding healthcare
industry as well as increased public awareness of health issues. The Indian pharmaceutical
packaging market was valued at $1,434.1 Million in 2020 and is projected to reach
$3,027.14 Million by 2030 at a CAGR of 7.5% from 2021 to 2030, according to Research and
Markets.
Personal care and cosmetics industry
With higher disposable income and changing consumer lifestyles, theres a heightened
demand for personal care and cosmetic products. Indias beauty and personal care market is
projected to touch $30 Billion by 2027, accounting for about 5% of the global market,
according to a report launched by Redseer Strategy Consultants along with Peak XV. This
necessitates high-quality and sophisticated packaging.
E-commerce
The e-commerce sector has seen rapid expansion since the pandemic, catalysing a need
for durable and sustainable packaging to ensure product safety. Indian e-commerce is
expected to grow at a CAGR of 27% to reach $163 Billion by 2026, as per India Brand Equity
Foundation (IBEF). The packaging industry will hugely benefit from this growth, especially
in the areas of logistics and shipment packaging solutions.
COMPANY OVERVIEW
Operational overview
In 2023, Huhtamaki India reported revenue from operations (net of GST) of 25,494.4
Million as against 29,829.2 Million in 2022. The EBITDA (before exceptional items) of 2023
was 2,101.8 Million as against 1,742.6 Million in 2022. The average return on equity for
2023 is 43.0% compared to 6.7% in 2022. Our market capitalisation as on December 31,
2023, stood at 21,644.6 Million.
Revenue from operations
Revenue from operations decreased by 14.5% in 2023 against 2022.
Revenue from operations
( in Million)
| Year |
Turnover |
| 2019 |
25,989.8 |
| 2020 |
24,627.0 |
| 2021 |
26,252.8 |
| 2022 |
29,829.2 |
| 2023 |
25,494.4 |
Note: The erosion in the topline during 2023 is partly due to strategic position taken
and partly due to lower offtake in some specific categories
EBITDA and PAT
Operating profit (EBITDA) before exceptional items witnessed a 20.6% increase in 2023
as against 2022. This is majorly on account of network optimisation by consolidating the
manufacturing footprint, operational efficiency resulting in cost optimisation, overhead
reduction and stability in input prices. Profit after tax stood at 4,096.3 Million in 2023
as against 496.4 Million in 2022 driven majorly by exceptional income of 3,695.3 Million.
EPS and dividend
The EPS for 2023 (excluding exceptional items) is 16.3 as against 6.6 in 2022. We have
proposed a dividend of 5 per equity share of face value of 2 each for the year 2023.
Reserves and surplus, capital expenditure and fixed assets
At the end of the 2023, reserves and surplus were at 11,353.5 Million as against
7,418.5 Million at the end of 2022. Our fixed assets at the end of 2023 were at 6,143.4
Million as against 5,138.3 Million at the end of 2022. Capital expenditure during 2023 was
1,413.9 Million.
Debt working and capital returns
Gross debt as of December 31, 2023 was 2,029.5 Million compared to 3,661.5 Million as
of December 31, 2022, a decrease of 44.6% y-o-y.
Debt working and capital returns
( in Million)
|
Year |
| Particulars |
2022 |
2023 |
| Inventory |
2,979.9 |
2,698.9 |
| Debtors |
6,587.0 |
5,510.0 |
| Current liabilities |
7,393.0 |
5,851.5 |
| Loans and advances |
1,138.2 |
764.3 |
| Cash flow from operations |
1,326.5 |
2,735.8 |
| Return on equity (RoE) (%) |
6.7% |
43.0% |
| Return on capital employed (RoCE) (%) |
7.9% |
11.9% |
Key financial ratios
| Name of ratio |
2022 |
2023 |
Explanation for significant change (above 25%) |
| Current ratio |
1.4 |
2.2 |
The current ratio has improved in current year primarily due to reduction in current
borrowings and increase in bank balance and investments. |
| Debt-equity ratio |
0.5 |
0.2 |
The ratios have improved due to reduction in total borrowings. |
| Debt service coverage ratio |
7.3 |
1.1 |
|
| Net profit ratio (in %) |
1.7% |
16.1% |
|
| Operating profit ratio |
3.0% |
20.8% |
The ratios have improved primarily on account of exceptional income during the year. |
| Return on net worth |
6.7% |
43.0% |
|
Risk management
Huhtamaki India employs a structured approach towards risk management that is central
to our strategic and operational planning. The Risk Committee operates under a robust risk
management framework and is guided by Huhtamaki Group Enterprise Risk Management (ERM)
Policy. Regular meetings conducted periodically, enable the committee to review and
discuss key risks, potential impacts and the implementation of mitigation strategies.
Understanding and addressing key risks
Huhtamaki India recognises the dynamic nature of the business environment, which
presents both significant risks and opportunities. Our future growth hinges on our agility
in predicting and responding to changes and our commitment to innovation, particularly in
developing sustainable packaging solutions.
Regulatory risks: The evolving regulatory landscape, especially concerning ban on
materials and recycled content requirements, poses a challenge. Huhtamaki Indias strategy
involves leading an evidence-based discourse on packagings value in promoting hygiene,
food safety and waste reduction. Early tracking of regulatory changes enables us to align
our product development and commercialisation efforts accordingly.
Competitive and customer-related risks: Shifts in the competitive environment and
reliance on major customers are critical considerations. Our ability to adapt to changing
consumer preferences and technological shifts is pivotal. Engaging in active dialogues
with customers and fostering cross-functional collaborations are key to managing these
risks while capturing growth opportunities.
Technological and operational risks: The risk of technological obsolescence and
operational inefficiencies is mitigated through continuous monitoring of long-term needs,
investment in research and development, intellectual property protection and strategic
partnerships.
Macro-level risks: Economic volatility and geopolitical tensions are monitored
closely and continuously. The recent geopolitical events, such as the Ukraine conflict and
the resulting economic implications, highlight the importance of vigilance and
adaptability in our operations.
Human resource risks: Talent availability is crucial for our success. We employ a
comprehensive strategy for talent reviews, succession planning and career development
initiatives to attract and retain top talent.
Operational and financial risks: Managing price volatility and cost escalations in
raw materials and energy is critical. Our risk management strategy includes diverse
supplier networks, contractual safeguards and continuous monitoring of market trends to
mitigate these risks effectively.
Cybersecurity and compliance risks: Protecting our IT infrastructure against cyber
threats and ensuring compliance with applicable laws and regulations are paramount.
Continuous improvement programs, disaster recovery planning and compliance training form
the backbone of our risk mitigation efforts in these areas.
ESG risks: Our approach involves continuous assessment and mitigation of risks
related to regulatory changes, environmental impact and social accountability. By
integrating ESG considerations into our operational and strategic planning, we strive to
minimise negative impacts while enhancing our corporate reputation and ensuring long-term
sustainability and compliance.
Focus areas for FY2024
As we prepare for the upcoming financial year, Huhtamaki India will be guided by five
core priorities that are integral to our vision of leading with innovation and
sustainability in the flexible packaging industry.
People
Everyone Safe Home, Happy @Huhtamaki - Ensuring the safety and well-being of our
team members is paramount. We are committed to creating an environment where everyone
feels secure and valued, fostering a culture of happiness and inclusion within the
workplace.
Innovation
First-to-Market Sustainable Products - We aim to be the first-to-market products
that meet and exceed environmental and consumer expectations. This is exemplified through
the blueloop™ initiative that focuses on developing sustainable packaging solutions.
Customer Excellence
‘Where to Play, ‘Play to Win - Strategic market positioning and
customer engagement are at the heart of our approach. By understanding where our strengths
lie, we will concentrate our efforts in sectors where we can deliver maximum value,
ensuring a competitive edge and fostering long-term partnerships.
World-class Operations
Productive, Agile, Cost-effective - Operational efficiency is key to our success.
We are focusing on enhancing our productivity, agility and cost-effectiveness to remain
competitive in the global market. This involves streamlining our processes, adopting
innovative technologies and continuously improving our operations.
Compliance
Adherence to legal, regulatory and ethical standards is non- negotiable. Compliance
ensures that all our actions and decisions are guided by a commitment to doing business
responsibly and sustainably.
People
In 2023, Huhtamaki Indias people strategy was centred on creating a high-performance
culture through continuous personal and professional development. Embracing our core
values of Care, Dare and Deliver, we prioritised innovative training programmes,
leadership development and talent inclusion. Our approach was focused on skill enhancement
and the overall well-being and engagement of our employees. We leveraged digital
transformation in HR processes to enhance efficiency and employee experience. This was
reflected in our strong engagement scores and reduced attrition rates, demonstrating our
dedication to creating a supportive, inclusive and dynamic work environment. Read more on PAGE
28.
INTERNAL CONTROLS
Internal financial control systems of the Company are commensurate with its size and
the nature of its operations. These have been designed to provide reasonable assurance by
recording and providing reliable financial and operational information, in compliance with
applicable accounting standards and relevant statutes. It has led to the safeguarding of
assets from unauthorised use, execution of transactions with proper authorisation, and
ensuring compliance with corporate policies.
The Audit Committee deliberated with the members of the management, considered the
laid-down systems and met internal and statutory auditors to ascertain their views on the
internal financial control systems. The Audit Committee reviewed the control systems and
found them to be adequate and effective. The Committee keeps the Board of Directors
informed about their concerns, if any, on the financial control systems. However, the
Company recognises that no matter how the internal control framework is, it has inherent
limitations. Periodic audits and reviews ensure that such systems are updated at regular
intervals. The Company has an independent internal audit function with well-established
risk management processes both at the business and corporate levels. The scope and
authority of the internal audit function are derived from the Internal Audit Charter
approved by the Audit Committee.
The Company has engaged a reputable external firm to support the Internal Auditor in
carrying out the internal audit reviews. Reviews are conducted on an ongoing basis through
a comprehensive risk-based audit plan, approved by the Audit Committee at the beginning of
each year. The Audit Committee meets on a periodic basis to review and discuss the
internal audit reports and follow-up action plans, considering the audit issues and
compliance with the audit plan. The Chairperson of the Audit Committee has periodic
meetings with the Internal Auditor to discuss any key concerns.
CAUTIONARY STATEMENT
The report contains forward-looking statements that may be identified by their use of
words such as ‘plans, ‘expects, ‘will, ‘anticipates,
‘intends, ‘projects, ‘estimates or other words of similar meaning. All
statements that address expectations or projections about the future, including statements
about the Companys strategy for growth, market position, expenditures and financial
results are forward-looking statements. Forward-looking statements are based on certain
assumptions and expectations of future events. The Company cannot guarantee that these
assumptions and expectations are accurate or will be realised.
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