In the wake of slowing demand for last few quarters, Uflex, the country's leading packaging company, is moving towards a premium portfolio.
The Rs 6,200-crore company, which earns 46 per cent of revenue from the flexible packaging division, aims to bring the share up to 50 percent in the next three years.
The plastic films business generates a majority of Uflex's revenue and has a strong customer base in Europe, the US, Dubai, Mexico and Egypt. However, the scope for innovation and premiumisation in packaging is far higher than the film business, as the latter is used as an intermediary raw material in preparing flexible packs.
The fast moving consumer goods packaging industry has in the past few years gone through a pressing time.
Slowing consumer demand over a period of timehas led to exit of smaller players, price wars and squeezed margins. Uflex aims to avoid the price war and differentiate itself from peers by innovation, said R K Jain, group president.
The company has come up with hologram-coated tubes and plastic-coated sacks that make counterfeiting harder for high-value products and lowers loss during transport, respectively.
To fulfil its ambitions of becoming a more packaging-ocus company with a premium portfolio, it is setting up an integrated manufacturing unit in Sanand, Gujarat, by April 2017 that could produce the entire range of flexible packaging products.
BUILDING A PREMIUM PORTFOLIO
The Rs 30,000 crore Indian flexible packaging industry is growing at 15%-17% annually
Greater consumption of branded products is giving unique identity to packaging both in terms of product quality and presentation
Uflex aims to bring the share of packaging division compared to plastic films at 50:50 by 2018 from current 45:55
Currently, it gets some 45 percent of the revenue from international business, which is expected to get a boast as its packaging push materialises
- Net profit margin is under pressure - from 11.64 percent in FY2011 to 4.27 percent in FY2015