Dear Valued Shareholders,
The stability in earnings during the year under review has been accomplished through our long standing strategy of geographical and product diversification, portfolio expansion especially on the value added and specialty side as well as on-going initiatives on operational effectiveness.
The reported sales and other income were flat at INR 45.49 billion despite higher sales volume due to decline in selling prices induced by fall in raw material prices. The Operational EBITDA (profit before interest, tax, depreciation and exceptional items) was higher by 18% at INR 9.44 billion. Higher cash flows from operations and a strong & liquid balance sheet with negative leverage (net cash positive) provide financial flexibility to access growth opportunities.
The successful start-up of the Indonesia PET film greenfield project alongwith its associated metallizer / resin plant and a quick ramp-up is a major milestone and will favorably impact earnings for future besides consolidating our global leadership in the flexible packaging segment. Several ongoing smaller investments aimed at increasing our competitive edge with increasing share of specialty products and improving our productivity will provide further stimulus to our operations in the next 1-3 years.
The BOPP line under implementation, adjacent to the PET film line in Indonesia would help diversify the product offering, drive economies of scale and help mitigate challenges posed by concerns surrounding sustainability on our core business of PET films.
The robustness of our industry and Company’s superior positioning is evident from the lack of any adverse impact of the Covid-19 global pandemic. Operations across all the Company’s locations have remained largely unaffected and future business fundamentals remain strong. Flexible packaging segment, which constitutes a majority of our sales, has seen a surge in demand while industrial end use segment has seen some reduction, both of which would normalize over the medium term. Longer term implications related to importance of hygiene, higher home consumption, newer applications in PPE / hygiene related uses, de-globalization and preference for shorter supply chains etc would be broadly positive for the industry and the Company in particular with its distributed manufacturing base and global reach. In developing economies, a marked shift from consumption of unpackaged food to packaged food products is expected, driven by health and hygiene considerations.
The Covid-19 pandemic has also helped ease concerns around usage of plastics in flexible packaging with its proven benefits from hygiene, cost and low weight to package perspective. Flexible packaging, which is multilayered plastic constitutes about 5% of total plastic consumption globally and PET film in particular, is less than 1%. Flexible packaging is considered superior on various sustainability criteria vis-à-vis traditional packaging alternatives due to its inherent functional properties. The Company has been long involved in developing environment friendly and sustainable solutions, as an endeavor to contribute continuously and effectively towards global initiatives around sustainability and “circular” economy.
The Company has taken effective steps to safeguard its employees’ health in the ongoing pandemic and also contributed to similar efforts in nearby communities at all its global plant locations.
On behalf of the Board, we would like to thank all the shareholders and other stakeholders including business partners and the employees of the Company for their continued support and efforts.
Pranay Kothari
Chief Executive Officer
Sanjiv Saraf
Chairman