Since its inception in 1985, Uflex Ltd has transformed into a multi-billion dollar company focused on trust, customer value creation, quality innovation and customer satisfaction. Uflex Ltd has grown from strength to strength with large manufacturing capacities of packaging films and packaging products providing end-to-end solutions to clients in over 140 countries, enjoying a formidable market presence, making it India’s largest flexible packaging company.
Uflex Ltd serves as a one-stop provider of flexible packaging solutions in various sectors covering USA, Canada, South America, UK, Europe, Russia, South Africa and other African countries, Middle East and South Asian countries. Uflex’s manufacturing facilities are ISO and HACCP accredited and its products are FDA approved.
UFlex Ltd, announced its business results for the first quarter of FY2022-23. The company reported consolidated EBITDA at INR 725 cr for Q1 FY22-23, up 44.3% YoY, while consolidated net profit stood at INR 374.5 cr, up 41.9% YoY. Consolidated sales recorded a year-on-year increase of 46.5% to 4045.8 cr in the said quarter. EBITDA margin for Q1FY23 was 17.9%.
The flexible packaging industry has traditionally had an extremely diverse and fragmented structure, consisting of several large global operations and many small to medium-sized national and regional companies. the growing demand for convenience foods and fast food creates a demand for lightweight packaging.
Also, changing consumer behavior and growing processed food industry are triggering the demand for easy and flexible packaging material. Demand for flexible packaging has grown rapidly worldwide as it can be used for a variety of purposes. In addition, with advances in packaging materials and packaging technologies, the demand for flexible packaging has also grown significantly.
Currently, barely 5% of food in India reaches the consumer in prepackaged form. Due to poor distribution infrastructure, it is estimated that nearly 40% of India’s fresh food perishes before it reaches the consumer, resulting in lost income for small farmers and higher prices for consumers.
This presents huge opportunities for the rapid growth of flexible packaging. High demand in flexible packaging segment with developments in SCM Rapid increase in promotion of polymer-based technology products Innovation in product flexibility makes it compatible with new requirements in industry.
The Company operates in the flexible packaging industry, some products are commodity grade and are largely substitutable with our competitors’ products.
Demand for the Company’s products is sensitive to changes in industry capacity and performance levels, cyclical changes in regional and global economic conditions and changes in consumer demand. The plastic film business is highly competitive. The company faces stiff competition from both international and domestic manufacturers.
Uflex Ltd. has minimal control over pricing in the film industry as the industry faces strong competition. The industry also lacks customer grip as customers have many options to choose from among many industry players. These factors could have a negative impact on margins.
An upward movement in oil prices results in an increase in raw material prices, thereby increasing the working capital cycle. Uflex Ltd has a broad global presence with manufacturing facilities in the USA, Dubai, Mexico, Egypt and Poland. Exports make up 50% of the company’s total sales. This exposes the company to the risk of incurring losses due to adverse movement in multiple currencies, which would subsequently affect the company’s profit margins.
The company has been at the forefront of innovation and has added several feathers to its cap in the past that have been the foundation of its growth story and from now on, game-changing innovation is expected to cement its leadership position and create new business opportunities.
Focusing on “high margin” business with lower investment will in turn help companies to improve the return ratio. The company is constantly adopting an innovative approach and creating a niche for itself. Going forward, the company would seek to increase the share of revenue from the packaging industry, thereby improving returns. It has launched a number of new products over the past year and development is ongoing. the company focused on three main categories for aseptic packaging – juices and energy drinks, dairy products and liquors.
Commenting on the company’s performance, Rajesh Bhatia Group CFO, UFlex Ltd said, “In the first quarter of fiscal 2023, we continued to deliver strong results despite volatile market conditions and strong global headwinds from supply chain and raw material constraints. In fact, we outperformed highest quarterly sales and net profit this quarter.”
He went on to add, “BOPET’s film plant in Nigeria is growing and reached 70% capacity utilization during the quarter. The impact of higher raw material prices continued during the quarter, as reflected in year-on-year revenue growth of 46.5% versus sales volume growth of 15.7%.”