Poor PET film margins, but primed for growth - UFLEX

By Mark Astley

- Last updated on GMT

Related tags Capacity utilization Profit

UFLEX, India’s biggest flexible packaging provider, has announced a significant revenue boost of nearly 30% for the third quarter of 2011, despite admitting poor profitability results for the period.

Further facility expansion and increased demand for flexible packaging in the Indian food market has led to a revenue lift for UFLEX of 28% for the third quarter, compared to results for the same period in 2010.

The company has attributed this growth to new capacity expansion and increased utilisation.

But in a quarterly report, issued by the company, net profit for the quarter ended 30 September 2011 had significantly reduced compared with Q3 2010 results.

This drop has been attributed to a drop in gross margin of PET film, higher input and other operating costs.

Despite the fall in profits, UFLEX said: “We are well positioned to pursue our strong growth potential and are moving forward with several development projects to further enhance shareholder value.”

“Not been a good quarter”

This quarter has not been a good quarter in terms of profitability due to pressure on margin of PET films both in domestic and international market,”​ said UFLEX chairman and managing director Ashok Chaturvedi.

But the new capacity expansion, higher capacity utilization and the growth in sales volume continue to be strong which is a reflection of strong fundamentals and strength of the company of its business.”

UFLEX, which is continuing with its expansion strategy and adding manufacturing lines for new products, already has facilities in Mexico, Egypt, India, Poland and the US.

Through these developments, the company intends to increase its proximity to the markets, while providing a broader portfolio of value-added products to its clients, which include Unilever, Pepsi and Nestle, at a competitive cost.

Facility expansions

An investment in its facilities in Mexico earlier this year, which involved an investment of $110m, created a total annual capacity of 60,000 tonnes.

The company said it has also commissioned an ALOX coater and CPP plant for packaging films at its Cairo based plant, joining only a handful of other manufacturers with ALOX-coated films and CPP films production capabilities.

Development at its Jammu plant has recently been completed and plans are in place for an investment of $180m to establish a polyester film plant in Kentucky with an annual output capacity of 60,000 tonnes.

A new $80m plant in Poland, which will have an annual polyester film production capacity of 30,000 tonnes, is also expected to be operational by June 2012.

UFLEX’s production capability, which is centred on its flexible packaging portfolio, includes the production of Biaxially Oriented Polyethylene Teraphthalate (BOPET) and Biaxially Oriented Polypropylene (BOPP) films, as well as Gravure printing, lamination and pouch formation.

Related topics Processing & Packaging

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