Our endeavour is to enhance Stakeholders' Value - Uflex Ltd.

MANAGEMENT DISCUSSION AND ANALYSIS
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 realized. The Company’s actual results,
performance or achievements could thus diff er materially from
those projected in any such forward-looking statements. The
Company assumes no responsibility to publicly amend, modify
or revise any forward looking statements, on the basis of any
subsequent developments, information or events.
1. Overview – Industry Structure & Developments
Flexible Packaging
Uncertainties, volatility and major bank failures
dominated global economic scenario during 2008-2009,
resulting in steep fall in global real GDP and aff ecting
sustained growth of emerging market economies. Albeit
strong fi nancial sector and resilience of the economy,
the global slow down aff ected Indian external sector
specifi cally exports and impacted industrial slow down
due to reduction in consumption demand. Indian
economy is estimated to slowdown with a GDP growth
of 6.5% to 6.7% during 2008-09 as against 9.0% in 2007-
08 while the projected GDP growth for 2009-10 stood
at 6.0%. India’s strong domestic consumption and
investment drivers will continue to support healthy rates
of growth over the medium term. India has weathered
the global storm with a high degree of resilience and we
expect the Indian economy to return to a robust growth
path ahead of other economies that are experiencing
recessionary conditions.
Flexible packaging and printing are the fastest growing
segment of the packaging industry worldwide. The
growth rate of fl exible packaging in global market, more
particularly in developed markets such as USA and Europe
has been around 5-6% per annum, which is expected to
grow at least at the same rate in future.
Packaging, as distinct from mere “packing”, plays it’s
most visible and catalytic role in a modern economy
with widespread adoption of branding of products
and development of consumer preferences. Packaging
consumer products safely, conveniently, attractively and
in environment friendly packaging improves brand value
which inturn increases market share. In the aggregate,
packaging as sectorial activity boosts consumption and
economic growth.
Increased competition in all product sectors within the
country as also the need to look for export markets have
contributed to the rising demand for appropriate and
cost-eff ective, packaging material and technologies.
Growth of the packaging industry has led to greater
specialization and sophistication in addressing host
of environmental issues. The need for addressing
environmental issues is more in food and pharma
industry.
UFLEX LIMITED
The World Packaging Organisation’s (WPO) slogan, “Better
Quality of life Through Better Packaging”, sumps up the
important place that packaging occupies in a modern
economy. To ensure that public appreciation of this role
and the policy-makers’ support to the industry are not
diluted, attention should be paid to basic issues like
collection, segregation and reuse of synthetic packaging
material and observation of regulatory requirements.
Indian packaging industry, presently at about USD 14
billion is growing at 14%-15% on annual basis. Growth is
expected to double in next couple of years. It is estimated
that more than 80% of the total packaging in India
constitutes rigid packaging, which is the oldest and the
most conventional form of packaging. The remaining 20%
comprises fl exible packaging. Rigid packaging constitutes
glass bottles, metal cans, aerosol cans, battery cell cans,
aluminum collapsible tubes injection moulded plastic
containers made of PVC, PET, HOPE barrels, paperboards,
and corrugated boxes. However, with the expanding
middle class and rising income levels, the patterns of
consumption are bound to change substantially and the
demand for quality and convenience-based products
will increase. Concurrently, the increased interaction
with the developed world will considerably infl uence the
aesthetic and quality norms of the Indian consumer and
lead to better consumption standards. This is expected
to stimulate greater consumption of branded products
and thus increase the use of fl exible packaging. Flexible
packaging contains multi-layered laminated sheets of
single or a combination of substrates such as plastic,
paper and aluminium. Flexible packaging fi nds preferred
use because of its ability to provide strength, moisture
resistance, aroma retention, gloss, grease resistance, heat
retention, printability and low odour. Flexible packaging
has gained vast acceptability because of the protection
it off ers to the product against environmental threats
like moisture, heat, and chemical reaction. Convenience
in handling the product and the cost benefi ts are added
advantages.
Packaging Raw Materials – Poly Condensation (PET
Chips)
PET chips are mainly classifi ed as polyester chips of fi lm
grade, yarn grade and bottle grade. These chips are used
as raw material for manufacturing of polyester fi lms,
polyester yarn and PET bottles.
The market for fi lm grade chips in India has grown beyond
expectation. However, installation and commissioning of
number of production facilities by new entrants as well as
end users themselves, has led to disbalancing of supply
demand ratio and has resulted in steep drop in price and
margins.
The yarn grade chips market in India is going through a
dull and diffi cult phase. Though, there has been demand
for yarn grade chips, the falling price and margins and
competition from countries like China and Indonesia have
made it quite unprofi table. The market for bottle chips in
India is very competitive with exceptionally low margins.
TWENTIETH ANNUAL REPORT 2008 - 2009
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