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

MANAGEMENT DISCUSSION AND ANALYSIS
Opportunities for the growth of Packaging Industry in
India
1. Urbanization
Modern technology is now an integral part of nation’s
society today with high-end package usage increasing
rapidly. As consumerism is rising, rural India is also
slowly changing into more of an urban society. The
liberalization of the Indian economy, coupled with
globalisation and the infl ux of the multi-nationals
has improved the quality of all types of primary and
secondary packaging. Also industrialization and
expected emergence of the organized retail industry
is fuelling the growth of packaging industry.
2. Increased Health Consciousness
As people are becoming more health conscious, there
is a growing trend towards well packed, branded
products rather than the loose and unpackaged.
Today even a common man is conscious about the
food quality of intake he consumes in day-to-day life.
3. Low Purchasing Power resulting in Purchase of Small
Packets
India being a growing country, purchasing power
capacity of Indian consumers is lower; the consumer
goods come in small, aff ordable packages. Apart from
the normal products packed in fl exible packaging,
the use of fl exible packaging in India includes same
novel applications not usually seen in the developed
world. Use of fl exible packaging in products like
toothpaste, toothpowder, and fairness creams in
laminated pouches are highly innovative. Another
typical example of such applications is tobacco and
betel nut-based intoxicants and mouth fresheners
catering to unique Indian taste.
India comprises of a big rural market and there has
been growing focus on rural marketing, whereby
manufacturers are introducing low-priced goods in
smaller pack sizes. Low priced sachets have proved to
be extremely popular in smaller towns and villages,
where people do not prefer to buy larger packs due
to fi nancial constraints.
4. Indian Economy Experiencing Good Growth
Prospects
The Indian economy is growing at a promising rate,
with growth of outputs in agriculture, industry and
tertiary sectors. Overall economic growth has proved
to be benefi cial for the consumer goods market, with
more and more products becoming aff ordable to a
larger section of the population.
5. Changing Food Habits amongst Indians
Changing lifestyles and lesser time to spend in
kitchens are resulting in more incidence of eating
away from homes resulting in extraordinary growth
Threats
UFLEX LIMITED
of restaurants and fast food outlets all over the
country. Indians are trying out newer cuisines and
also purchasing similar food items for their homes.
Therefore, the review period has seen new products
like pasta, soups, and noodles being launched in
India, fuelling the growth of packaging industry in
India
The business environment has changed signifi cantly
during the year, primarily driven by global economic
slowdown, its impact on our customers and the resultant
impact on our business. The Indian plastic fi lms market
is highly competitive both for PET fi lms and BOPP fi lms.
Your Company faces stiff competition both from the
international as well as domestic manufacturers. The
competition is increasing with the addition of new
capacities and emergence of new global players especially
from China. Increased competition might lead to reduced
price, decreased sales, lower profi t margins thus adversely
aff ecting the business and fi nancial conditions of the
Company.
Worldwide more and more bio-degradable products are
being used and plastic fi lms are considered environment
unfriendly. Therefore plastic fi lms generally face lot of
opposition from various strata of society and subject to
severe regulatory and statutory frame.
In order to mitigate the risks, the Company has increased
its focus on product applications and market development.
It has expanded international market by leveraging high
quality products at lower cost. With proper geographical/
product diversifi cation, the Company is much better
placed to deal with any unforeseen situation of economic
slowdown etc.
5. Future Outlook
The fl exible packaging market has been growing at a rate
of 15-20 percent per annum for the last several years.
It is believed that this growth rate will be sustained in
coming years. The market will move towards better quality
standards and technically improved products. There will
be an increase in demand for special fi lms that can be used
for CAP/MAP packing, multiple-use fl exible packages,
retort and microwaveable fi lms/sheets and speciality fi lms
for pharmaceuticals applications, etc.
The market expansion of fl exible packaging is also
allowing bigger capacities, and therefore there is a
tendency towards large output machines. This is a very
positive turn as the investments in high technologies can
be more readily recovered through large volume sale. The
market will grow in all sectors such as extrusion, printing
lamination, paper & plastic bags, metalising, holography,
barrier fi lms, form fi ll & seal machines and so on.
There are many factors that can be termed as the demand
drivers of packaging. First, the need for preservation of
food and other products helps in creating a demand
TWENTIETH ANNUAL REPORT 2008 - 2009
| 11 |
C O M P A N Y