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Wednesday, August 5, 2009

Manjushree Technopack:-Management speaks about the potential of the company

Vimal Kedia, Managing Director, Manjushree (Q,N,C,F)* Technopack, is a commerce graduate. He is a pioneer in the field commanding over three decades of experience in the business and commands extensive knowledge of the various strategic, managerial, marketing, commercial and financial aspects of the plastics industry.

1)In this challenging economic environment, how do you see the outlook of the packaging sector?

ans)The packaging sector has not been greatly affected by the recession. Industry segments like FMCG, Pharma and Food & Beverages have not been adversely affected. In fact they have registered growth, in most cases. For example - both Coca Cola and Pepsi have registered a growth of 30% and a few others have reported an annual growth of 15 to 20%. The growth in these sectors has in turn meant that there is a continuous need for packaging solutions.We are positive about the outlook for the sector in the long term. Packaging is increasingly becoming a differentiator for products in various FMCG categories. Innovative and customised packaging solutions will therefore have no let up in demand. At Manjushree we continue to invest heavily in technology and people to meet the packaging needs of marketers.

2)What kind of investments are you look at going forward? The company reported a phenomenal rise in standalone net profit for the quarter ended March 2009. During the quarter, the profit of the company rose 59.92% to Rs 19.91 million from Rs 12.45 million in the same quarter last year. What sort of financial performance could we expect for the forthcoming quarter and fiscal?

ans)The company has increased its plant capacity to 21740 MTPA during FY 2009 as compared to 9120 MTPA during previous year which has resulted in jump in turnover and profits during FY 2009. However, the full benefit of capacity expansion is likely to accrue in the FY 2010 only as this will be first full year of operations with expanded capacity, for which marketing tie ups have been established with reputed companies in CSD, Liquor and FMCG sectors.During the FY 2010, the company expects to have a quarterly top line of Rs 350 million with a likely net profit of Rs 25 million in the first quarter, with sequential growth of approx. 10% quarter over quarter with a full year target of overall sales of Rs 1,600 million and net profit of Rs 115 million, barring unforeseen circumstances. Capacity utilisation is likely to be of the order of around 60% including conversion jobs for CSD sector on an ongoing basis committed for next 3 years.During FY 2010 & 2011, the company has earmarked a capex of Rs 300-400 million to be fully funded out of internal accruals to increase the plant capacity by another 7000 MTPA in view of current order book position and marketing tie-ups. The company already has two units and is looking to invest in additional infrastructure also to cater to the expansion plans in near future.

3)How the packaging sector is faring during recessionary times and how do you see the future for Manjushree?

ans)The FMCG sector has been growing at a consistent pace, and the packaging sector (whether plastic, glass or paper) has a constant demand. Manjushree being a leader in Plastic Packaging looks forward to brighter times with a minimum growth of 30% to 40% per annum.

4)Which factors do you think would drive the growth of the industry in the medium term?

ans)Consistent demand from FMCG, Pharma and liquor industry will continue to drive the growth in the packaging industry, and at the same time modern retail is also growing at a fast pace. The entry of new payers like Walmart, will only hasten this growth.

5)What are the changes Manjushree has seen in the packaging sector in the past 25 years?

ans)There have been major changes in the packaging sector in the last 25 years. Many FMCG companies have changed their formats of packaging from ordinary paper boxes, metal and glass containers to a variety of fancy plastic containers with varied options of closures systems, labeling options and decorations. Today, the options for packaging are unlimited. Breakthrough designs such as the `upside-down` bottle design for shampoos, ketchups; child proof packaging for the pharma products; liquor bottles with non-return valves to protect against spurious liquor etc.are becoming popular. One can also mention the combination of glass bottles with plastic closures of different varieties such as pumps and sprays for perfumes and many more.The availability of talent in the packaging industry has received a boost with the advent of premiere packaging institutes like the Indian Institute of Packaging. Manjushree over the years has also innovated and invested in technology to develop its design capabilities, to provide packaging solutions that are on par with those available abroad.The best machines and materials are produced in the country or imported to manufacture world class packaging. With the advent of CMD machines and equivalents, the quality of moulds for containers, closures, etc., are of superior quality and can compete with any foreign packaging format.

6)On a personal note what takes up your time besides managing the Manjushree Technopack?

ans)When I do find the time to spare, I read to keep myself abreast with the latest developments in the packaging world by reading industry related news. I enjoy travelling and also attend trade fairs held in India and outside the country. Manjushree also undertakes initiatives that bring together people from the packaging industry. One such initiative is FuturePac All India Conference. This year the seminar focused on `Beverages - The Next Sunrise Industry` which included speakers such as Ramesh Chauhan, Chairman of Bisleri International, Pankaj Garg of Coca Cola, Christian Krautkraemer of BeriCap Germany and many more.Being passionate about Packaging, I am constantly on the look out for antiques and age old items displaying different packaging designs that can be showcased at our Packaging Heritage Museum, in Bangalore.

7)Would you like to convey any message to shareholder and investor of the company?

ans)The company caters to FMCG, CSD, Liquor and Pharma sectors to meet a host of their packaging requirements, which are growing at a steady pace of around 10% CAGR. The company has established strategic tie-ups with leading MNCs and domestic companies in these sectors to ensure consistently growing performance, which is evidenced by company`s past track record. The company is investing out of internal accruals year after year, by having least reliance on debt funds to ensure better returns to shareholders with prospect of capital appreciation. Investors are well advised to remain invested with a long-term perspective.

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