ANNUAL REPORT 2011-2012
To the Members,
Your Directors have pleasure in presenting this Twenty-third Annual Report
together with the Audited Accounts of the Company for the financial year
ended 31st March, 2012.
The summarized financial results for the year ended 31st March, 2012 and
for the previous year ended 31st March, 2011 are as follows:
[Rs. in lacs]
Year Ended Year Ended
2012 2011 2012 2011
Gross Sales & Job 500816 390941 357708 268767
Net Sales & Job 438711 340219 295654 218044
Revenue from 451584 349645 307894 230066
Other Income 2514 1434 2771 1573
Profit before 68239 114598 47259 63026
Finance Cost, Depreciation & Tax
Finance Cost 19925 16432 15999 13488
Depreciation 17829 13631 12365 9739
Profit before Tax 30485 84535 18895 39799
Less: Tax Expenses 5035 14853 3936 11597
Add: Minority Interest 52 116 - -
Profit for the year 25502 69798 14959 28202
YEAR IN RETROSPECT
During the year under review, your Company achieved on consolidated basis
total revenue of Rs.454,295 lacs including other income of Rs.2,514 lacs as
against total revenue of Rs.351,241 lacs including other income of Rs.1,434
lacs of the previous financial year ended 31st March, 2011. The profit for
the year ended 31st March, 2012 at Rs.25,502 lacs was lower than the
previous financial year ended March, 2011 at Rs.69,798 lacs.
During the year under review, your Company achieved on standalone basis
total revenue of Rs.310,665 lacs including other income of Rs.2,771 lacs as
against total revenue of Rs.231639 lacs including other income of Rs.1,573
lacs of the previous financial year ended 31st March, 2011. The profit for
the year ended 31st March, 2012 at Rs.14,959 lacs was lower than the
previous financial year ended March, 2011 at Rs.28,202 lacs.
The profits during the financial year 2011 were higher due to prevailing
extra-ordinary market conditions of PET film, giving rise to abnormal
higher prices and margins thereon. Whereas during the financial year 2012,
the PET film market took a u-turn, resulting into significant drop in
prices and margins on PET film thereby dropping the profitability for the
current financial year 2012.
The operational performance of the Company has been comprehensively covered
in the Management Discussion and Analysis Report.
In view of the future needs of funds for expansions & growth of the Company
and also the overall sluggish economic environment, your Directors are
pleased to recommend a dividend @ Rs.2/- per share for the financial year
ended March 31, 2012. The dividend, if approved at the forthcoming Annual
General Meeting will be paid to Members whose names appear in the Register
of Members as on 29th August, 2012. In respect of shares held in
dematerialized form, it will be paid to those Members whose names are
furnished by National Securities Depository Limited and Central Depository
Services (India) Limited as beneficial owner as on 29th August, 2012.
No fresh/renewal of deposits were accepted during the financial year 2011-
2012. There were no unclaimed deposits as at March 31, 2012.
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company Shri S.K. Kaushik and Shri M.G.
Gupta, Directors of the Company retire by rotation and being eligible,
offer themselves for reappointment.
Brief resume of the above Directors proposed to be re-appointed, nature of
their expertise in specific functional areas and the name of the public
companies in which they hold the Directorship and the
Chairmanship/membership of the Committees of the Board, as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchanges, are given as
Annexure to the Notice convening the Annual General Meeting.
DIRECTORS` RESPONSIBILITY STATEMENT
On the basis of compliance certificates received from the Executives of the
Company, subject to disclosures in the Annual Accounts and also on the
basis of the discussion with the Statutory Auditors/Internal Auditors of
the Company from time to time, we state as under:
i) that in the preparation of the annual accounts for the financial year
ended 31st March, 2012 the applicable accounting standards have been
followed and that there has been no material departures.
ii) that the Directors have selected such accounting policies and applied
them consistently and made judgement and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the Company
for the year under review.
iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities.
iv) that the Directors have prepared the annual accounts on a going concern
The Company`s Internal Auditors have conducted periodic audit to provide
reasonable assurance that the Company`s established policies and procedures
have been followed. The Audit Committee constituted by the Board reviews
the internal control and financial reporting issues with Internal Auditors.
AUDITORS & AUDIT
The Auditors of the Company M/s. Vijay Sehgal & Co., Chartered Accountants,
Delhi, retire at the forthcoming Annual General Meeting and being eligible
offer themselves for re-appointment. The Company has received a letter from
them to the effect that their appointment, if made, would be within the
prescribed limit under section 224(1B) of the Companies Act, 1956.
The observations of the Auditors and the relevant notes on the accounts are
self-explanatory and therefore do not call for any further comments.
Members are also requested to refer to the statement under section 215(2)
of the Companies Act, 1956 attached to the Financial Statements in respect
of non-signing of same by Chairman and Managing Director of your Company.
Pursuant to Section 212 of the Companies Act, 1956, Flex America Inc., USA,
Flex Middle East FZE, UAE, UFlex Europe Limited, UK, Flex Films (USA) Inc.,
USA, UTech Developers Limited, India, Uflex Packaging Inc., USA and UPET
Holdings Ltd., Mauritius are Subsidiary Companies. Further, UPET
(Singapore) Pte. Ltd., Singapore, Flex Americas, S.A. de C.V., Mexico, Flex
P. Films (Egypt) S.A.E, Egypt, TFlex America LLC, USA, Flex Films Europa Sp
z o.o., Poland & SD Buildwell Pvt. Ltd., India are subsidiaries of the
Company in terms of Section 4(1)(c) of the Companies Act, 1956.
In accordance with the general circular issued by the Ministry of Corporate
Affairs, Government of India, the Balance Sheet, Statement of Profit and
Loss and other documents of the subsidiary companies are not being attached
with the Balance Sheet of the Company. The Company will make available the
Annual Accounts of the subsidiary companies and the related detailed
information to any member of the Company, who may be interested in
obtaining the same. The annual accounts of the subsidiary companies will
also be kept open for inspection at the Registered Office of the Company.
The Consolidated Financial Statements presented by the Company include the
financial results of its Subsidiary Companies, Joint Venture & Associate
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard-21, Consolidated Financial
Statements read with Accounting Standard-27 on Financial Reporting of
Interest in Joint Ventures and Accounting Standard-23 on `Accounting for
Investments in Associates` issued by the Institute of Chartered Accountants
of India, your Directors have pleasure in attaching the consolidated
financial statements, which form part of the Annual Report & Accounts.
Your Company has taken adequate steps to ensure compliance with the
provisions of Corporate Governance as prescribed under the Listing
Agreement with the Stock Exchanges.
A separate Report on Corporate Governance along with Report on Management
Discussion and Analysis is enclosed as part of the Annual Report.
None of the Directors of your Company is disqualified as per provision of
Section 274(1) (g) of the Companies Act, 1956. Your Directors have made
necessary disclosures as required under various provisions of the Companies
Act, 1956 and Clause 49 of the Listing Agreement.
Particulars of employees as required u/s 217 (2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975 as
amended are given in Annexure `A` forming part of this Report.
Information under Section 217(1)(e) of the Companies Act, 1956, read with
Companies (Disclosure of Particulars in the Report of Board of Directors)
Rules, 1988 is given in Annexure `B` forming part of this Report.
Personnel relations with all employees remained cordial and harmonious
throughout the year. Your Directors wish to place on record their sincere
appreciation for the continued, sincere and devoted services rendered by
all the employees of the Company.
The Directors express their gratitude and thanks to the domestic and
international Financial Institutions & Banks, Government Authorities
particularly in the states of Uttar Pradesh, Madhya Pradesh and Jammu &
Kashmir, Shareholders, GDR holders, customers, suppliers and other business
associates for their continued co-operation and patronage.
For & On behalf of the Board
S.K. Kaushik Ravi Kathpalia
Whole-time Director Director
Place : NOIDA
Date : 11th July, 2012
ANNEXURE `B` TO DIRECTORS` REPORT
Information regarding Conservation of Energy, Technology Absorption and
Foreign Exchange Earnings and Outgo pursuant to Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 and forming
part of Directors` Report.
A. CONSERVATION OF ENERGY
Energy conservation is a very important part of energy planning and its
management. It not only saves energy resources for future, avoids wasteful
utilization of energy, provides solution to energy crisis and ensures
higher per capita availability/ consumption but controls environmental
degradation and pollution. Due to the liberalization measures of the
Government of India the industrial sector is rapidly growing, which in turn
is increasing the energy demand. In the short term, the only solution to
the problem is better energy management through conservation of power, fuel
and water. New strategy emphasis greater reliance on non-exhaustible and
non-conventional sources of energy so as to conserve exhaustible
conventional resources like coal, petroleum, natural gas etc. That is why
efforts are being made to promote the development and use of non-convent
ional sources of energy. Another aspect of energy conservation is related
to the reduction in consumption of energy.
Our Company`s development plans put lot of emphasis on energy conservation
& enhancement of machine efficiency. In general the conservation of Energy
in any form is very important for the existence of any Industry today.
Accordingly, the Company has undertaken various steps to reduce the power
generation cost as well as power consumption.
(a) Energy conservation measures taken
The below mentioned are some of the steps which have been undertaken during
1) We have installed two waste heat recovery units to feed Vapour
Absorption Machine (1440 TR). This has resulted in stopping the two
electrical chillers, resulting into annual saving of INR 216 lacs.
2) With the improved availability of Chilled Water we have stopped usage of
Process Water Pump resulting in saving of around 30 K.W. Power on daily
basis i.e. annual saving of around INR 17.5 lacs.
3) We have done the modification on the existing Chilled Water Circuit and
with this modification we are able to stop one Chilled Water and one
Condenser water Pump resulting in saving of around 90 KW power on daily
basis i.e. annual saving of around INR 50 lacs.
4) With the improved availability of chilled water we have introduced
Chilled Water Heat Exchangers to dry the air thus replacing existing Heat
less Purge Air Driers, resulting into saving of 30 KW power on daily basis
i.e. annual saving of around INR 17.5 lacs.
5) With replacement of fuel from HFO to HSD in HFO operated D.G. Sets we
are able to save around 150 KWh units on daily basis.
6) We have placed 05 Tr Fan Coil Unit in EDP server Room resulting into
stoppage of 03 Nos Split A.C. Stopping of these units has resulted in
saving around 150 KWh on daily basis.
7) Installed EREMA (wastage recycling plant)
Company has earned additional revenues of Rs. 3.15 lacs per month.
8) Changed over of all Boilers from furnace oil to CNG Company saves Rs.18
lacs per month
% reduction in CO2 (Ton/year) = 0.27
9) Installed wider presses (Replacement of narrower presses)
% reduction in CO2 (Ton/year) = 0.0162
10) Installed Davis Standard higher width Laminator (Replacement of old
narrow width Laminators)
Saving of energy/Kg = Rs.1.1/Kg.
Totalling to almost Rs.4 lacs per month.
11) Erection and Commissioning of 4 MKCal/hr petroleum coke based Thermic
The anticipated increase in RLNG demand and depreciation of our currency
affected RLNG prices considerably. Right time decision taken to convert one
Thermic fluid heater on pet coke helped in saving substantially - Rs.22
lacs per month.
12) Commissioning of Glycol residue burning in boiler upon receipt of
permission from CPCB helped us to consume energy of hazardous waste
category in useful way. This was the first authorization of its kind in
13) Reuse of spent MEG without distillation helped in saving distillation
cost - Rs.3.2 lacs per month.
14) By optimising cooling water pumps at ejector system saving achieved to
the tune of 43KWH - Rs.3.1 lacs per month.
15) Installed one 400 m3/hr pump for water circulation, helped in winter
season thereby reducing 35 KWH corresponding to 600 m3/hr capacity pump -
Rs.2.53 lacs per month.
16) Crushed polymer lump recycling maintained waste percentage below 0.5%.
(b) Future Proposals for Energy Conservation
The Company will take necessary measures as may be required from time to
time for conservation of energy. Such measures are as follows:
1) We are increasing our electrical demand form 1500 MVA to 6000 MVA on
State Grid (UPPCL), the aim is to shift our non critical load from the Gas-
Genset to Grid Power. This will result in annual saving of around INR 600
2) We are also exploring the possibilities of setting up a 1.00 M.W. solar
3) We are replacing our existing lamps with energy efficient Compact
Flurocent Lamps (CFL / LED). This will help us in reducing our annual
electricity cost by INR 30 lacs.
4) Replacement of old chillers by energy efficient chillers.
5) Replacement of pneumatic PTA conveying system by drag chain system.
6) Providing VFD to boiler`s FD fan.
(c) Impact of measures at (a) & (b) above for reduction of energy
The above measures will reduce energy consumption, improve efficiency of
the plant thereby improving the economics of the plant substantially.
B. TECHNOLOGY ABSORPTION
The following efforts are being made in technology absorption:
Research & Development (R&D)
Specific areas in which R&D is carried out by the Company
The Company has carried our R&D in multiple products, processes and
1. Benefits derived as a result of the above R&D
Products improvements in quality and quantity, conversion cost reduction,
import substitution, widening the product range. The capability to develop
new products boosts the morale and the culture of the organization.
Further, several new products have been developed by the Company to respond
to the needs of its customers both in the domestic and international
markets, with concurrent commitment to improve quality and productivity.
2. Future plan of action
Steps are continuously being taken for innovation and renovation of
products including new product development and enhancement of product
quality/ profile, to offer better products at relatively affordable
prices/process to customers.
3. Expenditure on R&D
During the year, the Company spent Rs.29 lacs. This is equivalent to 0.01%
of the turnover.
Technology absorption, adaptation & innovation
1. Efforts, in brief, made towards technology absorption, adaptation and
The Company as a matter of policy exposes its technical staff to latest
technological developments by encouraging them to participate in domestic
as well as global technical seminars and expositions; this helps them to
further improve their knowledge and skills, which in turn results in better
quality products and increased productivity.
2. Benefits derived as a result of the above efforts
Product innovation and renovation, improvement in yield, product quality,
input substitution, cost effectiveness and energy conservation as the major
3. Imported Technology
During the year, the Company has not imported any technology.
C. GLOBAL BUSINESS STRATEGIES
In order to serve our global base of customers, we have started expanding
globally into different regions in order to get closer to the customers.
This enables us to serve our customers with better & quick deliveries as
well as with reduced shipping times. This also reduces the freight cost.
Currently we are exporting to our customers present in around 120 countries
across the globe. Our endeavour is to add couple of more countries during
D. FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Activities relating to exports:
Initiatives taken to increase exports; development of new export markets
for products and services and export plans.
The Company is at present exporting its products to USA, Europe, Asia
Pacific, Middle East, Africa & other countries. The Company is continuously
exploring possibilities of exporting more of its products to different
2. During the period under review:
(Rs. in lacs)
a) Earnings in Foreign Exchange
i) F.O.B. value of export of 36884
ii) Sales of Services 88
iii) Technical Services 5991
iv) Interest 148
v) Misc. Operating Income 5
i) CIF Value of Imports 92975
ii) Expenditure in Foreign Currency 2002
For & On behalf of the Board
S.K. Kaushik Ravi Kathpalia
Whole-time Director Director
Place : NOIDA
Date : 11th July, 2012
MANAGEMENT DISCUSSION AND ANALYSIS
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 differ
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. Industry Structure & Developments
Flexible packaging covers materials that have undergone a conversion
process including printing, lamination, coating and extrusion, and can
involve different substrates such as plastic films, paper and foil.
Flexible pack types include plastic bags and sacks, wrapping films and
lidding films, paper bags and wrapper, and aluminum foil laminates, foil
lidding, blister packaging and foil bags, sachets and pouches.
Flexible packaging materials can be used separately or in combination for
primary retail food packaging and non-food packaging applications such as
pet food, cosmetics and personal care, household detergents & soaps and
pharmaceutical and medical products. Flexible packaging films can be made
from single-web substrates such as flexible plastics (PE, PP, polyester or
PA), flexible foils and flexible papers, or they can be coated, laminated
or coextruded with other materials to enhance their physical properties in
Worldwide demand for converted flexible packaging is forecasted to grow 3.6
percent per year to over 19 million metric tons in 2013, faster than real
(inflation-adjusted) gains in GDP. Factors contributing to rising converted
flexible packaging demand include growth in food and beverage shipments,
which represent the largest market by far. In addition, cost performance
and source reduction advantages, as well as ongoing developments in high-
barrier resins and value added features, will continue to favour flexible
packaging products over their rigid packaging materials.
Flexible packaging has reached market maturity in the developed nations of
North America and Western Europe and future growth will be modest. However,
in developing countries, the flexible packaging sees strong growth.
Asia is the largest regional market with 29.1% of global market volume in
2011, followed by Western Europe and North America. Asia is also the
fastest-growing market for consumer flexible packaging, with a forecast
CAGR for 2011-16 of 7.9%. The region is forecast to represent 55.0% of
total world flexible packaging consumption growth during the period 2011-
16. India and China are the fastest-growing national markets for consumer
flexible packaging, together accounting for 44.0% of world flexible
packaging consumption growth during the forecast period.
Global consumer flexible packaging consumption by region, 2011 (% share by
The Indian flexible packaging Market 2011 shows India represents a US$ 3
billion market that is expected to continue growing at around 18-20% a year
India is poised for huge growth with opening up of retail sector.
2. Business Review
Plastic Film Business
The main products of this business are Polyester Films, OPP Films,
Metalized & Specialty films and Polyester Chips of different grades etc.
The Company`s OPP films comprising of BOPP and CPP films are highly cost
effective and functionally efficient products that have rapidly penetrated
into high barrier sensitive packaging segment across the World. It is
primarily being used for applications in packaging food products such as
confectionery, biscuits, bakery, pasta, dried foods, meats and others. The
technologically superior and highly dependable BOPP film produced by the
Company in its state-of-the-art ISO 9001-2000 certified plants can be
structured in up to three layers and tailored for almost any machine
requirements and is capable of meeting both rotogravure and flexographic
printing standards. The Company produces BOPP film from its Indian plant
which largely caters to the captive & domestic market and Egypt plant which
caters to the international market.
The CPP film is highly dynamic and versatile with high gloss, greater
transparency, better heat sealability, good twisting property and better
tear strength. These factors provide its application in food wraps, anti
wraps, anti fog, garment bags, deep freeze applications, etc. Presently CPP
film is produced only from Indian plant and caters to captive & Indian
market. The CPP plant in Egypt caters to the international market.
The Company`s BOPET film is one of the main products of the Company. It has
not only succeeded in retaining its market share but also continues to
expand its markets in today`s dynamic & rapidly changing packaging
scenario. Biaxially oriented PET film (BOPET) is used successfully in a
wide range of applications, due to its excellent combination of optical,
physical, mechanical, thermal, and chemical properties, as well as its
unique versatility. BOPET Films, produced in state-of-the-art ISO 9001-2000
certified plants in different range of microns, the films have the capacity
to sustain the high fidelity graphics and meet the requirements of both
rotogravure as well as flexographic printing standards besides having
properties of BOPET film like optically brilliant, clear appearance,
unequalled mechanical strength and toughness, excellent dielectric
properties good flatness and coefficient of friction (COF), tear-resistant
and puncture-resistant characteristics wide range of thickness as thin as 8
micron up to 50 micron, excellent dimensional stability over a wide range
of temperatures, good resistance to most common solvents, moisture, oil,
and grease, excellent barrier against a wide range of gases. BOPET film is
produced from Indian plants and from Dubai & Mexico. Indian plant meets
captive & Indian market requirements whereas overseas plants serve to
The Company has the facility to produce polyester chips of film grade, yarn
grade and bottle grade. The film grade chips are used as raw material for
the manufacturing of polyester films whereas yarn grade chips are used for
the manufacturing of polyester yarn and bottle grade chips for production
of PET bottles. The Company has made use of its state-of-the-art batch
processing manufacturing facilities, by conveniently switching over to
produce different grades of chips based on the demand and orders in hand.
The Company manufactures a wide range of polyester chips suitable for
various applications. Through continuous R&D efforts, the Company developed
different speciality polyester chips, which has been well accepted in the
Indian Market as well as International Market. Presently the Chip unit also
caters to 100% requirement of the Specialty Chips at Company`s Wholly Owned
Subsidiary Companies Flex Middle East, Dubai and Flex Americas, Mexico
Flexible Packaging Business
The main products of this business are laminates made of various
combinations of Polyester, BOPP, poly, metalized & hologram films and
others in roll form and in various preformed pouches, rotogravure cylinders
for various types of rotogravure printing, Anilox/Coating, Rollers for
flexo printing and Shims for
holographic embossing and holograms and printing ink and adhesives and
packaging & processing machines. This business involves customization
according to the needs of customer. The Company provides complete solutions
to the packaging needs of customers and has, among others, mainly all
leading FMCG manufacturers as its clients. The Company is the market leader
in this sector and a dominant player in India and an emerging player in the
The Company has successfully developed several new packaging solutions for
various applications suitable for Food Industry, Bakery and Confectionery
Industry, Beverage Industry and the Personal Care Products Industry. The
Company`s strategy for product innovation together with cost leadership and
enhancing quality with better services has led to significant growth in
sales and making it a major supplier of packaging materials for various
multinational corporations in the FMCG sector.
Some of the recent innovations done by the Company in packaging products
segment are Slider Zipper with diaphragm, 3D Bags, WPP Bags, Eco-friendly
flexi tube for cosmetic & paste, Spot hologram products, Non-plastic
laminates for mouth freshener industry. In many of these cases, Uflex has
been accredited with National and International awards.
The value added flexible packaging business of the Company has been
progressively gaining larger share in the total revenue of the Company and
increased to about 42% of the total consolidated revenue and growing at a
faster pace both in the domestic and international market. Having attained
its dominant position in the domestic market, the Company is emerging a
growing player in the international market by giving a tough competition to
giant peers group. The Company is expecting to make its strong presence in
the international market in coming years having acquired customers like
P&G, Nestle, Unilever, Conagra, Cargill etc. on a global scale. This
segment contributes large share both in the top line and bottom line which
is expected to be progressively increased in the coming years. The Company
caters to its domestic and overseas customers from its plants in India at
NOIDA & Jammu and plans to set up such plants in overseas market in future.
Printing Cylinder - The Company has world class and state-of-the-art
expertise and facilities integrated with best software to produce good
quality cylinders. The quality of the cylinders is well accepted in India
as well as in the International Market.
The Company has bought special software for making specialised Cylinders up
to 2.2 mtrs. The same can be used for vinyl flooring, wood grains, Textile
& various other specialised purposes. Zero discharge system with effluent
treatment plant was installed to stop draining of waste chemical(s) after
The Company saves foreign exchange by developing in-house copper adetitive
for copper plating. It is also having a proofing system which can print on
actual substrate without engraving the Cylinders.
Flexo Plate : Flexo graphic printing is alternate to Gravure printing for
short & medium run jobs and the turn-around time in preparing plate for
printing is lesser. In Flexography, Polymer plates are used as Image
carrier. These polymer plates carry energy sensitive dye-based coating
which is ablated by (Flexo Laser) Imager on the basis of digital data from
prepress. Then these plates are exposed through UV Light. In this process
UV light passes through ablated dye surface and polymerizes the plate.
Further to this process, the plate is developed in solvent bath, in which
the non-polymerized polymer washes out (non-printing area) and where ever
polymerized that area becomes harden and raises the surface (printing
area). Then the developed plate gets ready for printing.
Flexo proof press (Wet Proof): This is capable of proofing on actual
substrate with actual ink and plates. This is the first time in India.
Prior to printing, jobs can be proofed to obtain the approval from the
customer. It saves lot of press time & waste of plates.
Digital Plate Cutting Table: This equipment can cut Flexo Plates either
straight or Staggered to the finished size, when mounted on plate sleeve
the joining will be more precise. This can cut Flexo plates as well as
paper board and Rubber Blanket.
Solvent Recovery Plant: Recycling of used solvent can be recovered by 90%
by this Equipment and same can be reused in the washout process, moreover
the waste of this process can also be used as fuel for our incinator,
Hologram produced by the Company has been well accepted both by the
Government and Private Organization across the country. The Company through
aggressive marketing has been able to get substantial orders from different
states. Hologram being low cost with better margin, add to the bottom line
The Company has produced indigenously the new generation cost effective
polyester base solvent less adhesive system for flexi pack, new ink system
for PVC profile and special coating for producing matt effect in laminates.
The Company also manufactures customized need based packaging and
processing machines. The ongoing process of innovation and introduction of
machines through its in-house R&D facilities, having unique features and
facilities for packaging products of different varieties, enables the
Company to manufacture both tailor made machines as well as machines of
specific design to suit the needs and requirements of various customers
both in India and abroad.
3. Financial and Operational Performance - Overview
The summarized financial results are given hereunder: Summary of results:
(Rs. in Lacs)
Consoli- Stand- Consoli- Stand-
dated alone dated alone
Total Revenue 454295 310665 351241 231639
Profit before 68239 47259 114598 63026
Depreciation & Tax
Profit before Tax 30485 18895 84535 39799
Profit for the year 25502 14959 69798 28202
4. Expansion projects
The Company`s following expansion plans are in progress and the status of
the same are narrated below:
Project at Poland
Flex Film Europa Sp.z.o.o. set up as a 100% subsidiary of Flex Middle East
FZE, Dubai, is setting up facilities in Wrzesnia under Walbrzych Special
Economic Zone "Invest Park" in Poland to produce 30000 TPA of PET film with
an estimated total capital outlay of US$ 80 million.
Land admeasuring about 67800 Sq. Meter has been acquired in WSEZ `Invest
Park Zone`. The site is fully developed and requisite infrastructures are
fully available. Soil Testing and plot survey has been completed,
architecture designing completed, civil construction work is almost
complete. Major Plant and Machineries are already supplied at site and
commissioning of same are at very advanced stage of completion. Term debt
and working capital debt for project are fully tied up. The Project is
expected to be completed by beginning of 2nd quarter of financial year
Project at USA
Flex Films (USA) Inc., 100% Subsidiary of the company is setting up
facilities in Elizabeth Town, Kentucky, USA to Produce 30000 TPA of BOPET
film with an estimated cost of US$ 80.00 million. Land admeasuring 31.6
acres has been allotted in Elizabethtown of Kentucky USA. Civil
construction has already commenced. The orders for major equipments have
been placed and started arriving at site. The Project is expected to be
completed by December 2012.
5. Opportunities & Threats Opportunities
Flexible Packaging has been one of the fastest growing sectors of the
packaging market over the past decade. Annual growth rate of 15-18% shows
very broad perspective of Indian Flexible Packaging industry and its
promising growth which is expected to be 25%.
Flexible Packaging that is a very versatile packaging form that can cater
to any needs of the customers and can be customized to specific
requirements of the end application. The inherent property of barrier
protection of packaging substrates like PE, PET, PP, PA, etc., offers
fearless protection against environmental threats like moisture, gas aroma,
heat and chemical reaction. The convenience factor of handling and cost
benefits are a few added advantages.
Factors driving growth of Flexible Packaging:
* Materials like metals are volatile, glass is becoming increasingly
expensive, wood is not eco-friendly, therefore posing excellent growth
prospect for flexible packaging.
* Flexible Packaging vies for conversion opportunities from rigid packaging
and already controls the Foodservice area. In general, flexible packaging
continues to provide solid market penetration vs. aseptic and hot-fill
rigid packaging, a trend most industry pundits believe will continue.
* Flexible Packaging also has a strong outlook for barrier packaging,
including stand-up pouches, non-retort stand-up pouches.
* A growing middle class population of over 400 million with high income.
Changing Consumer habits in 1, 2 & 3 Tier cities with working style of fast
economies like developed countries globally, therefore making life on a
fast track. Thus impetus given on easy, fast, convenient and flexible
products, which is the prime deliverance of Flexible Packaging.
* Rapid growth in globalization in FMCG segment.
* Emergence of organized retail and technological strides in food
manufacturing and processing is further fuelling the next growth trajectory
for the food industry in India.
The Company`s new expansions will have high value added product offerings
and its exposure in Flexible Packaging market will increase. Due to its
constant efforts for excellent product quality, low cost manufacturing
acumen, broad gamut of product offerings, one stop solution format,
complete integration of conversion capabilities, hands on style management,
motivated & skilled professional taskforce, top marquee of clients,
aggressive marketing strategies, etc. the Company is poised for becoming a
major and important player in the industry.
The Company`s established design development and cylinder operation with
world class softwares like Esko Artpro 10, Sonic speed engravers,
automatics proofing and mock-up machines has given the Company an added
advantage over its competitors. This advantage can directly be leveraged to
adding the profitability of the organization, as in-process flaws can be
eradicated at the initial level of digital proof providing to the clients
The industry is very dynamic and very fragmented at the same time.
Unorganized sector is still a very large part of the market. However,
growing awareness for hygiene and growing health consciousness and also
rapidly expanding organized retail sector help the Flexible Packaging
companies in the organized sector to grow.
It is generalized as plastic industry globally and therefore perceived to
be a non-eco-unfriendly industry experiencing stiff opposition. However,
with technological advances made by the Company in reprocessing of plastic
waste, flexible packaging has become safer for food products and well
accepted the world over.
The Company faces competition from other domestic manufacturers. However,
since the market is growing at a high rate and because of the Company`s
inherent strength, this factor is not worrisome.
The Indian plastic films market is highly competitive both for PET films
and BOPP films. The Company faces stiff competition both from the
international as well as domestic manufacturers. The competition is
increasing with the addition of new capacities. Increased competition leads
to reduced price, decreased sales, lower profit margins thus adversely
affecting the business and financial conditions of the Company; however
Company`s plan is to mitigate these by focusing on better efficiency,
improvement of productivity, introduction of innovative products and
proximity to customers etc.
6. Future Outlook
The global market for flexible packaging is projected to be worth more than
US$ 71 bn with world wide consumption set for annual growth of more than 4%
to reach almost 22.5m tons by 2016.
Overall growth is dependent on increased industrial production and
international trade. Demands on packaging converters have become more
intense and sophisticated. Increased penetration of organized retail in
India as well as increasing preference for branded products has greatly
increased the demand for flexible packaging solutions, which has led to
advent of machines and advanced technologies for printing and converting
packaging materials for the flexible packaging industry to meet the rising
On account of high barrier properties of flexible packaging, the demand is
always growing. A recent application of "food-grade flavor molecules" added
to polymer structure has resulted in the development of a film that retains
odors/aromas inside of a package. The flexible packaging industry has been
the center of revolutionary developments and innovations.
7. Internal Control Systems And Their Adequacy
The Company has an adequate system of internal control relating to purchase
of stores, raw materials including components, plant & machinery, equipment
and other similar assets and for the sale of goods commensurate with the
size of the Company and nature of its business. The Company also has
Internal Control System for speedy compilation of accounts and Management
Information Reports and to comply with applicable laws and regulations.
The Company has an effective Budgetary Control System. The Management
reviews the actual performance with reference to budgets periodically. The
Company has a well-defined organization structure, authority levels and
internal rules and regulations for conducting business transactions.
The Company has already formed an Audit Committee and has met four times in
the year. Audit Committee ensures proper compliance with the provisions of
the Listing Agreement with Stock Exchanges, Companies Act, reviews the
adequacy and effectiveness of the internal control environment and monitors
implementation of internal audit recommendations. Besides the above, Audit
Committee is actively engaged in overseeing financial disclosures and in
reviewing your Company`s risk management policies.
8. Corporate Social Responsibility
The Company is a socially responsible corporate citizen committed to
deliver a positive impact across social, economic and environmental
parameters. The Company acknowledges its responsibility on the manner that
its activities influence its consumers, employees and stake holders, as
well as the environment. The Company seeks to achieve its corporate and
social objectives by focusing on the following strategic areas -
* Environmental Responsibility
* Employee Engagement
* Community Initiatives
As a part of its Corporate Social Responsibility, UFLEX Limited endeavors
towards creating a better and sustainable future for underprivileged
children and youth through sports. In the last one year, UFLEX Limited in
association with Stairs has managed to impact the lives of thousands of
underprivileged youth across the country, with various sporting
UFLEX is dedicated towards creating sporting opportunities for
underprivileged children across the country. Besides being a recreational
activity, sport has an educative character which can help in building a
strong character and help in social integration of underprivileged youth.
These children have a lot of potential and latent energy that needs to be
tapped and through Uflex Khelo Dilli, we hope to channelize this energy in
the right direction. Our association with Stairs represents an extension of
our social commitment to bring about a positive change in the life of
underprivileged sections of the society by carrying out such programmes in
sport, education and health.
Uflex Khelo Dilli was conceptualized with the aim to provide free of cost -
space, infrastructure and sports equipment to the less fortunate children
of our society, to play. The first edition of Uflex Khelo Dilli has already
witnessed participation of more than 5000 children, who are regularly
playing at 28 Uflex Stairs centres, which have been established near the
colonies where these children reside.
Apart from Khelo Dilli, UFLEX Limited has also adopted cricket initiatives
of Stairs, namely, Uflex Stairs Cricket Championship and Uflex Stairs
Cricket Scholarship. UFLEX Limited supports Stairs in running cricket
training academies, providing sports scholarship and sports gear to the
underprivileged children. Recently, 64 talented children have been granted
the Uflex Stairs Cricket Scholarship and are being training at accredited
cricket centres in Delhi. Some of the students, who have been identified by
Stairs are already doing well at the national level and are earning laurels
for their States. Stairs also organizes sports camps at regular intervals
to promote youth talent.
9. Risk Management
Macro economic conditions do affect the Company`s operations. Low demand,
economic slow down, political instability, higher inflation, natural
calamities may affect the business. Business therefore cannot be risk free.
What is therefore important is to correctly assess the risk area wise and
to take steps to mitigate the risk before it becomes a potential threat.
General risk areas are statutory compliances, economy, financial,
government regulations and policies, market related, operational, products
and technology, intellectual property etc.
The Company has identified potential risks such as business portfolio risk,
financial risk, legal & statutory risk and internal process risk including
ERP and IT and has put in place appropriate measures for their mitigation.
10. Company`s Standalone Financial Performance & Analysis
A. Fixed Assets
The composition and growth of assets are as under:
(Rs. in lacs)
Particulars March 31, 2012 March 31, 2011
A. TANGIBLE ASSETS
Freehold Land 256 256
Leasehold Land 4139 3456
Buildings 27440 19947
Plant & Machinery 182176 157901
Electrical Installations 5103 3852
Office Equipments 4369 3991
Furniture & Fixtures 4875 4813
Vehicles 2203 2188
Aircraft (on Lease) 3585 3585
Sub-Total (A) 234146 199989
B. INTANGIBLE ASSETS
Software 1178 709
Patent 500 -
Sub-Total (B) 1678 709
Less: Accumulated Depreciation 90971 91446
Add: CWIP & Intangible Assets
Under Development 881 7618
Net Fixed Assets (A+B) 1457341 116870
B. Results of operations
The summary of operating performance for the year is given below:
(Rs. in lacs)
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Amount % Amount %
Revenue from Operations 307894 99 230066 99
Other Income 2771 1 1573 1
Total Revenue 310665 100 231639 100
Cost of Materials consumed 177733 57 117745 51
Purchase of Stock-in-Trade 26204 8 2125 1
Changes in Inventories of finished
goods, work-in-progress and
Stock-in-Trade (329) 0 (2893) -
Employee benefits expense 15759 5 12760 6
Finance costs 15999 5 13488 6
Depreciation and amortization expense 12365 4 9739 4
Other expenses 47233 15 41248 18
Expenses Allocated to Self
Constructed Assets (3194) - (2372) -
Total Expenses 291769 94 191840 83
Profit Before Tax 188951 6 397991 17
11. Human Resource Development/Industrial Relations
The Company`s Human Resources philosophy is to establish and build a strong
performance and competency driven culture with greater sense of
accountability and responsibility. The Company has taken pragmatic steps
for strengthening organizational competency through involvement and
development of employees as well as installing effective systems for
improving the productivity, quality and accountability at functional
With the changing and turbulent business scenario, our basic focus is to
upgrade the skill and knowledge level of the existing human assets to the
required level by providing appropriate leadership at all levels,
motivating them to face the hard facts of business, inculcating the
attitude for speed of action and taking responsibilities.
The effort to rationalize and streamline the work force is a continuous
process. Currently the Company has 4670 employees as on 31st March, 2012.
The industrial relations scenario remained harmonious throughout the year.
12. Environment, Occupational Health and Safety
Your Company is committed to conducting its operations with due regard to
the environment and providing a safe and healthy workplace for employees.
The collective endeavor of your Company`s employees at all levels is
directed towards sustaining and continuously improving standards of
environment, occupational health and safety in a bid to attain and exceed