Prospects of foreign direct investment (FDI) in multi-brand retail and the expansion of organised retail in the country will drive up the packaging industry?s growth by an impressive 25% a year from the current 18%, according to senior industry and government officials.
?The organised retail in India is expanding. Also, FDI in multi-brand retail would be one of the key drivers of growth for the packaging industry, which is now far lagging the level achieved in the US or Europe,? RK Jain, group president (corporate finance and accounts), Uflex, told FE. Uflex is India?s largest packaging company with a market share of around 25%.
As income level soars, consumers are increasingly opting for hygienic products in packaged form, said an official with the consumer affairs ministry, which overseas packaging rules. ?There is no doubt that with the entry of foreign retailers, demand for packaging would go up. The growth potential of the industry is yet to be tapped properly,? he said.
The growth prospects remain immense as the packaging market in India is worth only $4 billion, compared with around $100 billion globally. ?We don?t see any challenges in the sector. Any changes in the prices of the raw material are passed on to the customers. If overall macro-economic conditions, political and social environment are good, there is no problem,? Jain said.
The high potential of the sector is also driving up revenue of firms such as Uflex. ?Growing consumer awareness, new packaging material development and focus on innovation are the major factors for the growth of Uflex. Currently, we are expanding at 20-25% a year, but we expect to grow faster at 30% or more annually in future,? Jain said.
The company aims to double its revenue in three years to Rs 9,000 crore from Rs 4,500 crore in the fiscal that ended March, he added.
The company already has manufacturing plants in India, Egypt, Dubai, Mexico and Poland, and another unit is expected to be commissioned in the US by December, he added. Asked about acquisition plans of the company, Jain said: ?In our kind of trade, acquisitions are very difficult. We want to concentrate on our strategy of organic growth. However, the company may not be averse to any acquisition opportunity in plastic film business.?
