Delhi-based flexible packaging company Uflex Ltd is planning a major corporate revamp.

The plan includes bringing the overseas business, which contributes nearly half of its Rs 5,000-crore turnover, under an umbrella company based in Dubai and list it abroad to part-finance future foreign expansions.

Uflex makes plastic films – used in packaging of various kinds of products especially food products – and other value-added packaging materials.

While plastic films contributed nearly 60 per cent of the company’s turnover in 2012-13, value-added products contributed around 53 per cent of profits.

“We are planning a corporate restructuring with an aim for value creation and monetising the same for capacity expansion. The plan is currently in the drawing board stage.

“The Uflex board is expected to take a call on the same in early 2014,” Group President R.K. Jain told reporters during a recent visit to its plant at Wrzesnia, Poland.

Listed in India, Uflex currently has five overseas facilities—Dubai, Mexico, Egypt, Poland and the US. The businesses in Dubai, Poland and Egypt are held by an umbrella company in Dubai.

The plan ahead is to bring its businesses in the US and Mexico also under the Dubai-based company and list the same in an overseas stock exchange. The company is yet to take a call on the listing destination.

The shares of Uflex closed at Rs 73.45 on BSE on Monday at an annualised price-earning of 5.42. According to the peer group comparison on BSE, this is lower than a price earning multiple of 8.9 in the Piramal Glass Ltd counter. Shares of both companies are of Rs 10 face value each.

Expansion Mooted

“For a company which is one of the top three or four makers of plastic films in the world and, controlling nearly one-third of flexible packaging market in India, our shares are under valued,” Jain said.

The plan ahead, therefore, is to go for a “major” capacity expansion in the next three years beginning 2014-15 to broad-base the product range and improve margins.

Uflex ended the September 2013 quarter with an operating margin of 14.18 and a net profit margin of 3.13.

Though hesitant to quote investment numbers at this juncture, Jain indicates that overseas business will receive substantial attention in the days to come due to higher growth potential.

Uflex invested $150 million (Rs 930 crore today) to set up facilities in Poland and the US in the last two years. Both plants have already broken even and have provisions for future capacity expansion.

Talking on the European venture, Jain said the Polish plant is already operating at 100 per cent capacity utilisation to meet demands from the packaging industry in both Poland and the neighbouring Germany.

(The writer was in Poland at the invitation of Uflex Ltd.)

comment COMMENT NOW