Shareholding Pattern as on 30 June,2011
Transcript of Shareholding Pattern as on 30 June,2011
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Shareholding Pattern of More than 1 % as on 30th
June, 2011
Sl. No. Name of the Shareholder No. of Shares Shares as % of Total No.
of Shares
1 India Optima Fund 751,591 1.20
2 Shree Capital Services Ltd 896,147 1.43
3 HDFC Trustee Company Ltd -
HDFC
2,688,217 4.29
Total 4,335,955 6.92
63.88%
1.73%
4.85%
29.54%
Shareholding Pattern as on 30th June,2011
Promoter
FII
DII
Others
Stock details
BSE Group B
BSE Code 509820
CMP (Rs.) 80.40
Market Capitalization (Rs. In Cr) 504
Face Value (Rs.) 2.00
Book Value (Rs.) 46.84
52 Wk High (BSE) 93.15 (3rd
August 2011)
52 Wk Low (BSE) 50.00 (9th December 2010)
PAPER PRODUCTS LTD (PPL) 9th
September, 2011
Februar2010
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Company Overview:
PPL was incorporated in 1950 & is India’s leading manufacturer of primary consumer packaging.
Since 1999, PPL is majority owned by global packaging major, Huhtamaki Oyj, Finland
(one of the world’s top ten consumer packaging multinationals), which holds about 60.8%
of the equity capital (increased from 58.9% recently).
PPL was originally founded by Sardari Lal Talwar & started as a partnership concern at Lahore
(now in Pakistan) in 1935 and was shifted to Delhi in 1947. Later in 1950 it went public. In order
to scale up its value chain, the company became a part of a global flexible packaging giant
Huhtamaki in 1999, which acquired 51% stake in PPL & subsequently raised it to 58.9%.
Recently, after Talwar group sold off its remaining 1.9% stake in PPL, Huhtamaki’s stake has
increased to 60.8%. The Gupta family holds 3% stake in PPL.
PPL has an employee strength of ~ 1500 employees & is a pioneer and technology and market
leader in flexible packaging in India with manufacturing facilities at Thane, Silvassa, Hyderabad
and Rudrapur (Silvassa is the largest facility, which accounted for around 30% of PPL’s total
turnover in CY10). The company meets the packaging needs of almost the entire range of
FMCG segments including personal products, personal wash, laundry, foods, sauces,
beverages, bakery products, spices, chocolates and confectionery, dairy and also for seeds,
specialized chemicals, automotive lubes, electronics, healthcare and many other specific
specialized uses including anti-spurious packaging.
The Package Protection and Decoration products range includes latest leading edge technologies
(labelling) - shrink sleeves, wrap-rounds, heat transfers, pressure sensitive and metallised paper
labels. Manufacturing of specialized cartons and cartooning systems, manufacture of poly films,
specialized barrier metalizing and high-end application extrusion coating are also part of PPL’s
product offerings. The company’s packaging machines division offers complete packaging
solutions to customers. Further PPL is amongst select few companies worldwide having expertise
in holographic images in packaging medium. This makes the packaging look attractive, thus
enhancing the product visibility for premium positioning. Holograms are also popular as a
deterrent against counterfeits for product protection. Flexible Packaging & Labelling is done at
all facilities of PPL, while Cartons are produced only at Hyderabad facility & Tube Laminates are
produced only at Silvassa.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Installed Capacity, Capacity Utilization & Production in CY 10:
PPL’s parent profile:
Huhtamaki Oyj is a one of the top 10 consumer packaging companies in the world. Being a
market leader in several product categories, the company has a turnover of Euro 2.1 bn with
operations across the globe (in 31 countries). Huhtamaki has 53 manufacturing units & employs over
12000 people. The company has a large presence in Europe Its business is categorized into 5 segments
viz; Flexible Packaging (Strong market position in Tube Laminates & pet food worldwide, Biscuits &
Confectionery in India, Coffee in Thailand & Vietnam, Chocolate in Europe), Films (Global leader in
Release films, North America (shaped containers for frozen desserts, premium branded tableware),
Food Service E-A-O [Europe-Asia-Oceania] (Cups and lids to quick service, vending and catering) &
Moulded Fibre (Recycled fibre packaging - egg packaging, fruit trays). Paper Cups & Containers,
Flexible Packaging & Films and Moulded Fibre based products account for 85% of net sales of
Huhtamaki (Flexible Packaging accounts for 27%). Top 5 customers of Huhtamaki account for 18%
of sales, while top 10 contribute 26%. Top 5 customers include Costco, Kraft, McDonald‘s, Nestle
and Unilever. Citing strong growth opportunities in the Asian markets, particularly in India, Vietnam
& Thailand, the company is in the process of expanding its capacities over there in CY11.
Key Clients:
PPL derives almost 98% of its revenues from the FMCG industry. The company mainly caters to
the premium segment of packaging and its major clients include Britannia, Cadbury, Castrol, Coca
Cola, Dabur, Emami, Eveready, GSK, Godrej, Hindustan Unilever, ITC, Marico, Nestle, Pepsi,
Perfetti, P&G, Tata Tea, TTK-LIG, Wipro etc. The top ten clients of PPL account for ~60% of the
company’s revenues. Product-wise, Laminates and Converted, Coated / Uncoated Paper and Films=
category accounts for a major portion of PPL’s total revenues i.e. 94.4%. Cartons contribute 5.4%,
while Others category contributes a mere 0.2%.
PPL derives around 85% of its revenues from the domestic market, while exports account for
the balance 15%. Consolidating its position as India's most prominent packaging institution, PPL
expanded its business into promising overseas markets with a view to benchmark itself with the global
competition. Overseas, PPL has presence across 4 continents (Middle East, Africa, Europe &
America) & provides service to over 50 customers worldwide.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Products:
FLEXIBLE PACKAGING:
PPL produces a wide range of custom designed film, foil and paper based laminate structures, printed
in up to 10 colours high quality process, for primary packaging of products in solid, powder or liquid
form, in consumer pack sizes.
Labelling Technologies:
The company provides a range of labelling options to support its clients the right package that
constantly advertises their products.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
SPECIALISED CARTONS:
PPL manufactures lined cartons and systems for primary packaging of powders and solids in a
variety of consumer pack sizes.
PACKAGING MACHINE DIVISION:
The company focuses on designing equipment solutions and material solutions both optimally suited
to one another. This division plays an active role in providing systems solutions in order to reduce
infrastructure costs and improve logistics.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
HOLOGRAPHIC OPTIONS:
Holograms meaning "whole images" are visual reproduction of images in 3D by providing depth to the design.
Embossing of Holograms onto thermo-plastic surfaces is the preferred route for commercial production for
packaging and labelling applications.
Raw Material Analysis:
RAW MATERIALS AND PACKING MATERIALS
CONSUMED
For The Year ended
31-12-2010
For The Year
ended 31-12-2009
Tonnes
(Mn )
Value
(Mn)
Tonnes
(Mn )
Value
(Mn)
Paper 3.89 193.31 3.58 176.04
Paper Board 4.91 143.89 4.13 104.05
Films 18.51 2541.81 15.87 1973.30
Inks, Adhesives and Solvents 9.44 1041.49 8.18 853.49
Polyethylene Granules 9.45 787.89 7.51 583.74
Others * – 263.89 – 113.62
BOPP plays an important role in Flexible Packaging
In 2009 the average price of BOPP Films was around Rs.125/- per kg whereas in
2010 the prices increased to Rs. 137/- per kg
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Consumption of Polypropylene (BOPP) Films in Flexible Packaging:
Price Trend of BOPP Films in International Market:
There has been a falling price trend of BOPP Films in global market
which is a positive sign for packaging players like PPL.
As the price trend of BOPP Films in India is quite similar to the
international scenario
BOPP Films was around Rs. 137/- kg in 2010 which has declined to
Rs. 105/- kg in Q2 CY 11
51.00%
17.00%3.00%
29.00%
Packaging
Electrical/Electronic
Imaging
Other Industrial
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Industry Prospects:
The global Packaging Industry is worth US$ 424 billion. The domestic packaging
industry is estimated at Rs 160 billion.
The flexible packaging industry in India is currently estimated to be US$ 1
billion and is growing at a high growth rate of approximately 20%.
The packaging sector has been growing at 20% CAGR, mainly driven by growth
in the FMCG sector.
The FMCG packaging demand growth can be attributed to increasing emphasis
on hygiene and quality products, a sharp preference for branded commodities
and shift from conventional packaging.
Growth in consumption of western-style snack products, confectionery, baked
goods combined with increasing hygiene consciousness amongst the population
will result in even traditional food manufacturers using flexible packaging.
However, the consumption per capita of packaging in India is extremely low at
US$ 5 as compared to certain developed economies like Brazil, Mexico & China
the per capita consumption is low.
World demand for converted flexible packaging is likely to grow at more than
4% per year going forward. World’s emerging markets, including Eastern Asia,
Eastern Europe, Africa and Middle East will be the key drivers.
It is observed that a mere 20% of the population in India consumes 80% of the
packaged production whereas the remaining 80% of the population have an
access to only 20% of the packaged production.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Growth Triggers (Investment Rationale):
Market leader: PPL is a market leader in the high-end flexible packaging industry
and commands a market share of around 65%. It has a strong backing from its parent
Huhtamaki
Innovative Player: PPL has come out with its innovation initiative NASP (New
Application, Structure and Products) which had contributed to 27.2% of total 2010
sales would get added thrust in the current year and years to come. Organisational
measures to further accelerate the NASP efforts are in place with the CEO directly
overseeing the company’s innovation programs and strategy. In the long run, moving
more business to value added segments, Innovation and new products, exploring new
markets are seen as critical to profitable growth.
Growth Strategy: Company is planning to grow Organically as well as Inorganically
Company is looking forward to focus more on techniques to expand them into
innovative and value added products The Parent company has identified Rs. 4000
crore business of flexible packaging globally and India has been identified a
significant growth area for the company’s prospects. This is important because as
compared to the West, consumer packaging largely drives growth of the Indian
packaging sector, where packaging for food services is at a very nascent stage. Foods
sector accounts for majority of the parent's revenues. We expect this to be a long-term
growth driver for PPL. Currently, a mere 2% of India’s food production is being
processed, and there are plans in place to increase the food processing level to
10% over a period of ten years thereby increasing the demand for packaging
material manifold. With flexible and convenience packaging replacing the traditional
packaging, new product development is critical to sustain growth.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Opportunities from Food Processing Industries: The Ministry of Food
Processing Industries, Government of India has set a Vision-2015 which opens lot of
opportunities for packaging industries like PPL
1. Become the Food Factory of the World
2. Triple the growth of the Food Processing Industry
3. Increase the value addition from 20% to 35%.
4. Increase contribution to world agriculture business from 1.5% to 3%.
Hi-tech agriculture, horticulture, organic farming, contract farming and agri retailing
are already seen to be receiving a push at various levels. Staples like wheat, maize and
pulses are getting a special thrust.
Capacity expansion to drive the revenues: PPL is the process of expanding its
Laminates & Converted, Coated / Uncoated films & paper facilities at Rudrapur &
Hyderabad. At Rudrapur, the company is likely to add one more full conversion line
that includes printing, lamination, slitting & cylinder making. At its Hyderabad plant,
it is in the process of adding a printer, augmenting the overall print capacity. The total
CAPEX for this expansion plan is estimated to be Rs. 400-450 mn, which is likely to
be funded through internal accruals. Both these facilities are expected to be fully
operational by the end of Q3CY11. Post the ramp up, PPL’s total capacity of
Laminates & Converted, Coated / Uncoated films & paper is likely to increase by
5000 TPA from 35590 TPA to 40590 TPA. This would enable PPL to meet the
increasing demand from the user industries & drive its revenues going forward.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Risks and Concerns:
Inflation – particularly food inflation -- touched all segments of the economy.
Selectively increasing unit prices of packs, reducing pack sizes etc can work up to a
point in an elastic market.
Fuel inflation is worrying and industry faces higher input costs. Prices of a few
other key raw materials – especially dyes and pigments , crude based solvents,
waxes and some speciality grades.
PPL’s exports currently account for 15% of its total net sales and the company
has plans to strengthen its overseas presence further going forward. This exposes the
company to forex fluctuations.
The Rudrapur facility, which accounts for ~23% of PPL’s total output, is
entitled to 100% tax benefits till CY12 and thereafter, the benefit would be partially
withdrawn to 30%. This is likely to increase PPL’s effective tax rate from current
23.7% (in Q1CY11) to 27-28% going forward. This could put pressure on growth in
PPL’s net profits.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Quarterly Financial Performance:
(Rs. mn except EPS)
Particulars 3 months ended 3 months ended
Q2
CY11
Q2
CY10
VAR (%) Q1
CY11
VAR
(%)
1. Net Sales Income from Operations 1974.7 1741.5 13.39 1981.3 -0.33
Other Operating Income 15.8 19.7 -19.80 32.8 -51.83
Total Income 1990.5 1761.2 13.02 2014.1 -1.17
2. Expenditure
a.(Increase)/Decrease in stock trade &
WIP
-34.8 -32 8.75 22.6 -253.98
b. Consumption of Raw & Packing
Materials
1391.3 1259.1 10.50 1395 -0.27
d. Employees cost 159.7 157.2 1.59 140.8 13.42
e. Depreciation & Amortisation 78 81.6 -4.41 77.2 1.04
g. Other Expenditure 219.1 213.2 2.77 202.1 8.41
h. Total 1813.3 1679.1 7.99 1837.7 -1.33
Foreign Exchange (Loss)/Gain 5.9 -0.4 -1575.00 6.9 -14.49
3. Profit from operations before Other
Income, interest & exceptional Items
183.1 81.7 124.11 183.3 -0.11
4. Other Income 9.9 4 147.50 8.4 17.86
5. Profit before Interest & Exceptional
Items
193 85.7 125.20 191.7 0.68
6. Interest 1.4 1.5 -6.67 1.4 0.00
7. Profit after Interest but before
Exceptional Items
191.6 84.2 127.55 190.3 0.68
8. Exceptional Income/(Expense) 0 0 0
9. Profit from ordinary activities before
Tax
191.6 84.2 127.55 190.3 0.68
10. Tax expense 40.1 17.2 133.14 45.1 -11.09
11. Net Profit from ordinary activities
after Tax
151.5 67 126.12 145.2 4.34
12. Paid-up Equity Share Capital 125.4 125.4 125.4
(Face value of 2/· each)
13. Earnings Per Share (EPS) 2.41 1.07 2.32
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Profit & Loss A/c (Rs. mn except EPS)
Particulars CY 09 CY 10 CY 11E CY 12E
1. Net Sales Income from Operations 5776.90 7040.10 8244.25 9278.67
Other Operating Income 65.70 65.30 96.00 102.14
Total Income 5842.60 7105.40 8340.25 9380.81
2. Expenditure
a.(Increase)/Decrease in stock trade &
wip
-27.70 -64.20 -68.00 -38.00
b. Consumption of Raw & Packing
Materials
3853.10 5029.70 5943.97 6680.02
d. Employees cost 493.30 591.00 613.00 676.12
e. Depreciation & Amortisation 311.50 324.00 330.00 353.00
g. Other Expenditure 746.10 802.20 890.63 935.38
h. Total 5376.30 6682.70 7709.60 8606.52
Foreign Exchange (Loss)/Gain 15.40 28.00 24.00 35.00
3. Profit from operations before Other
Income, interest & exceptional Items
481.70 450.70 654.65 809.29
4. Other Income 25.40 17.90 39.12 48.89
5. Profit before Interest & Exceptional
Items
507.10 468.60 693.77 858.18
6. Interest 11.40 5.90 7.00 8.00
7. Profit after Interest but before
Exceptional Items
495.70 462.70 686.77 850.18
8. Exceptional Income/(Expense) 0.00 122.80 0.00 0.00
9. Profit from ordinary activities before
Tax
495.70 585.50 686.77 850.18
10. Tax Expense 121.90 134.80 176.71# 229.55#
11. Net profit from ordinary activities
after Tax
373.80 450.70 510.06 620.63
12. Extraordinary Income/(Expense) 0.00 30.50 0.00 0.00
13. Net Profit for the Period 373.80 481.20 510.06 620.63
14. Paid-up Equity Share Capital 125.40 125.40 125.40 125.40
(Face value of 2/· each)
15. Earnings Per Share (EPS) 5.96 7.68 8.13 9.90
# Effective Tax rate is expected to go upto ~ 27%
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Balance Sheet: (Rs. mn)
Particulars CY 09 CY 10 CY 11E CY 12E
SHAREHOLDERS FUND
(a) Capital 125.40 125.40 125.40 125.40
(b) Reserves and Surplus 2490.10 2811.20 3101.19 3501.74
LOAN FUNDS 239.40 225.30 235.98 227.00
DEFERRED TAX LIABILITY 67.80 52.60 55.00 58.00
Total 2922.70 3214.50 3517.57 3912.14
FIXED ASSET 2033.50 1786.90 1894.00 1915.38
INVESTMENT 310.40 394.50 408.00 576.00
CURRENT ASSETS, LOANS AND
ADVANCES
(a) Inventories 759.30 892.00 1029.00 1185.00
(b) Sundry Debtors 972.00 1188.30 1384.00 1570.00
(c) Cash and Bank balances 40.80 108.40 130.00 206.00
(d) Loans and Advances 212.10 197.50 257.00 298.00
(e) Other Current Assets 109.90 123.20 137.12 152.00
Sub Total 2094.10 2509.40 2937.12 3411.00
Less: Current Liabilities and
Provisions
(a) Liabilities 1245.20 1249.10 1435.76 1679.44
(b) Provisions 270.10 227.20 285.79 310.80
Sub Total 1515.30 1476.30 1721.55 1990.24
Net Current Assets 578.80 1033.10 1215.57 1420.76
Total 2922.70 3214.50 3517.57 3912.14
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Financial Ratios:
Ratios CY 2009 CY 2010 CY 2011E CY 2012E
EPS 5.96 7.68 8.13 9.90
P/E Ratio(x) 13.49 10.47 9.88 8.12
Book Value 41.71 46.84 51.46 57.85
Price/Book value(x) 1.93 1.72 1.56 1.39
ROCE (%) 12.79 14.97 14.50 15.86
ROE (%) 14.29 16.39 15.81 17.11
Debt/Equity(x) 0.09 0.08 0.07 0.06
Asset Turnover Ratio 2.84 2.51 2.96 3.24
Current Ratio 1.38 1.70 1.71 1.71
Price to Sales Ratio(x) 0.87 0.72 0.61 0.54
Dividend per share(Rs) 1.80 2.20 3.00 3.00
Dividend payout Ratio 0.30 0.29 0.37 0.30
EBITDA margin (%) 14.17 11.26 12.42 13.05
EBITA margin (%) 8.78 6.66 8.42 9.25
PAT margin (%) 6.47 6.84 6.19 6.69
Net Sales Growth (%) -5.61 21.87 17.10 12.55
Receivable Days 55.84 51.18 52.92 51.54
Payable Days 50.55 48.69 45.84 46.12
Debtors turnover ratio 5.94 5.92 5.96 5.91
Creditors turnover ratio 4.64 5.64 5.74 5.52
EV/EBITDA 6.61 6.66 5.23 4.36
Market cap/Sales 0.87 0.72 0.61 0.54
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
Valuation:
PPL’s Q2CY11 results were impressive, which was driven by increasing
demand for packaging from the main user industry FMCG.
This seems to be in line with our full year CY11 net sales estimates.
We expect the demand for packaging to remain robust as we expect the
FMCG industry to do well.
At a current market price of Rs. 80.40, the stock is trading at P/E of 9.88x
CY11 (E) EPS of Rs. 8.13 & at PE of 8.12x CY12 (E) EPS of Rs. 9.90.
In our view the stock is grossly undervalued & deserves a fair valuation of
P/E 12.42x CY12 (E) EPS of Rs. 9.90.
We recommend accumulation of the stock between Rs. 70-80 for a
“potential upside” of Rs.123 within next 18-24 months.
201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69
For Any Queries please feel free to contact our Institutional Team
Names Designation E-Mail Id. Contact
Nagji Rita CMD - -
Sales
Ravinder Kasliwal Head Institutional Sales [email protected] 40751565/66
Dealing
Shiv Damani Institutional Dealer [email protected] 22723797
40751565/66
Vinit Rita Institutional Dealer [email protected]
40751565/66
Rashda Ainapore Institutional Dealer [email protected]
Research
Mitesh.shah Research Analyst [email protected] 40751515 *
562
Divya Kant Research Analyst [email protected] 40751515
Akbar Shah Research Analyst [email protected] 40751515
Sheetal Nirmal Research Analyst [email protected] 40751515
Sanjeev Haria Research Analyst [email protected] 40751515
Sibayan Banerjee Technical Analyst [email protected] 22723797
Ashok Patel Technical Analyst [email protected] 22723797
Madhu Patel Technical Analyst [email protected] 22723797
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