Jindal Poly Films Limited

JPFL, through continuous capacity expansion in the past, commands leadership position in India in biaxially oriented polypropylene (BOPP), biaxially oriented polyester (BOPET) and non-woven segments. It also has sizable presence in the metallized film segment as well. Its single-unit operation (which is one of the largest integrated BOPP and BOPET manufacturing facilities in India) with multi-layers of forward and backward integration, leads to economies of scale and

JPFL is the flagship company of the B.C Jindal Group and has business vintage of over three decades. The group is a global flexible packaging solutions provider with manufacturing operations in India, Europe and US with sales footprint in over 40 countries. Although the Board has no representation from the promoters, the board and the senior management comprises professionals with several decades of experience in various functions of finance and marketing across varied manufacturing

Despite the restrictions imposed due to lockdown, the capacity utilization for BOPET, BOPP and metallized films stood comfortable at about 69%, 56% and 85% during 9MFY21. In terms of volume, domestic sales in all the segments have witness considerable growth during 9MFY21. The volume sales and capacity utilization of the non -woven division continued to improve during FY21 due to higher output from its newly added second lin e and unexpected surge in demand for medical

JPFL’s strong liquidity profile is characterized by healthy cash and liquid investment, moderate fund based working capital utilization, small net operating cycle and healthy current ratio. GCA during FY21 stood healthy at Rs.930 cr (PY: Rs. 504 cr) and cash and liquid investments stood at Rs. 550 cr as on March 31, 2021. JPFL’s capex requirement is modular and may rely on debt funding for the same. Utilization of fund-based bank limits was 22% in trailing 12 months ended J an’21. By virtue of

JPFL has regular capex addition programme to maintain its market dominance. As per the management, its ongoing brownfield expansions are running as per schedule. JPFL has projected considerable debt funded capex during FY2 2-FY24. Moreover, the requirement of debt vis a vis the current envisaged plan may increase if JPFL faces significant headwinds on its profitability. The successful implementation of these projects without any significant cost/ time overrun, besides increasing

The packaging film industry has witnessed cyclicality in the past with significant fluctuation in profitability of the incumbent players. India’s BOPET and BOPP production capacity is more than the domestic demand (due to slow demand pickup in comparison to significant capacity build-up) which has led to stiff competition. The Indian manufacturers also have to compete with its Asian counterparts, in order to be cost-competitive in terms of raw material, labourand overheads not only

JPFL’s major raw materials required are derivatives of crude oil; consequently, the finished goods prices fluctuate with crude oil prices. Furthermore, one of the key raw materials for the metallized segment is aluminium, which has witnessed volatility in the past. Material cost makes up ~70% of the final packaging film. Hence, ability of the manufacturer to pass on raw material price increase is critical.