Packaging firms hit in Q1 FY18 due to GST, rupee impact

The packaging firms like Essel Propack, TCPL, and SRF Limited among others, in their respective financial statements, said their business performance was impacted due to de-stocking by channel partners ahead of GST implementation in July.

In a press statement, Essel Propack said, “The quarter has been impacted by GST linked destocking in India and weaker off take in the US and Europe. Further, significant appreciation this quarter in Indian Rupee against various currencies has depressed the reported performance on account of translation impact. However, we are seeing traction in volumes in major markets in Germany, US and China, which should help improve performance in coming months.”

SRF Limited’s Ashish Bharat Ram, said, “Our Q1 results of FY18 have been subdued due to headwinds in the form of sharp rupee appreciation against the dollar and transitional issues related to GST. We expect the environment to remain tough in the near future with growth expected to revive only by the fourth quarter of this FY.”

TCPL Packaging

The net sales of TCPL Packaging decreased by 3% from Rs 142.71 crore to Rs 138.44 crore in Q1FY18 when compared with the corresponding period last year. The company’s consolidated profit after tax (PAT) decreased by a whopping 60% to Rs 309.49 crore in Q1FY18, mainly on account destocking of the goods by customers on the implementation of GST.

Essel Propack

Essel Propack’s net sales (net of excise duty) for the quarter came in at Rs 560.72 crore, registering 6.19% yoy increase.

The net profit of Essel Propack declined 8.9% to Rs 34.29 crore in the quarter ended June 2017 as against Rs 37.62 crore during the previous quarter ended June 2016. 

According to a company press release, the PAT in constant currency grew 3.0% against reported -8.9%, a swing of 11.9%. “But for GST impact (estimated loss of profit Rs 32.0 million) the PAT in constant currency would have grown by 12.2%.”

The company said in the statement that GST implementation in India impacted the revenue growth due to destocking by customers. The standalone India estimated revenue loss on account of GST for the quarter is Rs 165 million. But for this, the revenue growth would have been 8.7% as against reported 1.2%.

Huhtamaki-PPL

Huhtamaki-PPL’s standalone net profit declined 61.60% to Rs 7.23 crore in the quarter ended June 2017 as against Rs 18.83 crore during the previous quarter ended June 2016.

The net sales (net of excise duty) declined 11.27% to Rs 502.63 crore in the quarter ended June 2017 as against Rs 566.49 crore during the previous quarter ended June 2016.

Uflex

Uflex has clocked 8% bottom line growth (yoy) during the quarter ended 30 June 2017. The net profit stands at Rs 93 crore as compared to Rs 86 crore during the first quarter of FY 2016-17. At the operating level, consolidated EBITDA rose by 4% to stand at Rs 236 crore as against Rs. 228 crore during the same period in the previous fiscal.

The consolidated total revenue for the first quarter of the current financial year is Rs 1,624 crore as against Rs 1,516 crore in the same quarter last financial year thereby registering a 7% top line growth yoy.

In an official document released soon after declaring the Q1 earnings, Ashok Chaturvedi, chairman and managing director, Uflex, said, “Our aseptic liquid packaging material manufacturing plant at Sanand, Gujarat has been commissioned. This has completed our product offering bouquet in its entirety.”

Max Ventures and Industries (MaxVIL)

In Q1 FY 2018, MaxVIL has reported a net profit after tax of Rs 60 crore on a standalone basis, aided by a gain on stake sale of its subsidiary Max Speciality Films (MSF).

Toppan Printing, Japan has become a joint venture partner in Max Speciality Films Limited (MSFL) by acquiring a 49% stake in the company on a fully diluted basis through a mix of secondary sale by MaxVIL and primary share issuance by MSF. MaxVIL has transferred 35.84% equity of MSFL for Rs 145.41 crore to Toppan. In addition, MSFL has issued and allotted 13.16% equity share to Toppan for Rs 53.36 crores.

MSFL is undergoing a capacity expansion by setting up an additional line for manufacturing BOPP films (Line 5), with a capital investment of Rs 250 crore. This line will increase production capacity from 45,000 tonnes per annum to 75,000 tonnes per annum. Line 5 is expected to commence commercial production in first quarter of FY 2019.

SRF Limited

SRF Limited, a chemical-based multi-business entity, which also manufactures BOPP and BOPET films announced its financial results for the first quarter ended June 30, 2017. The consolidated gross sales of the company grew by 6.9% from Rs 1,299 crore to Rs 1,388 crore in Q1FY18 when compared with corresponding period last year. The company’s consolidated profit after tax (PAT) decreased to Rs 104 crore in Q1FY18, mainly on account of subdued commodity prices, channel destocking during the transition to the Goods and Services Tax (GST) regime and strengthened rupee.

Commenting on the results, managing director, Ashish Bharat Ram said, “Our Q1 results of FY18 have been subdued due to headwinds in the form of sharp rupee appreciation against the dollar and transitional issues related to GST. We expect the environment to remain tough in the near future with growth expected to revive only by the fourth quarter of this FY. However, on the positive side, we continue to focus on innovations to build a strong pipeline for induction of new offerings and value-added products.”

The segment revenues of packaging films business increased by 19.4 percent from Rs. 347 crore to Rs. 414 crore during Q1FY18 when compared with the corresponding period last year. “The packaging films business plants ran at full capacity during the quarter despite an oversupply in the market. This was possible mainly due to our low-cost structures, increased agility and a strong focus on increasing the share of innovative value-added products to the overall portfolio of offerings.”