Jindal Poly Films Limited(JPFL),
a part of B C Jindal group, is a leading producer of flexible packaging films. Before venturing into manufacturing of packaging films in 1996, it was engaged in manufacturing of polyester yarn. The company produces BOPET films, BOPP films, metallised BOPET and BOPP films, coated BOPET and BOPP films and polyester chips (for
captive consumption in the BOPET film). JPFL has 3 manufacturing facilities located in Maharashtra, Uttar Pradesh and Silvassa in Dadra and Nagar Haveli. The company has a partially-oriented yarn facility at Gulaothi, Uttar Pradesh, which has continuously witnessed weak margins and has hence, been temporarily shuttered. As of March 2010, the company has 5 subsidiaries, viz Hindustan Thermal Power Generation Ltd (formerly Hindustan Polysters Ltd), Jindal France SAS, Rexor SAS, Jindal Solar Rajasthan Ltd and Jindal Solar Powertech Ltd. The company’s plant at Nasik in Maharashtra is the world’s largest single location plant for the manufacture of BOPET and BOPP films. JPFL has installed capacity to manufacture 127,000 TPA of BOPET films, 180,000 TPA of BOPP films, 45,000 TPA of metallised films, 165,600 TPA of polyester chips and 4,500 TPA of coating films, as of December 2010. The company has a network of agents and distributors present round the globe.


INDUSTRY PROFILE

Packaging
The packaging industry is estimated to be around Rs 775 billion in size and has grown at a CAGR of around 15 per cent in the past few years. The industry is characterised by low entry barriers and high competition. Players usually have limited pricing power due to the strong bargaining power of buyers and the highly fragmented nature of the industry. Consequently, an increase in raw material prices has an adverse effect on margins as players do not have the flexibility to pass on price increases to consumers.
Over the medium term, demand for packaging products is expected to increase due to changing consumer preferences, increasing health consciousness and rapid growth of end user segments.
Depending on the kind of material used, the packaging industry is broadly categorised into rigid (glass bottles, metal cans, plastic containers, corrugated boxes, etc) and flexible (laminated pouches, flexible plastic material, bags, etc) packaging. Though the rigid packaging market is larger in size, the shift towards flexible packaging has been gaining momentum. Over the medium term, flexible packaging is expected to register faster growth due to its increasing usage for packaged FMCG products. Moreover, it offers benefits such as lower weight, ease of handling and longer shelf life of goods, besides being a medium of advertisement of the product.


Power Story to unfold over FY13
For FY10, JPFL has investments of INR 1.53bn in subsidiaries and affiliates. It proposes to invest additional INR 4.56bn in an 1800 megawatt (MW) pit-head coal-based power project in Angul district, Orissa. This project is executed through its group company, Jindal India Thermal Power Ltd (JITPL) with project cost of 91.21bn. The project is funded through Debt and equity (80:20). JPFL has already invested INR 1.08bn (INR 857Mn in FY09 and INR 225Mn in FY10) and remaining is expected to be invested over the next two years.
The investment is in Jindal India Powertech Ltd., (JIPL) which is a holding company of JITPL. Eventually, JPFL would hold a majority stake of 63.75% in JITPL.
The project would run partly on captive coal mine and partly on linkage coal.
The captive mine has reserves of 96.84 MT and has linkage is in place for 2.66MnT
from Mahanadi Coalfields Ltd. Revenue being back ended in nature, we haven't factored the value of this investment. This provides additional margin of safety.
The management intends to list this subsidiary eventually to unlock value for shareholders.


                   FY10    FY11E   FY12E   FY13E
Net Sales      17,671 33,638 33,688 44,022
EBITDA          3,635 10,599   9,462 11,791
EBITDA (%)      20.6     31.5    28.1   26.8
Adj Net Profit 2,084   6,549   5,389   6,678
Net Profit (%) 11.8    19.5    16.0    15.2
Adj. EPS        85.5   142.2    117.1   145.0

UPDATES:

Jindal Poly Films Ltd will increase stake in its power subsidiary Jindal India Power Tech Ltd to 73.7% from 46%, company officials said in a post-earnings conference call Monday. Jindal Poly Films has committed to invest Rs. 6.60 billion in the power arm, out of which it has so far invested Rs. 2.48 billion, the officials said. Jindal India Power Tech's project implementing company will set up 1,800MW thermal power project at Rs. 91.21 billion. Jindal India Power holds 86% stake in the project implementing company. The first unit of 600MW will be commissioned in Mar 2012, followed by another 600MW in Sep 2012, and the balance 600MW in Sep 2013. On completion, the project implementing company will be listed on stock exchange with possible 15% equity dilution, the officials said. Jindal Poly has so far entered power purchase pact with Tata Power Ltd to sell 900MW at Rs. 2.70 per unit, the officials said. SALES VOLUME Jindal Poly expects sales volume for 2011-12 (Apr-Mar) to rise 20% from target of 215,000 tonne in 2010-11, the officials said. The company will be completing its capacity expansion of BOPP films and PET films by Mar 2013 at an investment of Rs. 16 billion. Jindal Poly, which currently has a capacity of 307,000 tonne, is in the process of adding 132,000 tonne in BOPP films and 90,000 tonne in PET films, the officials said. Currently, the company is sells BOPP films at Rs. 110-115 a kg and PET films at Rs. 200-205 a kg.

Source : NDTV Profit.

Jindal Poly Films Ltd, a maker of flexible packaging films, is exploring options to raise $200 million for thermal power projects by selling a stake in its unit, two top executives told Reuters on Thursday.
The company plans to raise about $200 million by diluting up to 15 percent stake in the unit through an initial share sale within a year, Chief Financial Officer Sanjeev Agarwal and Executive Director Samir Banerjee said in a joint interview.
"To part finance the project equity, the company is exploring various possibilities to raise $200 million, including through an IPO," said Agarwal.
Shares of the company, which were down more than 1 percent earlier in the day, pared all losses to trade up as much as 3.7 percent following the news.
The shares, valued at about 20.2 billion rupees, closed up 2.8 percent at 450.05 rupees in the Bombay Stock Exchange.
Of the total project cost of 91.5 billion rupees, the company has tied up 72 billion rupees of loans from 22 banks, with Punjab National Bank as the lead banker, he added.
Jindal Poly will bring in equity funds as a major shareholder in the company by investing of 6.6 billion rupees, Agarwal said.
Of the remaining required funds, the promoters will put in about half, he said.
Jindal India Thermal Power Ltd aims to develop thermal power plants across various States with a total installed capacity of 4440 MW to be implemented in phases in next few years.
Jindal Poly owns about 63.75 percent of Jindal India Thermal through a special purpose vehicle Jindal India Powertech Ltd.
"There is a severe shortage of power in the country. Its a long term, profitable, sustainable business," Banerjee said.
Through the IPO, Jindal Poly targets diluting about 12-15 percent stake in the thermal unit, the executives said.

"SUPERNORMAL GROWTH"

Jindal Poly, which posted a more than 6-fold growth in profit for Oct-Dec, is aiming at revenue of $1 billion by FY14, Agarwal said.
"The super normal profitability that we saw in the last few quarters, will continue plus-minus 5 percent or so in the near term, depending on the demand," Agarwal said.
Apart from Jindal Poly, other major Indian packaging players include Polyplex Corp and Uflex Ltd. Jindal Poly is the market leader in the segment.
Jindal Poly expects revenue of about 30 billion rupees and profit margins of 20-22 percent for FY2011, Agarwal said.
"The company is doing well, the prices are still quite firm, and the demand is good. So the profitability should be good," he added.
On a global level has operations in over 40 countries, and exports about 20 percent of its products.
"Some new products have started using polyester films like the solar panels for photovoltaic (PV) cells. There is large growth there," Banerjee said.
Traditional PV modules made by companies like First Solar and Suntech directly convert sunlight into electricity, and make up the largest chunk of the solar market.
"Immediately preceding this (demand spur), there were the recessionary years of 2008 and 2009, when many companies in Europe and U.S. closed down these operations."


Edited by go4sheel - 21/Jul/2011 at 2:00pm