Overview of Indian Packaging Industry

Prepared for St. Johns Packaging

Indian Packaging Industry

Current Size

U.S.$ 15 billion

Past growth rate

15% year-on-yearconsistently

Future Growth rate

Expected at 25%Over the next 5 years

Key Growth Driving Factors

Growing Middle Class

Middle Class Population

50 million in 2005583 million in 2025

Per Capita Income

$1,050 per person in 2009

$3,231 per person by 2020

Households earning above U.S.$ 22,000 per annum

4.4 million now18 million in 2020

Retail Sales US$ 353 billion in 2010

US$ 543.2 billion by 2014

Policy Changes In the first half of 2011 India is expected to open multi-brand retailing for foreign players which would allow players like Wall Mart, Carrefour and Target to develop full fledged setup in India.

India’s Flexible Packaging market to treble from 1000 kilotons in 2007 to 3100 kilotons in 2014

Sectors that constitute demand for Packaging and Associated

Equipment

50%

25%25%

FoodPharmaceuticalOthers

Growth Driving Segments

Food

• Indians spend a higher percentage of their earnings on food consumption, compared with other countries globally. While urban India spends around 39% of its income, it is 52% for rural India.

• The domestic food market is likely to grow to $300-billion by 2015 from the now $190-billion.

• By 2015, the Indian food industry is estimated to grow by about 40% over the level in 2007. The Government of India is actively promoting the concept of mega food parks and is expected to set up 30 such parks, each with a cold storage facility. The parks will also have facilities for sorting, grading, processing, packaging and quality control, thereby providing an investment opportunity to integrated players, as well as developers.

Pharma

• India's pharmaceutical industry is now the third largest in the world in terms of volume and stands 14th in terms of value.

• The Indian pharmaceutical market is expected to triple to US$ 20 billion by 2015 from US$ 7.1 billion in 2007 at a compound annual growth rate (CAGR) of 12.3%, and establish its niche among the world’s leading10 markets.

• Personal care market in India valued at U.S.$ 5 billion in 2009 is estimated to grow at 19% CAGR for the next couple of years.

• Even with double-digit growth rates, the market penetration of cosmetics and toiletries products in India is very low. Current per capita expenditure on cosmetics is about $1, compared to $36.65 in other Asian countries. This low market penetration for cosmetics and personal care products in India offers an opportunity for more significant growth down the road in this country of 1.2 billion people.

Global Players in the Indian market-MeadWestvaco (U.S.)

Operational Strategy for the Indian market

Established its own subsidiary in India in 1995. In October 2008, MWV acquired 51% stake in the Indian company called Wadco. Wadco is one of the India’s largest corrugated fibre cartons maker.Areas of strength:MWV- Technological expertiseWadco- Manufacturing and on the ground experience required in the Indian market.

Area of Operations Solutions for fresh produce- The MWV Wadco joint venture is extending the corrugated packaging design, manufacturing and technology capabilities of Wadco and MWV to India's local fresh produce market, where products suffer a 40-per cent value loss due to inefficient post-harvest practices, processing and handling before they reach the market.

Pharmaceutical Packaging- MWV also has partnership with an Indian pharmaceutical packaging company Bilcare. They jointly acquired U.S. pharma packaging company called International Labs in 2008.

Global Players in the Indian market-Huhtamaki (Finland)

Operational Strategy for the Indian market

In 1999 Huhtamaki acquired 59% equity capital stake in India’s leading consumer packaging company called Paper Products Limited.

PPL is the pioneer and the technology and market leader in Flexible packaging and Labelling, with manufacturing facilities at Thane, Silvassa and Hyderabad.

Area of Operations It meets the premium 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, etc.; and also for seeds, specialized chemicals, electronics and many other specific specialized uses including anti-spurious packaging.

Client List Amway, Amul, Britannia, Cadbury, Castrol, Coca-cola, Dabur, DS Group, Emami, Eveready, GSK, Godrej, Hindustan Latex, HLL, HPCL, Marico, MICO, Nestle, Perfetti, P & G, TTK-LIG etc.

Global Players in the Indian market-Sonoco (U.S.)

Operational Strategy for the Indian market

In India Sonoco is operational as Conitex Sonoco which is a J.V. between Sonoco U.S. and Texpack (U.S. company into paper based packaging solutions).

Area of Operations Production of textile carriers for the spun yarn industry, and offers full packaging and handling solutions for spinning mills around the world.

Other products include: Flexible Packaging, Paper Bags, FIBC (FIBC (Flexible Intermediate Bulk Containers) Bags, BOPP (Biaxially Oriented Polypropylene) Bags, Corrugated Pallet, Plastic Pallet, Labeling System, Custom Printing, Stretch Film and Other Packaging.

Global Players in the Indian market-International Paper (U.S.)

Operational Strategy for the Indian market

Operational through a Corporate Sales Office in Hyderabad.

Area of Operations The Company operates in six business segments: Industrial Packaging, Printing Papers, Consumer Packaging, Distribution, Forest Products, and Specialty Businesses and Other.

Global Players in the Indian market-Alcan Packaging (U.S.)

Operational Strategy for the Indian market

Alcan Packaging established its own manufacturing setup in India during 2008 with an estimated cost of U.S.$ 10 million.

Alcan Global Pharmaceutical Packaging - a division of Alcan Packaging, a business unit of Rio Tinto Alcan acquired the Chakan (Pune) flexible packaging plant from an Indian company called Associated Capsules Private Limited.

Area of Operations Producing flexible packaging for food, pharmaceutical and personal applications in India.

Global Players in the Indian market-Sealed Air Corporation (U.S.)

Operational Strategy for the Indian market

Sealed Air Corporation operates in India through 2 fully owned subsidiaries in Bangalore and Delhi.

Area of Operations Its Cryovack division offers following solutions in food packing

Vacuum Shrink BagsMulti-Ply Bags EquipmentBarrier TraysMAP tray lidding systemAbsorbent Pads & Case LinersLaminatesRigid PackagingOxygen-absorbing Sachet

• Multi-ply Paper Block Bottom Bags- used for packaging a wide range of powdered and granulated food powders requiring protection during distribution and hygienic processing.

• Thin Walled Food Containers- designed for high speed filling lines and finds application in rigid packaging of food products.

Global Players expected to foray into the Indian market in 2011

Pactiv Corporation (U.S.)

U.S.$ 4 billion company manufacturing disposable plastic, foam, molded fiber, pressed paperboard, and aluminum packaging products for grocery stores, mass merchandisers, and discount chains.

Graphic Packaging(U.S.)

U.S.$ 4 billion provider of packaging solutions for a range of products to food, beverage and other consumer products companies. The Company operates in three business segments: paperboard packaging, multi-wall bag and specialty packaging.

Graphic Packaging is evaluating opportunities in the multi-pack beer market in India.

Ball Corporation(U.S.)

Ball Packaging Europe, a subsidiary of Ball Corporation, USA, had planned to enter the Indian beverage can market in 2009 by opening a plant at Aurangabad. The company however had put the plan on hold due to recession and has now decided to commission its Rs 260-crore beverage can-making plant during the first quarter of 2011.

Major Indian Players- ARUN PLAST PRIVATE LIMITED

Company Profile Manufacturer of polythene bags, polythene packaging bags, wicketed poly bags, poly bags, printed poly bags, wicketed bags, resealable poly bags, food packaging bags, bio degrable poly bags, sandwich bags and garment poly bags.

Products LDPE, LLDPE, HMHDPE, POLYPROPYLENE LAYFLATE TUBES, ROLLS, SHEETS,PLAIN & PRINTED BAGS, ( T-Shirt carry bags, Garbage bags, Gusseted bags,hanger type bags, sealking tape bags, Textile bags )

Scale of Operations Revenue- Around U.S.$ 2 millionNo. Of Employees- 50-100Location- Tamil Nadu

Major Indian Players- ITCCompany Profile ITC's Packaging & Printing Business is the

largest value added converter of paperboard packaging in South Asia. It converts over 70,000 tonnes of paper, paperboard and laminates per annum into a variety of value-added packaging solutions for the food & beverage, personal products, cigarette, liquor and consumer good industries.

Scale of Operations Three Factories in India:• Chennai (South India)•Bihar (East India)•Haridwar (North India)

Clients The Division supplies value-added packaging to ITC's various FMCG businesses.

Its client list includes several well-known national and international companies like Nokia, Colgate Palmolive, Pernod Ricard, Diageo, British American Tobacco, Philip Morris International, Agio Cigars, UB Group, Tata Tetley, Tata Tea, Reckitt Benckiser, Radico Khaitan, Akbar Brothers, Surya Nepal, VST Industries, etc.

Major Indian Players- Parikh Packaging

Company Profile It is a Parikh Group Company offering flexible packaging solutions in Pharmaceutical, Food, Non-Food and FMCG sector.

Products 3 Side Seal PouchStand Up PouchSide Gusset BagSpout PouchPackaging RollsWicket PouchesLidding Film

Scale of Operations 45000 square feet factory in Gujrat

Clients Hindustan Uniliver, Nirma, Amul, Bisleri, Dabur, Kingfisher, Zydus Cadilla, Torrent, Merck and Sanofi Aventis.

In March 2010 Parikh Packaging has tied up with Bharti Walmart, the JV between Bharti Enterprises and Walmart Stores Inc., for packaging prodcuts for its stores.

Major Indian Players- Jai Corporation

Company Profile Diversified group with six business areas. Plastic Processing Division- Manufacturer and exporter of PP woven sacks for packaging polymers, fertilizers, PP woven fabric laminated and unlaminated in different width as per requirements and GSM for wrapping, covering applications.

Products Products & Services

Geo Membrane Geotextiles HDPE Ropes HDPE Woven Sacks HM Polythene Bags LD Polythene Bags PP Leno Bags PP Non Woven Fabric PP Ropes PP Woven Fabric PP Woven Sacks

Scale Of Operations 4 Plastic Processing Divisions1 Plastic Processing & Mastet Batch Division 1 Plastic Processing & PSF Division

Major Indian Players- Parksons Packaging

Company Profile Leading high quality manufacturer of folding cartons in India.

Products Folding Cartons- capacity to produce 1 billion units per annumLitho-Laminated CartonsPlastic CartonsLabels for liquor, food and FMCG clientsRetail Ready Packs for Gift Packs like ChocolatesLined Cartons for liquids, granules, powders, tea etc.

Scale of Operations 3 Manufacturing Plants in Daman, Pantnagar and Pune.

3 Marketing Offices in New Delhi, Kolkata and Chennai

Corporate Office in Mumbai

Tecnova’s Work in the Packaging Industry

Client Work done by Tecnova

MeadWestvaco(U.S.)

Opportunity Assessment for MWV’s products in the Indian marketFormulation of Business PlanImplementation of Business PlanIdentification and Selection of Vendor NetworkExecutive Search of Key Executives

Ball Corporation (U.S.) Location Analysis for setting up Ball’s greenfield plant in India

Huhtamaki (Finland) Opportunity Assessment for their products in the Indian market

Sonoco (U.S.) Opportunity Assessment for their products in the Indian market

International Paper (U.S.) Opportunity Assessment for their products in the Indian market

Frantschach Packaging (Mondi Group Company)- Austria

Opportunity Assessment for their products in the Indian market

Tecnova’s hold in the Packaging Industry

• Experience with nearly 6 global packaging majors in helping them to understand the Indian market for their products, avoiding pitfalls made by other players and implementing low asset & low-risk business model.

• Strong capabilities in evaluation, cultural, social and financial due-diligence, negotiations and deal closures in case of acquisitions of small to mid-size family based Indian companies

• Nearly 2.5 decades of experience with global Food and Consumer companies like Perfetti, SABMiller, Godiva, Haribo, Borges, Danone, Royal Canin, Moet Hennessy. L’Oreal, Mary Kay, Amway, USANA, Nu Skin and Kao.

• On the ground approach- Exhaustive Primary research through interviews with Industry experts, vendors, purchase decision makers and end-users.

• Tecnova’s Chairman and President (both on the Board of the company) are ex-employees of Metal Box (U.K. based packaging company acquired by South African company Nampak in 1988) and bring with them years of experience and knowledge of what succeeds in the packaging industry in India.

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