HYDERABAD: From being a plastic packaging manufacturing facility at Annaram village in Medak district, the Rs 280-crore Mold-Tek Packaging Ltd has come a long way since its inception in 1986.
Founded by technocrats J Laxmana Rao and A Subrahmanyam, Mold-Tek started commercial production in 1987 and is now gearing up to venture overseas setting up a facility in the UAE next fiscal year with an investment of Rs 60 crore.
“This will be our first overseas venture and if the experimental foray pays off, we can look at other countries like Singapore, Malaysia and even Europe,” says Rao.
The city-based public-listed company that started operations with injection moulding technology, in which it claims leadership position, is also stepping up gas on increasing presence in food, FMCG and other products. The company started its roots as an integrated packaging company making pails, containers, moulds and decorative labels and stickers for plastic containers.
“Currently, the food industry contributes about 5 per cent to our in-mould technology (IML) products. We hope to take this to 15-20 per cent next year,” explains Rao.
According to him, Mold-Tek is the only Indian company having developed in-house robots for IML decorations. Typically, companies import robots at a cost but find it difficult to align with in-house processes. “By trial and error, our team successfully developed robots that fit our processes and importantly economical. If it costs Rs 60 lakh to import one robot, we develop it at Rs 15 lakh approximately,” he says.
According to Centrum Research, it is this cost advantage that allows Mold-Tek to double IML’s revenue share to 40 per cent in FY17 from 14 per cent in FY14.
This also helps the company to manage costs for the final products. For instance, for a 20-litre plastic container, if imported IML label costs Rs 20 to 24 a piece, Mold-Tek offers it at Rs 14 or 15.
The Indian plastic industry is growing at 15 per cent per annum, replacing other materials such as metal and wood. Currently, the market size of rigid plastics packaging in India is pegged Rs 210 billion (growing at 14 per cent CAGR), of which plastic containers used for paints and lube-oils comprises Rs 20 billion. Within this, the injection moulded plastic container market is estimated at Rs 12 billion where MoldTek commands 25 per cent market share.
The company supplies rigid containers primarily to paints and lube-oil companies like Asian Paints, Kansai Nerolac Paints and Akzo Nobel.
It operates seven units across the country and has a combined processing capacity of 25,000 mt per annum with over 63 injection moulding machines. Within the country, Mold-Tek plans to increase processing capacity by 40 per cent or 7,500 mt and modernise its tool room and robot manufacturing capabilities next fiscal.
Besides, the UAE plant to be commissioned in 2016-17 will have a capacity of 2,500 mt and is expected to save both capital and variable costs making it competitive within the Gulf region.
Meanwhile, the company’s revenue grew at 19 per cent CAGR during the last three years more than the sector’s CAGR of 14 per cent, while adjusted net profit rose 7 per cent CAGR.
Going forward, the rise in IML revenue share across both food and non-food containers should be margin accretive due to higher IML realisation and positive operating leverage on higher utilisation, said Centrum Research.