In conversation with Sandeep Sikka, CFO of AGI Greenpac

In FY23, the company posted the highest profitability ever. What were the factors which contributed to and fueled your growth?

In Q4 FY23, the Company delivered a strong performance and reported Revenue from Operations of Rs 680 crore, compared to Rs 432 crore in Q4FY22, registering a robust growth of 58 per cent on a Y-o-Y basis. The Company delivered EBITDA of Rs 196 crore, registering a growth of 111 per cent on a Y-o-Y basis with a margin of 29 per cent. Net Profit of continued operation stood at Rs 96 crore, registering a growth of 152 per cent on a Y-o-Y basis with margins of 14 per cent.

In FY23, the company delivered a robust performance and reported Revenue from Operations of Rs 2,281 crore, compared to Rs 1,430 crore in FY22, registering a strong growth of 60 per cent on a Y-o-Y basis. The Company delivered EBITDA of Rs 488 crore, registering a growth of 59 per cent on a Y-o-Y basis with a margin of 21 per cent. Net Profit stood at Rs 249 crore, registering a growth of 114 per cent on a Y-o-Y basis with margins of 11 per cent.

The sales and profitability improved on a Y-o-Y and Q-o-Q basis an improved product mix, and an increase in demand for the non-alcoholic and alcoholic beverages and packed food segment for the glass containers products.

What is your earnings outlook for FY24?

We expect to maintain our growth momentum in FY24 with a projected 15-20 per cent growth rate on the back of our integrated business, right product mix and optimised capacity utilisation. Furthermore, the recent commencement of commercial production at our speciality glass manufacturing plant is expected to yield promising results in the upcoming quarters.

What are the key growth drivers for the company?

Despite the challenging economic environment, our business has demonstrated resilience, as evidenced by our maintained EBITDA margin. The company reported robust numbers on the back of an enhanced product mix, improved operational efficiency, and increased demand for glass containers in the non-alcoholic and alcoholic beverages and packed food segment.

Our glass container plants' capacity utilisation during the quarter was an impressive 99 per cent, reflecting our strong commitment to meeting the customer's needs. In January 2023, we successfully initiated commercial production of our speciality state-of-the-art glass plant in Bhongir which boasts a daily installed capacity of 154 tonnes. We will manufacture high-quality speciality glass packaging product catering to industries such as pharmaceuticals, vials, and perfumery, cosmetics, high-end liquor for customers across North America, Australia, and European countries. We anticipate significant contributions to the company's growth in the coming quarters from this facility.

What is your outlook on the alcoholic and non-alcoholic segments of your business for the next few quarters?

We project a positive outlook for our alcohol and non-alcoholic segments. We expect our alcohol segment to grow by approximately 8 per cent, while the non-alcoholic segments will grow by around 12 per cent. This growth is driven by the increasing demand for packaged food products. As consumer preferences shift towards convenience and ready-to-consume options, we are well-positioned to capitalise on this trend and drive growth in these segments.

Can you shed some light on your competitive landscape?

The Indian packaging industry is anticipated to grow at an accelerated rate due to several factors. This growth is being driven by a rise in consumer markets, particularly in processed food, personal care, and pharmaceutical industries. The young Indian population with growing disposable income and fast-paced lifestyles has led to a surge in the consumption of fast food and ready-to-eat products, further propelling the industry's expansion.

The glass containers market in India is expected to register consistent growth in the coming years. The increased alcohol consumption in the country has played a significant role in driving the growth rate of the container glass market. Additionally, sectors like pharmaceuticals, FMCG, and cosmetics also make substantial contributions to the growth of the glass containers market.

However, the industry does face challenges in terms of competition from alternative packaging forms such as aluminium cans and plastic containers. As these alternatives gain popularity, the glass containers market must strategize to maintain its competitive edge.

What are your future capex plans?

Currently, one of our furnaces is temporarily shut down as we are undergoing the process of relining it. During this shutdown, we are also taking the opportunity to increase its capacity by 100 tonnes, bringing the total capacity to 425 tonnes. The capital expenditure (capex) required for this relining and expansion project amounts to approximately Rs 200 crore. We expect the furnace to be up and running again by July.