UFlex Ltd.

An Established Leader in An Established Leader in Flexible Packaging

S t b 2009September 2009

Brief introduction

Largest flexible packaging company in India

Highly experienced leadership team with average experience of over 20 i h k i i dyears in the packaging industry

Only vertically integrated player with large film manufacturing capacities

World class film manufacturing facilities in India, Dubai, Mexico and Egypt [current : 160 000 TPA; By FY12 : 263 400 TPA][current : 160,000 TPA; By FY12 : 263,400 TPA]

Strong Global Sales & Distribution Network Customers in > 94 Countries

CAGR of 23%, 30% and 53% in revenue, EBITDA and PAT respectively over past 5 yearsover past 5 years

Existing clients include top multinationals like Unilever, Nestle, P&G & Britannia

Approximately 80% of company’s production is consumed by food & FMCG industry – strong revenue visibility

Board comprises 8 directors, of which 5 are independent; only 1 from promoter group

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Proven business strategy Proven business strategy creates long term shareholder valueshareholder value

Proven business strategy

World class manufacturing facilities

Operational expertise: Constant process re-Technical excellence

Strategic expansion

Operational expertise: Constant process reengineering has resulted in measurable gains with existing equipment

Strategic locations allow company to maximize tax benefits, leverage trade treaties while saving on key

Long-termShareholder

improves global reach

Customer focus

costs such as Freight

New facilities improve reach into large US & European markets

Consistent new product development in sync with ShareholderValue

Customer focus

Vertical integration allows cost

Consistent new product development in sync with customer needs

Packaging division sources films, inks & adhesives internally

allows cost minimization

Cost pass-through helps maintain

Engineering division complements product portfolio by providing packaging solutions

Raw material price changes are adjusted in the final product price with a lag

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marginsproduct price with a lag

Growth drivers

Expansion & growth of key application areas

Processed food

Meat poultry & sea foodMeat, poultry & sea food

Pet food & frozen food

With expanding middle class and rising income levels, consumption of packaged goods is increasing

Increased interaction with the developed world is influencing the quality standards of consumption for Indian consumer

Increasingly bigger market for small packets in rural areasg y gg p

Changing lifestyle & food habits amongst Indians

Increasing demand for ready-to-eat/ 2-minute foods - pasta, soups, and noodles etc

Business divisionsBusiness divisions

Presence in all segments of the value chain

Vertical integration enhances competitive edge

High quality control over final products

Timely delivery

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Timely delivery

Cost effectiveness

Diversification of product portfolio

Films division

Films DivisionFilms Division

Flexible Packaging Division

Engineering DivisionEngineering Division

88

Films divisionFilm Grade Chips : Raw Material for manufacturing Polyester Films

Yarn Grade Chips : Raw Material for manufacturing Polyester Yarn

Bottle Grade Chips : Raw Material for production of PET BottlesPolyester Chips

Capacity (TPA) : India – 72,000

Properties : Barrier Properties, High Tensile & Dielectric Strength,Thermal & Chemical Stability & Toughness

A li ti F d P k i El t i I l ti G hi A t dApplication : Food Packaging, Electric Insulation, Graphic Arts andImaging

Capacity (TPA) : India – 54,000; Dubai – 51,600; Mexico- 52,800*;Egypt – 30,000**

BOPET Films

Brand : FLEXPET

Properties : Strong Moisture Barrier, Highly Cost Effective, FunctionallyEfficient

BOPP Films Application : Food Products Packaging (confectionery, biscuits, bakery,pasta etc.), Cigarette Cartons Wrapping, Bags for Readymade Garments,Adhesive Tapes & Print Lamination

Capacity (TPA) : India – 28,000; Egypt – 35,000***

BOPP Films

9

Brand : FLEXOPP

* 26,400 TPA expected commissioning in October 2010

** Expected commissioning in April 2011

*** Expected commissioning in April 2010

Films division

CPP Fil

Properties : Highly Dynamic & Versatile Films with High Gloss, GreaterTransparency, Better Heat Sealability, Good Twisting Property & BetterTear Strength

CPP FilmsApplication : Retort Packing, Food Wraps, Anti Wraps, Anti Fog,Garments Bag, Deep Freeze Applications etc.

Capacity (TPA) : India – 6,000; Egypt – 12,000*

B d FLEXCPPBrand : FLEXCPP

* Expected commissioning in April 2011

10

Films – Industry overview

Dupont/T iji 14%

BOPET Films (Major Players Worldwide): Market Size- USD 4.8 bn

Chinese Players

BOPP Films (Major Players Worldwide): Market Size- USD 8.0 bn

Teijin 14%

Toray/Saehan 13%

Others 55%Moplefan 3%

Treophane 3%

Chinese Players 25%

Mitsubishi/Hoechst 8%

SKC 8%Ufl 4%

Others 53%Others 55%

Mobil/Exxon 9%

Nanya/Formosa 5%

SKC 8%Uflex 4%

Ufl 22%MTZ 6%

Others 3%

BOPET Films (Major Players in India): Market Size- USD 0.34 bn

Uflex 17%Max 5%

Others 6%

BOPP Films (Major Players in India): Market Size- USD 0.25 bn

Uflex 22%

Ester 10%

Poly Plex 8%Max 5%

11Jindal 26%Garware 13%

SRF 12%

Jindal 43%

Cosmo 29%

Source: Company/PCI research reports

Efficient film producer

EBITDA per Film

Company

EBITDA per KG for Films

Film Capacities

(MT)

Cosmo Films Limited 16.3 56,000

Jindal Poly Films Limited* 15.8 266,000

Max (I) Limited 17.9 29,200

Polyplex Corporation 13.0 22,900

Uflex Limited 17 3 133 600Uflex Limited 17.3 133,600

* FY08Source: Company reports for last reported fiscal

1212

Flexible packaging division

Films DivisionFilms Division

Flexible Packaging Division

Engineering DivisionEngineering Division

1313

Packaging industry

Packaging Industry

Rigid Packaging Flexible PackagingFlexible packaging is fast

g g g Packaging

Glass/PlasticBottle

Plastic/ Film

• Flexible packaging is fast replacing rigid packaging owing to superior qualities at competitive price points

• Management estimates Plastic/ FilmManagement estimates growth of > 20% in flexible packaging demand in the near futureCarton Box

Metal Can/Boxes

Paper

14Wooden Box Alu-Foil

Flexible packaging

Products :Flexible Laminates : BOPP, BOPET, VMPET, VMOPP, BON, CPP, AluminumFoil Paper LDPE/LLDPE/m LLDPE HDPE Acid Co Polymer Ionomer Saran

Flexible Laminates &

Pouches

Foil, Paper, LDPE/LLDPE/m-LLDPE, HDPE, Acid Co-Polymer, Ionomer, SaranCoating, Security HologramsPre – Formed Pouches : Stand-up/Centre-sealed, Three SideSealed, Guessetted Pouches and Bags; Reclosable Zipper and SliderPouches (for powders and granules); Reclosable Cap and Pouring SpoutPouches (for liquids); Carry bags, Gift and Promotional Bags( q ); y g , g

Capacity (TPA) : India – 55,400

Products : Holographic Metalized Films; Holographic Metalized transfer toProducts : Holographic, Metalized Films; Holographic, Metalized transfer topaper with or without printing; Gift Wraps; All Purpose Slider Bags; BOPETFilms Laminated to Paper; BOPP with or without Surface Printing

Capacity (mn Sheets) : India – 70Holograms

Allied

Products : Inks & AdhesivesApplications : Inks – used for printing on a substrate (film) and then driedAdhesives – applied on multiple application roll that applies the adhesives toSubstrate (film)

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Allied Materials

Substrate (film)

Capacity (TPA) : Inks – 9,600; Adhesives – 6,000

Flexible packaging – Industry overview

Flexible Packaging Laminates (Worldwide) : Flexible Packaging Laminates (India):

Alcan 7%Bemis 7%

Amcor 5%

Flexible Packaging Laminates (Worldwide) :Market Size- USD 25 bn

Others 29%Uflex 19%

Flexible Packaging Laminates (India):Market Size- USD 2.3 bn

Sealed Air 4%

Constantia 2%

Exopact 2%Others 69%

Rexor 4%

Sharp-Akar 7%

Printpack 2%

Winpack 2%Paper

Products 15%

Positive

Essel Propack 8%

Multiflex 4%

Paharpur 4%

Source: Company/PCI research reports

Packaging 10%

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Competitive packaging solutions provider

Last reported

CompanyMCap

(USD mn)Operating profit%

Bemis – flexible packaging division 2,873 10

Sonoco Products – packaging division 2 616 8Sonoco Products – packaging division 2,616 8

Uflex – flexible packaging division 127 16Source: Company reports for last reported fiscal; Bloomberg

Sonoco & Bemis are among the leaders in packaging solutions globally

Vertical integration and location of units in lower cost regions enables Uflex to earn higher margins

1717

Engineering division

Films DivisionFilms Division

Flexible Packaging Division

Engineering DivisionEngineering Division

1818

Engineering division

Uflex specializes in manufacturing of a wide variety of packaging machines whichUflex specializes in manufacturing of a wide variety of packaging machines, whichcater to customer’s specific requirementsUflex machines are globally accepted in more than 35 countriesValued customers for machines include MNCs like Unilever, Coca Cola, Wrigley, TataTea, ITC etc.

Form Fill & Seal Machines : Packaging of tea, sugar, spices etc.High Speed Pouch Making Machines : Tailor made for Stand-up, Easy Pour, Centre

Seal, Zip Slider PouchesConverting Machines : Rotogravure

Printing, Lamination, Slitting, Inspection, Holographic MachinesWrapping Machines : For Round & Rectangular Objects like

Biscuits, Soaps, Cassettes, IV BottlesSpecial Purpose Machines : Vacuum Brick Pack Machines, Pick Fill & Seal Machines

Capacity (Nos) : India – 1,570

Reach : Accepted in > 35 countries

Customers : Unilever, Coca Cola, Wrigley, Tata Tea, ITC etc..

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Expansion PlansExpansion Plans

Strong expansion plans

Phase I Phase II

Mexico Egypt

Phase I Phase II Phase I (July 2009)

Phase II (Oct. 2010) Total

Product PET film PET film PET film

Phase I (March 2010)

Phase II (March 2011) Total

Product BOPP filmCPP + PET

filmsPP + PET

films

12000 + 47000 + Capacity 26400 tpa 26400 tpa 52800 tpa

Total investment (USD mn) 54 54 108

Capacity 35000 tpa 30000 tpa 30000 tpa

Total investment (USD mn) 52 83 135

The move is primarily to counter the anti dumping measures unfavorable to exports of films from India

Overseas facilities in countries with trade pacts allow access to large & Overseas facilities in countries with trade pacts allow access to large & profitable markets

Mexico – part of NAFTA and access to North American Markets

Egypt – GCC nations, Southern Europe & Africa

Dubai (existing facility) – Middle East, West Asia, CIS etc.

Global presence post expansion

Jammu (J&K)• Packaging• Holography

Noida (UP)• Packaging

Holography

Jammu (J&K)• Packaging• Holography

Jammu (J&K)• Packaging• Holography

Noida (UP)• Packaging

Holography

Noida (UP)• Packaging

Holography• Holography• Rotogravure Cylinder

(47,000 Nos.)• Poly Film (6,000 TPA)• PET Film (54,000 TPA)• PP Film (28,000 TPA)• Metalized Film

(28,800 TPA)• Inks and Adhesives

(14 800 TPA)

• Holography• Rotogravure Cylinder

(47,000 Nos.)• Poly Film (6,000 TPA)• PET Film (54,000 TPA)• PP Film (28,000 TPA)• Metalized Film

(28,800 TPA)• Inks and Adhesives

(14 800 TPA)

• Holography• Rotogravure Cylinder

(47,000 Nos.)• Poly Film (6,000 TPA)• PET Film (54,000 TPA)• PP Film (28,000 TPA)• Metalized Film

(28,800 TPA)• Inks and Adhesives

(14 800 TPA)(14,800 TPA)• Converting and

Packaging Equipments(1,570 Nos.)

Malanpur (MP)• Poly

Condensation• Packaging

(14,800 TPA)• Converting and

Packaging Equipments(1,570 Nos.)

(14,800 TPA)• Converting and

Packaging Equipments(1,570 Nos.)

Malanpur (MP)• Poly

Condensation• Packaging

Malanpur (MP)• Poly

Condensation• Packaging

Malanpur (MP)• Poly

Condensation• Packagingg gg gg gg g

Dubai (UAE)

•PET Film (51,600 TPA)

Egypt

• PET Film (30,000

Mexico

•PET Film (52,800 )**

Market Presence

Agents / Distribution

TPA)*

•PP Film (47,000 TPA)*

TPA)**

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Market Presence

Manufacturing Facilities

* Expected commissioning in FY11 & FY12

** Expected commissioning of Phase 2 by Oct, 2010

Funding for capex in place

Phase I(2010)

Phase II(2011)

TotalEgypt

Equity 27 20 47

Debt 25 63 88

Total 52 83 135

Phase I(completed)

Phase II Total

Equity 30 8 38

Mexico

Debt 24 46 70

Total 54 54 108Source: Company, Almondz Research

For Egypt, out of the total debt requirement of USD 88 mn, USD 50 mn has been tied up. Balance amount is only required in FY11

For Phase II in Mexico, total debt required is USD 46 mn, arrangement for which is already in place. Equity will be provided by the parent company

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Reasonable debt/ equity of 1.4x with good operational cash flows allows headroom for different funding options

Outlook

Overseas expansion should improve profitability

Stable power supply – key factor for higher productivity

Indian production facility suffers from erratic power supply and is reliant on captive DG sets: relatively lower productivity and relatively more frequent maintenance y p y y qprotocols

Overseas facilities have high quality power supply (=> reliable, available, low voltage fluctuation), which results in higher productivity and lower per unit cost of productionp

By FY12, 71% of production will be in overseas facilities vs 40% at present

Blended tax experience for the consolidated entity is lower because of lower tax regime in overseas locations

Dubai: zero tax rate

Egypt: 20%

Mexico: 30%

Reach enhanced by strategic location of units

Dubai: Middle East

Egypt: will cater to Africa, Europe including CIS countries

Mexico: member of NAFTA; easy reach into Americas

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o b o ; asy a o as

Favourable change in geographic mix

Revenue Mix

As capacities in Egypt and Mexico come online by FY12, a larger share of revenue contribution will come from exports which have higher realisations & revenue contribution will come from exports which have higher realisations & higher margins

Significant increase in capacities by FY12

PET – 188,400 MT in India, Egypt and Mexico, , gyp

PP – 75,000 MT in India and Egypt

Packaging – 73,600 in India

( ) C it Mi (MT)Revenue Mix (INR mn)

30,00040,00050,000

Capacity Mix (MT)

200,000

300,000

400,000

-10,00020,000

FY09 FY12

D i E

-

100,000

,

FY09 FY12

PP P k i PET

26

Domestic Exports PP Packaging PET

Source: Company, Almondz Research

Proven business strategy=Financial success

Sales (Rs mn)25,000FY09 Net Revenues breakup

Flexible Packaging,

International 43%

5,000

10,000

15,000

20,000g g,

31%, 43%

-

,

FY05 FY06 FY07 FY08 FY09

Plastic Films, 69%

Domestic, 57%

EBITDA (Rs mn)

3,0003,5004,000

PAT (Rs mn)

1 500

2,000

69%

-500

1,0001,5002,0002,5003,000

-

500

1,000

1,500

27

FY05 FY06 FY07 FY08 FY09 FY05 FY06 FY07 FY08 FY09

Source: Company, Almondz Research

Proven business strategy=Financial success

Sales growth EBITDA & EBITDA margin

10 000

20,00030,000

40,00050,000

10%

20%

30%

40%

2 000

4,0006,000

8,00010,000

15%

17%

19%

21%

010,000

FY06 FY07 FY08 FY09 FY10E FY11E FY12E0%

Sales (Rs mn) Sales growth (%)

-2,000

FY05 FY06 FY07 FY08 FY09 FY10E FY11E FY12E13%

EBITDA (Rs mn) EBITDA %

EPS growth

30.0

40.0

40%

60%80%

Net Debt & ROE %

1.50

2.00

15%

20%

0.0

10.0

20.0

FY05 FY06 FY07 FY08 FY09 FY10E FY11E FY12E-20%0%

20%40%

EPS (R ) EPS th %

0.00

0.50

1.00

FY05 FY06 FY07 FY08 FY09 FY10E FY11E FY12E0%

5%

10%

N t D bt ( h) / E it R E %

28Source: Company, Almondz Research

EPS (Rs) EPS growth % Net Debt (cash) / Equity RoE %

Incremental RoCE is earnings accretive

RoCE vs Incremental RoCE

25%30%35%

5%10%15%20%

Source: Company Almondz Research

5%FY06 FY07 FY08 FY09 FY10E FY11E

RoCE Incremental RoCE

New investments generate higher returns

Larger export content (carries higher realisation per MT)

Higher productivity in overseas locations (yield higher margins)

Source: Company, Almondz Research

29

Higher productivity in overseas locations (yield higher margins)

Innovative packaging solutions deliver higher margins

Financials

Financials

Income Statement FY08A FY09A FY10E FY11E FY12E Cash Flow Statement FY08A FY09A FY10E FY11E FY12ENet Sales 16,389 20,421 25,383 32,412 40,840 Operating profit 1,790 2,645 3,413 4,797 6,104 Cost of sales (11,929) (14,105) (17,420) (21,922) (27,232) + Depreciation 852 1,004 1,257 1,295 1,629 Employee Exp (888) (1,080) (1,472) (1,718) (2,042) + WC changes (1,082) (2,545) (1,387) (970) (1,983) Other Expenses (1,658) (2,597) (2,284) (2,917) (3,676) Other CFO 104 91 - - - EBITDA 2,641 3,648 4,670 6,092 7,733 (-) Purchase of FA (3,641) (2,976) (4,976) (4,752) (650) Interest (646) (944) (1,250) (1,296) (1,490) (-) Tax paid (166) (167) (303) (700) (1,107)

( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )Depreciation (851) (1,003) (1,257) (1,295) (1,629) FCF to Enterprise (2,143) (1,948) (1,996) (331) 3,993 Other Income 46 62 - - - (-) Net Interest (833) (1,049) (1,250) (1,296) (1,490) PBT 1,223 1,803 2,163 3,501 4,614 FCF to equity (2,976) (2,997) (3,246) (1,627) 2,503 Less: Tax (171) (337) (433) (840) (1,246) Dividend paid (-) - (260) (310) (311) (394)

Tax Rate 14% 19% 20% 24% 27% Net Debt mvmt (4,529) (775) (456) (1,938) 2,109 PAT 1,052 1,465 1,730 2,661 3,368Less: Preferred Dividend - - - - - PAT for Equity S/H 1,052 1,465 1,730 2,661 3,368 Valuation Ratios FY08A FY09A FY10E FY11E FY12E

EPS - Diluted 13.0 18.1 20.2 25.2 32.0 Cash EPS 23 30 35 38 47Book Value 139.5 136.7 144.6 170.3 202.9

Balance Sheet FY08A FY09A FY10E FY11E FY12E DPS 4.7 4.0 2.9 2.9 3.7 Gross Block 18,923 22,447 23,539 29,086 33,114 Dividend Yield (%) 2.9% 3.8% 3.0% 3.0% 3.8%Less: Accumalted Depreciation (6,988) (7,929) (9,186) (10,481) (12,110) P/E (x) 12.0 4.5 4.8 3.8 3.0Net Block (incl Cap WIP) 13,160 15,110 18,829 22,287 21,308 Cash P/E (x) 6.9 3.4 2.8 2.6 2.0

Price/BV (x) 1.2 0.8 0.7 0.6 0.5Investments 2,909 974 772 772 772 EV/Sales (x) 1.4 1.0 0.8 0.7 0.6Total CA 11,378 12,391 12,824 15,028 18,465 EV/EBITDA (x) 8.6 5.6 4.5 3.9 3.1Debtors 4,070 3,950 4,984 6,365 8,020 EV/EBIT (x) 12.7 7.8 6.1 5.0 3.9I t 1 941 2 238 2 763 3 478 4 320 EV/NOPAT ( ) 14 7 9 6 7 7 6 6 5 4Inventory 1,941 2,238 2,763 3,478 4,320 EV/NOPAT (x) 14.7 9.6 7.7 6.6 5.4Cash 2,766 1,190 0 0 0Loans and Advances 2,602 5,013 5,077 5,186 6,126Total 27,447 28,475 32,425 38,086 40,545 Key Financial Ratios FY08A FY09A FY10E FY11E FY12E

GrowthLess: Current Liab. & Prov. Revenue 18% 25% 24% 28% 26%Creditors (2,148) (2,059) (2,386) (3,003) (3,730) EBIT 24% 48% 29% 41% 27%Provisions (455) (507) (507) (507) (507) EPS -6% 39% 12% 25% 27%Total (2,603) (2,566) (2,893) (3,510) (4,237) Margins

Gross Margin 27.2% 30.9% 30.0% 31.0% 31.0%Net Working Capital 3,949 6,158 7,545 8,515 10,498 EBITDA Margin 16.1% 17.9% 18.4% 18.8% 18.9%Deferred Tax (555) (878) (1,007) (1,147) (1,286) EBIT Margin 10.9% 13.0% 13.4% 14.8% 14.9%Equity Share Capital 650 650 1,213 1,213 1,213 PAT Margin 5% 5% 6% 7% 7%Reserves 7,102 8,145 13,503 15,853 18,827 LeverageNet Worth 7,752 8,795 13,201 15,550 18,524 Net Debt/Equity (x) 1.5 1.4 1.0 1.0 0.7

Net debt/EBITDA (x) 4.4 3.4 2.8 2.4 1.7ProfitabilityRoE 15.8% 17.6% 15.7% 18.5% 19.8%

Turnover Ratios FY08A FY09A FY10E FY11E FY12E RoIC 10.0% 11.2% 11.5% 12.8% 14.2%Debtor (Days) 77 72 72 72 72 Turnover Ratio

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Debtor (Days) 77 72 72 72 72 Turnover RatioInventory (Days) 59 58 58 58 58 Asset T/O (x) 0.9 0.9 1.1 1.1 1.2Creditors (Days) 53 59 50 50 50 Receivables T/O (x) 4.0 5.2 5.1 5.1 5.1Asset Turnover (x) 0.9 0.9 1.1 1.1 1.2 Inventory T/O (x) 8.4 9.1 9.2 9.3 9.5

Disclaimer

This Document has been prepared by Almondz Global Securities Ltd The information analysis and This Document has been prepared by Almondz Global Securities Ltd. The information, analysis and estimates contained herein are based on Almondz’s assessment and have been obtained from sources believed to be reliable. This document is meant for the use of the intended recipient only. This document, at best, represents Almondz opinion and is meant for general information only. Almondz, its directors, officers or employees shall not in anyway be responsible for the contents stated herein. Almondz expressly disclaims any and all liabilities that may arise from information, errors or omissions p y y y ,in this connection. This document is not to be considered as an offer to sell or a solicitation to buy any securities. Almondz, its affiliates and their employees may from time to time hold positions in securities referred to herein. Almondz or its affiliates may from time to time solicit from or perform investment banking or other services for any company mentioned in this document.