Essel Propack Limited

Renewed Energy Expanded Playfield

Annual Report 2014-15 Content

02 About Our New Logo 04 Chairman’s Message 06 Vice-Chairman & Managing Director’s Message 09 Expanded Playfield 10 Renewed Energy 12 Award Winning Tubes 13 Awards and Accolades 14 Board of Directors 15 Leadership Team 16 Financial Highlights 17 Corporate Information 18 Directors’ Report 45 Management Discussion and Analysis 51 Corporate Governance Report 70 Financial Statements - Standalone 108 Financial Statements - Consolidated

Please refer Back Cover for our social media addresses

Energy is behind all Growth and Sustenance. The primordial energy unleashed by the Big Bang has been keeping this Universe in spiralling expansion over billions of years. The cover of our Annual Report is inspired by the potential of this unleashed energy. 25 Vice-Chairman & Managing Director’s units Message 12 The huge tube market countries beyond the oral care 2800 category, 22 billion a This is the Renewed people year in volume, has Energy that is unleashed almost tripled Essel by Essel Propack from its Propack’s Playfield in Extraordinary Value 25 units spread over 12 volume terms and creation for its countries, which is: multiplied it manifold in shareholders value terms.  driving Value growth  exploding dynamically across categories of The Innovative spirit of for securing leadership Beauty & Cosmetics, the Company that so in newer playfields... Pharma & Health, successfully changed an Food, Home and Oral entire market for oral  charming customers care packaging from ...captured in the aluminium to laminated with Extraordinary tubes, is at play again Packaging solutions new logo introducing to the  aligning its 2800 ESSEL Propack market an entire New people behind an has given itself Generation of laminated exciting Vision and tubes. Mission of

1 About Our It better Expresses What New Logo We Stand For Our new identity better expresses what we At Essel Propack we have always strived to deliver the extraordinary. Over stand for as a Company dedicated to bring the last three decades we have grown from being an Indian manufacturer to life extraordinary packaging in a more to becoming a global leader; with a global outreach, international dynamic and relevant fashion than ever relationships and technological resources that make us number one. before. It is important that we express our unique position in the marketplace, verbally and visually.

Also, this image should be aligned with our global positioning, and is It has a a key building block of a comprehensive, long-term business strategy. contemporary We, therefore, believe that the time is right to signal our extraordinary Look Feel potential in the world of packaging through a revitalisation of our identity Fonts, shapes and colours need to be to the world – our logo. refreshed in order to keep with changing All our 2800 employees actively participated in creating this new logo. times and to provide a more contemporary and modern feel. Our new logo does The new logo forms the letter ‘e’ using five petals representing each of the just that. categories that we serve viz. Beauty & Cosmetics, Pharma & Health, Food, Home and Oral. We have given each of them a vibrant colour which are reproduced below. It signals Transformation

Since our inception, we have evolved to become world leaders with global facilities and an international workforce, spanning verticals. Our new identity projects our transformation and pre-eminent position in This design is a revolutionary new approach the world of laminated plastic tubes. and represents the renewed energy, commitment and aspirations for our Company. The space in between creates a ‘star like halo’ It takes care to represent the idea of ‘extraordinary’. of Technical Considerations Blue being the brand color of Essel Propack historically, is carried forward here. The Complex logo designs often do not scale down well. Our new logo is technically typeface in this logo has been designed superior, designed to work well across a exclusively in lowercase to make us look wider range of applications with respect to modern, fresh and approachable. print and digital media. 2 All in all, we have a new extraordinary logo, because we are just that.

A logo that reminds us we are extraordinary every time we see it.

A logo that expresses we are ahead of time and better than EVER.

A logo that inspires us to go that extra-mile, each and every time.

A logo that signifies Essel Propack’s Same values and Same Spirit, with New Possibilities and New Thinking ! 3 Chairman’s Message

Dear Shareholders,

A year has flown by and it is my pleasure to once again share with you details of your Company’s performance and the path we have carved going forward.

As most of you are aware, your Company has been delivering consistent returns over the last 4 years and is firmly on the growth path. For the financial year ended 31st March 2015, we have sold about 6.5 billion tubes; our Revenues are at ` 23.23 billion - a growth of 9.2 % over the last year and Net Profit is ` 1.4 billion, a growth of 30% over the last year.

As noted Russian-American writer Ayn Alissa Rand wrote “ The ladder of success is best climbed by stepping Success is set for ourselves. on the rungs of opportunity.” contagious. For us The positive business At Essel Propack, we have tried and availed of every opportunity at Essel Propack, scenario for us as to retain our position as one it is renewed a Company, in an of the top global players in the laminated tube space. Over the energy, renewed economy where last 3 years, the Company’s focus commitment and performance is on “Multiplying the Products and Markets”, the “Determination to renewed effort to currently sub-par, Deliver” value to our Customers and stakeholders has led to the surpass the high has only enthused Company “Providing wings to standards we have our teams. FMCG brands globally.” Yes, the

4 Company’s evolution from an oral is the capacity to translate vision a Company, in an economy where care packaging Company to an into reality.” Rightly so. When performance is currently sub-par, innovative packaging solutions leadership is closely aligned with has only enthused our teams. We are provider to the high value non-oral the organisation’s vision, where therefore, eager and committed to care category is getting globally Leaders and teams are aligned take full advantage of the expanded recognised. and work closely with complete playfield available to us in the understanding of the goals and non-oral care space, with renewed Innovation is the key to your relevant guidance and motivation energy and zest. Company’s growth. As Steve Jobs is constantly provided, the said “Innovation distinguishes I am reminded of a comment by Tony organisation is bound to succeed. between a leader and a follower.” Gwynn – a Hall of Fame baseball Leadership is also about being We have always tried to be one player “The minute you’re satisfied approachable to people down the step ahead of the market in terms with where you are, you aren’t there line; about helping them remove of our product range, constantly anymore.” road-blocks and resolve issues defining and evolving to meet the without delay. This would result in There are opportunities out there ever-changing market requirements two good things happening in the available to us for the asking; it might – be it the quality of our products organisation – (i) the leadership mean more work and untiring effort & processes, presenting of the behaviour of being proactive will for us as a Company. I am sure that “first moment of truth” to the percolate down the line and (ii) the we can do it and together with all our consumer by way of attractive organisation will be strong, positive stakeholders strive to reach greater decoration, convenient dispensing and motivated. heights. systems and anti-counterfeit, eco friendly structures and processes Peter F. Drucker said “Leadership is I would like to thank our valued that reduce carbon footprint. lifting a person’s vision to high sights; Customers for their continued Your Company has applied for the raising of a person’s performance faith and trust in us; our Suppliers, patents for over 100 products and to a higher standard; the building Shareholders, Bankers and all processes globally and quite a few of a personality beyond its normal other stakeholders for their of them have been granted. limitations.” invaluable support in all our endeavours; the Board of Directors Our innovation has extended to If we succeed in achieving this with for their unstinted support and working with our machinery supplier, our Human Capital, we will have conscientious guidance to enhance to enhance machines, both in terms people of 25 different nationalities the Company’s performance in of speed as well as capabilities. Our with varied cultural backgrounds, every aspect; last but not least, to latest achievement is the “SHOT” rallying around and working towards the Leadership Team, Esselites who line, which is capable of actually one single Corporate Vision. There are the backbone of the Company; producing 500 tubes per minute. will then be nothing to stop us on our their enthusiasm and efforts have Hitherto, we had machines which growth path and delivering on our contributed to the growth of the could produce maximum of 240 promises. Company. tubes per minute. Success is contagious. For us at The other key to your Company’s Essel Propack, it is renewed energy, With best wishes, growth is fast decision making renewed commitment and renewed and timely implementation of effort to surpass the high standards decisions by business leaders. As we have set for ourselves. The Subhash Chandra Warren Bennis said “Leadership positive business scenario for us as Chairman

5 Vice-Chairman & Managing Director’s Message

Dear Shareholders, East Asia Pacific (EAP) has also made progress, although on a smaller base. The Financial Year 2015 for your We have built additional capacity Company was one of all round and new capabilities in these regions growth. During the year, we sold and they are now fully equipped about 6.5 billion tubes. Our Sales The Renewed to handle requirements of the Revenues grew 9.2% to ` 2323 Crore. Customers in respective Regions. Energy within us as Our Profit After Tax grew 30% to an In China, your Company has made all-time high of ` 140 Crore. a Company and the a strategic investment in a new site in South East China, where most Expanded Playfield As has been shared before, the Cosmetic Customers are located. Beauty & Cosmetics sector offers an The unit was inaugurated on 4th (market opportunity) additional 12 billion tube opportunity December, 2014 and is now fully globally. I am happy to inform you that is available to commissioned. that on the back of continuous and us, will provide us new innovations, we have made The Pharma & Health sector offers an with the momentum good progress in getting business additional opportunity of 10 billion in Beauty & Cosmetics from local as tubes globally. India has succeeded to sustain the well as MNC Customers in all regions. in Pharma business. Our efforts to Americas, Egypt and Europe have equip one more of our facility with a growth. made good progress in this area. clean room, in addition to the one we

6 already had, has helped in servicing have begun in right earnest and we required to make another effort or the Pharma Customers. While we are beginning to see the fruits of this another approach is the secret of have made good progress, we are effort in all geographies across the winning.” confident that we shall continue to globe. It is evident that our strategy to enter push for more growth in the Pharma On the Human Capital front, the non-oral care space is yielding category going forward. conscious efforts have been made the desired results. The Renewed In Americas and Europe, the strategy in engaging more and more with Energy within us as a Company and to expand our presence in non-oral our people across the globe. The the Expanded Playfield (market care offerings has taken off well and engagement levels are measured opportunity) that is available to us, the impact is increasingly visible in every year by an independent will provide us with the momentum the financial performance of these professional agency. Another to sustain the growth. two vital regions over the last 2 years. motivational scheme “All Ideas With best wishes, The Poland unit is now a profitable Matter” was launched as a measure operation and is a flag-bearer for to involve employees to come up expansion in Europe. India & China with ideas which challenges the Ashok Goel continue to present immense status quo. We received tremendous Vice-Chairman & Managing Director potential, albeit a slowdown in the response to this scheme from all our short term due to macro-economic plants. We have also strengthened conditions. Your Company is Functional Excellence in vital areas addressing this by opening new like Supply Chain and Quality & market niches, both in non-oral care Process Improvement by deploying and oral care categories, including global lead positions. replacing other packaging forms with With all this, we envision your laminated tubes. Company to grow Net Profit We continue to focus on geographical @ 20% CAGR over the next 5 years expansion of our markets whereby and achieve ROE & ROCE of 20%+ in each of our units in every country the next couple of years. We have is actively pursuing export of our also targeted 50% of our revenues to products to the neighbouring come from non-oral care. countries. For example, Egypt has In keeping with the new image of the commenced servicing neighbouring Company as a one-stop provider of countries in Gulf and Africa. America packaging solutions, we undertook is servicing Brazil and so on. a complete re-branding exercise, In step with our strategy to expand covering every area that comes into in Beauty & Cosmetics and Pharma & public arena, including our website Health in new geographies, we have and logo. Your Company is now positioned ourselves as a complete present in social media - Twitter, packaging solutions provider, Facebook etc. You may have read the engaging with the Customer from the write-up on the same, published in concept stage to global rollout. this report.

Your Company has undertaken The noted American Motivational training of its Human Capital, speaker, author and consultant to enable them to contribute Denis Waitley has said “Success is meaningfully to the new strategic almost totally dependent on drive thrust. Our efforts in this direction and persistence. The extra energy

7 packaging, apart from maintaining product integrity, offers the “first moment of truth” for consumers of fmcg brands Expanded Playfield

From cosmetics to pharma to food, laminated tubes are increasingly emerging as the preferred choice of packaging, replacing bottles, jars and aluminium tubes.

8 Expanded Playfield

Beauty & Cosmetics Pharma & Health

Emerging products such as Anti Ageing Aluminium Tube as packaging form is on Creams, BB Creams, CC Creams, Hair decline for ointments, gels and medicated Colourants and Hair Care system are creams expanding the category Laminated Tubes offer superior barrier, Growing youth population with increasing safety and user friendly features aspirations is driving demand

Food

Tubes are becoming increasingly popular for Condensed Milk, Wasabi Paste, Peanut Butter, Jams and Sauces Higher usage is being driven by lifestyle changes, convenience and hygiene benefits

Home Oral

Expansion in home application products such Cosmetic and therapeutic toothpaste brands as adhesives, glues, paint colours are rapidly expanding the category Convenience, ease-of-use and dispensers are Premiumisation of toothpaste driving high driving tube as preferred packaging for home value add laminated tubes applications

9 At Essel Propack, the EXPANDED PLAYFIELD is inspiring everything we do, from creating new applications to delivering superior solutions with Renewed Energy

Green Maple-Leaf structure provide high class service to build Creativity and offering “Sustainable” long term relations Innovation packaging solutions we partner customers to Our R&D is creating path-breaking seamlessly roll-out their launches innovations across the globe

Structures with high look and we operate global Key Account feel, UHB / UVB technology process to provide customised to meet the requirements of single-point service to large MNC sophisticated cosmetic creams customers and pharmaceutical products we reach out through trade shows advanced decorations and 360 and focused road shows for degree printing different categories Tamper-evident, anti- Customer counterfeit features and dispensing systems for Engagement pharmaceutical products We remain focused on delivering our best to the customer

we go beyond sale of products and support their innovation and

10 Our manufacturing process New Product is geared to meet the more Creating offerings stringent manufacturing Value to We are creating a varied range of standards of Pharma and Food Stakeholders products products for our customers working We are committed to creating closely with them from concept to we have successfully pioneered superior value for our stakeholders launch CoCo model in India for a large Driving growth in the non-oral customer Replacing traditional bottle, jar categories to achieve 50% share and aluminium tube formats to we have commissioned a of Revenue in the next couple of new generation laminated tubes greenfield factory in East China years for enhanced shelf appeal and to locate closer to cosmetic Pursue 20/20/20 vision of novelty for the consumer manufacturers growing profits by 20% CAGR using Egnite laminate for high- over the next 5 years and end cosmetic brands improving ROCE & ROE to 20%+ Pioneering packaging solution in the next couple of years

for Flavored Vodka is an award Sustaining highest level of winning innovation professionalism, governance compliance and social responsibilities in all our operations

8.95 People

A number of modern people 6.87 initiatives empower and enable employees to achieve and sustain a 5.15 14-15 culture of excellence 13-14 Operations Focused employee engagement 12-13 activities align personal and Strong and disciplined operations EPS ` continue to remain the core of business goals Essel Propack in delivering superior Involvement and participation 19 customer experience by employees in improvement

Today, we have the capability oriented initiatives ensures to handle diverse SKU’s running successful implementation 13 into thousands with flexible Targeted competency building 9 production runs and aggressive and skill development 14-15 lead times programmes based on specific 13-14 individual development plans 12-13 ROE %

11 Award Winning Tubes

TruAge AGE Therapy Gel Medline Phytoplex Glo Whitening & Axe Peace Tube (Europe) (US) HydraGuard (US) Antiozidant Toothpaste The first place in the Citrus Twist (US) The decoration on the This tube is skillfully Laminate Tube category AGE Therapy Gel tube is extruded through state This tube is extruded went to the AXE Peace what makes it intriguing. of the art machines and with a perfectly mixed tube from Essel Propack The artwork is simple shoulders are molded masterbatch then goes Deutschland for Unilever’s and classic but it is with onto the sleeves to create to the silk screener European product the combination of gloss the stunning base for for the first part of the launch. Here, the jury and matte coatings that decorating. Rich blue decoration. After it was impressed by the we are able to achieve a colors that are offset makes a trip through transparent window at checkerboard look. This printed were used the silk screen process the end of the tube, the decoration process really to achieve this shelf it heads over to the hot absence of any disruptive sets th