-ITC Paperboards & Specialty Papers Division of ITC group is a leading manufacturer of packaging & graphic
boards in South Asia.
-Paper division closed last fiscal with ~10% of its produce being exported. Exports will go up. In value terms, exports is 15%
2/ Focus
-Packaging industry will grow at a CAGR of 7.5% from 2020-25.
-It is focusing on sustainable packaging solutions with development of innovative B2B value added paperboards & import substitution given the unfolding opportunities in new segments of the packaging biz.
-#Laurus is more chemistry based company and they do have biology but India is not that developed in this category whereas #china and #korea are way ahead of us.
-Laurus has no expertise in biology. They do accept this and #Richcore completes this expertise.
-When they do acquisition, they acquire target’s management also who has that expertise and laurus complements them with additional requirements like reaching customers and scale as laurus has advantage in geography footprints.
-The company is eyeing cost savings to the tune of ₹150 crore as it partly absorbs the price increase in key raw materials like copra, sunflower and rice bran.
2/ How will it do?
-It has cut back on over 100 stock keeping units (SKUs).
-These SKUs were contributing nearly only 1% of turnover and hence it made no sense to continue with such a long tail.
High import duty on raw materials and low import duty on finished products is hurting the domestic manufacturing industry, making it noncompetitive in the international market.
On Raw Material:
-Natural latex liquid has 70%import duty
On Finished Products:
-Latex products have only 5% and gloves 0% under the FTA with ASEAN countries.
2/ Duty Effects
-This has led to rising imports, hitting the domestic industry badly.
-The inverted duty structure has forced many rubber product manufacturers to turn traders of rubber goods and stop manufacturing because products have become uncompetitive.
-Replacement lubricants account for 95% of topline. Lubricants are used in cars, bikes, tractors etc.
-Have usually grown at 2-3x of the market growth rate.
-#2 brand in the overall private market. (55% is B2C)
-Doesn't supply to brand new vehicles, as for new vehicles the oil comes from OEMs.
-Where Gulf has tie-ups with 15 OEMs (Bajaj, Ashok Leyland, Mahindra), so if customers are buying more of Bajaj, Leyland, Mahindra then Gulf will benefit.
-Q2 FY-21 had the highest quarterly sales of 68 Cr, a growth of 84% y.o.y. Top 10 products contributed 71% of topline and Top 5 contributed 45% of topline.
-Growth reasons: Market share gain + Growing demand.
-Company’s traditional products are mainly responsible for this growth.
-Entire growth was led by volume growth of traditional products. They used newer capacities to manufacture traditional products.
-They have been working in this segment since last 10 years and currently the are banking on good margins and this year they expect to post 15-20% higher biz
