Pakka Limited Investor Call Summary (February 12, 2024)
Overview of the Call
• Date: February 7, 2024
• Key Participants:
• Vice Chairman Ved Krishna
• Managing Director Jagdeep Hira
• Pranay Pasricha (facilitator)
Company Vision and Market Potential
• Focus on regenerative and compostable packaging solutions.
• Target market worth $600 billion by 2030.
• Expansion plans for Ayodhya site aiming for $250 million turnover by 2025.
• Development in North America and Guatemala with a projected turnover of $750 million.
Financial Performance Highlights
• Molded business achieved a net profit of 1.75 crore.
• 32% increase in export volumes.
• 3% year-on-year revenue increase despite FMCG sector slowdown.
• Compostables segment saw 26% quarter-over-quarter revenue growth.
Strategic Developments
• Basic engineering for Guatemala plant initiated.
• Strategic partnerships for product introductions in North America.
• Refurbishment of Paper Machine 3 to enhance production capacity.
Market Dynamics
• Imports surged from 18-20% to 46%; exports increased from 24% to 32%.
• Focus on acquiring new clients in flexible packaging.
• Projected turnover goal of approximately 1200 crores, linked to Project Chakriti.
Compostable Business Insights
• Sustainable EBITDA margins projected between 20-40%.
• Slow growth due to limited domestic capacity and reliance on outsourcing.
• Focus on research and development in flexible packaging.
Future Expansion Plans
• Ongoing projects in North America and Guatemala with funding expected by mid-year.
• Primary focus on food packaging, with no immediate plans for non-food packaging.
Investor Concerns and Responses
• Questions about revenue projections for FY24 and market dynamics.
• Acknowledgment of challenges due to FMCG sector demand and partnership delays.
• Commitment to sustainability and potential growth in biodegradable products.
Additional Insights
• Demand for disposable products linked to the Ayodhya temple.
• Plans to expand presence in other religious sites.
• Focus on chocolate packaging innovations and scaling production.
Competition and Market Challenges
• Limited competition in the niche of food packaging.
• Rising craft paper prices due to waste paper shortages.
• Assurance of quality and customer relationships despite market shifts.
Product Development and Sales Strategy
• Prioritization of food packaging over other segments.
• Asset-light strategy through partnerships for molded products.
• Breakdown of retail versus institutional sales, with retail accounting for 10% of sales.
Conclusion
• Optimism about growth trajectory and innovation.
• Gratitude expressed to participants for their engagement.