Huhtamaki India Ltd
Chairman Speech
Transforming India's flexible packaging industry
Dear Stakeholders,
I am delighted to be addressing you all as the Managing Director of Huhtamaki India
Limited and with your support, I am confident that we will take this Company to great
heights of success.
In FY2022, we made strategic progress toward our ambition of helping brands enhance
their impressions through reliable, responsible, sustainable and innovative packagi ng
solutions. Although uncertainties remain due to the dynamic macroeconomic environment and
the lingering effects of the pandemic, we continued to strengthen our balance sheet during
the year and establish benchmarks in flexible packaging and labelling solutions.
Revenue from operations increased by 13.6% to Rs. 29,829 million during the year and
registered a CAGR of 6% over the last 5 years. In spite of flat volumes, the Company has
been able to realise value for its product offering which was partly offset by a steep
increase in raw material prices during the year.
EBITDA (before exceptional items) stood at Rs. 1,742.6 million in 2022 against Rs.
1,184 million in 2021, representing a 47.2% increase.
Profit after Tax (PAT) stood at Rs. 496.4 million in 2022 as against a loss of Rs.
226.9 million in 2021.
The industry faced its share of turmoil during the year. As the demand for affordable,
safe and hygienic packaging increased, so did the challenges of lengthening supply chains,
rising product-to-paper packaging ratio, an unprecedented rise in the price and hindered
supply of our raw materials. Proactive planning and value engineering ensured our
continued competitiveness, despite the cumulative rise i n costs across our supply chain.
Our Company continues to leverage the expertise, knowledge and resources of Huhtamaki
Oyj in terms of, inter-alia, the strong brand reputation of Huhtamaki in the market,
access to a wide range of resources such as technology, financial capital, human
resources, network of suppliers/customers, wealth of knowledge and expertise in the
flexible packaging industry, which have helped Huhtamaki India further improve its
performance.
On a steady path toward our goal
We are at the forefront of transforming the packaging industry in India and have been
actively working on sustainable solutions that are both eco-friendly and cost-effective.
During the year, we continued to focus on developing fully recyclable mono-material
structures for flexible packaging under our blueloop™ brand. This is our
enterprise-wide brand which comprises a range of sustainable packaging solutions and
technologies and we are making strategic investments in our manufacturing capabilities to
deliver game-changing innovation. We have also made investments in digital printing
technology that enables us to offer personalised packaging solutions with minimal waste.
Furthermore, we implemented recycling programmes for used packaging materials, which
help in reducing the overall environmental impact of packaging. Our commitment to
sustainability and innovation has stood us in good stead as a pioneer in the Indian
packaging industry.
Taking a progressive stance, with a focus on sustainability
Our aim is to consistently provide our customers with dependable, responsible and
cutting-edge packaging options. Equally, we work closely with our partners to mitigate and
eliminate the negative impacts of packaging on the environment.
One of the initiatives undertaken by Huhtamaki India was to sponsor a trust (Huhtamaki
Foundation) to recycle post-consumer multi-layered plastic waste that is difficult to
recycle and would otherwise end up in landfills. The Foundation has been working to
collect post-consumer waste from nearby cities like Pune and recycle it into either
value-added products or granules that can be used as a substitute for virgin plastic. This
step is part of Huhtamaki Foundation's #CloseTheLoop initiative to tackle post-consumer
waste to deliver valuable secondary resource material.
To reduce our scope 1 emission, we shifted the operations of our Rudrapur factory from
furnace oil to piped natural gas for heating of thermic oil, resulting in 75% lesser
emissions and higher efficiency. As a result of switching to biomass fuel at Sricity, we
were able to shift to 9.8% renewable energy for our primary energy needs. We reduced our
absolute scope 1 GHG emissions by 8.9 % this year and this project contributed towards
achieving this.
Sustainability is a fundamental aspect of our strategy and daily operations.
We strive to conduct business in a financially, environmentally, and socially
responsible manner.
With ethics and integrity
As a leader, integrity is my foremost priority. We must run our business in a
transparent and honest manner and be accountable for our actions toward all our
stakeholders. We have a robust corporate governance framework in place that inspires trust
among everyone associated with us, thus enabling us to build a sustainable brand for
tomorrow. We are also consistently improving our processes by implementing best-in-class
standards and practices that guide our actions.
Focusing on the future
The Indian packaging industry is predicted to experience significant growth in the near
future due to increased demand for packaged food and non-food items due to population
growth, rising income levels, expansion of organised retail and rise in e-commerce.
Moreover, with rising environmental awareness, the need for sustainable packaging is now
crucial. We are, thus, committed to meeting the increasing demands of consumers and making
positive changes to become the first choice in sustainable packaging.
Our key focus areas in the coming years
• Our financial and non-financial performance, especially considering the
continued impact on the market and supply chains due to geopolitical and other
macroeconomic conditions
• A strong balance sheet
• Portfolio optimisation and expansion with cutting-edge sustainable packaging
solutions
• Compliance and ethical conduct
• People - their safety and skill upgradation
• Long-term sustainability
As I take on the reins as the Managing Director of Huhtamaki India, I would like to
thank the whole team for your support and hard work - it is a pleasure to see the passion
and commitment you bring. Finally, everything that we do is for our customers - thank you
for challenging us to go beyond each time. I would also like to take this oppurtunity to
express my gratitude to our bankers, government authorities, all our business partners and
shareholders for their support and confidence in us.
With the continued oversight of the Board, I am confident that Huhtamaki India will
scale new heights and generate unparalleled value for all its stakeholders.
Best wishes,
Dhananjay Salunkhe
Chairman.
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Huhtamaki India Ltd
Directors Reports
Your Directors have pleasure in presenting the 74th Annual Report of
Huhtamaki India Limited (‘Company‘) along with the Audited Statements of
Accounts for the year ended December 31, 2023.
FINANCIAL HIGHLIGHTS
Your Company's financial performance during the year was as under:
(B in Million)
| Particulars |
2023 |
2022 |
| Net Sales |
24,813.2 |
29,165.0 |
| Profit/(Loss) before Tax & Exceptional Item |
1,305.1 |
559.3 |
| Exceptional Item Income/(Expenses) |
3,695.3 |
- |
| Profit/(Loss) after Exceptional items & before Tax |
5,000.4 |
559.3 |
| Less: Provision for Current Tax |
803.8 |
172.9 |
| Provision for Deferred Tax |
100.3 |
(110.0) |
| Profit/(Loss) for the year |
4,096.3 |
496.4 |
| Opening balance of Retained Earnings |
5,805.0 |
5,390.4 |
| Other Comprehensive Income/(Loss) for the year |
1.5 |
(6.3) |
| Dividend on Equity Shares for the year |
(151.0) |
(75.5) |
| Adjustment relating to prior periods |
- |
- |
| Closing balance of Retained Earnings |
9,751.8 |
5,805.0 |
BUSINESS PERFORMANCE
The Company registered net sales of B24,813 Million, as compared to B29,165 Million for
the previous year representing 15% decrease. Profit before Exceptional Items and Tax stood
at B1,305 Million as compared to B559 Million for the previous year. While there has been
an erosion in the topline during the year, partly due to strategic position taken and
partly due to lower offtake in some specific categories, the Company has reported more
than double the Profit before Exceptional Items and Taxes and delivered an impressive PBT.
We accelerated the strategy execution with network optimisation, consolidation of
Manufacturing footprint, Operational efficiency and Cost productivity initiatives to
deliver better profitability.
The Company has reported an income of B3,695 Million (Net) categorised as Exceptional
Income for the Year, primarily stemming from the divestment of Land and Building at two
former manufacturing sites. This income was partially offset by costs incurred in
implementing the Voluntary Retirement Scheme (VRS) for employees at the Khopoli and
Hyderabad Plant, along with minor expenses related to the restructuring of manufacturing
facilities.
The Company continues to focus on enhancing the efficiency of its manufacturing
network, reducing operational wastage through World-Class Operations (WCO) initiatives and
aims to optimise the efficiency of its sourcing and supply chain network, leveraging raw
material procurement efficiencies. Simultaneously, the Company strategises to scale up its
profitable core business while driving transformational projects. across the organisation.
DIVIDEND
Your Directors have recommended a dividend of B5/- per equity share of B2/- each
(250%). This dividend is subject to the approval of the Members at the forthcoming annual
general meeting and if approved, Members whose name appear on the register of Members on
April 24, 2024 will be entitled to the dividend.
This would involve a total cash outflow of B 377.6 Million. The declaration of dividend
is in accordance with the Company's Dividend Distribution Policy which is available on the
Company's website and can be accessed at https://
www.huhtamaki.com/en-in/flexible-packaging/investors/
corporate-governance-and-policies/policies/.
PUBLIC DEPOSITS
The Company did not invite or accept deposits covered under Chapter V of the Companies
Act, 2013 and there are no deposits outstanding with the Company.
BORROWINGS
The Company continued to optimise borrowings during the year by focusing on cash flows
and working capital management. During the year, the Company has availed Working Capital
Demand Loan and issued Commercial Papers for funding Working Capital. The Company has
repaid the entire short-term borrowing from proceeds received on account of sale of its
land at Thane. Borrowings as of December 31, 2023, have reduced by B1,632 Million compared
to December 31, 2022.
TRANSFER TO RESERVES
The Company is not required to transfer any amount to its reserves and accordingly no
amount is transferred to reserves during the year under review.
SUBSIDIARY COMPANIES AND FINANCIAL STATEMENTS
The Company does not have a subsidiary and Form AOC-1 is not required to be provided.
In accordance with the provisions of Section 136 of the Companies Act, 2013, the audited
financial statements, and related information of the Company are available on the website
of the Company: www.flexibles. huhtamaki.in.
MANAGEMENT DISCUSSION AND ANALYSIS
A review of the performance and future outlook of the Company and its businesses, as
well as the state of the affairs of the business, along with the financial and operational
developments have been discussed in detail in the Management Discussion and Analysis
Report, which forms part of the Annual Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information pursuant to the provisions of Section 134 of the Companies Act, 2013 and
the rules framed thereunder, relating to conservation of energy, technology absorption,
foreign exchange earnings and outgo, forms part of this Report and is given at Annexure
1.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Stefan Lotz retires at the forthcoming Annual General Meeting by rotation and being
eligible, has offered himself for re-appointment. Details of the proposed re-appointment
have been provided in the Explanatory Statement to the Notice of the 74th
Annual General Meeting of the Company pursuant to Section 102 of the Companies Act, 2013.
The Board has recommended his re-appointment.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declarations from all the Independent Directors of
the Company confirming that they meet the criteria of independence laid down in Section
149(6) of the Companies Act, 2013 and SEBI Listing Regulations, 2015 and the same has been
noted by the Board of Directors.
The Board of Directors are of the opinion that Mr. Murali Sivaraman, Ms. Seema Modi and
Mr. Ashok Kumar Barat, Independent Directors of the Company meet the necessary criteria
for continuing as Independent Directors of the Company, including having cleared the
proficiency self-assessment test conducted by the Institute notified under sub-section (1)
of Section 150 of the Act.
PERFORMANCE EVALUATION AND REMUNERATION POLICY
The Nomination and Remuneration Committee follows a robust process for evaluation of
the Board and the Committees, including each other and the Chair. Every member of the
Board and Committees independently rates the performance of the Board, Committees, the
other Directors and the Chair, against the criteria prescribed by the NRC and offers their
feedback. The Corporate Governance Report, annexed to the Annual Report, details the
process followed.
The Company has in place a policy for appointment and remuneration of Directors and Key
Managerial Personnel, encompassing the criteria for determining qualifications, positive
attributes, independence of a director and other matters provided under Section 178(3) of
the Act, and Part D of Schedule II of the Listing Regulations. The above policy along with
the criteria for selection is available on the Company's website at
https://www.huhtamaki.com/en-in/
flexible-packaging/investors/corporate-governance-and-policies/policies/.
MEETINGS OF THE BOARD
During the year, the Board met 6 (six) times. Particulars of attendance of directors at
the said meetings are given in the Corporate Governance Report, which forms part of the
Annual Report.
AUDITORS AND AUDITORS' REPORT
M/s. BSR & Co. LLP, Chartered Accountants, (Firm Registration No. 101248W/W-100022)
were appointed as the statutory auditors of the Company for a term of five years from the
conclusion of the 70th Annual General Meeting till the conclusion of the 75th
Annual General Meeting.
The Auditors' Report to the Members on the Accounts of the Company for the year ended
December 31, 2023, is a part of the Annual Report. The said Audit Report does not contain
any qualification, reservation, or adverse remark.
There are no instances of fraud which are required to be reported by the auditors under
Section 143(12) of the Act and rules framed thereunder, either to the Company or to the
Central Government.
COST RECORDS AND COST AUDITORS
The Company is required to maintain the cost records as specified by the Central
Government in terms of Section 148(1) of the Companies Act, 2013 and accordingly such
accounts and records are prepared and maintained by the Company.
On the recommendation of the Audit Committee, the Board of Directors appointed M/s. R.
Nanabhoy & Co., Cost Accountants as the Cost Auditors of the Company for conducting
the audit of the cost records maintained by the Company for the Financial year 2024. M/s.
R. Nanabhoy & Co., have confirmed that they are free from any disqualifications as
specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of
the Companies Act, 2013. They have further confirmed their independent status. Pursuant to
the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit
and Auditors) Rules 2014, a resolution seeking members' approval for the ratification of
remuneration payable to the Cost Auditors for the Financial Year 2024 forms part of the
notice of the 74th Annual General Meeting of the Company and the same is
recommended for your consideration and approval.
SECRETARIAL AUDIT & ANNUAL SECRETARIAL COMPLIANCE REPORT
The Board of Directors had appointed M/s. S. N. Anantha subramanian & Co., Company
Secretaries, to conduct Secretarial Audit for FY2023 pursuant to the provisions of Section
204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014. The Secretarial Audit Report received from the
Secretarial Auditors is annexed to this Report as Annexure 2. The said Audit Report
does not contain any qualification, reservation, or adverse remark.
The Annual Secretarial Compliance Report issued in terms of Regulation 24A of the
Listing Regulations forms part of the Annual Report and has been submitted to the stock
exchanges within 60 days of the end of the financial year. During the Year 2023, your
Company has complied with the applicable Secretarial Standards issued by the Institute of
Companies Secretaries of India.
HUMAN RESOURCES AND PARTICULARS OF EMPLOYEES
People are our biggest asset and the Company is invested in the holistic development,
health and well-being of our employees. The Company has been providing continuous skill
upgradation and learning opportunities through structured training programmes, career
discussions and individual development plans. A detailed note on Human Resources forms
part of the Annual Report.
Disclosures pertaining to remuneration and other details as required under Section
197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are annexed to this Report as Annexure 3.
The statement containing particulars of employees as required under Section 197(12) of
the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. In terms of
Section 136 of the Companies Act, 2013 the Report and Accounts are being sent to the
Members and others entitled thereto, excluding the aforesaid information. Any member
interested in obtaining such information may write to the Company at
investor.communication@huhtamaki.com and the same will be furnished on request.
PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During the year under review: a) all contracts/arrangements/transactions entered by the
Company with related parties were in its ordinary course of business and on an arm's
length basis; b) contracts/arrangements/transactions were entered into with related
parties in accordance with the Policy of the Company on Materiality of Related Party
Transactions and on dealing with Related Party Transactions.
The Company has not entered into any contract/arrangement/ transaction with related
parties which is required to be reported in Form No. AOC-2 in terms of Section 134(3) (h)
read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not granted any loans or made any investments or provided any
guarantees or security to the parties covered under Sections 185 and 186 of the Act,
during the financial year ended December 31, 2023.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirements of Section 135 of the Act, the Company has
constituted a ‘Corporate Social Responsibility (CSR) Committee' and has also framed a
CSR Policy. The details of the policy, composition of the Committee, CSR initiatives, CSR
expenditure during the year etc., have been provided as Annexure 4 to this report,
as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as
amended.
Your Company is committed to CSR and strongly believes that the business objectives of
the Company must be in congruence with the legitimate development needs of the society in
which it operates. During the year under review, the Company set off B10.9 Million and
incurred additional expenses of B14.6 Million towards CSR activities.
The CSR projects of the Company are primarily focused in the areas of environmental
sustainability, healthcare, promotion of education and skill development, social welfare
and rural development and providing drinking water, sanitation facilities and hygiene.
ETHICAL BUSINESS PRACTICES AND GOVERNANCE
The Company lives by its values Care Dare Deliver – with integrity. The Company is
committed to foster an atmosphere of openness and transparency and maintaining the highest
ethical standards in everything it does. The Company sees compliant and ethical business
conduct as responsible leadership and something that is relevant for all its employees and
in every business transaction that the Company is involved.
Huhtamaki Ethics and Compliance programme focuses on Huhtamaki's commitment to
integrity and legal compliance across the organisation. The programme serves as a toolkit
supporting Huhtamaki in conducting its business in compliance with laws, regulations and
ethical standards and ensuring that the Company has adequate procedures in place to
prevent it from taking part in any unethical business activities.
RISK MANAGEMENT
Risk Management at Huhtamaki aims to identify potential events that may affect the
achievement of Huhtamaki's objectives as outlined in its 2030 Strategy. Its purpose is to
manage risks to a level that the Company is capable and prepared to accept so that there
is reasonable assurance and predictability regarding the achievement of the Company's
objectives. The aim is also to enable the efficient allocation of resources and risk
management efforts.
The Company has formulated Risk Management Policy to review and control risk and has
constituted a Risk Management Committee which oversees and monitors implementation of the
Policy, validates the process of risk management and mitigation and periodically reviews
and evaluates the Company's Risk Management Policy.
Recommendations/Observations of the Risk Management Committee are taken to the Board.
The Committee and the Board review the Risk Assessment procedures periodically to ensure
that risk including Information technology and Cyber Security risks are
controlled/mitigated by the management. In 2023, the management identified and assessed
strategic, operational and financial risks and opportunities. Risk treatment actions were
defined in order to reach acceptable risk levels at each stage. The risks were reviewed by
the Risk Management Committee twice during the year and taken note of by the Board of
Directors.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Internal control is an essential part of the corporate governance and management of the
Company. The Company has defined the operating principles for internal control. The Audit
Committee monitors the effectiveness and efficiency of the internal control systems and
the correctness of the financial reporting. The aim of internal control is to ensure
reliability of financial reporting, effectiveness and efficiency of operations as well as
compliance with laws and regulations. Control of financial reporting assures that
financial statements are prepared in a reliable manner. The aim is also to ensure that all
financial reports published and other financial information disclosed by the Company
provide a fair view on the Company's financial situation. Control of operations is aimed
at ensuring effectiveness and efficiency of operations and achievement of the Company's
strategic and financial objectives. Control of compliance ensures that the Company follows
applicable laws and regulations. Details in respect of adequacy of internal financial
controls with reference to the Financial Statements are given in the Management's
Discussion and Analysis, which forms part of the Annual Report.
Internal audit: The objective of the internal audit is to improve the effectiveness of
supervising obligation of the Board. Internal audit aims at ensuring that the Company's
operations are efficient, information is adequate and reliable and that set policies and
procedures are properly followed by the organisation.
The internal audit function reports to the Audit Committee. The Audit Committee
approves the annual internal audit plan. Audit Committee has two meetings in a year
dedicated exclusively to focus on internal audit observations, key findings, conclusions
and recommendations for control improvements. The implementation of the action plan is
followed up periodically by the line management and reviewed by Internal Audit function.
ANNUAL RETURN
As required under Section 92(3) of the Act, the Company has placed a copy of the annual
return on its website and the same is available in the Investors Section on the Company's
website at the link given below. The Annual Return for the year would be updated once the
same is filed with the Registrar of Companies in due course.
https://www.huhtamaki.com/en-in/flexible-packaging/ investors/financials/annual-reports/
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) and 134(5) of the Act, the Board of
Directors of the Company confirms: a) that in the preparation of the annual financial
statements for the year ended December 31, 2023, the applicable accounting standards have
been followed along with proper explanation relating to material departures if any; b)
that such accounting policies as mentioned in Note 2 of the Notes to the Accounts have
been selected and applied consistently and judgement and estimates have been made that are
reasonable and prudent so as to give a true and fair view of the state of affairs of the
Company as on December 31, 2023, and of the profit of the Company for the year ended on
that date; c) that proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 2013
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities; d) that the annual financial statements have been prepared on a
going concern basis; e) that proper internal financial controls have been laid down to be
followed by the Company and that such internal financial controls are adequate and were
operating effectively; and f) that the proper systems to ensure compliance with the
provisions of all applicable laws are in place and were adequate and operating
effectively.
INSOLVENCY AND BANKRUPTCY CODE 2016
Neither any application has been made nor any proceeding is pending in respect of the
Company under the provisions of Insolvency and Bankruptcy Code 2016.
OTHER DISCLOSURES/REPORTING
• The Company has not issued any equity shares with differential rights as to
dividend, voting or otherwise;
• The Company has not issued any shares (including sweat equity shares) to
employees of the Company under any scheme;
• Neither the Executive Director nor the Whole-Directors of the Company receive
remuneration commission from any of its subsidiaries;
• No significant or material orders were passed by Regulators or Courts or
Tribunals which impact the going concern status and Company's operations in future;
• There have been no material changes and commitments, if any, affecting the
financial position of the Company have occurred between the end of the Financial Year of
the Company to which the Financial Statements relate and the date of this Report.
APPRECIATION AND ACKNOWLEDGEMENT
The Board wishes to place on record its gratitude for the confidence reposed in the
Company by our bankers, government authorities, customers, vendors and all shareholders.
The Board further wishes to record its sincere appreciation for the significant
contributions made by employees at all levels for their commitment, dedication and
contribution towards the operations of the Company.
By Order of the Board
For Huhtamaki India Limited
Murali Sivaraman
Chairman
(DIN 01461231)
Date: March 22, 2024
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