ESSEL Propack has entered health, hygiene & hand sanitizer segment; It represents opportunities for growth: Sudhanshu Vats, MD & CEO

Sudhanshu Vats, Managing Director and CEO, Essel Propack, talks about Q1FY21 results, demand from FMCG and pharma sectors, debt levels and international business and its performance among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: Give us the highlights of the quarter and what led to this growth? Also, tell us about the segment that has performed better?

A: We operate in four geographies and we have operations in India, Europe, America and China, and this time, we have seen growth everywhere. So, it is a well-rounded growth. In the case of India, there has been an impact in April and May because a very strict lockdown was enforced here in April. Our revenue grew by 17.7% to Rs 742 crore (7,541 million), which was very good. Our growth is well rounded everywhere. There was double-digit growth in AMESA and India in June. India and Amisha also witnessed double-digit growth in June.

Q: Have you added any new clients in this quarter? Can you throw some light on the kind of demand you have seen from the FMCG and pharma sector, especially in the sanitizer segment in this quarter?

A: We have started a new segment in health, hygiene and hand sanitizers. We believe that health and hygiene is a secular law trend after this COVID-19. It is a sticky trend, so that will remain and within that hand, the sanitizer will be an important one. Interestingly, Essel Propack developed a tube through which hand sanitizer can go within 15 days. And, at the moment when I am talking with you, we have developed a partnership with more than 50 brands and we are supplying it to them. So, you are seeing hand sanitizer in over 50 brands across the world and I think that in this segment, we have a pipeline of 150 million for the year. And, I am very happy to share with you that we have already commercialized over 50% of this 150 million annual pipeline. So our hand sanitizer segment has seen strong growth across the world and we believe that this growth will continue. The way we look at the segments, like beauty and cosmetics, health & hygiene and pharma, then health & hygiene and pharma are the two segments which are doing quite well. Beauty and cosmetics is the segment that is under pressure. Oral consumption to be strong, we are very strong and are world leaders in oral. 

Q: You have reduced your net debt in this quarter. How much reduction can we expect going forward from here?

A: One of the philosophies we have is, “Capital Efficient, Consistent Growth”. And as we continue to make money, so our free cash flow is increasing, so our ability to reduce debt is going up consistently and therefore you will be able to see a very healthy debt position as we go forward. 

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Q: How is your order book, if you can quantify that numbers for us? Also, update us on your international business performance and the segment from which growth is coming?

A: We don’t provide guidance, therefore I have not been able to give a very specific number but you have seen our growth which stood at 17.7% in the first quarter and the second quarter is well on its way and July has been a good month. As far as our international growth is concerned then China has done exceedingly well and has seen a V-shaped recovery as you may have heard from other business leaders as well. So that has been good and we believed in very good growth there. We have seen very good competitive growth in Europe and the Americas as well. As I have been telling I think the regions are looking very strong. Now in AMESA and India June month onwards, our performance has been good and growth is coming in this region as well. So, we are very confident as the year progresses that we will be able to deliver a good year. Based on the pipeline, which we have based on the new customers and the knowledge share gain we say in our industry that will be helpful. We consistently in the new segment about which I was talking with you earlier, whether it is pharma or health and hygiene, will be grown. In the segment, our ASP (average sale price) per 1000 tubes is better, and therefore the margin is better. So as the growth comes in some of these categories, we are likely to see profitable marginal growth.