Leno Bag

Leno:Improving Bottom Line

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Opportunities in Leno• Highly Profitable Business• Growth Story• Application areas• Demand Supply Gap• Certification & Accreditation• Cost Benefit Analysis• Leno Project: Improved Bottom lines• RIL Support for market penetration.• Conclusion

Leno Bags- Highly Profitable Business• 40 Cr Leno Bags used in ‘09-10.• 940 operational leno looms• 16 KT PP consumption for Leno• Jute belt- Bengal packs 70% of potato in Leno• Leno Project Profitability:• Internal Rate of Return (IRR) : 35%• Return on Investment (ROI) : 19%Huge Market & Profitability Makes Business Sense..

Growth StoryGrowth in Leno Looms• 24% CAGR growth in Leno looms addition.• Local & overseas m/c suppliers with 6, 4 & 2 shuttle convertible looms.• Labeled & printed leno bags to drive future demand for leno bags1300 additional looms required to meet the demand

Market – Commodity VegetablesPotato / Onion / Garlic / Ginger• Production ~ 52 MnT (PP Potential ~ 40 KTA)• Current PP consumption ~ 12 KTA• Penetration in Potato 35%• Penetration in Onion/Garlic/Ginger < 10%• Potato growing states ~ WB, UP, Bihar,Punjab, Gujarat & MP• Onion growing states ~ Maharashtra,Karnataka, Gujarat, BiharAdditional 415 looms required

Market - VegetablesCabbages, Cauliflower, Okra, Brinjal, Peas& leafy Vegetables….•Production ~ 50 MnT (PP Potential ~ 30 KTA)•Current PP consumption ~ 3 KTA•Penetration < 10%•Major producing States ~ WB, UP, Bihar, AP, TN& KarnatakaAdditional 665 Looms required

Market - FruitsSweet lime, Coconut, Lemon, Raw Mango,Guava, Pineapples….• Production ~ 25 MnT (PP Potential ~ 10 KTA)• Current PP consumption ~ 1 KTA• Penetration < 10%• Major fruit producing States ~ AP, TN, Kerala,Maharashtra, NE States & GujaratAdditional 220 Looms required

Approvals & Accreditation• CPRI (Central Potato Research Institute)certified Leno Bags for Potatoes.• DOGR (Directorate of Onion & GarlicResearch) certified Leno Bags for Onions.Certification is helping further Growth

Cost Benefit AnalysisBag Size(Inches)LoadCapacity(Kg)BagWeight(Gram)Avg. Bag Price(Rs/Bag)LenoJute24X40 50 55 7.00 12.0022X40 50 52 6.50 11.0024X36 40 50 6.25 10.0018X40 20 42 5.50 8.009X23 5 16 2.25 4.00At least 60% cost saving in packaging

Demand & SeasonalityVegetables Production MnTLeno BagReqd. in KTPotato 36 27Onion 14 11Brinjal 11 3Cabbages 7 5Cauliflour 7 5Other F & V 55 30Total 130 81Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSeasonality of Demand…• Top 5 vegetables covers 65% of the Leno demand spanning 9 monthsPeak SeasonLean Season• Convertible Dual purpose Leno looms to offer cushion during lean seasonRound the Year Demand Barring Monsoons

Demand Supply GapExistingLooms425WestPotential for Leno - 17 KTConsumption - 4 KTPenetration - 25%Addl Looms reqd. - 145ExistingLooms235SouthPotential for Leno - 19 KTConsumption - 3 KTPenetration - 17%Addl Looms reqd. - 400NorthPotential for Leno - 19 KTConsumption - 2 KTPenetration - 11%Addl Looms reqd. - 545ExistingLooms350EastExistingLooms87Potential for Leno - 26 KTConsumption - 7 KTPenetration - 26%Addl Looms reqd. - 515Additional 1600 Looms Required

Investment OpportunityAverage capacity for Stand aloneLeno project will include• One Tape Line with 180 Kg/Hr ( Major supplier Lohia, JP, Starlinger etc.)• 30 Leno Looms ( Major suppliers Lohia, GCL etc.)• Investment ~ Rs. 4 Cr.• 45 Tape Lines & 1300 LoomsRs. 175 Cr. Investment required

Leno Project: Improved Bottom linesProject SummaryCapacity Lac Bags / Month 20Consumption MTM 100ROI % 19Simple Payback Years 2.8Discounted Payback Years 3.8NPV Rs. Lac 745IRR % 35ROCE % (10 years avg) 28Disclaimer: Projected Statement based on assumption.Lucrative Returns with Sustainable Growth

RIL Support to Promote Leno BagsMarket Development & Awareness Programs• RIL published brochure in vernacular languages• Awareness programs at APMC, Krishi Vigyan Kendra.• Farmers meet & training programs• Promotion to Cold Storage Owners & exporters.• Promotion with Jute traders, Agricultural Scientists.Grass Root Marketing & Supply Chain Development

ConclusionLeno Bag- Makes Business Sense…• Market acceptance of Leno bags for major Vegetables• Packaging suitability of Leno - Certification from leading Govt. Institutes• Jute shortages & 60% lower cost of Leno resulting higher penetration• Convertible leno looms offer flexibility in operation• 30% product mix in form of Leno results up to 8% top line growth &>20% growth in bottom line due to higher value addition.• 360 0 RIL support for market development & application extension.Be a Part of Redefining Packaging… Reducing Waste!

For further query please contact usPhone: 022-44780372Email : packaging.polymers@ril.com