Essel Propack Ltd., which claims to be the world's largest maker of laminated tubes, has bought one of India's largest manufacturers of specialty flexible packaging in a move to diversify its product lines.
Essel bought Packaging India Private Ltd. for 875 million rupees (US$18.9 million) from Chennai-based consumer products maker CavinKare Group. Essel said the purchase would strengthen its position in India's specialty pharmaceutical, retail and processed food markets, which are potentially more lucrative than its traditional tube business.
``With the pharma and retail market poised for tremendous growth, the demand for specialty packaging is slated to rise high,'' said Ashok Geol, vice chairman and managing director of the Essel Propack, in an Aug. 30 statement.
PIPL is slated to finish an expansion in the next three months that will take it from a capacity of 13.2 million pounds a year to 19.8 million pounds, said Essel spokesman Ramdas Warrier. As well, the acquisition brings expertise in extrusion lamination and barrier properties, Essel said.
PIPL, which is India's third-largest maker of specialty flexible packaging, had sales of 989 million rupees (US$21.3 million) in its most recent fiscal year, with projections for 1.15 billion rupees (US$24.7 million) this year, Essel said.
The company's growth in part is being fueled by 15 percent annual growth in India's 25 billion rupee (US$538 million) market for specialty flexible packaging. That's about a quarter of the country's overall 110 billion rupee (US$2.4 billion) packaging market, Essel said.
The country's specialty pharmaceutical packaging market, in particular, is projected to grow from 4.6 billion rupees (US$99 million) last year to 8.1 billion rupees (US$175 million) in 2009, although per capita spending on health care remains very small, at US$93, Essel said.
PIPL will remain focused on the Indian market, but Essel said it sees growth potential as the country becomes more of a platform for multinationals to export pharmaceuticals.
``We would like to first consolidate ourselves in the Indian market, and then look at exports,'' Warrier said. ``The exporting has just begun, so it's in a nascent stage.''
PIPL began in 1990 as the captive packaging unit of CavinKare, which makes personal-care and food products. Because PIPL had broadened to working with other customers, including some competitors of CavinKare, the potential conflicts of interest were starting to limit the company, officials said.
``It was realized that PIPL has to align itself with another packaging company to achieve its true growth potential,'' said C.K. Ranganathan, chairman and managing director of CavinKare. ``The company [PIPL] was at a point of inflection in terms of growth.''