Business Daily from THE HINDU group of publications
Thursday, Aug 31, 2006

Cross Currency

Group Sites

Corporate - Mergers & Acquisitions
Essel Propack to acquire CavinKare's packaging arm

Our Bureau

In all-cash deal of Rs 63.5 crore

Mr Ashok Goel (left), Vice-Chairman & Managing Director, Essel Propack Ltd, and Mr T.D. Mohan, Managing Director, Packaging India Ltd, at a press conference in Mumbai on Wednesday. - Shashi Ashiwal

Mumbai , Aug. 30

Essel Propack is acquiring CavinKare group company - Packaging India Private Ltd (PIPL) - for Rs 63.5 crore in an all cash deal.

Announcing the acquisition, Mr Ashok Goel, Vice-Chairman & Managing Director, Essel Propack, said, "India is fast emerging as a hub for packaging material for pharmaceutical and food processing companies. This combined with the retail boom is accelerating the demand for packaging material. Through this acquisition we expect to leverage the emerging opportunities.'' Through its latest acquisition, Essel Propack expects to expand its product portfolio and combine the synergies between the companies to move up the value chain.

Mr. R. Chandrasekhar, COO, Essel Propack, said, "Packaging India and Essel Propack have many similarities in approach to business, knowledge, market reputation and the desire to grow. The acquisition will complement the technologies that we already offer.''

Funding the acquisition through internal acquisitions, the packaging major expects to scale up its operations in the global market where it has already set up greenfield projects in Poland and the US. Estimating the specialty packaging industry at Rs 25,000 crore with a compounded annual growth rate (CAGR) of 15 per cent, the laminated tubes major is open to acquisitions in future.

Financial advisors, Bellwether Capital and Deloitte Haskins & Sells, did the due diligence.

The Essel Propack scrip closed at Rs 77.90 today, up 1.17 per cent against Tuesday's closing of Rs 77.

`Conflict of interest'

Speaking to Business Line in Chennai, Mr C.K. Ranganathan, Chairman, CavinKare Pvt Ltd, said the sale was necessitated because of a conflict of interest between CavinKare's personal products business and the packaging business. He said that Packaging India was doing a lot of packaging for multinational clients, who chose to move out their business if there was a conflict with CavinKare's own brands in shampoos and fairness creams.

CavinKare itself, he said, sourced at least 30 per cent of its packaging needs for its brands from other suppliers.

Mr Ranganathan explained that while CavinKare's brands were growing rapidly, their growth could not be held ransom by who Packaging India's clients were.

Asked if he was looking to deploy the funds raised from the sale in brand acquisition, he said that the company was indeed looking at regional food brands to acquire.

"We are discussing some options," he said, while adding that there were not many brands available for sale in personal care products.

More Stories on : Mergers & Acquisitions | Packaging

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Sagar Cements plans pref offer

PTL rejects arbitration
When does private turn public?
Norway court favours Ranbaxy on atorvastatin
HC confirms SIV Ind's mines, stock sale
Essel Propack to acquire CavinKare's packaging arm
India Pistons may merge IP Power with itself
United Phosphorus to buy Bayer CropScience's products
Escorts to divest stake in Carraro
NCL Ind approves Deloitte's valuation
Ensuring `faithful representation' in financial reports
Alok Ind plans more exclusive stores
Mantri super premium apartment ready
SAIL urged to complete expansion ahead of schedule
Microsoft to set up centre for Vista migration in India
`No exemption from Clause 49 compliance'
HCG ties up with Ramaiah hospital
Poly Medicure scouting for strategic partner
Indo Asian forms venture with Spanish co Simon
Sanofi grant to Isha Foundation
ACE plans overseas acquisition
BMW to begin production in India early next year
Cos witness growth in profit margins
Sharma frontrunner for ONGC Chairman post

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line