Right from the first week of August, the financial press has reported that the promoters of the Indian US$ 4.2 billion Zee Group is looking to exit from Essel Propack, in which it holds 57.19% of the shares. These reports resurfaced in late September with global packaging players Huhtamaki and Amcor-Bemis mentioned as potential suitors and Morgan Stanley mentioned as having the mandate to manage the disinvestment. Both Finland-based Huhtamaki and Australia-headquartered Amcor-Bemis have earlier made packaging company acquisitions in India and have a strong presence in the country with several plants.
Although global consolidation is gripping the packaging sector, the case of Essel Propack is somewhat unusual in the sense that it is an Indian company with a global footprint and perhaps the largest laminated plastic tube manufacturer in the world. It has 20 manufacturing facilities across 11 countries, including the US, Mexico, Colombia, Poland, Germany, the UK, Egypt, Russia, China, Philippines and India.
Essel Propack’s consolidated turnover for the financial year ending 31 March 2018 was Rs. 2,450 crore, slightly up from the previous financial year’s Rs. 2,338 crore (approximately US$ 334 million). However, its profit after tax declined by Rs. 20 crore from Rs. 171.60 crore (approximately US$ 24.51 million) in FY 2017-18, in comparison to Rs. 190.32 crore (approximately US$ 27.18 million) in FY 2016-17. The financial press says that the promoters are looking for a 30% premium for divesting a controlling stake in the company whose current market capitalization is approximately Rs. 3,426 crore (approximately US$ 489 million).