M&A Critique

Strategic partnership between Max Specialty Films & Toppan Printing

Max Speciality Films Limited (MSF) was founded in 1990, and is a leading supplier of specialty packaging, labels, coating and thermal lamination films for the Indian and overseas markets.

Post-Corporate restructuring of Max India Limited, MSF became 99% subsidiary company of Max Ventures & Industries Limited which focused only on packaging business and obtaining new industrial ventures. MSF is one of the market leaders of specialty Biaxially Oriented Polypropylene (BOPP) films in India.

This JV is aimed to achieve the twin benefits of expansion of capacity and increasing sales revenue.
It has 4 BOPP lines, and a Rs 250 crore investment is in the pipeline to set-up a 5th BOPP line, which will help augment production capacity by a significant 60% to over 70,000 tons per annum, which is the sole objective of the new JV with Toppan Printing Co Ltd. Japan.


  • MSF exports 34% of its output and it increased 9% during the year.
  • The market share in Speciality Films Segment is 36%.
  • Europe, Japan, and America are the largest overseas markets for MSF.

Toppan was established in 1900. The Five founders, Kimura, Fukuya, and three other investors, Kishi Ito, Tatsutaro Kawai (the first president) and Shinjiro Miwa, established Toppan Printing Limited Partnership at 1 Nicho-machi, Shitaya Ward, Tokyo (now 1 Taito, Taito Ward, Tokyo).

It is involved in following segments:

  • Information & Communication
  • Living & Industry
  • Electronics

Toppan is a large global buyer of BOPP products and will serve as a customer of MSF after the strategic partnership.

Mr. Shingo Kaneko, President & Representative Director of Toppan Printing Co. Ltd is looking forward for the following projections:

Cursory look at Investment

Post JV following points emerge

  1. Post completion of the transaction, MaxVIL and Toppan will hold equity share capital in MSF in the ratio of 51:49 as partners.
  2. Through and open offer for up to 1.84 crore shares the promoters stake will increase to 75 percent.
  3. MaxVil will incur a capital expenditure of Rs 250 crore to increase the production capacity by 67% (from 45K tons to 75K tons per annum) by introducing 5th BOPP line of MSF.

Funding analysis

MSF MaxVIL Total Funds raised by MaxVil
Receive Rs 53.37 crore as a result of this JV. Receive Rs 146.75 crore as a result of this JV. Rs 200 crore approx.
Nil Receive Rs 121 crore by selling 22.51% stake to a subsidiary of New York Life Insurance Company. Rs 121 crore
Nil Receive Rs 26.9 crore by issuing warrants to the promoter group equivalent to 4.76 per cent of the post-issue share capital of the company on a fully diluted basis. Rs 26.9 crore
Total Rs 347.9 crore

Utilization of Funds

Toppan’s global expansion in packaging business is evident from their management challenges.
  1. MaxVIL have capitalised new thermal line amounting to Rs 35.33 crore, in order to increase its production capacity.
  2. The new capital expenditure of Rs 250 crore for setting up 5th BOPP line will be funded by using a mix of debt and internal accruals. This approved line is expected to commence in Q3, FY 2017-18 and will increase capacity to over 75000 tonnes per annum.
  3. The funds will be partly used to invest in manufacturing of BOPP and packaging films, real estate development, education business, and will provide intellectual and financial capital to promising and proven early-stage organizations.

Management Control as per agreement

  1. MSF will have independent directors on its Board in accordance with applicable laws.
  2. MaxVIL and Toppan will have a privilege in right for subscription to fresh issuance of equity shares of MSF proportionate to their shareholding.
  3. MaxVIL and Toppan will have affirmative rights with respect to agreed matters pertaining to capital structure, management, and operation of MSF.

Synergy Benefits to both the companies

Max Speciality Films Limited

  1. Toppan Printing Co Ltd, being a global buyer of BOPP products which are used in making flexible packaging and labelling and MSF being the global supplier of BOPP will strategize its supply channels in line with global needs.
  2. Injection of funds will give way to expansion of portfolio and include various new categories of products
  3. This partnership is an important milestone in their globalization journey as with this it will increase exports in markets viz. Europe, Japan, and America.
  4. This partnership will unlock shareholder value, sharpen the focus of each business and promote ‘Make in India’ collaborations.

Toppan Printing Co. Ltd (Japan)

  1. Shingo Kaneko, President & Representative Director of Toppan Printing Co. Ltd, sees enormous opportunity in India and in this business specifically. MSF has emerged as a front-runner in their unwavering commitment towards R&D and constantly innovating and upgrading technology to stay at the top of the leaderboard across a wide field of applications from labelling to flexible packaging. We are excited to partner them and help the business scale new heights.”
  2. Toppan has demand of transparent barrier film in Japan as well as overseas. Its customer base is spread across Europe, North, Central and South America. In order to respond to the increasing demand of the same, it has planned to invest about ¥10 billion with the startup of the new equipment scheduled for autumn 2018.
  3. Further, against a backdrop of such issues as the reduction of food loss and conservation of the environment, it is anticipated that the global packaging material market will see increasing demand for transparent barrier films, which allow foods to be stored for long periods and enable glass and metal containers to be replaced with flexible packaging.
  4. Sales of highly functional products will be expanded in the market for foods, in particular, retort foods, for which growth is anticipated, as well as applications in the medical, pharmaceutical, and industrial materials sectors.
  5. Toppan Printing is targeting overall sales of approximately ¥130 billion for its transparent barrier film-related businesses in fiscal 2020.

Hence, this JV is aimed to achieve the twin benefits of expansion of capacity and increasing sales revenue.

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Anuja Awasare