Packaging solutions provider Jindal Poly Films (JPFL) is exploring the sale of a significant minority stake to raise as much as Rs 1,000-Rs 1,200 crore, as the BC Jindal group company looks to take advantage of frenzied investment activity in the packaging industry.
Investment bank Rothschild has been hired to run the sale process of the New Delhi-based packaging films player, two people aware of the development said.
BC Jindal’s son Shyam Sunder Jindal, grandson Bhavesh Jindal and their family own JPFL through holding companies and trusts. The company is managed by a professional team and none of the promoters have a presence in the director board. BC Jindal is the brother of OP Jindal, whose sons Sajjan and Naveen have dominated the steel and power sectors in India.
Promoters hold an about 74.55 per cent stake in the company which has a market cap of Rs 3175 crore as on January 8. On Monday, its shares closed at Rs 726, up 10.52 per cent, on the BSE.
Large private equity funds including the Blackstone Group and Advent International have been approached for the stake sale, the people said.
Mails sent to JPFL and Blackstone did not elicit any response till press time Monday, while a spokesperson for Advent declined to comment.
JPFL is the eighth largest global manufacturer of BOPET (biaxially oriented polyethylene terephthalate) films. BOPET is used in the packaging of products in industries such as food & beverages, cosmetic & personal care, electrical & electronics and pharmaceuticals.
JPFL also has a strong position in the high-value-added metallised films market.
From being only a polyester yarn producer in 1985, JPFL diversified in 1996 into BOPET film production. In 2003, the company commenced production of BOPP film and metallised film. It expanded the business by the acquisition of Rexor S.A.S, in France, which produces metallised and coated films as well as tear tape, stamping foil and security thread.
Its manufacturing plant at Nasik in Maharashtra is the world’s largest facility for the production of BOPET and BOPP films, according to the company website. Uflex and Polyplex Corp are the major competitors of Jindal Poly Films in BOPET films manufacturing.
Jindal Poly has been able to maintain a steady operating performance during the Covid-19 driven national lockdown as well, because of healthy demand for packaging and hygiene products, ratings firm Crisil said while upgrading the company’s ratings. “Hence, while overall revenue may be marginally lower in fiscal 2021, the operating margin should remain healthy,” Crisil said.
The company’s earnings before interest, tax, depreciation and amortisation had increased by over 40 per cent from a year earlier to Rs 648 crore, with the margin at 18.3 per cent, in fiscal 2020. This has led to further improvement in liquidity to Rs 650 crore as on March 31, 2020, Crisil said.
US-based Blackstone had done the largest buyouts in Indian packaging industry where Piramal Glass, the glass packaging business of the diversified Piramal Group, was acquired at an enterprise value of $1 billion in December 2020. It bought Essel Propack for $470 million in 2019.
Source: Economic Times