Private equity firm Advent International-backed Manjushree Technopack Ltd has outlined a strategy to increase sales through acquisitions, a senior executive said.
In October 2018, Advent International acquired a majority stake in the rigid plastic packaging maker in a transaction that valued it at over ₹2,400 crore. Advent currently holds about 77% in the company. Its former promoter, the Kedia family, holds 20% while 3% is held by other smaller parties.
The polyethylene terephthalate (PET)-based packaging maker’s growth strategy aims to triple its revenue to ₹3,200 crore in the next four years through acquisitions and organic growth, chief executive officer Sanjay Kapote said in a phone interview.
“We are embarking on a vision to triple our sales, profitability and Ebitda (earnings before interest, tax, depreciation and amortization) in four years, and that growth will be achieved via the organic and inorganic route,” Kapote said.
The company currently makes PET jars and bottles, multilayer containers, PET hot-fillable bottles, and pre-forms for use in the food, beverage, pharmaceutical, cosmetic, agricultural chemicals, and allied sectors.
The firm plans to add ₹1,000 crore worth of sales through acquisitions in the next four years.
“We have already identified our target firms. Our inorganic growth plans will be focused on consolidating our rigid packaging market and acquiring allied businesses such as caps and dispenser manufacturing firms. We expect to close our first acquisition in the coming weeks and the next acquisition will close in six months. There will also be two to three more acquisitions in the next fiscal,” he said.
The company’s sales grew 26% to ₹1,148 crore in 2018-19 from a year ago, while net profit grew 35% to about ₹50 crore. The firm counts Coca-Cola, PepsiCo, Mondelēz, Reckitt Benckiser, Dabur, L’Oréal, Unilever, Nestlé, Heinz, Tata Global, Hindustan Unilever and Marico, as some of its top clients.
According to Pankaj Patwari, a director at Advent International, the fragmented nature of the rigid plastic manufacturing industry provides several opportunities for inorganic growth for Manjushree.
“The rigid plastic packaging industry in India is estimated to be at 2 million tonnes. Manjushree addresses only 60% of the market today with about 10% market share. It has significant headroom available both through expansion and market share gain within its current segments. In addition, the fragmented nature of the industry provides an opportunity for inorganic expansion which could be both in the form of smaller tuck-ins or larger transformation mergers and acquisitions,” said Patwari.
This is not the first time Manjushree has set its sights on expanding market share through acquisitions. In 2016, it acquired five facilities of a Delhi-based rival, Varahi Ltd. In March 2017, the company started its Guwahati plant with a capacity of 4,000 tonnes per annum (tpa). Its first plant was set up in Bidadi, Bengaluru in February 2013. All its seven facilities, together, contributed to an installed capacity of about 144,000 tpa in FY19. The company is currently in the process of setting up a new facility in Silvassa costing ₹130 crore, which will enhance its production by 20,000 tpa capacity. “The new facility, which will be up and running in the next 3-4 months, would help us expand our footprint to new clients in western India, especially in Gujarat and Maharashtra,” said Kapote
Currently, about 70% of its sales come from south India, and the remaining from north and east India.
Advent, which is active in India since 2007, has invested nearly $1 billion in the country across 10 companies from sectors such as consumer products, financial services, healthcare, industrial and technology. On 4 October, the PE firm said that it is buying out women’s innerwear brand Enamor from India Alternatives, Faering Capital and its promoters for about ₹320 crore. Earlier in September, it signed a definitive pact to buy a majority stake in DFM Foods Ltd from its promoters and existing investors, including WestBridge Crossover Fund, Llc, for an estimated ₹852 crore.
Its other investments in India include Aditya Birla Capital, the holding company for the financial services businesses of Aditya Birla Group; ASK Group, a leading wealth and investment management business and QuEST, a global engineering solutions provider.
Source: Mint