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Essel Propack to acquire 100 per cent stake in Essel Deutschland Germany
Monday, 26 September, 2016, 08 : 00 AM [IST]
Our Bureau, Mumbai
Essel Propack Limited, a global leader in laminated plastic tubes catering to the fast moving consumer goods (FMCG) and pharmaceutical space, will acquire a 100 per cent stake in Essel Deutschland Germany (EDG).
Following this transaction, EDG will be a 100 per cent subsidiary of Essel Propack, which was a joint venture (JV) partner with 24.9 per cent share in the company, whose enterprise value stands at $32 million.
The acquisition will help Essel Propack unlock synergies such as enhanced cross selling opportunity in the German markets, sourcing flexibility and better capacity utilisation at all of its plants in Europe.
Essel Propack can now deploy its proven capability to offer high-decoration laminated tube solutions for the premium non-oral care brands across Europe, including Germany. It will also have the benefit of a long-term supply agreement, which EDG recently signed with a local oral care company.
EDG’s revenue of approximately $40 million will now be consolidated in Essel Propack’s global revenue and will boost consolidated revenue by 11 per cent. In financial year 2016, Essel Propack’s consolidated revenue stood at Rs 2,184 crore.
Ashok Goel, vice-chairman and managing director, Essel Propack, said, “The acquisition of EDG will further enhance our position in the non-oral care category. This move is in keeping with our overall plans for achieving revenue growth of 15 per cent and profit after tax (PAT) growth of 20 per cent and achieving our Mission 20:20:20.”
The company has embarked on Mission 20:20:20 – earning before interest, taxes, depreciation and amotisation (EBITDA) margin of 20 per cent, return on equity (ROE) at 20 per cent and return on capital employed (ROCE) at 20 per cent within the next two years.
Ram Ramasamy, global chief operating officer, Essel Propack, said, “The complete buyout will enable us to step up productivity and efficiencies to those of other Essel Propack plants and improve overall profits.”
Alan Conner, European Business vice-president, Essel Propack, said, “This move will help us to creating a strong platform for growth in Europe, especially in the non-oral care category.”
“As we have a ready customer base, this will help improve our revenue growth through synergies. The acquisition will add 63 per cent to our Europe revenue on an annualised basis,” he added.
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