Thursday, February 23, 2017
Manjushree Technopack on inorganic growth path with Varahi acquisition
Friday, 25 November, 2016, 08 : 00 AM [IST]
Our Bureau, Bengaluru
Manjushree Technopack, the Rs 546-crore rigid packaging major, has forayed onto the inorganic growth path by acquiring its Delhi-based competitor Varahi Limited. This will enable the company to propel its turnover toward the Rs 800-crore mark. However, it refused to divulge the details of the cash deal.
Varahi, which is over four decades old, offers rigid packaging solutions for fast-moving consumer goods (FMCG), beverage and pharmaceutical companies. Its manufacturing units are located in Noida, Baddi and Pantnagar with a combined production capacity of 20,000 metric tons (MT).
For Manjushree, the move is a first for India’s largest polyethylene terephthalate (PET) and preform manufacturer. It has widened its lead as the largest supplier of rigid packaging in India through its six manufacturing units across India, with a total production capacity of one billion units per annum.
Its clients includes GSK, Coca-Cola, Nestle and Mondelez. The company stated that the acquisition has now swelled its client base to 200 with the addition of new customers like Dabur, SC Johnson, Perfetti Van Melle and Patanjali.
“This is a significant milestone for us as it marks our first strategic investment. With this acquisition, we gain a solid foothold in north India. The cross-selling of products between Manjushree’s and Varahi’s customers will give us optimum growth,” said Vimal Kedia, managing director, Manjushree Technopack.
The 32-year-old Manjushree Technopack, which is based in Bengaluru and backed by Kedaara Capital, will boost its sales by gaining access to registered designs and patents filed by Varahi. It now owns over 300 registered designs and patents, which will allow it to produce five- to 20-litre PET units in 1,000 different designs.
The Indian plastic packaging industry’s output is expected to touch 17.6 million MT in 2016-17. PET is the most common polymer resin used for packing food, beverages and medicine. It accounts for almost 10 per cent of the total output at about 1.8 million MT.
The demand for polymers, particularly PET, has been growing at a compound annual growth rate (CAGR) of 10 -12 per cent in the last decade, and is expected to hold the trajectory.
India’s per capita PET consumption is 0.6kg, while the global average is about 2.9kg. Manjushree has a production capacity of 1,00,000 MT, roughly 12.5 per cent of the total PET demand in India.
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