Essel Propack sees revenue, margins up in FY11

Essel Propack sees revenue, margins up in FY11


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Mumbai: Packaging materials maker Essel Propack expects its revenue from laminated tubes, in which it is a world leader, to grow 14-15% in FY11 as against last year’s about 9%, a top official said on Monday.

“Sales in India, China and Mexico would grow above the overall growth, while the US and Europe would see a modest growth in the current year," R. Chandrasekhar, president, told Reuters in a telephone interview.

Sales in Russia, Egypt and the Philippines, meanwhile, are seen rising 8-9 percent on year.

Essel Propack, which is also the largest maker of toothpaste tubes globally, has two manufacturing units in China — one set up in 2009 and the second in April 2010.

“With these two new plants operating, you can see better growth rate now," Chandrasekhar said.

Though the plant that was set up in 2009 was for a Chinese customer “it also exports to Korea, Japan and for a multinational company", he said.

He sees revenue from the speciality packaging segment rising 17 percent in the current year.

“The speciality segment is meant only for Indian market that is doing extremely well and we have adequate capacity to support this growth," he added.

On 29 October, the Mumbai-based Essel group company, which manufactures more than 4.5 billion tubes annually, reported a consolidated net profit of 9.38 crore on a net sales of 350 crore rupees in July-Sept.

Margins boost

The two new manufacturing units set up in China would help Essel Propack boost operating margins to 20% in the current year from 16.5% last year, Chandrasekhar said.

“We have even increased our manufacturing capacity in India by 10-12 percent in the recent past to push sales," he added.

“Post 2008, we have re-negotiated a lot of contracts in China and India and now we are better insulated to (rising) raw material costs," he said.

He sees margins margins rising to 22-23% in years to come.

Essel Propack, which has manufacturing units in 12 countries, has spent about 45 crore as capex in the current financial year and sees overall capex of 85 crore by FY11-end, he added.

At 2:37 p.m., shares of Essel Propack were trading at 55, up 0.18% in a weak Mumbai market.

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