Essel Propack buys packaging arm of CavinKare

31-Aug-06

In a significant step in the company's diversification strategy, Essel Propack has acquired Packaging India (PIPL), the packaging arm of CavinKare for Rs 87.5 crore in an all-cash deal. The equity component was Rs 63.5 crore and the balance was debt. This acquisition marks Essel Propack's foray into the Rs 25 billion specialty packaging segment that is growing at over 15% pa. With this acquisition, Essel plans to tap the tremendous potential of the pharmaceutical and processed food industries, both within the country as well as, as an outsourcing hub. For PIPL, it has become necessary to align itself with another company to achieve it's full growth potential. Also, PIPL being predominant as a packaging supplier to FMCG, many off its clients were direct rivals to CavinKare. This could result in a conflict of interest and hence affect business, both for CavinKare and PIPL.