Essel Propack today announced that it has acquired Packaging India (PIPL), the packaging arm of CavinKare for Rs 87.5 crore in an all-cash deal. Rs 63.5 crore was the equity component with the balance being debt... This acquisition is a significant step in the company's diversification strategy. There is tremendous potential in the pharma and processed food industries, both within the country as well as, as an outsourcing hub, which we are looking at tapping by entering this segment," Ashok Goel, VC & MD of Essel Propack said.This acquisition marks Essel Propack's entry into the speciality packaging segment which is a Rs 25 billion category and growing at over 15% per annum. The overall packaging market in India is estimated at Rs 11,000 crore. CK Ranganathan, CMD of CavinKare Group, said: "PIPL had reached an inflection point and it was necessary for it to align itself with another company to achieve it's full growth potential." The other problem was that PIPL being predominant in the FMCG space, many of its clients are direct rivals to CavinKare which could result in a conflict of interest and hence affect business, both for CavinKare and PIPL. Given the company's decision to focus on its core FMCG business henceforth, it made sense for the company to divest the business and use the funds to fuel its growth plans, Ranganathan added.
