Max Group ropes in Japanese strategic partner for packaging films business

Builds up war chest of Rs 300 cr for education and real estate businesses

Analjit Singh-promoted $2-billion Max Group is bringing in a strategic partner in its speciality packaging films business, Max Speciality Films (MSF). 

Japan’s Toppan Printing Co. will pick up 49% stake in MSF for around Rs 200 crore at an enterprise value of Rs 655 crore. Max Speciality Films was the first venture promoted by Analjit Singh in 1990, before the group forayed into sectors such as telecom, healthcare, insurance, among others. 

  

“This deal gives us competitive advantage with access to technology and the global markets. As a strategic partner the Toppan group will share their expertise in managing the global speciality films business as well as help us leverage its global sales network,” said Sahil Vachani, managing director, Max Ventures & Industries Limited (MaxVIL), the holding company of the packaging film business. 

Toppan group, established in 1900, is one of the large global buyers of BOPP products. Incidentally, the Japanese major is also the official printing services partner for the Tokyo Olympics in 2020. 

  

Following this deal Toppan Printing Co. would have two directors on the board of Max Speciality Films, while the Max group would continue to enjoy management control over the company.  Plans are afoot to introduce other products from Toppan’s portfolio into the India market through the joint venture, while expanding manufacturing footprint beyond BoPP products.   

Currently 70% of MSF products are targeted at the domestic market with the remaining directed for exports. “Going forward this mix will change with equal contribution from the domestic and exports markets,” Vachani said. 

The focus of the business will be to grow profitability through better pricing power by introducing value-added products in the market, he added. 

The deal comes at a time when MSF is augmenting its production capacity to over 70,000 tons per annum with an investment of Rs 250 crore, raised through a mix of debt and internal accruals. 

The Toppan deal will allow MSF to retire some of its debts, while building up around Rs 300 crore worth of treasury corpus at MaxVIL. In January 2017 a subsidiary of New York Life Insurance Company had picked up 22.5% stake in MaxVIL for Rs 121 crore.  MaxVIL is the holding company of the group’s investments in the manufacturing (MSF), real estate (Max Estates), education (Max Learning) and intellectual and financial support services (Max I). 

Vachani said bulk of the Rs 300 crore-war chest at MaxVIL would be used for the group’s foray into the education business, likely to be rolled out over the next six months.  The remaining funds would be deployed in the existing commercial real estate business, he added.   

Max India Group was demerged in January 2016 into Max Financial Services Limited, Max India Limited and Max Ventures and Industries Limited.