ESSEL PROPACK LTD - AN INDIAN MNC

 

Even if we consider the entire glob , India is one country with maximum number of listed companies in any stock exchanges. This gives us an opportunity to select from a large pool . But if our selection criteria is specific  to find out a company with sizable global market share in any product , it may be bit difficult. Only very few Indian  listed  companies succeeded to grow beyond boundaries and eligible to be called as true Indian Multinationals , especially in manufacturing sector. This week let us look into one such company -Essel Propack .

                                                                   Essel propack is the  global leader in  laminated  tubes    with  close to 35%  percent  global market  share.( Laminated tubes are familiar  for us as the packing material of Tooth Paste) . Company operating about 25 factories located in more than 10 countries. Essel serving both Oral care and non-oral care segment and it is an undisputed leader in oral care segment with more than 50 % market share in large countries like India and China. In the non oral care segment , company’s products are used to pack food items, Pharmaceuticals, Cosmetics ..etc. Company generating about 40 % of income from India , 20% from China and remaining from other countries.At present , majority of income is coming from oral care segment and now company is taking efforts to increase its market share in non oral care segment where growth is high and margin is better. It is aiming to reach a 50:50 ratio in another few years.

Innovation and customization backed by strong R&D is the backbone of the success of Essel Propack. Company developed many first of its kind products and always keen to develop products as per the specifications given by its customers.High lustre metallic look lami-tubes ( EGNITE) ,Recyclable tubes with Oxygen barrier ( GREEN MAPLE LEAF) ..etc are some of company’s unique innovations.

                                                                                  As we are aware,  many western countries are still fighting to come out of recession . As a global player, Essel’s performance is subject to the improvement of economies of these countries too. Even in a not so good condition for economies of  some of its major markets including European countries, company could perform well .Few of company’s subsidiaries are still operating in loss or at break even level . I hope, with improvement in western economies , more and more subsidiaries of company will improve their performance going forward. Since company’s raw materials are crude derivatives , price of crude is one point to note .Any significant increase in crude price may impact its margins if company not in a position to pass on the same to its customers.There was a family arrangement  between the promoters  of company during December 2014 and as per this Essel propack is vested with Ashok Goel .  Subhash Chandra , his immediate family members and the entities controlled by him and his immediate family members have ceased to be part of the promoter group of Essel Propack  as part of this  modified family arrangement.I believe, clarity on the ownership will help and encourage the management to take the company to next level of growth through a focused approach .In an effort to strengthen its balance sheet , company now taking efforts to reduce its debt . In FY 2013-14 Essel reduced its debt by Rs.60 Cr.

                                                                             For the financial year ended March 2015 , company reported a topline of Rs.2323 Cr ( Previous year  Rs.2126 Cr) and a net profit of Rs.141 Cr ( Rs.108 Cr) . EPS for the year is Rs.9 . Essel propack is a proxy play to ride on global consumer growth and a stock suitable to include in core portfolio for steady compounding in the years to come . EPL listed in both stock exchanges and currently trading around Rs.127

Link to Company Website HERE 

Discl: It is safe to assume that I have vested interest in EPL

Posted in: Investment Guru