PAG-backed Manjushree Technopack may spend $150-180 mn to acquire 4-5 assets as packaging sector undergoes consolidation
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Business News/ Companies / News/ PAG-backed Manjushree Technopack may spend $150-180 mn to acquire 4-5 assets as packaging sector undergoes consolidation Priyamvada C , Sneha Shah The sector, which is at the cusp of consolidation, has shown substantial growth potential, driven by demand across India's consumer, industrial, pharmaceutical, and export industries, making it an attractive proposition for PE firms and global companies. Last year, US-based fund Advent International sold its majority stake in MTL at a valuation of $1 billion to Asia Pacific-focused private equity firm PAG. Gift this article
MUMBAI :PAG-backed Manjushree Technopack Ltd (MTL) is in talks to acquire 4-5 assets and may spend a combined amount of $150-180 million to bolster its offerings, three people familiar with the matter said, further underscoring the growing consolidation in the packaging sector.
PAG-backed Manjushree Technopack Ltd (MTL) is in talks to acquire 4-5 assets and may spend a combined amount of $150-180 million to bolster its offerings, three people familiar with the matter said, further underscoring the growing consolidation in the packaging sector.
"The company is looking to strengthen its presence in its existing areas and bolster its revenue growth. It has identified 4-5 candidates to acquire, and the discussions are ongoing. Two of them are in advanced stages and are expected to happen in the coming months," the people added.
'These acquisitions are aimed at improving MTL's revenue growth and justify the billion-dollar valuation it sought when PAG invested in the company last year," one of the people cited above said. MTL did not respond to Mint's emails sent on Friday requesting comment.
The packaging sector, which is at the cusp of consolidation, has shown substantial growth potential, driven by demand across India's consumer, industrial, pharmaceutical, and export industries. This makes it an attractive proposition for PE firms and strategics orglobal companies looking to buy assets in India. Also Read: MTR Foods owner Orkla files draft IPO papers, to sell 22.8 mn shares
Last year, US-based fund Advent International sold its majority stake in MTL at a valuation of $1 billion to Asia Pacific-focused private equity firm PAG. Initially, Advent sought an exit on its six-year-old bet through an IPO, which was later called off when the private equity firm got the opportunity for a full exit at a better price in the private markets. PAG investments
While proceeds from the offer-for-sale were expected to go to Advent, MTL detailed that the fresh issue will be used to repay/prepay outstanding borrowings, in full or in part, and pursue inorganic growth through acquisitions and other strategic initiatives, as per its DRHP filed in August last year.
Meanwhile, PAG made its second investment in the packaging sector through a majority stake in Pravesha Industries Pvt. Ltd for $200 million in January. While Manjushree serves a diversified customer base spanning consumer end-markets such as home care, personal care, food and beverages, paints, nutraceuticals, agrochemicals, liquor and spirits, and dairy, Pravesha stands out as a specialised player, focusing solely on pharmaceutical packaging.'PAG's investment has enabled MTL to leverage Pravesha's network to foray into pharmaceutical packaging," one of the people cited above said.
Broadly, several investment firms, like Carlyle Group and Bain Capital, have also created dedicated platforms to acquire and integrate mid-size companies. While Carlyle announced its diversified auto platform by combining Highway Industries and Roop Automotives, Bain is also in the process of creating a similar structure.
Carlyle also has a platform in the generic pharmaceuticals segment in India through partnering with Viyash Life Sciences in 2021 and acquiring Symed Labs, a manufacturer of niche APIs to enable backward integration.
Over the years, Manjushree has acquired companies such as Pearl Polymer, Classy Kontainers, and Hitesh Plastics Pvt., which have helped it increase its geographic presence across India and expand its product categories and customer base in newer industries.
MTL, which already has expertise in select areas, plans to further bolster its presence through inorganic and organic growth plans. According to its DRHP, the company reported an operating revenue of ₹ 2,117 crore in FY24, compared to ₹ 2,096 crore a year earlier. Its profit more than doubled to ₹ 140 crore. Growing through acquisitions
With other acquisitions such as Varahi in 2017 and facilities of National Plastics Industries Ltd (Napla) in fiscal 2020 in North India, its overall market reach and ability to service diverse clients improved substantially,Crisil said in a report in December.
The acquisitions have also helped to improve product diversity (Napla acquisition has added dispensers and sprays to the portfolio), add new clients, and supply new products to existing clients, thereby improving wallet share, the credit rating agency said.
'These helped to expand into new client and product (such as caps and closures) segments. Addition of new plants in Vizag and Mysore will further support client additions, apart from enhancing product profile," Crisil said, adding that the acquisition of the plastic packaging business of Oricon is expected to further strengthen its business risk profile.
Manjushree Technopack's presence in North India improved after the acquisition of Varahi, Napla, and PPL. It should continue to help MTL integrate manufacturing units with customers' supply chain systems, underlining the successful integration of its past transactions. Additionally, the newly commissioned Vizag plant, the upcoming Mysore plant, and recent acquisitions will bring the company's facilities closer to customers, Crisil said.
India's packaging sector, valued at ₹ 6,399 billion in FY23, is expected to reach ₹ 8,620 billion over the next five years, driven by various factors such as rising disposable incomes, urbanisation, increased demand for processed and packaged goods, and a thriving e-commerce sector, according to a Technopak report last year. The report added that other government initiatives focused on organised retail and food safety are further propelling demand for high-quality, standardised packaging solutions.
MTL, which competes with listed rivals such as Moldtek Packaging, TCPL Packaging, Uflex Ltd and EPL Ltd, is one of the largest players in the rigid plastics packaging business in India. It has a strong market share supported by established relationships with customers such as Reckitt Benckiser,Dabur India, Hindustan Coca Cola Beverages, PepsiCo India, and Mondelez India Foods. Also Read: Sheela Foam eyes further investment in Furlenco as furniture rental market grows
While the packaging industry is highly fragmented, leading to intense competition that may continue to constrain scalability, pricing power, and profitability, Crisil said MTL may continue to benefit from its well-developed, in-house design facilities, capabilities of diverse manufacturing processes, and ability to pass on raw material price variations to clients. Topics You May Be Interested In Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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