Flexible packaging films producer Jindal Poly Films on Friday entered into an agreement to buy Exxon Mobil Chemicals’ global polypropylene films business.
The move will help the company to not only double its manufacturing capacity for the commodity, but also enter newer territories and access more advanced technology, said Sanjeev Aggrawal, group chief financial officer, Jindal Poly Films.
“While it will take some time to seal the deal finally, it will help us in increasing our current BOPP (biaxially-oriented polypropylene) capacity from 2.1 lakh tonne per annum (tpa) to almost 4.5 lakh tpa and also increase our product portfolio,” he said.
The BOPP division of the Exxon Mobil has access to technology for very “high value-added” premium films, specialised and coated films and has a significant patent portfolio, all of which are part of the deal.
The deal will be through a combination of debt and equity, Aggrawal said, but refused to disclose the value due to European regulatory concerns.
In fact, the company will also look at entering the Asian markets with the premium range of products manufactured by the Exxon unit, he said.
According to a press release issued here, the agreement to acquire the division covers five BOPP production locations in the US and Europe. The manufacturing sites are in Georgia and Oklahoma in the US and the Netherlands and Belgium in Europe. The transaction also includes technology transfer and sales office in New York and office in Luxemburg, with a total work force of 1500.
Jindal Poly currently manufactures biaxially-oriented polyester (BOPET) films, which are extensively used in LCD screens of mobile phones and television sets, besides BOPP films, which are used in flexible packaging with a combined capacity of 3.37 lakh tpa.
“The market in India is currently growing at 15% and hence, while there is not much demand-supply gap, it is expected to widen going forward,” said Aggrawal.
BOPP currently contributes up to 50% of the total revenues of the company, said Aggrawal, pointing out that “the price of BOPP films is not very encouraging currently”.
However, the company expects the market for BOPP to grow further after the government’s recent decision to allow 51% foreign direct investment in retail, which will open up the food packaging sector as well, and also impact prices positively.