Essel Propack to step up non-oral care play

Essel Propack, the world’s largest maker of laminated tubes, is betting big on the high-margin non-oral care segment to drive its growth in India, said vice chairman & managing director Ashok Goel.

He said the sector is growing at about 25% annually in terms of volumes in India compared to 7-8% seen in oral care.

Propack, part of the Essel group, sells about 500 crore tubes a year, half of which is in India.

“About 30% of the 2.5 billion tubes sold here is from non-oral care segment,” Goel told DNA on Friday.

The segment’s contribution has doubled from 2008-09. The following year, its share stood at 22%.

“Cosmetics and toiletries are growing at as high as 100%,” he said.

He said more and more hair care and men’s grooming products are being launched. “A lot of over-the-counter and prescription pharmaceutical products are now moving from aluminium tubes to laminated tubes,” Goel said.

While oral care products like toothpaste are packaged in laminated tubes, non-oral care products are packaged in plastic tubes.

Plastic tubes are pricier and offer more margins than laminated tubes, which scores on volumes. While Goel did not reveal the margins for either type of tubes, Propack’s overall operating margins stood at 18% for the fiscal ended March 31.

Contracts to produce tubes for oral care are normally for a period of 3-5 years, whereas in non-oral care it is 1-1.5 years, Goel said.

“That means in oral care, once we have bagged the contract it’s just servicing. So we have reorganised our sales time to focus more on marketing. And we have also got newer technologies to ensure there is a quicker turnaround time for non-oral care tubes,” he said.

Asked if the share of non-oral care will further increase from 30% this fiscal, he said no as even oral care is growing and on a larger base. “But non-oral care will catch up with oral care in the long run and that’s the idea,” Goel said.

Other than laminated and plastic tubes, Propack is into flexible packaging, which includes sachets and packets for wafers and biscuits. It produced 12,000 tonnes of flexible packaging in 2010-11.

Propack, 80% of whose business is overseas, has 22 manufacturing facilities, including eight in India. The company has planned a capex of about Rs90 crore this fiscal.

Propack is targeting a volume and topline growth of 12% and 15% respectively this financial year.

For the three months ended March 31, Propack’s sales rose 22.8% from a year ago to Rs104.01 crore and bottomline jumped 138% to Rs8.52 crore.

Disclaimer: Essel Propack is part of the Zee Group, which is a co-promoter of Diligent Media Corporation that publishes the DNA.