Anand Kripalu, MD & Global CEO, EPL aims to strengthen its double-digit growth trajectory and enhance profitability, with an expected boost in return on capital employed (RoCE) to above 20% in the foreseeable future.
The company, which has a current market capitalisation of ₹6,757 crore, has seen its shares gain more than 11% over the last year.
EPL Limited, formerly Essel Propack, is a Mumbai-based global packaging company owned by The Blackstone Group. It specializes in manufacturing laminated plastic tubes for the FMCG and pharmaceutical industries.
These are the edited excerpts of the interview.
Q: After five years of underperformance, Blackstone has decided to sell half of what it owns in the company right now. What’s the plan for that? And secondly, with the buyer being Indorama, the question that arises is it a strategic sale? What happens with Indorama? Do they plan to buy a little more thereafter and there could then be an open offer etc as well?
A: Indorama is a $16 billion conglomerate. They operate in petrochemicals and packaging. They have been watching EPL very closely for many years now. They are impressed with EPL’s journey of being one of the fastest-growing and most profitable packaging companies in the world. They see opportunities and they are a strategic investor therefore, we are looking at how we can exploit this opportunity in the years to come.
Q: As of now, what is their role? Will it be a mix of a financial investor and also looking at helping EPL expand its global footprint? If yes, which geographies are you looking at? Give us a couple of numbers as well. What is the current exposure globally and where is it headed?
A: They are a financial investor, but a strategic investor. They will come on to the board once the regulatory hurdles are completed. And for me, this is a bit of a win-win situation. Blackstone continues to stay invested in supporting us in the way they’ve supported us. And Indorama comes in with a wide geographic footprint. For example, we have already announced the fact that we are setting up a Greenfield plant in Thailand.
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Indorama is headquartered in Thailand and we believe we can leverage their knowledge and capability on the ground to get up to speed much more quickly. There are other geographies in Africa where they have a large presence and we are going to explore possibilities of geographic synergies where we can take their help and their support to accelerate our global expansion and our performance as well.
Q: With this strategic partner coming in with some money and the promise of geographical expansion as well you speak about how much faster can your business grow on the topline and the bottomline front from here. What sort of RoEs should one look at from hereon?
A: Our stated objective is to grow this business strong double digit with EBITDA growing faster than our topline. And as you rightly said, we have been a little shy of our double-digit topline ambition. So getting squarely into the double-digit zone is our priority and we will see how we can leverage the knowledge and support that comes from Indorama to as quickly as possible get to that ambition. Now specifically our return on capital employed (RoCE) has been improving consistently over the last several quarters in the last couple of years. We are now at 16.9% in the last quarter that we reported and I see our RoCE in the foreseeable future getting into the 20s.
For the full interview, watch the accompanying video
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