Essel Propack packed a punch early on Wednesday after declaring a solid 65% dividend to shareholders for the year ended 31 December 2002.

The scrip of the packaging company, in fact, plumped up by 7.45% to Rs 141.35 by 10:50 IST. A total of 7,599 Essel Propack shares were exchanged on BSE by that time.

The scrip now has turned around from a bout of losses - 12% to its 52-week low of Rs 130.25 on 11 March 2003 from Rs 147.70 on 28 February 2003. Apparently, the high dividend pay-out of 65% (Rs 6.50 per share of Rs 10) declared by the company is causing the current upbeat run.

The company announced fourth quarter as well as full year's results (for the period ended 31 December 2002) yesterday. For Q4, Essel Propack posted a 21% fall in net profit to Rs 8.40 crore on 10.2% drop in total income to Rs 52.60 crore. The company posted a net profit of Rs 46.30 crore for the year ended 31 December 2002, comprising 12 months, whereas the same was at Rs 29.60 crore in the year ended 31 December 2001, comprising 9 months. Total income for FY 2002 is at Rs 242.10 crore (Rs 2.42 billion) as against Rs 174.10 crore (Rs 1.74 billion) in FY 2001. On a consolidated basis, for the full year, the Essel Propack group has posted a net profit of Rs 65.10 crore and a total revenue of Rs 471.90 crore (Rs 4.71 billion).

Analysts say the results are in line with expectations. Considering the slowdown in the economy and the main user of packaging products, the FMCG sector, the company's performance has been commendable. FMCG companies have posted negative-to-flat growth rates over the last couple of quarters. There have been reports lately that Essel Propack is close to acquiring a Chinese plastic tubes maker. The size of the deal is estimated at $10 million (Rs 48 crore).

EPL, earlier known as Essel Packaging, has a virtual monopoly in the Indian laminated tubes (lamitubes) segment of the packaging industry. It became the world's largest lamitubes producer in November 2000, from its earlier second position, through the takeover of Propack, the fourth largest lamitubes producer globally then, in a $50 million stock-cum-cash deal. The Propack takeover has made EPL a global player with a presence in other relatively high growth regions of the world - S E Asia, Latin America and East Europe.

The company's Vision 2005 plan envisages 80% market share each in China and India and an overall 50% share of the global lamitubes market. This, though a challenge in itself, appears to be achievable going by the management's past track record of implementation of the Vision 2000 plan, formulated in 1995 - to get globalised. EPL is exploring the possibility of an aggressive $120-million expansion plan in the international markets by setting up new units in the US, Africa and China. Its production capacity of 2.8 billion tubes per annum is expected to reach 7 billion by 2005.

EPL's Vision 2005 plan is also to become an admired global speciality packaging company. Last year, it bagged a five-year contract from P&G to supply laminated tubes for its North American operations. To meet the requirements of P&G, the company set up a new manufacturing facility in the city of Danville. Full capacity utilisation is likely to be achieved by April 2002. Lamitubes is a high growth potential business, especially in the emerging markets where EPL has already established strategic presence.

EPL expects significant developments in terms of new opportunities in 2003. The company's strategic alliance with American FMCG giant P&G is expected to contribute around 15-18% increase in revenues. It will also increase EPL's world market share from 25% to more than 30%. EPL has 17 manufacturing facilities spread across 11 countries in developed and emerging economies including Venezuela, Mexico, Egypt, Germany, China, Nepal, Indonesia and Philippines besides India. The company is also in the process of negotiating merger and acquisition deals in Europe and India. As on 31 December 2002, promoters held 37.15% stake in EPL, while the public, institutions and foreign bodies held 15.72%, 11.81% and 30.11%, respectively