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CavinKare may sell packaging arm

August 30, 2006 12:05 IST

Essel Propack, the world's second-largest maker of laminated tubes, is close to acquiring Packaging India, the packaging business of CavinKare.

Sources close to the development said the Essel group company would announce the acquisition this week. The size of the deal, however, could not be ascertained.

An Essel Propack spokesperson declined to comment on the development, while CavinKare CEO C K Rangnathan could not be reached.

Pondicherry-based Packaging India, sources said, posted a turnover of Rs 90 crore last year -- nearly one-fifth of CavinKare's total income in India.

Packaging India is into flexible packaging solutions, with a production capacity of 6,000 tonne per year. It caters to the confectionery, cosmetics, detergent, food, and beverage industries.

The deal will mark CavinKare's exit from the packaging business. However, it will continue with its portfolio of hair care, skin care, personal care, and food products.

Essel Propack, earlier known as Essel Packaging, commands over 70 per cent of the domestic market for laminated tubes. Started in 1984 in technical collaboration with American National Can Company, Karl Magerle Kusnacht of Switzerland, and Kaito Chemicals of Japan, it supplies tubes for toothpaste, cosmetics, pharmaceutical products, grease, and adhesives.

It also supplies laminates for its operations in Nepal, Egypt, and China.

Essel Propack has a capacity of three billion tubes per annum. Of this, 1.2 billion tubes are sold in India, and one billion in China. It commands a market share of 70 per cent in India and China, while it has a market share of 25 per cent globally.

Essel Propack recently announced the setting up of manufacturing units in Poland, with an investment of $23 million. It has 24 units in 15 countries.

Kausik Datta in Mumbai