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leadership
Dr Amit Rangnekar
www.dramitrangnekar.com
Case learnings
Insights into
EPLs evolution from a local to a global leader
Global market entry strategies in emerging &
developed markets
Focus, cost leadership & vertical integration
strategies
Inorganic growth strategies
Media
Entertainment
Education
Packaging
IT & Telecom
Essel Group
Subhashchandra Goel- serial entrepreneur
Essel= Subhashchandra & Lakshminarayan (Grandparents)
1970s- Rama Associates, polymer envelopes store 100T GOI
grain
Fortune from GOI quota rice exports to Russia
1982- Indias 1st laminated tubes maker- Essel Packaging
1989- Indias 1st private satellite channel- Zee
1986- Indias 1st theme park- Esselworld
1992- Indias 1st MSO- Citicable
2008- Group Turnover Rs 100b ($2.5b)
2008- Enterprise value Rs 500b, 8,000 employees
MD Speak
If you have a product you
truly believe in that is
global in terms of
competitiveness, then just
do it. Find a way to play on
the global stage.
Ashok Goel, MD &VC,
Essel Propack
Lamitubes
Laminate
Manufacturing Process
Blown film
Lamination
Slitting
Printing
Moulding
Tubing
Essel Packaging
1982- single-unit company in Vasind, MS
Integrated facility- lamination & tube manufacturing
Late 80s- lamitube capacity 1.4b, production capacity
only 53m
Challenge- match tube production to lamination capacity
1990- 2 tube manufacturing plants around Mumbai
1994- tube manufacturing plant at Wada
New product, new concept but technological complexity
Competitive advantage- integration, value chain control
1980s
Lamitubes- low product acceptance in Indian till
late 1980s
India- Low cost market
EPL- poor capacity utilisation
Premium price rejected despite superior
packaging
Strong resistance- metal to lamitube conversion
1989- Huge losses, company recapitalised
Frustration, but conviction- product was too good
to reject
Post Liberalisation
Egyptian XP
China
Permissions
The local authorities were very supportive. We
had no consultant to help set up, we did it on our
own. We went straight to local authorities and told
them what we needed. We didnt know the ABCs of
how to get it. But we asked them to help us. They
appreciated the clarity & transparency of our
approach.
EPL convinced them about unique technology
transfer to China
EPL solved capacity problem of a local plant Only
few workers knew how to use the machinery
China Progress
Location- Guangzhou, Guangdong Province
Approval- 100% foreign-owned, 1st company in
Guangdong
Commercial production within 6 months,
Americans 1-2 years
Confidence to operate globally
2004- 4 plants, $40m investment on the ground
Profitable in Y1, 19971998
P&G- late
entrant
Unilever
Pr
op
ac
k
Co
lg
at
el
Colgate
Pr
op
ac
k
Chinese
manufacturers
80% share
Es
s
suppliers
Tube
Toothpaste
manufacturers
P&G China
MNC acceptance, key to better margins
Domestic tube manufacturers- significant price
threat
P&G entry, spectacularly successful, aligning critical
Crest- reformulated & repriced- took of
Repositioned- female brand to common mans
toothpaste
P&G volume growth 10 times in 5 years
M&A
CMD Speak
Most of the managers, the senior team, used to
believe they were truly entrepreneurs. Once you
are able to inculcate that feeling, then people get
charged to do things. This just do it
entrepreneurial drive was demonstrated by
Essels leadership in its global expansion Goel
Global Thrust
P&G, US
2002- P&G floated quotations for lamitubes in US &
Canada
P&G had retained same US supplier for L20Y
Landing P&G contract- key to EPL global aspirations
No price advantage/ xp of mature, high lamitube usage
US market
Regional relationship with P&G India, China &Egypt
Entry options- M&A, alliance, export
P&G- US centric
Colgate US- own lamitube expertise
Unilever- not US focused
P&G contract
EPL 2004
Global leader, turnover Rs 609cr, 17 plants at 85%
efficiency
Global lamitube market- 12.8b tubes, EPL- 3.84b, 30% share
60% global contribution (2.27b) tubes, India 40% (1.57b
tubes)
Global cost leader- efficiency + vertical integration
Meet- Quality standards, delivery schedules, price
expectations
Competitors- primarily converters, no value chain control
EPL 1st Indian company with facilities in all 5 continents
Strategic alliances- leading Swiss, German, Japanese & US
companies
CSFs
CSF
Organisational Capability
Future
Vision 2010 Through acquisition & strategic client
relationships, establish EPL as a leading player in
plastic tubes across all geographies by 2010 with a
20% market share.
Expansion into medical devices
Focus segments- pharmaceuticals, cosmetics & food
Our approach is of a manufacturer with a service
provider mentality, one that brings value to our
customers through creative applications of
knowledge of science, technology, design &
marketing. Chandrasekhar, CEO
Opportunity 2009
Controlling stake Global No. 3, Betts (UK) 14% GMS
Betts 50m sales, 8m loss, huge debt
Financial mess, hence reasonable valuations
expected
Betts well placed in EU, EPL weak
2007- Gresham PE M&A Betts (110m/ Rs 815cr)
Betts pure tube player M&A, strategic fit for
integrated EPL
Betts buys resins, key RM, can buy from EPL
References
Essel Propack to open a new plant in Danville, Siliconindia,
Wednesday,27 August 2003 www.siliconindia.com/shownews/
Essel_Propack_to_open_a_new_plant_in_Danville-nid-20574.html
ESSELPROPACKLIMITED ibef.org/download/essel_propack.pdf
EsselPropackwww.esselpropack.com
EsselPropackPolskaPlant
www.esselpropack.com/europe.html
EsselPropackopens newplantin U.S.
www.hindu.com/2003/08/28/stories/2003082804391600.htm
ESSELPROPACK www.alacrastore.com/search/ESSEL+PROPACK
EsselPropackto set up unit in Poland www.domainb.com/companies/companies_e/ essel_propack/20060802_
propack.html
EsselPropackannounces entry
www.indiantelevision.com/release/y2k6/aug/augrel3.htm
References
World's Largest Plastic-Tubing Firm Funnels First
U.S.Plantinto www.siteselection.com/ssinsider/pwatch/
pw020729.htm
India withEsselPropackwww.plasticstoday.com/articles/
mumbai-india-essel-propack
EsselPropacknew in-plant in China www.domainb.com/companies/companies_e/essel_propack/20030726_
revenues.html
EsselPropackaquires UKs Telcon Packaging www.printpackaging.com/news/Essel_sub56711344.html
EsselPropackwww.moneycontrol.com/stocks/company_inf
o/locations.php?sc_did=EP11
EsselPropacks Global Sales cross Rs. 10 Bn
www.indiantelevision.com/release/y2k7/jan/janrel57.htm
ESSEL Propack sets sights on UK's Betts, 11 May 2009,
MV Ramsurya,ET