Essel Propack sees China traction, stable Europe

EPL Ltd. | Plastic Products | Chemicals & Fertilizers | BSE: 500135 | NSE: EPL

08 Sep 2009 Evaluate

Essel Propack, the world's largest tube-packaging manufacturer has won a series of new contracts in its Chinese business over the last few months, and stabilised its European operations. Last year, the company had slipped into losses for the first time after losing customers when it shifted operations from Western Europe to Eastern Europe. The company has started winning back the customers this year and posted modest profits during the first two quarters.

Its overall revenues grew 7.2% to Rs 333 crore during the last quarter, Europe, which contributes around 8% of total revenues, saw a topline decline of 45%. Despite its smaller share, European operations made a dent of Rs 10.3 crore in the company's operating profits (EBIT) during the last quarter, dragging it down to Rs 32 crore. The company expects European operations to return to normal by early next year, as more and more clients continue to come back. The firm has seen increased traction from the China market, where it claims a market share of 30-35%.

The company has won, and is in the process of negotiating, several large long-term deals. Together, they should add around 15% to its total revenues, when they are fully operational by the first quarter of next year. The increased revenues are likely start showing up in the accounts for the current quarter.

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