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Essel Propack - Packing gains

| 6/20/2011 1:38 PM Monday

A visit to a plastic tube manufacturing facility in Germany by Subash Chandra was what paved the way for the Essel Group’s entry into this business. Replacing the age old aluminium tubes by a product far modern and less messy was the idea that has seen this company grow from strength to strength over the years. Facing resistance initially, Essel got its first major order from Hindustan Lever, which was a turning point for the company. And the rest, as they say, is history. In 1991, the introduced a polyester-based product called EP9190, which is still very popular amongst brands such as Ponds. In 2000, they acquired Propack and became Essel Propack.

Progress so far

At the global level, Essel Propack commands a one third market share in the laminated tubes domain. That means, every third tube in the world is manufactured by Essel. The company has emerged as a truly Indian multinational with its corporate office in Mumbai.

From the initial days when customers were not ready to accept the concept of using plastic laminated tubes as an alternative to popular aluminum tubes and because of the high-tech nature of the product no one could think that such a product could  be made  in India the company has in fact come a long way. From convincing customers to change their packaging lines which involved capital expenditure to ensuring a time delivery along with superior quality have been tough tasks which the Essel management has managed quite well.

In the current scenario where the economic and demographic pattern of country is changing rapidly and so are customer requirements the company has been progressively managing its state of affairs and retaining its position as an industry leader. Product innovations, managing  environmental concerns, etc have been at the core values of the Essel management. Essel has  developed Egnite™, a high-luster, metallic finish  plastic barrier laminate tube for cosmetics  and Etain a fully recyclable plastic packaging tube made from a combination of virgin and recycled plastic materials to address the environmental concerns. It has success-fully developed a new product using Inviseam technology to make laminate tubes in large volumes for personal care products. It has introduced Digital Printing for non oral care high value added laminated tubes, first time in India, for fast turnaround time.

Almost 20 years ago Essel initiated a change in oral care market by replacing metal tubes with laminated tubes. The change is almost done. Currently it is replicating the same for pharmaceutical tubes. But challenges are different. The quality standards are stringent; tube inner surface resistance to the pharmaceutical ingredients has to be high. The company has developed Pharma tubes which can hold pharmaceutical ingredients and preserve volatile substance i.e. essential oils and perfume for longer period. It is available with different types of nozzle for various applications and diameter sizes.

Business Verticals

The company has two business verticals: tubes and flexible packaging. Business is structured geographically continent-wise into four divisions. It uses the hub and spoke model where the laminates are manufactured only at two locations worldwide: India and China. These are shipped to plants all over the world close to customers where the tubing happens.

There is one large plant supplying to multiple customers. It also has a by-plant facility. Under this segment, the company sets up a facility near the clients manufacturing unit. Majority of the production goes to the client and some spill over goes to other clients. That gives a lot of cost advantage to its clients. It also has another model called in-plant, where the plant is set up under the customer’s manufacturing facility only and the supply goes exclusively to the client. The model to choose, depends on the customer, volume and nature of the contract.

Customer Concentration

Essell works with all MNCs in the FMCG sector. The customer concentration depends on which country or geography one is looking at. Regionally, the customer concentration depends upon their market share. However, the company’s focus is on maintaining a balanced mix of consumers globally. Essel’s product mix has been changing in last three years. Currently while it continues to grow in the oral care segment, pharma and cosmetic segments are growing in leaps and bounds.

 

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