MUMBAI, March 9: The Foreign Investment Promotion Board (FIPB) has cleared the acquisition of 40 per cent equity in Gujarat Glass by Indocean Packaging, India Private Equity Fund and Citicorp Investment Bank for a total consideration of Rs 118 crore. Gujarat Glass is the glass-containers division of pharma-major Nicholas Piramal, which is being spun-off into a separate subsidiary, effective April 1, 1998.Industry sources said that Gujarat Glass' new partners will also get board representation in the company, though details on the board strength were yet to be finalised. Indocean Packaging Ltd (a fund set up by Chase Capital Partners and the Soros Chatterjee group), the India Private Equity Fund (supported by the Overseas Private Insurance Corporation) and Citicorp Investment Bank (Singapore) Ltd will hold approximately 11 per cent, 24 per cent and 5.4 per cent respectively in Gujarat Glass, with Nicholas Piramal retaining 60 per cent of the equity.
Sources said the new subsidiary will examine all growthoptions including an entry into the non-glass based packaging industry. If this move fructifies, it could mark Gujarat Glass' first significant non-glass based diversification and possibly help expand its customer base considerably. At present, its customer base is concentrated within the top 50 pharmaceutical companies in the industry, since captive sales to parent company, Nicholas Piramal, accounts for less than 5 per cent of total sales. For the year ended March 31, 1997, Gujarat Glass registered sales of Rs 104 crore, a growth of 48 per cent over the previous year.
Analysts added that Gujarat Glass had been planning to diversify its product range to include production of flaconnage (high quality, value-added specialty glass-packaging material) for non-pharma industries like cosmetics and food, and the availability of additional funds could facilitate this.
The spin-off of the glass unit was done as this was a capital-intensive business and a standalone company would allow more focused attention andincreased growth prospects in Australasia and Africa. Gujarat Glass, at present, manufactures bottles and vials both of sodalime glass and borosilicate (or neutral glass), besides amber pharma bottles.
