The company has acquired land, building, and plant & machinery of the APR packaging unit, free from all encumbrances and liabilities.

It said the acquisition was being funded through a mix of debt, preference shares and internal accruals. There will, hence, be no equity dilution. Its equity base at present stands at Rs 6.15 crore with a book value of Rs 97 per share.

The new unit, located oustide Hyderabad, will manufacture flexible packaging cartons and packaging systems. The company, at present, has facilities in Thane, Nagpur and Silvassa in Maharashtra, and Kalyani in West Bengal.

Paper Products plans to invest around Rs 8 crore to modernise the manufacturing facilities, add certain balancing equipment - which includes import of alaminator - and infuse working capital. The unit at Hyderabad is expected to add Rs 50 crore in a full year to Paper Products turnover.

Paper Products is a technological and market leader in flexible packaging and labelling in the country. In the flexible packaging business, it concentrates on the premium segment of the market where it has a two-third market share.

Paper Products is also the country's largest labelling manufacturer with a range of the latest international labelling technologies like shrink sleeves, heat transfer labels, pressure sensitive labels and metallised paper labels.

The company's clientele includes multinational FMCG companies like the Unilever subsidiaires, Nestle, Cadbury, Smithkline Beecham, Dabur, Colgate, Godrej, Britannia, Eveready, Kellogs, Perfetti, Procter & Gamble, and Corn Products.

INSIGHT
Enhancing monopoly status

Paper Products has virtually no competitor worth its name in the premium segment of flexible packaging. Flex Industries has majorcash flow problems despite repeated equity dilutions, while Akar Laminators is also having troubles of its own. Paper Products will be installing a laminator to balance the capacity (APR Ltd's unit, which is being taken over by Paper Products has 8 colour printing machines of a famous Italian company) between printing and lamination. The company will provide the expertise which the Thapars did not have (reflected in working capital problems by the unit) and the acquisition will enhance the practical monopoly status of Paper Products in the premium segment.