Rollatainers is also looking at acquisition of smaller packaging companies. The company has plans to double the capacity in the next three-four years.

The company will get about Rs 25 crore from making preferential allotment of 70 lakh shares to ITC at a premium of about Rs 25 per share.

Rollatainers managing director director Ambrish Bhargava told The Financial Express that the amount will be utilised to become cost efficient through adoption of better technology as well as making a foray into related product areas.

The company also plans to set in motion soon the process of tying up with some overseas companies for possible joint ventures in the same product segment, said Bhargava.

The company's paid up equity capital which currently stands at Rs 6.84 crore will double to Rs 13.6 crore post preferential allotment. Theexact price of the preferential allotment will, however, be arrived at after getting SEBI approval as per the guidelines. The company is also in the process of approaching the stock exchanges in this regard.

ITC will pick up the 51 per cent stake through one of its subsidiaries -- Russel Credit.

At present, ITC's packaging division has an annual capacity of 30,000 tonne while Rollatainers has an annual capacity of 16,000 tonne. The combined capacity of over 46,000 tonne makes the company one of the most formidable and largest packaging company in the region.

"The company decided to divest majority stake in favour of ITC as it was felt that the synergy in operations of the two partners will result in Rollatainers emerging as more competitive. The enhanced product quality will also be to the benefit of the customers", said Bhargava.

In the enhanced equity structure, ITC Ltd will emerge the majority partner with 51 per cent equity stake, followed by institutions and public which will hold a combined 29per cent as against the present 60 per cent. The promoters -- Bhargavas-- will see their equity holding being halved to 20 per cent.

Bhargava said the promoters are not in favour of changing the name of the company as it enjoys a considerable brand equity by virtue of being one of the largest and better managed paper packaging company. "However, if the situation warrants it, we may go on for a change of name", he added.