‘Our journey is high to higher’

EPL Ltd., formerly Essel Propack Ltd., is transforming from a family-run company into a professionally-managed global packaging giant under Blackstone, which took a controlling stake in 2019. MD & CEO Sudhanshu Vats speaks about the four pillars that will support the company’s growth plans. Excerpts:

How is EPL transforming under Blackstone?

EPL is the largest specialised tube manufacturing company. We do about 8 billion tubes around the world in 20 plants located in 10 countries. It is the largest manufacturer of laminated tubes in the world.

The transition from family ownership of Ashok Goel, who was the CMD of this company before, happened in 2019 when Blackstone acquired controlling shares in this listed company. In FY20 we delivered ₹2,748 crore in revenue, about ₹558 crore in EBITDA translating to 23% EBITDA margin, and about ₹250 crore in PAT.

We are one of the most profitable global packaging companies. As we begin our transformation journey, our mission is very clear. We want to deliver market leading revenue growth and capital efficient consistency in earnings growth. We have done very well on this journey. Even in a tough COVID year like this, we have been able to deliver in the first 9 months double-digit revenue growth [10%] and delivered an EBITDA growth of about 14% with an EBITDA margin of about 20.8% with an expansion of 60 bps in EBITDA margin.

So, our journey on continuously delivering revenue growth and consistency in earnings growth is there and I am happy to share that in the last two years we have actually moved our return on capital employed from 17.8% to 22.3% now. There are not many companies that I know of that have achieved this in a short period of time and have done so well. We are very well geared for the future. For us the future is suitability.

What are you doing to achieve the company’s sustainability goals?

This is our most important strategic thrust. Our global customers, many of them global majors, have all laid down their goals for sustainability by 2025, by 2030. Most of them have given out their goals to 100% conversion to recyclable packaging materials. We, as a responsible packaging company, are totally committed to sustainability. We are looking at it from all the angles — the 3Rs — recycle, reuse and reduce.

The work that we have done in recycle is to be able to deliver and build recyclable laminates. We do our own films. Now, we have come out with sustainable laminates under the brand name Platina. It now has a portfolio. We are continuously working in building 100% recyclable laminates. We are fully geared up for the future.

Towards reuse we started doing work on making tubes from recycled materials. Our first set of tubes have come out for two of our customers. As of now, we are 35-38% of recycled material in our recycled tubes.

On reduce, we are doing a lot of work. We are reducing the amount of plastic that is needed. If earlier the tube was going with 500 micros, we are now being able to deliver the same experience with 300 to 350 microns. So, we are reducing the use of plastic. For the future, we are also looking at alternate materials, bio materials which may be called as bio plastics. We are working on this.

We are the first company to get 100% recyclable full tube (the laminate, the cap and the shoulder) from the Association of Plastic Recyclers in America.

As a responsible company, to give back to the community, we have sustainability in our CSR programme. It is about management of waste and the entire cycle. We are also skilling individuals in sustainable manufacturing. I am very excited about this transformation journey as we go forward, because we are committed to deliver double-digit revenue growth, mid teens EBITDA growth and high teens and low twenties PAT growth in the medium to long term.

You had worked with HUL and Viacom 18 for nearly 28 years. You joined this company last year. What are the changes you have introduced since taking over?

EPL was a very well-managed company in the past as well. Therefore, our journey is in some way high to higher. The work that we are doing is actually the digital transformation of the company. So, it is about bringing about digital processes and automation. We are getting into data analytics and using real time information to bring in transparency. In future, we are looking at Artificial Intelligence and Machine Learning. In terms of governance, we are committed to best in class of governance. We also have brought in talent management processes.

On the whole, our transformation journey will be run on four key pillars. It will be on sustainability, digital transformation, talent management programmes and innovations.

What is your expansion plan?

We have close to 4,000 people working with us in 20 plants. We have 7 plants in India, 5 in China, three plants in Europe and three in Americas. We have a global footprint. Some of our customers are the biggest names in the FMCG & pharma sector.We look at the market in the 5/2 lens. Oral, Beauty & Cosmetics, Pharma, Food and Home. We have two types of customers. MNCs and local. Our framework has been designed for this. We will continue to work like that. We will continue to grow organically and inorganically. We have just made an acquisition in India. We will continue to look at acquisitions everywhere as long as they fit into getting new customers and helping us to get into new categories, new geographies or getting new technology. We are absolutely committed to double-digit profitable growth and continuously market leading revenue.

Any particular area in acquisition?

We are the global leaders in oral. One in three tubes in the world is done by us in oral. We want to dial up our share in beauty & cosmetic and pharma. So, in category point of view, we are seeking companies in these areas. We may look at a company if it is getting us a big customer also.

What is your investment plan?

To achieve our goals we will be making capital expenditure of about ₹230-₹240 crore a year which is exactly our depreciation number.

How were you impacted during COVID time?

We are a very innovative company. Our agility and innovation allowed us to make the COVID challenge into an opportunity. So, we entered the COVID year with the introduction of hand sanitizer tubes and made 100 million tubes of hand sanitizers. We partnered with 50 brands around the world. That really helped us in a real tough year. It was a tough year for us in terms of managing the manufacturing plants under COVID conditions, managing lockdowns in around the world. We navigated all challenges very well. Beauty and cosmetics and travel tubes were impacted but other segments did well. Our geography and category portfolio really helped.

What is your vision for the company?

We want to lead the pack.

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Printable version | Jul 25, 2021 7:31:02 PM |

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