How many times do you touch plastic every day? No, this is not a question from an environment quiz, but the first salvo Vimal Kedia has fired. I have no clue, but the 58-year-old founder and managing director of Manjushree Technopack, one of Asia’s largest rigid plastic packaging companies, clearly has. The answer, he says, is 300 [on average]. “Those touch points are growing, and so are we,” he adds happily.

Kedia’s story is unique in many ways. The onetime umbrella maker from Assam took a leap of faith and entered the PET market barely two decades ago. PET stands for polyethylene terephthalate, which is used to package nearly everything, from
food to cosmetics. The Indian Institute of Packaging estimates the industry to be worth Rs 149,000 crore, the sixth-largest in the world, and growing at about 12% a year.

ALL SEALED: Manjushree caters to a bevy of marquee clients, and is Coca-Cola’s biggest partner in India
ALL SEALED: Manjushree caters to a bevy of marquee clients, and is Coca-Cola’s biggest partner in India

The family moved to Bengaluru in the mid-’90s when insurgency and strife made business tough in the north-eastern state. Early on, Kedia identified opportunity in an industry that rarely grabs the headlines, although he had no professional training in packaging or polymer science. The upshot: Manjushree (named after a sister who died) is now the largest PET manufacturer in South Asia, with an installed capacity of 80,000 tonnes of PET bottles, containers, and preforms a year. (Preforms are packaging material given a rough shape, but finally moulded by client companies.)

Last year, the company guzzled 63,000 tonnes of resin, the raw material for plastic packaging, which amounted to 9% of the country’s total consumption. Its two factories, one in Bengaluru’s Bommasandra Industrial Area and the other on Mysore Road outside the city, are spread across a total area of 70,000 sq. m. and account for 15% of the total PET packaging capacity in India.

The company boasts a bevy of marquee clients: It is Coca-Cola’s biggest partner in the country—about 15% of its revenue comes from Coke—and also caters to brands like Bournvita, McDowell’s, and Tupperware. Apart from the domestic market, it sells preforms to neighbouring countries like Nepal and Bhutan, and across Africa.

En route, Kedia outran the once undisputed market leader Pearl Polymers (PPL), which introduced the Pearlpet range, pretty much the only packaging brand most Indians recall. PPL’s revenue for the quarter ending December 2014 was a shade below Rs 150 crore with a net loss of Rs 2.7 crore, while Manjushree clocked Rs 386.3 crore with net profit of Rs 22.4 crore.

With total income growing at 26.1% year over year for the past five years (FY10-FY14), Kedia is eyeing an even bigger jump. He aims to invest Rs 1,000 crore in the next five years to up the company’s capacity to 300,000 tonnes. “China has factories that can do a million tonnes a year; so that’s the ultimate goal,” he tells Fortune India. The near-term focus is a factory in Africa worth Rs 100 crore, to be started in the next couple of years. The money for all this expansion will come from debt and internal accruals.

The twist in the story: Kedia has taken the company private, delisting it from the BSE with effect from March, at a time when most pundits predict that the Indian public markets are in the middle of a long bull run. After delisting, the promoter holding has increased from 71% to about 75%. Private equity firm Kedaara Capital, whose maiden fund has nearly $600 million (Rs 3,830 crore) in assets under management, has bought 24%.

IT MAY SEEM A CONTRARIAN move for a company that has managed to build a robust public profile in a largely unorganised business. But then, Kedia has never been interested in business as usual.

That’s what led him to build the country’s first plastic packaging museum, for instance, minutes away from Manjushree’s factories. The museum houses more than 2,000 items—from Kellogg’s packets (including a Kellogg’s ‘classic’ that urges “Don’t be too fat” and promises that the wonder food “takes off the big stomach, gives the heart freedom, enables the lungs to expand naturally”) and perfume bottles to soap and medicine containers.

It’s not just a quirky hobby but offers a glimpse into Kedia’s penchant for understanding change and innovation. “We have been consistent with innovation,” says Ajay Nayak, marketing head (exports). “It has helped us set the price levels in the industry.”

It has also helped Manjushree become a strategic partner to its customers rather than just another replaceable vendor. For instance, the containers it has developed for Kissan, a Hindustan Unilever brand with a portfolio of jams, ketchups, and squashes, help save on transportation costs in a big way. A PET bottle weighs just 60 gm, compared with a glass jar—Kissan’s earlier avatar—that weighs 10 times more. Similarly, it has designed a ketchup bottle which can be squeezed to blob out the ketchup and also suck in any residue at the mouth.

Also, it has come up with packaging concepts rarely seen in the domestic liquor industry, says Ankit Kedia, the younger of Vimal’s two sons. The flagship is a 2 litre whisky bottle developed for McDowell’s, featuring a collapsible handle that fits into a groove on the bottle. “It took us eight months to design that handle,” says Ankit, an MBA from S.P. Jain Institute of Management & Research, who specialises in marketing and lean management.

Clients readily commend such initiatives. “Manjushree has actively supported us in right-weighting our packages through innovation,” says S.K. Jawahar, CFO and executive director at Hindustan Coca-Cola Beverages. Coke, which uses 30,000 tonnes of Manjushree’s products annually for its beverage brands, says that the company’s preform manufacturing unit is “more than comparable to facilities across the world”. One Coke factory uses over 2 million PET preforms a day during the peak summer season, producing 600 to 720 bottles a minute. “The promoters are actively engaged in managing operations on a daily basis, so we are guaranteed 100% support in times of need,” Jawahar adds.

Ankit Kedia, Vimal Kedia’s younger son has expertise in lean management and marketing.
Ankit Kedia, Vimal Kedia’s younger son has expertise in lean management and marketing.

The emphasis on hands-on management is a legacy from the company’s early days. Kedia says he had to learn about the industry “100% hands-on” when Manjushree started competing with Pearlpet in the mid-1990s. Even today his office is right next to the factory floor, and he inspects the assembly lines every day. He takes me on an hour-long factory tour, and everything seems pitch-perfect. But Kedia is not satisfied. He calls the factory supervisor and points out some scratches on the rubber matting on the floor. “I built everything from the ground up, so I greatly value attention to detail,” says the patriarch.

The other thing he values is transparency. “The price of resin would vary month to month and market leaders [like Pearlpet] would increase their prices when the costs went up. But there would be no reduction in their pricing when the costs fell,” recalls Kedia. He introduced a transparent system of announcing all costs and adjusted his prices accordingly. Around 40 Pearlpet customers switched over to Manjushree after that, he claims.

WHAT PUSHED HIM TO DELIST? Kedia says that companies like his, with high promoter holding, which operate at the backend and are not known brands, don’t get enough support from retail investors. Another reason for delisting, he says, is the excessive disclosure of financials that plays into the hands of competitors. Nearly 50% of the PET packaging industry is unorganised. “As a listed company, I have to declare way too much. But most of my competitors who track my every move don’t have to reveal anything. It’s an unequal playing field,” Kedia says.

In fact, for all his success, Kedia has had a stormy relationship with stock market. The market turned out to be extremely volatile each time Manjushree was out raising funds. The company came up with its first IPO of Rs 4 crore in 1995, just after the Harshad Mehta scam left the markets shaken. Back in 2008, its public-cum-rights issue of Rs 36 crore came barely a week after the debacle of Reliance Power’s IPO. At the end of the listing day, Manjushree’s stock closed at Rs 65 against the issue price of Rs 45. But it fell by about 20% the next day and remained below the issue price for the next 19 months as markets tanked 50% due to the recession. “Most bankers tried to dissuade us [from going ahead with the issue]. It was the time when GMR and Wockhardt withdrew their plans,” remembers Kedia.

But taking the company private at a time when the market is bullish could have deeper significance. Kedia needs the flexibility to take bigger risks in order to pursue his long-term growth plans. Delisting will give him freedom from the short-term pressures and margin games of the stock market that has little patience for down quarters.

That Kedaara Capital has decided to buy into the company is another positive. PEs are mature investors and don’t hesitate to bet on a company gearing up for longer-term growth. Asked about the proposed stake buy, Sunish Sharma, managing partner at Kedaara, tells Fortune India, “Kedaara’s investment in Manjushree is in line with our focus of investing in high-quality, market-leading businesses driven by talented entrepreneurs. We strongly believe that Manjushree is well poised to benefit from the expected uptick in India’s consumption story.”

Kedia’s clients, too, believe in his vision. Says Rakesh Gaur, sector head, polyester, at Reliance Industries: “I have every reason to believe that strong vendor and market linkage will catapult Manjushree to clock fast growth in the next two to three years, making it three to four times bigger than its current profile.” That’s a splendid compliment to a company that started with nary a clue about plastics.

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