Parksons steps up growth potential with Manohar Packaging acquisition

Meeting of minds: All along, we have been concentrating on growing our revenues. Previously the engine of growth was only organic, however, we also believed that going the inorganic way can also be an engine of growth, though that’s not the only path that Parksons will be looking at to grow in future. It all depends on the right fit.

In the case of Manohar acquisition, we looked at, one, strategic and cultural fit, and two, customer segment and location fit. When the Parksons and Manohar families connected, it was a meeting of minds. We engaged, learned about each other's businesses and felt that the combination of Parksons Packaging and Manohar Packaging could become a lethal combination in providing power to the customer. That led to the acquisition of Manohar Packaging by Parksons.

Manohar's USP: Manohar Packaging's experience and knowledge in the premium segment is a great asset. Alcobev is the most premium segment for folding cartons. Parksons is known for premium packaging. However, in the Alcobev segment we are much smaller than Manohar Packaging and have a much lesser experience. So, in a way, this played a part in the decision-making.

Technology enhancement: Manohar Packaging has invested in infrastructure, which is very similar to ours. Manohar has an impressive plant and brand new equipment line. We were impressed with Aditya's vision – especially the way the Punjab plant has shaped up. It's very rare for an entrepreneur to conceptualise such a large expansion, and create a scalable plant with the best technologies. The plan is to work together to further bolster the plant and many things - for example, technology.

The thought process:  We have two plants in North India, and though we have headroom to grow, it's not as scalable in terms of capacity enhancement. One reason is: all our plants in other regions – West, East and South India  –  had enough space to grow, however, in North India, we had lesser headroom to grow. Hence, we were always looking at how to grow – whether we should add a third unit in Pantnagar or look for a factory in North India. We would have followed either an organic or inorganic path to grow in that region in any case. So, when this opportunity came our way, something which we wanted to, we grabbed it. We started the process in July 2021, and the entire finalisation process took four months. The first month was an informal discussion, understanding each other's philosophy and thinking. The trust was there since our acquaintance goes back a long way. From a cultural fit and the business side, meeting of minds was much more important. This did not take too long, just a few weeks. After that, it took about three months to complete the transaction.

The plus factor: As I have mentioned, there is a great cultural fit between Parksons and Manohar. Second, both the companies are into high-quality folding carton production, and we deploy top-of-the-line technology to produce mono cartons. So, in a way, there's no need for revamping or recreating something which both the companies have built. That is the big plus. Now it's all about how to scale up. 

Communication channels: From our perspective, the biggest beneficiaries of the Manohar acquisition will be our customers. The production capabilities of eight plants instead of two is a win-win for our customers, be it in the confectionery or alcobev segments. Both Parksons and Manohar have gone through a lot of learnings while running our respective businesses. Both the companies – Parksons and Manohar – are among the top five players in this segment in India. We can now pick up the best practices from each other and implement them in the operations. It's only going to make us better and sharper, in terms of managing our business.

The Warburg Pincus quotient: Long back, we have segregated shareholding and professional management. Both, dad (Ramesh Kejriwal) and I are working as professionals. The messaging for us was very clear: whether you are a small, medium or large business, everybody should segregate their shareholding with professional management. We since the beginning have built our team and our thinking more like professionals than owners. Hence when entrepreneurs like Aditya, who expanded the Manohar business, join hands with us, we will continue to think like business entrepreneurs, work in a professional environment, and deploy our knowledge and strength to drive more power to the company.

As a subsidiary of Parksons, Aditya Patwardhan will continue as director of Manohar Packaging. Chaitanya Kejriwal and I from the Parksons family and the Warburg representative will be inducted into Manohar's board.

Scale and size of the plant: When I look at the Punjab plant, it mirrors our vision of what we did with the 10-acre Chakan plant near Pune. Manohar's Punjab plant is a 1.40-lakh sqft linear plant built on a 10-acre plot. It is close to some of the largest industrial belts in Punjab and Himachal. As PrintWeek and WhatPackaging? know, the Manohar plant operates a single line – a press and finishing machines and converts close to 7,000 to 8,000 tonnes a year. When a second line completes it, the overall capacity would be closer to 17,000 to 18,000 tonnes per annum.

So, the present 1.40 sqft plant can house a minimum of additional two presses and converting lines. However, the land bank available gives a huge scope to build two or even three more similar plants.

Siddharth and Ramesh Kejriwal

Eight plants across India: We will be a force to reckon with in the industry, and we hope that the customers will benefit because of our pan India reach, logistics and the support we can extend. From a size perspective, we have a big vision of growing as a joint company. We are looking at a target of Rs 2,000-crore sales in 2022-23. But at the top of our mind, is better customer service and better customer experience.

Workflow and systems integration: On the technology side, as I said, Manohar Packaging has invested in a top-of-the-line press and converting machines at the Punjab plant. So, I think there's very little to be done in terms of integration. However, while both of us use the Esko workflow, we have a much deeper understanding of the software, since we use multiple software from the Esko portfolio, including the Esko WebCenter. These modules will be extended to the portfolio of Manohar's customers. Also, we will work on enhancing the pre-press systems at Manohar - and make them more efficient, faster, and collaborative. On the design side, we have a strong packaging development team, and we will integrate that with the specialists from Manohar who work on the premium liquor segment. It will be a convergence of intelligent design. And, we have SAP and ERP systems to deliver quick and accurate data on the second and third day of the month. We will extend that capability to Manohar and implement it within the company.

Approval etiquette: Every segment has different ways of developing and approving the final packaging prototype. We will go by that flow of experience plus SOP that we have with our respective customers and segments. I wouldn't really want to change much there.

Further, we possess capabilities for niche technologies within our armoury. For example, the HP digital press for quick turnaround, be it for proofs, launches, or variable data printing. And so, some of these capabilities would definitely add value to our joint operation. And that's what we are going to use to our advantage. Once again, I reiterate that the customer experience will be at the helm of anything we do.

Product mix: Certain businesses got disrupted, whether it is the cloud kitchens, and therefore, the food services business. Also, certain product categories like packaged food, health and hygiene, have had accelerated growth and this has boosted the packaging industry. The consumption of premium packaging or products, either replacing plastics or transitioning into paper has accelerated during the pandemic. So whether it is eCommerce or people going out and buying products at the retail store, the importance of packaging cannot be undermined.

Sustainability index: What packaging does to a product, and the brands are key. Considering that we did not have virgin boards some years ago, the amount consumed today is a clear indicator. Also, the kind of enhancement and embellishments on the packaging show that packaging is playing a significant role. From a carton packaging perspective, sustainability is an excellent ingredient for the packaging economy. And paper, as the most sustainable choice, is bound to get a boost from the brand owners. That’s very clear.

The next one year: As I said, we had a certain headroom for capacity with six plants in North, West, East and South India, most of them with scalability options. In the North, we are operating at 80% utilisation. Now having Punjab and Goa, I think we can dream a bigger dream. We can scale up faster. I haven’t done any detailed calculation, but once the printing lines and complementing equipment are in place, we hope to scale the combined converting capability to 3,00,000 tonnes per annum. This is probably bigger than some paper mills that operate with 1,50,000 to 2,00,000-tonne per annum capacity.

Final thoughts: Pavan Goenka, former managing director of Mahindra & Mahindra, and who has also been recently designated as the chairperson of the Indian National Space Promotion Authorisation Centre, visited our plant in Chakan. His tweet is a testimony of the high-calibre that our Chakan plant is. He said, “Was impressed to see what all goes into making a foldable carton in which we get our chocolates and toothpaste. Lots of automation and innovation. I will look at a package now with more respect”.

The point is, brand owners will require a certain kind of work culture within the production area, system, and social accountability. All this will lead to consolidation because this will become difficult for a mid-sized converter in a 30,000- to 40,000-sqft plant to manage, considering that he will have to create the perfect packaging plant.