Huhtamaki acquires 51% shares in Webtech Labels

As per an official press release, Huhtamaki Oyj's subsidiary in India has acquired 51% of the shares in privately held Webtech Labels for a debt-free purchase price of approximately EUR 7 million. Webtech Labels is specialised in manufacturing high-end pressure sensitive labels, especially to pharmaceutical customers.

10 Nov 2012 | By Rushikesh Aravkar

The annual net sales of the company are approximately EUR 10 million. The acquisition complements the flexible packaging segment's existing product portfolio. "We continue to implement our growth strategy, and we are pleased to add this expertise to our offering in a fast-growing market such as India," says Jukka Moisio, CEO of  Huhtamaki Oyj.

Huhtamaki Group is a leading manufacturer of consumer and specialty packaging. Its food service and consumer goods markets are served by approximately 14,000 people in 62 manufacturing units and several sales offices in 31 countries. The parent company,  Huhtamaki Oyj, has its head office in Espoo, Finland.

This is the second alliance for  Huhtamaki. Since 1999, it has had an alliance with Paper Products Limited (PPL) which is India's leading manufacturer of primary consumer packaging.

Huhtamaki holds about 60.77% of the equity capital. PPL is a pioneer and technology and market leader in flexible packaging in India, with manufacturing facilities at Thane in Maharashtra, Silvassa, Hyderabad in Andhra Pradesh, and Rudrapur in Uttarakhand.

On 2 November, PPL reported its Q3CY12 results. Its net sales rose by 13.7% while operating margins shrank on account of rise in raw material prices.

As per a PPL statement, its "Net sales increased by13. 7 % YoY to Rs 221 crore. in Q3. Volumes growth for the quarter was at 8%. Exports which constitute 20% of the topline continued to grow at 11.5%+. 9M sales grew at 12.8% to Rs 665.6 crore."

PPL's topline growth was impacted due to inventory correction at client base on account of standardisation norms deadline and slowdown in rural markets. presently, the firm is witnessing strong demand growth for packaging coming in from beverages, food processing and personal care manufacturers. The topline growth was supported by healthy demand from clients as well as the phased expansion coming on stream from the end of Q1CY12.

With Huthamaki's stake in Webtech, the alliance is expected to bolster operating profit and boost EBIDTA margins which have been under pressure due to rise in raw material prices.

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