Beauty, cosmetics segment to be key growth driver for EPL; raises near-term revenue guidance

New Delhi: Packaging major EPL Ltd expects its beauty and cosmetics business to emerge as the key growth engine going forward, even as its oral care segment continues to deliver steady growth, said its Global CEO Hemant Bakshi.

EPL sees the growth momentum continuing in July after reporting 25 per cent topline growth in the June quarter, and has raised its revenue guidance for the near term to 16-18 per cent and has retained its margin guidance at 20 per cent.

On the proposed merger of EPL with Indovida, which according to reports will create a consumer packaging major with a combined valuation of around USD 2 billion, Bakshi said the transaction aligns closely with EPL's long-term strategy.


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"We want to become a global leader in consumer packaging, focused on emerging markets. Rather than just being a supplier, we have to become an innovation partner for our customers," Bakshi told PTI in an interview.

EPL (earlier known as Essel Propack Ltd), now promoted by the Blackstone Group through Epsilon Bidco Pte Ltd, is looking at the country's beauty and cosmetic sector, one of the fastest-growing globally, as its second growth engine.

We "think of our business in two engines. One is our engine of cash and steady growth, which is oral. And the second engine of growth, which will be through premiumisation and market share gains, will be beauty and cosmetics," said Bakshi.

While oral care -- toothpaste and related categories -- remains a resilient, largely inflation-proof business given its habitual, everyday consumption, Bakshi said the segment has matured both in India and globally, and is likely to grow in the "middle to high single digits".

Beauty and cosmetics, on the other hand, could grow as much as 20 per cent, he said.

"An average lady in India will consume two or three (beauty) products every day, compared to women in Korea, who use almost eight products every day. So there is a significant gain in per capita consumption that will happen in India over the next four to five years," Bakshi said.

EPL's global market share in oral care tubes stands at about 35 per cent, while its share in personal care packaging is around 8 per cent.

"Our share in personal care is relatively low. We are about 8 per cent. And our rightful share in personal care should also be closer to 30 per cent. But even if we don't go to 30 per cent, even half of that will mean that we will have to double our market share from 8 to 16 per cent in the next four to five years," he said.

On the commodity front, Bakshi said the Middle East crisis pushed up prices of polymer-based raw materials, which are derived from petrochemicals, by almost 100 per cent during the June quarter.

Unlike during the COVID-19 pandemic, when the company had to absorb cost inflation and lost margin, EPL managed to pass on the entire cost increase to customers this time, he said.

On the company's proposed merger with Indovida, Bakshi said EPL has received approval from the Competition Commission of India (CCI) and is now awaiting clearances from the stock exchanges and market regulator SEBI, after which the process will move to the National Company Law Tribunal (NCLT). The merger is expected to be completed by early next year, he said.

According to Bakshi Indovida's June quarter volume growth was 12 per cent, revenue growth was 25 per cent and EBITDA growth was 62 per cent.

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The merger fits EPL's strategy of expanding beyond tubes into new packaging formats such as rigid plastics and bottles, giving it access to new customers like Coca-Cola and PepsiCo, and strengthening its presence in Southeast Asia and Africa, where Indovida has a strong footprint, Bakshi added.

EPL operates 21 facilities across 11 countries and a workforce of more than 6,000 employees representing 23 nationalities. The company produces more than 9 billion tubes annually and serves over 1,200 customers across Oral Care, Beauty & Cosmetics, Pharmaceuticals & Health, Food & Nutrition, and Home Care.