The company is looking at China, Nigeria and South Africa for a mix of acquisition opportunities as well as clients.

Latha Venkatraman

Mumbai, Sept 2

PACKAGING company Shree Rama Multi-Tech Ltd's free cash flow over the next 10 years is expected to be on an upward trajectory as the company is in the process of expanding its offerings both to varied sectors as well as geographies.

According to the Scheme of Compromise and Arrangement between Shree Rama Multi-Tech and its creditors, the company's free cash flow is estimated to rise to Rs 495.90 crore by the end of December 2014 from Rs 12.40 crore at the end of December 2004.

At the end of December 2006, free cash flow is expected to be Rs 103.60 crore and Rs 150 crore a year later.

The company and its creditors led by Asset Reconstruction Company (India) Ltd have agreed for a 10-year repayment of the outstanding loan of Rs 485 crore. The scheme is awaiting approval of Gujarat High Court.

Any shortfall in the company's free cash flow would be met by promoters through additional infusion of funds.

Apart from financial restructuring, Shree Rama Multi-Tech has clearly focused on growing its packaging business both in terms of offerings for various industrial sector as well as geographical reach to new markets.

"Our aim is to change our revenue mix to include flexible packaging. At present, laminated tubes account for 80 per cent of our earnings. Our target is to bring it down to 40 per cent on a larger base and earn 60 per cent from flexible packaging," said Mr Vikram Patel, Chairman and Managing Director, Shree Rama Multi-Tech Ltd.

The company is confident of sustaining growth over the next few years. It has recently been chosen by Unilever as a preferred vendor for the FMCG major's operations in Sri Lanka, Bangladesh and Africa.

The company has also earned a formal order from Hindustan Lever even as it continues supplies to Vicco, Emani, Coke, Dabur and Ajanta.

Shree Rama Multi-Tech's focus during the current fiscal is to consolidate, Mr Patel said. But the company has already commenced its work in terms of exploring acquisition opportunities as well as new overseas markets and sectors to focus on.

"We are looking at China, Nigeria and South Africa for a mix of acquisition opportunities as well as clients," he said. With an eye on the European market, the company has appointed Mr Gordon Diaz of Telcon (now acquired by Essel Propack) as a consultant.

Food and pharmaceutical industries offer a huge packaging market for Shree Rama Multi-Tech. "The food packaging market alone is Rs 3,000 crore," Mr Patel said adding that it is also talking to pharma companies, including Ranbaxy.

The company is also benefiting from the turnaround in the FMCG sector. "Besides, India is emerging as an outsourcing destination for multinational companies, which are scouting for good packaging solutions company," he said.

(This article was published in the Business Line print edition dated September 3, 2005)
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