Kanpur Plastipack Ltd sells its CPP Division

Kanpur Plastipack Limited is a leading manufacturer and exporter of Flexible Intermediate Bulk Container (FIBC)/ Bulk Bag/Jumbo Bag, PP Multifilament Yarn, PP Woven Sacks, CPP (Cast Polypropylene) films and a wide variety of Fabrics like Sulzer Fabric, Ventilated Fabric, Circular Fabric, etc. Located in Kanpur, India, and with over 50 years of experience in Industrial Packaging, KPL has an excellent track record for providing high-quality products and customer satisfaction.

The Company had diversified into CPP film manufacturing in 2023 when it commissioned its CPP plant. The CPP Film market is part of flexible film packaging industry catering to the consumer sector. The films so made were to be supplied to Convertors who would then in turn supply the same to the FMCG segment apart from other end uses. However, due to Global uncertainties and a slowdown in economic activity, consumer products and FMCG sector has not shown robust growth affecting the demand for flexible packaging products. Tremendous over capacity in the flexible films industry led to prices which were not only uneconomical but also unviable in the long term. This had impacted the overall performance of the Company.

Objects

CPP division stand alone delivering affected financial performance since its inception. The division continues to suffer losses and an internal analysis shows that CPP division on its own is unlikely to be viable in the near future. In view of the evolving market dynamics and future projection based on the various studies, the management was seeking the possibility of exiting this business and concentrate on its core activities of FIBCs, PP Fabric and small PP sacks. With a view to prevent the losses and financial burden which the CPP division is putting on the main division of the Company and to focus on expanding its core Raffia business, it has been decided to exit from the CPP business and sell the plant and machineries of the CPP division.

Sale of Plant and Machinery of CPP Division

In view of the above, the Company has entered into an Assets Purchase Agreement on 11th March, 2025 to sell the plant and machineries of the CPP division on 'as is where is' basis at a total consideration of Rs. 49.25 Cr. (Rupees Fourty Nine Crores and Twenty Five Lacs Only) to M/s SRF Limited.

Outlook

Going forward the sale of these machineries will be a cash positive activity as the entire proceeds from the sale shall be used to repay the outstanding term loan on these assets thereby considerably reducing the debt burden. The losses of CPP will no longer drain the profitable Raffia division of the company. Savings on account of interest outflow will further enhance the bottom line of the company.

Significantly, the infusion of funds by the promoters in the form of preferential issue of warrants to the tune of Rs 20 Crores, currently underway, will also help in increasing the liquidity of the Company. The Raffia division itself has shown a healthy profit trend in the last quarter which is expected to continue.

With both these exercises the debt structure of the Company will significantly reduced and the Balance Sheet of your Company will significantly strengthen coupled with the significant reduction of interest cost. The management is confident of a bright future ahead. Plans are underway to strengthen the core Raffia business and increase its capacity.

Shares of Kanpur Plastipack Limited was last trading in BSE at Rs. 116.90 as compared to the previous close of Rs. 123.90. The total number of shares traded during the day was 1036 in over 113 trades.

The stock hit an intraday high of Rs. 124.95 and intraday low of 115.00. The net turnover during the day was Rs. 121274.00.

Source : Equity Bulls

Keywords

KanpurPlastipack INE694E01014 CPPDivision Sale