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Essel Propack, a leading laminated tube maker is eyeing a controlling stake in England’s tube maker Betts, reports Economic Times, quoting sources. The Essex based tube maker was placed in administration after breach of banking covenants.

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With Betts under administration, Essel is likely to get the company at reasonable valuations. No figures are not known yet. What also interests Essel Group in Betts is the latter's  presence in the UK - the markets where the Indian tube maker reported a significant operating loss. In its for 2007-08, Essel Propack said that it is facing huge challenges in “ramping up issues in plastic tube plants in Europe due to capacity imbalance and other teething issues, which caused significant volume losses as well unrecovered capacity costs and other one-off stabilisation costs.” The company is also facing a major problem at its Poland Unit. 

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Essel has a global market share of 32% in the laminated tubes segment with units across the world, while Betts accounts for nearly 14%. Essel’s plastic packaging business is managed by four geographical segments viz. Americas (with operations in the USA, Mexico and Columbia), Europe (with operations in the UK, Germany, Poland and Russia), Africa, Middle East & South Asia – AMESA (with operations in Egypt & India), East Asia Pacific – EAP (with operations in  China, Philippines, India). Last year, Essel acquired US-based Catheter and Disposables Technology, a supplier of specialised medical disposable devices.

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The Telegraph, UK reports that the Betts, which was acquired by Gresham in a £110m deal in October 2007, has been placed in administration after failing to keep up with debt repayments. Paul Marson-Smith, managing partner at Gresham, told Telegraph that "things did not go according to plan" after Betts breached its banking covenants. Lenders to Betts including CIT Group, GMAC, Icelandic bank Glitnir and South Africa's Nedbank seized control of the manufacturing company via the pre-pack administration.

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 The company's accounts show it made a pre-tax loss of £7.7m in the 200 days to last March on revenues of £49.7m after paying more than £11m in debt interest payments. Betts had group debts of £94.1m made up of £53m of bank loans and £39m in shareholder debts. Adding to its woes, the accountancy firm, KPMG said the manufacturer would require new shareholder investment to meet its loan covenants.

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Essel's UK unit posted an operating profit of Rs. 183.9 crore (before exchange losses) and Rs. 132.2 crore (after providing for exchange losses), which are lower by 9% and 37% respectively from the EBITDA last year.

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The company’s standalone India unit recorded a net profit of Rs. 27.2 crore – a 27% lower compared to the previous year due to sharp increase in polymeric prices, exchange losses and high interest charges.

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