Good things come in small packages

A niche player in the rigid plastic packaging space and attractive valuation make Mold-Tek an interesting small-cap bet

Harsha Vadlamani

What does Amul, Procter & Gamble, Hindustan Unilever, Asian Paints, Akzo Nobel, Kansai Nerolac, Shell, Castrol, Cadbury, Vadilal and London Dairy have in common? Apart from being blockbuster brands all of them are clients of the Hyderabad-based Mold-Tek Packaging. 

A Rs.275 crore company today, the little-known company started its operations in 1986. The business began with a small project outlay of
Rs.55 lakh. After passing out from IIM Bangalore in 1982, J Lakshmana Rao along with his uncle started a commercial tool room that manufactured moulds. However, Rao soon sensed there was a bigger opportunity in packaging products and set up Mold-Tek Packaging in 1986. 

Finding its feet
In the ’90s, Mold-Tek started developing plastic pails for the paint industry which until then was using metal containers. It didn’t take much time for the paint industry to make the switch to plastic pails and Mold-Tek started raking in a lot of orders from the likes of Asian Paints, Kansai Nerolac and Berger Paints. 

The surge in orders called for further investment and expansion, which led Mold-Tek to access the capital market in 1993. A Rs.4 crore public issue was floated to fund the expansion plan of Rs.6-7 crore. 

After conquering the paints market, Mold-Tek started to address another lucrative market, lubricants, in 1998. It started supplying plastic pails to companies such as Castrol, Valvoline, Shell and Exxon Mobil which were using metal containers till then. The company came up with innovative features such as the “pull up spout”, locking system and tamper-proof seals. These product innovations were granted a patent in 2007. 

Jatin Damania AVP, Kotak SecuritiesA complete package
Rao, however, felt that the physical features in plastic packaging can only be innovated so much and it would be difficult for Mold-Tek to differentiate itself if it didn’t


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