The total cost of the project is around Rs 42.5 crore. The new company will have an equity base of Rs 13 crore and the remaining will be raised through loans, according to a company press release.

The plant will be located at Dresden, which is one of the fastest developing areas in the erstwhile East Germany. The plant will supply laminated tubes to customers in Germany and other European countries, says the release.

Essel's chief executive Cyrus Bagwadia said: "Most countries of Eastern Europe extensively use aluminium tubes for toothpaste and food products. This provides increased opportunity for conversion into laminated tubes. Essel will be bringing to the joint venture state-of-the-art technologyand cost leadership."

He added that this is Essel's major foray into European markets. The company's aim is to become the world leader in laminated tubes by the turn of the century.

Sanjay Das, executive president (overseas business) said: "The company's other ventures in China and Egypt have reported encouraging performance for the current year. The wholly-owned subsidiary in China has successfully penetrated the Chinese market and has over 12 leading Chinese toothpaste manufacturers among its list of customers."

The company's Nepal unit is also expected to commence production shortly.