Four lessons from the corrugators of India

A year ago, Western India Corrugated Box Manufacturers Association (WICMA) had hosted a top pedigree conference in India. The highlight was a panel discussion which comprised the CEOs of kraft paper mills and their engagement with the corrugators of India. The tenor of the discussion was: at a time when India is improving its standards of living, and the number of automated packing lines are on the ascendancy.

And so, the industry players appealed to the paper mills for standardisation and JIT schedules to cater to the latest technology-based automatic board plants. This made sense, at a time when India is improving its standards of living, and the number of automated packing lines on the ascendancy.

There are four key lessons from the three days at Corpex 2012 exhibition and the conference from 11 to 13 December 2012 in Mumbai.

Lesson 1. Paper power
The corrugated box industry in our country is fragmented. There are more than 10,000 units in India manufacturing 3.5 to 4.0 million tones of kraft paper.

On the side-lines of the panel discussion, the audience was introduced to Peter Durette, senior vice president, and chief strategy officer for MeadWestvaco, a global leader in packaging and packaging solutions that manufactures three million tonnes of paper board.

The group has entered into "a definitive agreement” to acquire Ruby Macons, a leading player in corrugated packaging materials, based in Vapi and Morbi, Gujarat. Durette said, "That currently, Ruby Macons produces one lakh fifty thousand tonnes annually in the corrugated packaging materials space in India. The revenue of the firm is, $80 million (Rs 416 crore) and thanks to the acquisition, an expansion is underway." Durette expected this to grow to four lakh tonnes, soon.

The other corrugated board news which was doing the rounds was from JK Papers. The paper major has formed a joint venture with Japan's Oji Holdings Corporation and Marubeni Corporation for manufacturing and sales of corrugated paper products. The company also plans to invest Rs 150 crore on a new plant in Rajasthan. In the new joint venture - Oji India Packaging (OIPPL) -- Oji Holdings will own 60 per cent stake, while Marubeni and JK Paper each will have 20 per cent.

The facility will manufacture corrugated packaging products of 34,000 tpa at an investment of Rs 150 crore. The JK plant will be targetting companies in auto components, high-end electronic and consumer durables sectors located in the region as consumers of its corrugated packaging products.

Lesson 2. Celebrating success
We spoke to four dealer-vendors and manufacturers. The numbers are looking good. Bobst India has made their first big ticket sale of a FFG618 Quatro to Bengaluru-based Pyramid Packaging, a part of Horizon Packs which is headed by Kirit Modi. Suba Solutions has notched up sale of four Champion corrugation machine and ancillary equipments in India. Meanwhile Acme Machineries who have an alliance with the Taiwanese-based company TCY, three years ago, has installed four machines. And finally, NBG who have tied-up with Dinshung a Taiwan based company who are manufacturers of litho laminators, have seven machines in India.

As per a guesstimate, there are 150 automated corrugating printing plants in India. This market is planning to add another 100 corrugated box machines in the next 24 months. The prospect of growth is good. Even today 85% of the liner boxes are produced single or two colours. There is a demand of four colour jobs in beverage and vegetable oil industry and here the box is first printed in offset and then laminated.

There is a distinct shift from semi-automated operations to a Chinese line which is capable of 1200-1400 metres/hour, while a Taiwanese machine can offer 2000-2500 minutes/hour. A Bobst Quatra can notch up twice the speed.

With corrugated packaging playing a pivotal role in the supply chain of all manufactured products. Especially, all the manufactured products like engineering goods, pharmaceuticals, processed foods, textiles and garments, beverages, FMCG products, consumer durables, fruits and vegetables, this mode of packaging of is expected to have a big boost.

Lesson 3. Appreciating standards
How many corrugators will conquer the "standardisation" cliff?

Quite a few, if the tone of the panel discussion with four major print buyers was an indication. Be it Reliance, Dr Reddys or Pepsi, they felt there has been a mindset shift and as buyers they are appreciate a good print job.

Jaichandra, managing director at Veepee Graphic Solutions, the Bengaluru-based flexography pre-press trade shop, says, “We have invested in the latest Esko kit so to address the highest quality flexo applications, primarily in the flexible packaging, folding carton markets and corrugation." Jaichandra added: "The flexo plate requirement for corrugation industry will be bigger than the label industry. The volumes are huge - and they are growing.”

Likewise, Deepanshu Goel, owner of Creative Graphics, who says, “the market is growing.”

Established in 2001, the pre-press house supplies plates for flexo and letter printing presses around the country especially northern part of the country. Currently, the company produces plates with conventional system and a Kodak imager.

As for opportunities in corrugation, Goel said, "With the rise of supermarkets, the demand of labels and packaging has gone up and when FDI is approved by the government, it will increase exponentially."

Today, Veepee and Creative are pioneering advanced flexo plate technologies from HD screening to flat top dots; and providing a complete colour managed solution all the way to the press.

Both bureaus provide a multitude of options for the corrugated print firms; by providing advanced imaging and screening technologies which can ensure optimum print quality.

Lesson 4. An issue of measurability
A year ago, Crisil Research launched CoDex, an index for tracking input cost movement for making corrugated box in western India, which accounts for 30-35 per cent of the industry output.

Pankaj Shah who spearheaded this exercise for Western India Corrugated Box Manufacturers Association (WICMA), stated Crisil Research have used this data independently collected from raw material suppliers in Maharashtra, Goa, Daman, Silvassa and border areas of Vapi.

“CoDex will bring in much needed transparency and authenticity to measure the cost movements. We hope CoDex will provide credible information tool for all stakeholders in the corrugated box industry and provide a better indication to adjust prices,” said Shah.

Crisil Research and WICMA have defined the weightage of each raw material in the index. Besides paper, which is the main raw material, the index will also take into account price movements in adhesives, power, fuel, labour and other inputs.

Based on these prices, the model computes the CoDex value. Specialty and rarely used materials such as binding cloth, multi-colour printing, partitions/fitments, lamination and coatings etc are not included.

Shah said, "CoDex has proved to be of enormous value not only to corrugated box makers but also to suppliers and consumers. It has enable these players to track movements in cost of corrugated boxes in an accurate, scientific and credible manner."

Conclusion
Many players in the industry have learned a lot from this experience. Now there's a clamour from other associations and federations in the print industry. And so, many more firms are stepping out of their comfort zone, and challenging themselves to understand a different model of success. 

I am sure we can all benefit from the innovation by the corrugators.