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A package of opportunity and risk in the rigid box

By Dibyajyoti Sarma, Rahul Kumar,

28 April 2017

In these very pages we have written about the growing rigid box market. Come 2017, has the market already consolidated? Not quite, but there are enough machines in the market to meet the current demands while the projected demands are yet to manifest. The converters are no longer gung ho about the future, but cautiously optimistic. Rahul Kumar and Dibyajyoti Sarma survey the scenario.

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When a visible trend emerges in the market, everyone wants to jump on the bandwagon. This is exactly what is happening with the rigid box manufacturing in India. The news in the market is that with projected rise of packaging in India, demand for rigid boxes will go up. The work towards this has already begun, and businesses looking to diversify are looking at the rigid box market as a serious option.

Some have already opted for it, including Kundli-based book printer Replika Press. Recently, the company, under the banner Replika Packaging, installed six automatic rigid box machines from Zhongke India. With this, according to Rohit Rajpal of Zhongke India, Replika Packaging becomes India’s first company to be able to produce 50,000 finished rigid boxes per day.

Today, there are more than 50 fully automatic rigid box machines running in India. Most of these installations are in the northern and southern parts of the country. West has very low penetration and there are hardly any installation in east.

Besides Replika, other big-ticket players in the field include Noida-based Any Graphics, Hyderabad-based Pragati Pack, Chennai-based Label Kingdom, among others. Pragati is one of the pioneers of rigid box manufacturing and is present in multiple segments, including liquor boxes. On the other hand, both Any Graphics and Label Kingdom  specialise in mobile handset boxes.

Making it rigid
Despite the noise surrounding the rising demand for rigid boxes, manufacturing of rigid boxes is not a recent phenomenon. It has always been used as a means of packaging. However, almost 80% of traditional rigid box manufacturing in India has been manual, with little to no machine intervention. Understandably, manual rigid box manufacturing is a time-consuming process. To top it, manual manufacturing often fails to achieve the precision customers seek.

Thus, to achieve faster turnaround time and quality, the option is to opt for an automatic or semi-automatic machine.

A complete rigid box is a combination of two boxes – top and bottom, and a rigid box machine is a set of multiple tools, including grooving machine, board-taping machine, box-wrapping machine and conveyers.

An automatic machine includes all the kits required so that a finished box can be made without or minimum human intervention. However, an automatic machine is also twice as expensive as a semi-automatic kit. Thus, most converters begin with a semi-automatic machine where the finishing of the boxes (like pasting) is done manually.

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A rigid box machine is a set of multiple tools — grooving, board-taping, box-wrapping machines and conveyers

Why rigid box
Most converters who have opted for a rigid box machines want to capture the rising market of mobile handset boxes. And rightly so.
In a recent development, the handset brand Oppo is planning to set up a big factory in Greater Noida in collaboration with Micromax. Apple is also planning to establish a manufacturing plant in Bengaluru in the coming months.

According to the Ericsson Mobility Report, India is the fastest-growing smartphone market in the world, accounting for 27.5 million devices sold in the second quarter of 2016. Mobile subscriptions are expected to hit 1.4 billion by 2021.

Consider the numbers. For the 27.5 million mobile devices sold, the manufacturers also need 27.5 million boxes (55 million if you consider top and bottom boxes as separate).

Besides mobile phones, there are other lucrative segments, especially in high-end packaging, where volume may be less, but since these are demanding jobs requiring precision and quality, the returns are big. These segments include confectionery boxes, chocolate boxes, garment boxes, fragrances and cosmetic boxes, gift boxes and others.

Investing in a rigid box machine

Know your risk
True, rigid box is a market with potential, yet there are hurdles too. One issue is the excess capacity in the market. The other is changing trends affecting buyer decision. Rigid boxes are more expensive than conventional cartons. So buyers wouldn’t usually invest in rigid boxes if they can find a cheaper alternative. Consider the recent trend where mobile phone packaging buyers shifted to
high-end art paper boxes (soft boxes), instead of rigid boxes. The bottom line, know your risk.

Know your requirement
A fully automatic line is a considerable investment. So, do not base your investment on hearsay. First, study the market and choose a segment you want to service. Find out where there is a requirement gap and then make your investment based on this requirement, as manufacturers offer different machines for different shapes/types of boxes.

Start small
Instead of investing in a complete line, you can start small, perhaps with a semi-automatic line and then scale up. Job requirements may vary from time to time. So you should have a machine which is dynamic. Today, most rigid box machines can be expanded with minor modifications in software and hardware.

Market experiences
The potential of rigid boxes dominated the conversations in the last 24 months, so much so that nearly 50% of the packaging converters PrintWeek India talked to showed interest and willingness to invest in a rigid box line. This explains the almost 50 installs within a short span of time.

In the last six months, however, converters, even those with a rigid box line, seem cautious. One converter from North India, who did not want to be identified, explained this as a result in the sudden shift in supply-demand ratio. There was a time when there was a genuine demand in the market. As more and more converters made investments to meet the demand, the per-converter volumes started to shrink. Now, there is more capacity in the market than there is requirement.

Also, demand forecast doesn’t always reflect the ground reality, the converter argues. For example, it’s true that 27.5 million mobile devices were sold in the second quarter of 2016. But it doesn’t means that all the devices were packed in rigid boxes. After all, a rigid box is expensive than a traditional carton. Thus, even high-end mobile phone manufacturers often prefer to use cartons than rigid boxes. Add to that the price war, a common occurrence in the industry, the situation is not as rosy as it is often painted.

A saturated market?
The investment plans are on, and converters are optimistic of growing projections coming true. Yet, they are cautious. Gone are the days when you could invest in a machine and then go looking for customers. Now, you must create your market first and then invest.

This is the reason why the North Indian converter PrintWeek India talked to, who already had a rigid box machine, put his investment plans for a second machine on hold. The company did not want to trudge the murky waters of price war. Instead, the company did its research and finally invested in a rigid box machine which it is using for special applications.

The same way, a Delhi-based commercial printer, who had shifted base to Haryana, had booked a European rigid box machine. Later, however, the company cancelled the deal and instead opted for a machine from China, at almost half of the earlier investment. The logic is simple. The company first wants to test the waters with a low-cost investment. If it makes it, it can always go for a European machine later. After all, rigid box is still a fledgling market.
Meanwhile, a Greater Noida-based first generation packaging printer was planning to invest in rigid box machine. He studied the market and later, dropped the idea. Now, the company has diversified into corrugation.

Another example is Faridabad-based Big Box Industries. The company ventured into packaging with investments in two rigid box machines. A year or so down the line, the company has now decided to add packaging printing to its portfolio with investments in new equipments.

Case Study: Baljinder Verma, Dimple Packaging

Ludhiana-based confectionery boxes manufacturer Dimple Packaging recently opted for two fully automatic rigid box machines from two different Chinese manufacturers. With the machines now running, Baljinder Verma of Dimple says, the company is making around 12,000 boxes per day in a single shift.

The company shopfloor already had 20 semi-automatic machines. “We have been manufacturing boxes for sweets for the last five decades,” says Verma, adding that he had to make some plans how he was going to use the automatic machines within the existing setup. So, he decided to use the automatic machines only for long-run jobs, as die changing consumes more time. For this, operators were also separately trained.

What’s the difference between automatic and manual? Verma says size variation among boxes in a single batch is a major risk in manual operation. “The machines, on the other hand, produce boxes of same sizes at much faster speed,” he adds.

The company is now educating its customers to shift from folding cartons, the traditional boxes for packing sweets, to rigid boxes. “You are selling your sweets for Rs 1,000 or more per kg, we tell our clients,” Verma says, “you must pack the contents in a rigid box which can hold it properly without any damage.”

Verma believes that the FMCG sector is growing and will be growing around 25% annually. At Dimple Packaging, boxes range from Rs 10 to Rs 100 per unit. If you want something fancy, you will have to pay a premium.

Explaining his investment choices, Verma says he considered European machines first, but the investment cost was too high. “In a print production facility you need multiple machines.

If your ROI goes long-term, how are you going to invest in other machines?” he argues, adding, “Technology keeps changing and you have to invest continuously. I believe in thinking big. In the next two years, I want to install ten more automatic rigid box machines. We have the setup to scale up.”

While the mobile phone box market is picking up, Verma believes the market is competitive and at the same time, the delivery time is too short. “Perhaps I will go for mobile handset boxes after I have 10 machines,” he says. For the, the focus is on boxes for sweets and dry fruits.

Case Study: Himanshu Garg, Big Box Industries

Faridabad-based Big Box Industries is perhaps the only company which ventured into the packaging market with just rigid box machines. According to Himanshu Garg of Big Box Industries, the company manufactures around 3.5 lakh complete mobile boxes (top and bottom) for companies such as Intex, Karbonn, Panasonic and Ziox.

Garg believes the market has potential for continuous growth. “Mobile manufacturing is increasing in India. Many domestic companies are coming into the market while multinational manufacturers too are also setting shops in India,” he says.

He gives the example of Gionee, which last year, signed a MoU with the Haryana government to set up its first manufacturing unit in Faridabad, with an initial investment of Rs 500 crore. The capacity of the facility will be close to 30 million units and Gionee plans to manufacture around six lakh mobiles per month from this facility.
Coming to the argument that manufacturers were going for soft and duplex boxes instead of rigid, Gupta concedes that the trend was visible for some time as the market was down. However, he argues that the move proved to be unsuccessful as those duplex boxes could not handle safe packaging of those phones. Thus, he says, the manufacturers have returned to rigid boxes.

Full of possibilities?
Multiple winners of the PrintWeek India Post-Press Company of the Year, Replika Press is a name to be reckoned with. So when the company decided to diversify into packaging with installations of not one or two but six rigid box machines, you know the company is not following the trend blindly. It knows what it wants to achieve, and who its target customers are.

The same is the case with Palwal, Haryana-based PR Packagings. Established in 1991, the company started with manufacturing paper and board boxes in 1997. Last year, the company installed two rigid box machines, each of which can manufacture 2,100 boxes per hour.

Talking to PrintWeek India in October 2016, Ravinder Gupta of PR Packagings said, “Right now, we are manufacturing two lakh boxes per month. Our target is five lakh boxes.”

Curiously, however, as were researching for the story, most converters with rigid box machines did not want to be quoted. Even manufacturers were unwilling to share the names of their customers.

Certainly, there is an air of caution surrounding the segment.

Rigid box Machine manufacturers in India

Total 11 rigid box machine brands are available in India — three Italians, five Chinese, one Japanese and two Indians.

Both Megabound and Memory Repro Systems are new entrants to the field and launched their machines at PrintPack 2017.

The others are:
Emmeci
(represented by Anil Agencies)

Sate
(represented by Integriti Consulting)

Europrogetti
(majorly represented by SLKGC; particular models represented by SRK Technology)

Fuchu (represented by SLKCG)

Tianyu Machinery (represented by Elector Mec Machinery)

Zhengarun (represented by Sodhisons Mechanical Works)

Hongming (represented by NBG Printographic Machinery)

Zhongke India (partnership between Rohit Rajpal and Zhongke China)

Longxingsheng Machinery (represented by Ample Graphics in India)

Installations (fully automatic)

Zhengarun 27

Zhongke India
15

Emmeci 10 (approx.)

Fuchu 6

Hongming 5/7

Tianyu Machinery 2

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