PrintWeek India (PWI): Congratulations. Siegwerk recently completed a 100 years of its existence? How strong are your financials in India?
VK Gupta: Our turnover should be crossing well over Rs 300 crores in 2012.
PWI: And production capacity, I am told its 10,000 metric tons?
VKG: Yes, close to it and is only for now. We are in the project 3X phase where over the next five we should be trebling our capacity from what it is. Our plant is going through major expansion program; the construction activity is going on at full swing at our Bhiwadi plant.
PWI: In terms of products?
VKG: In terms of products, we service all the packaging segment customers through a range of products and ink system. This means, we have conventional and UV offset inks together with coatings for carton packaging and four-colour printing; solvent-based inks for flexible packaging and tobacco; water-based inks for labels and liquid food packaging like Tetra Pak; UV inks for labels etc. The products are manufactured at our Bhiwadi plant and conforms to Siegwerk technology and manufacturing processes.
PWI: And bulk of your business comes from which segment? And why?
VKG: We service our customers who are primarily in the packaging segments as said earlier and four-colour offset printing. We do not operate in the web or newsprint segment – heatset and coldest inks. We differentiate ourselves as a company which specialises in servicing the packaging sector, and in four-colour printing. We believe we can add value in this critical and fast growing segment.
PWI: Have you worked with any of your customer in product improvement?
VKG: Yes, we have. And it’s not only for product improvement but also for product development. We developed ink system for a customer which was suitable for presses capable of running on the latest high speed sheetfed offset (18,000iph) presses. Such machines were making inroads into India. These customers wanted to buy presses but weren’t very sure if they could run it at that speed with the present ink systems available in India. We worked with our head office and global R&D team, designed and created an ink system for high speed machines. We did the same with UV inks too, again improved it to meet customer requirements of UV ink system running on high speed UV sheetfed offset presses at up to 18,000 iph. Siegwerk transferred the technology to India to have new technology inks manufactured at our Bhiwadi plant.
PWI: Siegwerk has been in an expansion mode. Is the expansion merely on increasing your production capacity or does it also include widening of your ink offerings?
VKG: As mentioned above, yes, we are expanding our capacity. The capacity expansion will take care of the organic growth in the market place as well as new product offerings. India is one of the fastest growing economies; we have to be prepared for the growth opportunities our country offers and invest in creating right infrastructure. In terms of products, we are servicing primarily the carton packaging, labels, tobacco, and liquid food packaging segments.
In flexible packaging, we have leadership position in CI flexo segment. We have now made our entry into fast growing gravure segment in flexible packaging and do hope, with Siegwerk’s global strengths in this segment, we will be able to bring value-added products in flexible packaging for our customers in India.
To keep our customers in India abreast with the latest trends in packaging development and help them stay competitive globally, we will have to keep bringing in new technologies and new products. We will add products depending on the market demand. We are expanding ourselves in terms of our capacity and also in terms of bringing in more and more products in line with Siegwerk technology.
PWI: What about toulene-free inks?
VKG: Our major focus will be in the flexible packaging segment where we would like to bring in more products which are toluene-free. Siegwerk has strong commitment towards HSE (health, safety and environment) as part of the good corporate governance and we do comply with the HSE regulations. For example, world-wide we do not manufacture any flexible packaging inks having toluene in it. However, traditionally, the Indian gravure inks market is toluene based. But, it is good to see that there is a shift and not only the end-users but also some of the printers are demanding use of toluene-free inks to help them stay globally competitive but also discharge their obligations towards HSE. This is a welcome shift and development. Siegwerk in India is getting ready to launch its toluene-free inks in the Indian market soon.
PWI: So right now Siegwerk inks are not toluene-free?
VKG: They are. First the market size of toluene-free products is very small. All the inks used in CI flexo presses are toluene-free and we have a leadership position in this area. For gravure presses, as mentioned, we have ink system available which are toluene-free. As a part of our global philosophy, we will be focusing on toluene-free inks in India and help to develop this market. I am confident, soon we will be able to produce cost effective products for flexible packaging segment which will meet customer requirement in terms of ecology, HSE and conform to food packaging safety norms etc. Also, all our sheetfed and UV offset products that we bring conform to indirect food contact norms.
PWI: Was Siegwerk’s decision to focus more on packaging segment a conscious one?
VKG: Yes, it was a conscious decision taken by our Board to focus on packaging segment. Business decisions and which areas to focus on, depends on the philosophy of the company/corporate body. Siegwerk in Europe had a strong leadership position in the publication gravure and web offset inks, which we still produce but in small quantities. But, we realised many years ago that this segment is not our focus for the future. With a strong R&D base and excellent infrastructure, we felt we must focus on the segments in printing and packaging that allow our customers to add value to their products. Printing inks for the packaging industry is exciting and challenging where we felt we could add value to the packaging products and the customers.
PWI: But why only packaging?
VKG: Packaging is growing at a fast pace at 20% and even more. It is one of the fastest growing industry, and a challenging one too.
PWI: How long do you think will the growth sustain?
VKG: India has a long way to go in terms of packaging consumption. It’s just a beginning.
PWI: Will not the raw material supply shortage and cost hamper the growth?
VKG: Has anyone stopped buying food or other necessities, whether in packaged or loose form, irrespective of the slowdown, or for that matter the pressure on costs? People will keep buying and the emerging change in buying habits will drive the growth in the packaging segment. More and more items are being introduced and sold in a packaged form. Gone are the days when one would buy house essentials in pudiya from the next door kirana store. Even milk and juice packaged in poly-bags and/or Tetra Pak are gaining momentum and is now available in villages too. Things are changing and so are the packaging designs that endeavour to make them more attractive.
PWI: Has ink pricing been an issue with Siegwerk?
VKG: Pricing is a big challenge today. The prices of raw materials have skyrocketed. Yes, we have increased the prices of our ink system. Most of the ink companies realised that if we didn’t, we would bleed. Fortunately, our customers also know about the global hike in raw material costs and that the rise in ink prices was imminent. We have not been able to pass the entire increase in cost of raw materials to the customer; we have also absorbed a part of it.
PWI: Is it true that when you joined Siegwerk in 1999, you made a statement that you would like to see Siegwerk’s packaging inks segment turnover grow ten-fold?
VKG: Yes. Siegwerk’s packaging inks segment turnover was Rs 10-crore per annum when I joined in 1999. I said at that time, I wanted to see the turnover of our company grow to Rs 100-crore; people and my colleagues laughed. I did not belong to the print industry and here I was, an electronic engineering who did management, making such a tall statement. But I must admit, that my enthusiasm was largely based on the packaging industry’s market size and its growth potential. Plus the faith I had in the ability of my team at Siegwerk and our own research and development activities which would help us grow ten-folds and beyond. As we have seen, this belief did help us and contributed to our success and growth.
The journey from Rs 10-crore to where we are today has been very interesting. I think the team has done a good job and I owe every bit of that growth to the team. It’s the team which has understood the customer, who has provided the services to the customer. Our research and development activity within the ink industry in India, I believe, is the best. We have spent over $4-million in creating one of the finest and well equipped R&D lab in ink industry in the country. Our R&D centre has recognition from the government of India, Department of Scientific and Industrial Research.
PWI: What kind of a business cycle are you seeing for this year?
VKG: The increased production capacity coupled with the way the market is growing is the key. A 20% + growth is easily achievable for Siegwerk India. We need to grow not only at the market pace but outpace the market growth.
PWI: Are you up to the mark with waste management?
VKG: We do respect the waste management policies and we adhere to them. The waste generated, which is very small as you would have seen, is being properly disposed off as per law. We dispose it at a central incineration plant as specified by the Government of Rajasthan. Besides, we have our own incineration unit at our plant at Bhiwadi.
PWI: Presently the production of UV inks is only 5%. Do you have any plans for upping the UV production?
VKG: Yes. It all depends upon the market. Siegwerk has transferred necessary technology for locally manufacturing UV inks at our plant at Bhiwadi. We are manufacturing our own UV inks now. So, whether the produced volumes are 5% or 50% of the total, it does not matter. It’s connected to the market and of course our production capacity. If the market grows, and I am confident, the market will grow, then manufacturing is no longer an issue for us.
PWI: Siegwerk’s absence at trade shows in India, even at Drupa 2012 Siegwerk will only be present with a small touchpoint. Can you explain that?
VKG: We respect all the trade shows. We have participated very actively in the trade shows. We will continue to do so, as and when right opportunity comes and the need is felt. However, in our business, we believe one-to-one interaction with the customers can add more value. We believe in going to the customer rather than customers coming to you for this.
PWI: During such shows, we come across visitors who are the “old world print masters”, who mull over the future of print – and the rapid technological strides of print (formulations, chemistry, soy-based, solvent-free sheetfed inks). What would you say to them?
VKG: Fortunately for us, our customers have been in-sync with the new technology and have welcomed the technology change. They have adapted to any such change happening if they feel it is going to be beneficial for them.
PWI: Here we are not talking of the big players like the Tetra Paks or the TCPLs ...
VKG: See, I do not understand why anyone won’t want to change if it’s going to help them. The day I realise that technological change in terms of machines, inks, print processes or post-print operations will help me to give better value and service to my end customers, I will make the move to upgrade my business and adapt to new technologies. Otherwise, I will not be competitive in the market place. It is a question of my survival. Further, the change also depends upon the demand from end-users or customers. In my opinion, many top printers in India are realising the possible necessities and will do the needful as and when required by the business.
PWI: Your advice to the printers who resist change?
VKG: I think the printers must not shy away from using any of the newer technologies beneficial to them, because technology certainly improves efficiencies, productivity service and ultimately the bottom-line.