Parksons’ Ramesh Kejriwal shares his packaging mantras

The Kerala Master Printers Association hosted a tech seminar on 14 January at the Radisson Blu Hotel in Kochi. The full day seminar had presentations by Ramesh Kejriwal of Parksons Packaging and Ankit Tanna of Printmann; as well as Venugopal Menon (Bobst India) who addressed the requirements of a packaging business.

Excerpts from Ramesh Kejriwal's keynote address

Today, we have gathered to talk about packaging.

Firstly, what are the opportunities in packaging and what are the key challenges?

To begin with, I would say that packaging has got huge opportunities. India is growing at six to seven percent every year. As per my knowledge, packaging grows at least 1.5 times the GDP growth. In the next few years, we can see at least ten percent growth in packaging. So there is a huge opportunity.

Having said that I must highlight the challenges.

The biggest challenge for printers is the mindset. We have to change our mind from commercial printing to packaging.

Let me rewind a bit, and share my personal journey with you.

I remember I started my journey as a printer in 1971 when I finished my graduation. We started our company as a playing card manufacturer. As most of you know, playing cards is a branded product and it’s not a service. But the quality required for manufacturing the printing side of the cards is very critical. All the 52 cards in a pack have to look identical, if even one card is not similar then it is not acceptable. So the quality culture was imbibed from the beginning.

After ten years in the business, I learnt the commercial, market and financial aspects of print. I realised playing cards would not be a great business model for future. A lot of users will shift from playing cards to computers. That was the time, we decided we foray into commercial printing in the 1980s.

It was a big challenge for us. Since in playing cards, we had to focus on production and manufacturing and finally, selling the product. Whereas in commercial printing, we had to sell first and then manufacture. Plus wherever we went to solicit business, especially to our playing card customers, they said, “You are a playing cards manufacturer, you cannot do commercial printing.”

In 1986, we purchased a four-colour Heidelberg. This was perhaps the latest machine in those days. And the quality it produced was beyond our expectations.

After a year, there was a queue of customers, lining up to get their jobs done on our press. That was our journey from 1986 to 1993. I remember that we had to install more machines in the commercial printing space along with our playing cards production.
Again, the question was, will commercial print last forever? Or was the writing on the wall; and this was a growth sector in decline?

Around that period, we could see the demand for quality packaging amongst the multinationals and big brands. There were packaging companies like VFC, Color Carton and RMDC and others, who had been industry leaders for years. This could have been a hindrance for us in terms of our foray into the packaging sector. But we wanted to do something different. We realised if we did "more of the same" then we would not be able to gain an edge in the market.

Also, we realised packaging was just merely printing but much more. We had to learn how to create a million pieces that accurately simulate print output – both CMYK and spot colours. We realised the importance of a centralised database for the secure management of spot colours, which ensures that all machines use the same critical colour data. As a result, we can precisely reproduce these colours in specific printing conditions. This was important since many new brands were entering India. McDonald's, L'oreal, Kellogs who sought international quality of packaging.

We began our packaging journey in 1994. It was a massive learning process. We started understanding what the packaging requirements step by step. One: we started putting procedures in place to comply with the standards to improve effectiveness and productivity. The second thing we understood was for us to attract new work and more contracts from existing customers, we needed to comply with exacting standards. This proved to be a boon. Since, standards can help you reduce your costs, improve turnover, improve profitability, and improve the company profile with stakeholders including your buyers.

Till 1998, we continued our experiments in packaging. But somehow we felt, we were not taking it to the next level. Then in 1999, we invested in a state of the art of manufacturing packaging factory. When we started our first state of the art plant in Daman, we did new things in the packaging space. We installed the first ink kitchen for ink manufacturing; we purchased a Kongsberg table. I remember some of the packaging stalwarts making fun of our decision, saying that the Kongsberg table costs Rs 30 to 40 lakh. In those days, one could have brought a second-hand die-cutter for that money. But we knew we had an edge. You must understand, paper and board were the unloved child of packaging. Till then, a lot of focus of R&D transpired in plastic and not so much on paper. This is the value addition, the Kongsberg table provided for us.

When you want to innovate or create something new, you have to modify your mindset. You have to de-program your settings, you have to come out of your shell and do what you have not done, hitherto.

We understood that paper was being seen as a sustainable and attractive option for consumers. Around the turn of the century, we understood innovations in coatings would be used in many more applications.

This was the Parksons journey up to 2001.

It was a big challenge since Mumbai was becoming costly. Most of our customers were shifting to Daman and Silvassa. We were hesitant to follow them. One reason was: the master printer's mindset that you have to be on the shopfloor 24x7; and you had to smell the ink and manage everything. How was such a thing possible, if the factory is 200 km away?

But when we ran the Daman for five to six years, we were confidently able to set up the Chakan factory. It was less challenging. It meant having a different kind of managing system. The factories have a proper hierarchy and workflow. Today’s modern presses run automatically. These are great and with improved makeready times once can constantly add to the value of a job and its quality.

We have proper systems and personnel to man these systems in place. One of the things, I learnt during this transition was: print is the most subjective part of our industry and we need to have ISO and lighting within premises to ensure nothing affects the colours. The other thing is, we have shortened reporting lines at our mission-critical manufacturing operations and looked at how we can operate most efficiently with the fewest layers between the general manager and the shopfloor.

Based on these systems, setting up the third, fourth and fifth plant, became much easier. There was a system in place and it was a template which we have learnt to replicate.

The Parksons Packaging journey has been a great journey. There is continued growth in paper-based packaging due to a buoyant GDP, changing demographics – more single serve packs and convenience packaging – sustainability and recycling concerns, technological advances, security, and the ongoing drive for added value, which is responsible for much of the innovation in packaging.

The per capita consumption for packaging is very low in India, as compared to global average and other countries. (India is 3.3 kg while the global average is 19 kg). So there is a huge opportunity. Thanks to our solid print background, especially in offset printing, which is the key for manufacturing folding cartons, we can master the art of packaging.

It has been a tough - but satisfying journey and one should not expect instant success. It will be a journey of 10-15 years. You will get a good result if you focus on your goal and stick to it.

Trends in packaging

In 2015, the global paperboard demand grew by about 1.5%. The demand from Asia remained steady, whereas demand from US and EU increased slightly y-o-y on account of slightly better economic growth

Global demand for paperboard is expected to reach about 290 million tons by 2019 from 270 million tons in 2014

Over the next three to four years, demand for paperboard in India is projected to reach four million tonnes by 2019-20 and 6.5 million tonnes by 2024-25.

Challenges in packaging. How to prepare for them

Post-printing is very critical. You need a very good die-cutting and gluing system to cater to the satisfaction of the customers. The ratio of post-press to print holds the key to streamlining your operations.

Colour consistency holds the key. The new colours are influenced by design trends across our industry and can also signal new cultural and social influences. Brands are less inhibited about colour choices and more likely to choose bright and bold shades than in the past. There are now 1,867 Pantone colours in total.These colour shades are critical for the brand owners. For example, Mcdonalds and Coco-Cola have to be produced in the same colour consistency on all packaging.

Coating. In commercial printing, you can afford to wait for hours for a printed job to dry. But in packaging that increasingly demands rapid turnarounds, mastery of the coating technology is crucial. You should know what you are opting for? Be it, in aqueous-based or UV-based or LED? Whether you will switch from coated to uncoated stocks? How much of your work is of plastic? The final packaging has to go through the manufacturing process at the customer's end, therefore you need to know, how important the gloss is, how important is rub-resistant. Similarly, the drying process in your process, be it in-line or offline plays a very important part.

Paper and paperboard. In packaging, you don’t have a standarised paper format of 23x30-inch or 23x40-inch, the art paper 130 and 140gsm or a map litho. You have various grammage and multiple sizes. Here, you cannot afford to waste any part of the paper board. Which is why you must opt for a special size. Some converters save time by requesting the mill to or the paperboard supplier to despatch the paperboard in the cut size on a pallet. This ensures saving time and cutting down waste.

High inventory and WIP of material. You are shifting from converting 20-30 tonnes of paper to a minimum of 100 tonnes to - upwards of 1000 tonnes. This means, lots of space leading to higher finance and infrastructure cost. In packaging, after you print, you cannot convert immediately. In packaging, the first and foremost is the value addition which could be coating or foil stamping etc. We call it "Work in Progress (WIP)". For this, you require a lot of space, so space has to be planned properly which again entails large investment.

Again on the inventory side, the packaging end-customer asks you to hold the stocks. He puts an order and says the sales are sluggish so you are asked to hold the stock. In India, the problem is, customers do not pay for stock storage, and the packaging converter has to bear the cost of the stock.

The cost of marketing is a lot. At Parksons, we are converting about 6,000 metric tonnes every month. We have almost 60 people in marketing. We convert almost 70,000 tonnes of paperboard every year. We have a huge marketing which is costing huge to us.

Rejection level in packaging. This can be a huge loss because in commercial printing if you print with certain defects, you can salvage the material by talking to the customer. But in packaging, if there is a defect, and if you have not printed correctly and if there is a missing font or a reverse text then it can lead to a total loss. If there is a rejection then it can affect you badly.

Huge development cost. The customer will give you an artwork, and you have to proof it and provide dummies, create a prototype and help produce the final product. In India, customers don’t pay for development cost. The only way to recover your development cost is adding it, into your final cost or having a larger customer base product. One has to be ready for development and absorb the development cost into your cost structure.

Standards and certifications. A lot of multinationals and food and pharma brands require huge social accountability and other regularity compliances. One has to be free from child labour and pay minimum wages and adhere to all the statutory compliances on the labour side. If you wish to stay within the technical standards and certifications, you must undertake regular maintenance and maintain not just your pre-press kit but also your proofing equipment and presses and post-press kit to a high standard. It's a question of inculcating a habit in your team and ensuring you are strict about this.

Financial handling. What are the key elements of financial handling? How you handle your financial when you have large investments.

Go where the market is. One has to clearly define, where the market is. You cannot cater if there is no market within a certain radius from your current location. As long as you can cater to a market within 400 km of your manufacturing unit, it is a justifiable investment. If you cater beyond 500 km then handling the logistics and other nitty gritty will be costlier.

Ramesh Kejriwal's checklist for a packaging firm

• Use right technology for the target industry segment
• Optimum use of capacity of the key assets
• Right quality tools to check consistency and minimum wastage of material
• Keep your debt-equity balance healthy
• Keep healthy balance between standard products and value added products
• Keep your overheads under control
• Specialise product quality or industry segment
• Watch your Capex to turnover ratio