"Our dream to cross the Rs 1000-cr mark is realistic"

PrintWeek India visits the Parksons Packaging office at the Indiabulls One Centre in the heart of Mumbai. Siddharth Kejriwal, the newly designated managing director, shares his aspirations of achieving 50% growth and his future plans of scaling up and reaching out to customers in terms of efficiency and proximity.

10 Jul 2014 | By Ramu Ramanathan

Ramu Ramanathan (RR): Happy to be a Rs 400-crore firm? Or aiming for Rs 1000 crore? 
Siddharth Kejriwal (SK): We are happy with the growth we have achieved so far. But our vision is much larger. We cannot rest on what has been done. We have a strong internal vision and mission and our entire organisation is aligned towards this goal. I would not want to specify a definite period but a dream to cross the Rs 1000-crore mark, going forward, is not an unrealistic one.
The simple reason is, the Indian market should continue to grow and pick up. As the market grows, well-organised firms will benefit. The sheer fact of the percentage growth on your base will boost the numbers. As you increase in size and manage your business, there is an opportunity for inorganic growth, as well.
RR: Phase one of Parksons was to establish itself as a playing card specialist. During phase two, the plan was to become multi-locational and scale up to converting 4000-metric tonne of board per month. In that sense what would phase three be?
SK: Phase three would be to build on this platform and achieve greater economies of scale. Right now, it is 3500 tonne conversion between our three locations. But we believe that our three locations in the folding carton segment can convert up to 5500 tonnes. This means, we are looking at 50% growth from our existing capacities. We are augmenting our infrastructure and systems to prepare for this growth.
Also, we would try and reach out and be as close as possible to the manufacturing locations of our customers. Our constant endeavour, especially in a country like India, where logistics are complex, is to identify the locations of our customers, their movement, and be up-to-date. So to sum up, phase three would involve expansion of scale and locations.

RR: A plant in South India ...
SK: Right now, I would not say that we will have a plant in South India or any other location. We continue to scale up our existing locations, we are monitoring the external environment, such as government policies and upcoming manufacturing hubs. Once we are certain, we have the expertise to move quickly and set up new locations. We are open to making quick changes in our thought process as to where we want to set up the plants. The location would ultimately be driven by our customers, and the fiscal benefits available.

RR: What about the possibility of setting up a plant outside India?
SK: We are seeing tremendous positivity. We do not have near term plans of looking for a manufacturing facility outside India. But we are increasing our export customer database and getting into strong partnerships. There might be possibilities that it may lead to viable projects outside India. If yes, we would definitely act upon it in the coming years.
RR: Do you envisage diversification into corrugation post the tie-up with Billerud?
SK: We have identified corrugation as one of the growth areas for our company. We have a tie-up with a company called Billerud Paper. They have an arm called Paccess, which provides support to their partners across the globe on corrugated packaging for perishable products. We have had a short stint (six to eight months) since we got into that arrangement. Since then, we have added capabilities to implement this plan, which will continue to be a focus area for us.
RR: What kind of investments did this entail?
SK: For this purpose, we have invested in high-end flexo print capability in our Chakan plant, which is most essential if you want to get into high-quality corrugated boxes. The output of the machine is close to 500 tonne per month. The objective of investing in such an equipment is to try and grow the opportunity with Paccess. With our knowledge of paper, and the packaging knowledge that exists with Paccess, we have a huge opportunity in the Indian market to add value to agro product exporters. We will be able to pack their products in the right form of packaging.
Today, there are lot of negative claims and supply-chain losses, which exporters have to bear due to improper packaging. A lot of this unfortunately has to be imported. All this could change very soon.
RR: You aim to be a provider of these services?
SK: Yes, that’s our whole objective. At the same time, we believe that Indian retail, however slowly it is growing, will continue to grow over the next 10 years. The moment you have growth in the modern retail formats, the need for higher quality retail-ready packs is going to increase. We believe this would allow us to tackle both markets, the Indian local growth and the export opportunity.
RR: Is this investment looking at the long-term picture?
SK: We feel this is a long-term opportunity and we want to be a part of it. We are clear about one thing: we are a company whose strength is paper conversion. We  want to continue to use that strength and exploit it. Whatever diversification we think of, we are planning on what more we do in paper.
RR: There have been a slew of alliances in the last three to four years. Is that your mandate too?
SK: The decision to enter any alliance is driven by the growth drivers, and the vision of the company for the next five to ten years. The thing is: will it add value to the bottomline of both the alliance partners? I don’t think we are looking at alliances just for the sake of making news. 
RR: How do you describe the Billerud alliance?
SK: In case of our alliance with Billerud, we believed that corrugated packaging would grow in the near future. Also, there was a dearth of people who could provide the right capability to the market for fresh produce. This is where Billerud has its expertise and can add great value. That is the reason we got into the alliance. 
RR: You have a tie-up in liquid packaging as well. 
SK: Yes, this alliance allows us to offer customers a solid end-to-end solution for this market segment. Again, we see this as an area of tremendous growth in the future; where there is a need for such a solution. These are not short-term alliances or initiatives, but rather long-term strategies.
RR: Are these alliances driven by knowledge sharing or capital infusion?
SK: There is no capital infusion or financial investments that are done by our alliance partners. Instead, there is a lot of knowledge sharing and information exchange, to create and deliver to demand. As mentioned earlier, any alliance should be a win-win and add to the bottomline of the partners for it to make sense. That is exactly how our partnerships are structured.
RR: In the M&A space, there are two things happening: either it is a merger between two big giants, or an angel investor in the market. Is that the case with pape converting as well?
SK: If you study the paper industry, there are companies like International Paper, Dupont, entering India and acquiring companies. We have MWV in the corrugated industry. To some extent it is happening in the folding cartons, too, with Manipal acquiring Utility Packaging, Edelmann acquiring Janus, and so on. So the trend has started.
I feel the flexible packaging market was more mature and had higher scales. And so, we saw it happen much earlier than folding cartons. Similarly in labels, the sizes have been small so it has been easy for alliances. Today, the folding carton industry in India is moving in that direction. This is a natural trend. I think consolidation is a reality. It’s no longer a thing that the industry should fret about.
RR: Today Parksons has three plants in Daman, Chakan and Pantnagar. What are the lessons you have learnt from the manufacturing of folding cartons in Daman?
SK: We set up our Daman plant in 2001. At that time we were not so big in packaging. We knew the market demanded a superior quality and service. Since it was untested waters for us, we were not certain if the initial foray was over-ambitious and how long it would take to fill capacity.
However, in the next five years we saw a demand. Our initial space was inadequate. The lesson we learnt is, we want to set up scalable plants. We used that  learning when we set up our Chakan plant.
RR: Did you achieve the right scale at Chakan?
SK: Yes. In Chakan we have the flexibility and luxury to expand to a larger number in an organised manner. This, we have achieved through the workflow, diversified products, as well as managing everything effectively and efficiently. The good part is, even in Daman, we have managed to improve our efficiency by acquiring extra space. Plus we have started specialising in key product categories. Mostly pharmaceuticals are produced in the Daman plant. Allowing two plants, which are not too far from each other to operate with similar technology and capability, has helped us in the last two to three years. It has brought efficiency to both our plants.
The key is: have a longer-term perspective when setting up a brand-new plant.
RR: What is the Pantnagar narrative?
SK: In Pantnagar, we inaugurated the plant with a slightly compact working area. However, over time, the plant has been transformed to have a strong workflow, in twice the space, we were utilising earlier. Now we have scaled up our Pantnagar operations too. Over time, we learnt to bring more and more expertise to each of the plants in terms of conversion capabilities.
You can’t be a jack of all. Therefore, specialisation holds the key to build expertise in each of our plants.
RR: There are enormous amounts of wastages and bottlenecks among convertors. If you could touch upon the manufacturing practices, the levels of automation that you are following…
SK: It is very important to focus on the system and workflow. For example, you should reduce the movement of material. The time should be spent in production activity. We have spent a lot of time in revisiting our plant layouts. In fact, every time we have expanded our capacity, we have looked at the layout.
RR: How so?
SK: Chakan is a classic example. When our micro-flute business was increasing, rather than adding equipment sans a plan, we created a cellular structure. This allowed us to have lesser movement of materials. As you know, in corrugation, the quantum of movement is much more because of the thickness of the board. So we created a structure which allowed us to work much-more effectively in a smaller area even if the the plant is larger. Right from the paper issued to the production and to the outward movement of the finished goods, they occupy a very small area of the plant.
RR: What happens when you install a new press? Does the workflow get disrupted?
SK: When we put a KBA press in Daman, it was installed within the existing print department where we were able to create space. We try to create extra resources even in a location like Daman, where we have limited space in terms of growth. This is because we are conscious of the right manufacturing practices. We have created a cellular structure in our Daman plant, too. We have something called the pharmaceutical cell. Lot of our conversions for the healthcare industry are done in that location. We have tried to reduce arrows, which signify movement, and focus more on the production activity.
RR: There was a time when Parksons was investing in pre-owned and proven technology. Then there was the Parksons which was a front-runner in investing in machineries for the critical bottleneck areas. Did this give you an edge?
SK: This debate is never-ending; whether to invest in new equipment or old equipment. One point I agree with, you can’t invest in a non-proven technology. There is a difference between a brand new machine and a non-proven technology. I think we have always been careful. For example, even when we got a double coater, the technology had come 10 years ago. So it’s not a new technology. When we studied the technology, we believed it has reached a stable point. Also, there were not too many double coaters in India. Hence we invested in the technology. 
RR: Are your investments customer-driven?
SK: In the Indian context, a lot depends on your customers; the products you offer and the segments and markets you want to cater to. After you study all this, you have to decide what equipment you need to install.
If your objective is to offer folding cartons in the second and third tier value-added segments, investing in a brand new press is not justified. However, if you want to do low value-added jobs it is better to get a proven secondhand equipment. Studying the market is important in order to understand what to invest in. My belief is, within the proven technology, there are lots of changes in terms of makeready, changeover etc. Study all of it. Invest wisely.
RR: Will Parksons invest in a pre-owned kit?
SK: Let me put it like this, we are in the premium value-added offering space and we have to create what the product demands. Thus, if you invest in a 10-year-old machine, it won’t give you the edge to produce the right product. In the Indian context, cost of labour, cost of power, and cost of infrastructure are no longer what they were 10 years ago. You should ensure that you maximise productivity with the equipment you own.
RR: Is there an optimum level for ROC, ROI, which a folding carton firm should have?
SK: You have to first look at the balance sheet, irrespective of the industry. And so, ROCs and ROIs are most critical to evaluate. It is not possible for you to have an excellent ROI and ROC unless you have a unique business proposition, or unique product, or you offer something different than your competitors, for you to have a better returns.
RR: Should the customer be plugged into this?
SK: Yes. We should be able to communicate with our customers about the ROCs and ROIs that we are working on since it justifies how we price our products. Today we account both these values separately. Obviously, it doesn’t make sense. We are appalled by the way people in our industry quote for business. 
RR: Why is this happening?
SK: Everyone is looking at a very short window. This is leading to unhealthy competition and erosion of margins. I don’t think our business allows us to have unrealistic margins. However, with the amount of effort which is put in by every entrepreneur one can’t conduct business like a charity.
RR: In terms of customer pain-points, one is price. Is price determined by the input costs. Do you get a value for quality, scale, technology? 
SK: I don’t think it is fair to say that customers don’t value quality or innovation. In fact there is a lot of emphasis put by large Indian companies and multinationals on new areas. I think price is a derivative of what we have projected to this industry. In our industry, most people believe that reducing price is the only way they will get new business. Thuswe are undermining our own capability of offering better quality and an innovative product. I would not blame the customers for this.

RR: What has been your strategy for reducing the customer’s pain-points and keeping them in the loop about the quality audits and checks?
SK: I think our engagement with our customers on a day-to-day basis is quite considerable. Every month, we have presentations with our existing and new, prospective customers. This is a continuous focused activity within our organisation. We have been organising programmes since the last two to three years wherein we bring in the customers / end-users on a common platform and share where the industry and technology is moving. 
RR: A lot is happening at Parksons with your R&D team in terms of design and prototypes...
SK: We are working on multiple projects, and on projects which are driven by internal expertise, which customers may not even ask for. There is a lot of brainstorming on it. We get lots of enquiries from our customers. Now some of it may not convert into business, but it gives us a clue. We know of what to expect in the coming months. So we start working on key ideas. I think it is a team effort and there is an exchange of ideas between the management, marketing, product development, and Design Park teams. At Parksons, collaboration is the mantra.
RR: In real terms what does this translate into?
SK: We are offering at least one or two new products to the market every month. We see that many customers are receptive to this. We have seen many customers who are very quick in adopting new ideas. Also, there are some customers who just talk about it and do not take the effort to adapt it to their native environment.
RR: Suddenly, we are seeing a shift in trend, with print packaging firm moving from more of a Shah and Nahar industrial estate to a corporate park. Why so?
SK: Typically, the Shah and Nahars existed because the printing presses were located in it. Over time, we have seen people moving out of the city to a location outside Mumbai. That has created space for people to occupy and turn it into an office. But as companies expand or grow, their aspirations seek a corporate environment.
It is not necessary that this is leading to more efficiency or effective work. Also, the scenario in Mumbai is changing. Earlier there were no corporate parks so you had no choice but to move to an industrial estate, but as industries are moving the office space is getting transformed. One does not have to be big or large to move into a corporate park. You can be a medium-sized company, but I think everyone is looking for a corporate environment. I think this culture will set in among several print-packaging companies.
A new day has begun. We live in exciting times.
(Photographs and interview supervision by Anand Srinivasan)
Management shuffle at Parksons
Congratulations on becoming the managing director at Parksons Packaging. Tell us about the tweak in top management.
Siddharth Kejriwal (SK): It is a change in titles based on the current accountability and responsibilities which we have made effective from 1 April, 2014. My father, Ramesh Kejriwal, will be the chairman of the company, while I have moved from the position of an executive director to that of a managing director, and my brother Chaitanya, to the joint managing director’s post.
What is the message to the market?
SK: As mentioned, this is a re-alignment to ensure the designations reflect our operational roles. My father, who has been instrumental in building our packaging business, has created what we are today. Mr Kejriwal will play a strategic-guiding role. He has become a vision-setter, someone who looks at where we should take the company in the next five to 10 years. To a large extent, he is not involved in the day-to-day operations of the business. I am fully engrossed in spearheading the day-to-day operations, sales and marketing, buying, etc.

What about your sibling, Chaitanya?
SK: Earlier, Chaitanya worked closely in supporting my father in strategy, finance and IT initiatives, but now he is leading these operationally along with strategising new initiatives for the company.
For example, the Design Park initiative – our creative design lab – is being led by Chaitanya with a group of creative people. Also, he is involved in the human resource function to strengthen our people practices and to build a strong human capital.
Kudos on your new office at the plush Indiabulls building. What was the thought process?
SK: We felt that, as it is important to have good people in an organisation, it is also necessary to have a good working environment. It helps improve the efficiency of people. Keeping this in mind, we shifted in July 2013. The reason was that we were contemplating on looking for a more corporate feel and a larger office, since our Lalbaugh office was becoming cramped. We felt there were a lot of residential buildings coming up in Lalbaugh, which was creating a nuisance. 


Chaitanya Kejriwal, joint managing director
Traditionally we had pre-press and packaging development divisions, which a lot of other people have. The idea behind establishing Design Park, which was two and a half years ago, was to create a separate division which essentially focuses on ideas that you would not ordinarily spend time on. 
The approach that we have taken at Design Park is, we work on client projects, where we work on the ideas from the client and develop it and also on internal projects, where we create our own intellectual property. Once we create our own intellectual property, we see what the various applications are and the customers who we can fix these to.
The other idea behind the internal projects is that a lot of the client’s projects are driven by short term goals and what their immediate needs are. So we tend to pre-empt little bit into the future and work on concepts that maybe out-of-the-box ideas and solutions for some clients.
The team currently at Design Park does not have a prior experience in packaging. They are designers but they come from varied backgrounds. The idea here was to bring in diverse set of minds and work on ideas differently. The team currently has seven people and we work on all aspects, be it materials, structures, graphics or using existing materials as in inks, coatings or composite materials. 
This is a new initiative which according to me is evolving everyday and we are putting together a structural framework that we will further evolve and grow in a couple of years. We will break it into certain focussed segments which we are actually in the process of.
There must be atleast 10 projects which has hit the market in the last one year. We won Godrej recognition award for the pack desinged by our Design Park team. The higlight of the product was that the Godrej team wanted to do something different for the packaging of their launch product. We created a different structure with a sleeve and box type package. It is different in terms of aesthetics and ease of use.