M&A is becoming by and large an inevitable trend: Ajay Mehta

Ajay Mehta, managing director, SMI Coated Products talks to Supreeth Sudhakaran about Labelexpo Europe and trends from the Indian label industry.

25 Sep 2013 | By Supreeth Sudhakaran

How many Labelexpos have you attended and what’s different for you this time?

This is our second Labelexpo Europe as an exhibitor. We have previously participated as visitors in several editions of the show. This time, we have booked our stand at a prime location and launched several new products especially in the filmic label segment. As I always say that Labelexpo Europe is the Mecca of all label shows.

With the current Rupee devaluation, how much of a threat or opportunity is there for Indian manufacturers of labelstock or labelling machines?

Rupee devaluation has brought in good news for those banking on export markets. At the same time, the raw materials like the adhesives and release liners are all imported. So there is hardly any good news for labelstock manufacturers. The value-addition that we do is the differentiating factor. Worldwide the recessionary trends are there, and everyone is looking for economic solutions. Therefore, the manufacturers stand to gain.

Thinner labels, liner-less labels, wash-off labels…several buzz words at the show. But how much of these are relevant to India?

As far as thinner labels are concerned, SMI is equipped to offer solutions in this sphere. Liner-less has been making noise since last 15 years but we are yet to see the business from India shifting to it. The reason are the ingrained limitations such as limited sizes, shapes, as well as the adhesives used are not as aggressive as they are in other solutions. These are good for the environment but yet to make significant improvements to achieve a higher adoption rate.

The exhibitors and visitors here are also talking a lot about PET and PP labels. How much of this trend do you foresee trickling down to India?

India is a nascent market, and expecting it to adopt PET and PP labels quickly is not possible. The first step for us is to move from wet glue labels to pressure sensitive labels and gradually make the progression. It’s going to take some time before it starts taking major shape in developing markets like India. Although there are several products being sold from the supermarkets but the volumes have not yet reached a point where a label would be an effective factor for purchase. Packaging in India is still not a tool for marketing. Only volumes will drive the growth of filmic label.

How much of FDI will help to speed up the case?

The view that FDI in retail will give a boost to the packaging and label industry, especially the transition from wet glue to pressure sensitive labels, holds merit. At the same time, it will take four to five years to really bring the change to surface. Currently, Wal-Mart not participating in India is disappointing news but it will change. At the same time, the point is that there are commitments by leaders in the world of products, where they say by 2020 they will reduce their packaging costs. So while there would be growth in packaging, concurrently, several different sizes and packages will be taken off the market.

What is your perspective/view on digital inkjet technology?

Worldwide production of labels on digital is less than 3%. The presumption and also the fact is that it is costlier. Unless the manufacturers launch technology that is compatible with normal media rather than specially coated media, it is going to be a challenge. The conventional machines are also focusing on less wastage; some even claiming it as less as 10m and with a changeover time reduced to as low as one minute.

When we talk of short-runs, India label industry is genetically a short-run label market. The capital investment in the digital inkjet would only make the labels dearer. There is a constant change that is happening. Quality parameters of digital will improve, at the same time, the conventional printing machine manufacturers are also working on making short-runs a viable business idea.

What are the major trends that you see in India?

With each passing day M&A is becoming by and large inevitable trend that is engulfing developing countries like India. This will also help in building the standard operating procedures in the industry and wake the players from slumber.

In general, it is assumed that whatever that is made in India will be substandard. We are considered as over adaptive and over compromising. The fact is that this perception has been lingering around since the mid-80s. The printers and converters of the industry today have travelled and visited international print centres and adapted the work patterns in their facility. We are completely an industry that is made up of entrepreneurs who are self-driven to create global products.

The per capita consumption of labels in India is still very small. What are the major hurdles in its way of growth and by when do you expect to see the change in volume?

In labelling, the biggest segment which contributes worldwide to the share is food and beverages market followed by home and personal care. Unfortunately, food and beverage market in India is not very big; packaged food is not a preferred option. At the same time, if we grow by 10% we would have grown three times by next 15 years, if it was 15% growth we will grow by seven times and so and so forth. There is no denial that label industry is still growing over 10%. The wet glue label is primarily and gradually shifting over to PS labels. The challenge is not whether growth will happen; the issue is that whether we are ready to support this growth.