Corrugation growth will touch 20% in next five years

Rahul Kumar (RK): In an industry where paper is the biggest cost, it makes sense that companies would want to track its use, or more specifically, its waste factor. How do you do it at your plant?
Dharmendra Kumar Pandya (DKP): Yes, kraft paper is the biggest cost. It is our major raw material (75-80%) when we produce corrugated board/box. A corrugator needs to track and monitor both the economic and scientific use of optimal kraft papers and the permissible waste factors. At our semi-automatic corrugation line, we produce a variety of boxes in terms of sizes, paper specifications and printing to satisfy the tailor-made needs of our customers. We have performed standardisation of the board for small orders by scientifically manipulating and minimising the gsm, BF, CS and reel-deckle. This is common practice for all orders, and ensures better quality. Adopting this method, we have reduced the inventory of kraft paper reels and thus, have saved on cost and waste. The Federation of Corrugated Box Manufacturers (FCBM) of India conducts comprehensive courses, seminars and webinars to acquaint its members about scientific costing on the packaging, standardisation of board, optimised costing, saving wastage and many more subjects, where I am a faculty member.

RK: The wastage at an average corrugation plant in India is as high as 14-15%. And one realises that one of the major causes of higher wastage is the poor quality of kraft paper available to Indian corrugators. Why is that?
DKP: As per my observation and experience, 14-15% average wastage is not economically permissible. It should not be more than 8-10%. But, a significant cause of wastage is indeed the poor quality of kraft paper available to Indian corrugators. In India, most kraft paper mills use recycled waste paper and some imported OCC to make the paper. Due to the old technology, corrugators are not getting the consistency in kraft paper. Now, many paper mills with the latest technologies and effluent treatment plants are producing standard kraft papers, which will be helpful for corrugators to reduce paper wastage. At the same time, it is the responsibility of corrugators to improve the operating system at their end.

RK: What are the other potential areas of loss at your plant: automatic plant vis-a-vis semi-automatic plant?
DKP: In a semi-automatic corrugation plant, we have to monitor the process at various stages, from unloading paper reels to loading boxes for dispatch. The potential areas of loss are manual unloading of paper, single-facer corrugated machine making two-ply sheet, sheet pasting machine making three-five-seven-ply board, and so on. These losses can be reduced and controlled separately at every stage of manufacturing. In an automatic board plant, loading and unloading are done by forklift, which reduces loss. Still, during board-making in an automated plant, a small mistake may cause a massive loss due to wash boarding or overheating due to running length and the speed of the machine.

Corrugated bed for Covid patients

RK: For some paper mills, running a corrugator at 300-m/min, probably the fastest in the country, would mean a new set of challenges for controlling wastage. What are these, and what measures have you taken to minimise the wastage?
DKP: This speed can be achieved only when the kraft paper quality is good. Most of the installed automatic lines in India are hardly running at their peak speed. They run somewhere in between 80 to 150-m/min. With a variety of size changeovers and the poor quality of paper, it may be a challenge to control waste.

RK: Expertise in the corrugation industry is underrated. How much wastage is caused because of an untrained operator? How to hire a candidate and train him?
DKP: It’s high time automatic plants and high-end converting machines get installed in the corrugating industry, and to operate such machines, skilled operators are required in big numbers. The FCBM and other national bodies are working on it and are seeking government help to open training institutes so that we can get skilled and trained operators and workers in the future.

RK: One feedback was that paper cracking is a major challenge, as paper mills have increased the use of starch in paper to increase burst factor and ring crush values. How do you address this issue?
DKP: Yes, it’s true. Good quality, standard local kraft paper is still a dream for the Indian corrugator. Most of the domestic kraft paper available have cracking problems because of the excess use of starch and minimum use of long fibres. I have observed that overuse of starch in kraft paper helps increase BS and RCT. Still, when it is converted into a corrugated board, it seems BS and CS drastically decreased while making a corrugated board.  
 

Corrugation goes fashionable

RK: What sort of yields should a corrugator target while creating an operating model? In terms of a profitability tree, are the existing models sustainable?
DKP: Every corrugator has a different operating model. Some use their experience and create their operating model. Nowadays, corrugators also work on new ERP models. The existing models are sustainable if we understand all the aspects, such as proper production planning, scientific costing, and so on.    

RK: With fluctuating kraft paper prices and corrugators operating on wafer-thin margins, efficiency becomes paramount, and one wonders if an average Indian corrugator is aware of his operating costs? Do you capture your production costs?
DKP: As the industry operates on wafer-thin margins, a corrugator needs to properly understand the scientific method of costing. Square metre-based costing is a better method instead of the kg-based method. The FCBM has organised many seminars on the scientific costing of corrugated boxes. There may be variations in the final costing for individuals, but the bottom line must be the same. Capturing the production cost is not a big challenge.

RK: How does one explain the investment and new projects in the corrugated box industry in the past two years? Has the business environment improved?
DKP: Due to the new MSME policies for the subsidy, loan and working capital, many corrugated projects are coming into the market with considerable investments in the last couple of years. This will help improve the business environment.

RK: With automated corrugation lines and high-end finishing machines, the quality and performance of the box improve, leading to optimisation of specifications and light-weighting. Does that mean the overall market will shrink?
DKP: Yes. Due to automatic corrugation lines, high-end finishing machines and improved technologies, the performance of corrugated boxes has improved. On the one hand, we can produce high-performance boards with lightweight paper specifications, which provide more ECT of the board and hence more BCT of corrugated boxes. On the other hand, we can do fast production of boxes. The growth of the corrugated box market is increasing by 12-15% every year. It is expected to touch 20% in the coming five years.

Durable and eco-friendly dustbins

RK: Has our industry seen a shift in how contractual agreements are drawn between vendor and client? What kind of monitoring and evaluation systems are in place now?
DKP: It is a triangle between kraft paper mills, corrugators and end-users. Unfortunately, due to the uncertain price scenario in kraft paper, it is impossible to adhere to a contractual agreement.

RK: Two emerging sectors: entry of modern retail and therefore, multicolour and photorealistic images and multicolour graphics. What are the new possibilities for printing on the brown surfaces? What role digital printing play?
DKP: For printing attractive brown and white duplex boxes, many of our corrugators are offering multicolour flexo printing for bulk quantities for which nylon blocks are used. And yes, digital printing will definitely play a vital role because it can be deployed in short-term orders and fast processes. We are entering the digital print field. Most of the corrugated board POP, POS are printed by digital process nowadays.

RK: Which are the segments that will drive the corrugated box industry? Fruits and vegetable segment? eCommerce?
DKP: FMCG is the emerging segment that will drive the corrugated box industry. But the trend changed in the last two years after Covid-19, wherein the eCommerce and pharma segment increased by leaps and bounds because safety measures became top priotity.

RK: Please share inputs on the price hike of raw materials?
DKP: The recent price hike of kraft paper was due to the rise in coal prices. If we calculate, during Covid, the cost of corrugated boxes has shot up by 70-80% and now, it is almost double.