Ink innovation in Gujarat factory

Flint made a statement of intent in packaging with a new plant in Savli, Vadodara. PrintWeek India discussed plans with Antoine Fady, CEO, Flint Group and Upal Roy, managing director, Flint India.

19 Feb 2013 | By Noel D'Cunha & Sachin Shardul

PrintWeek India (PWI): Tell us about this new plant in Savli, Vadodara?

Upal Roy (UR): This plant is all about catering to the needs of the customers and being closer to our customers. As you know most of the demand is in North and West India. 70% of the demand for liquid inks and inks for narrow web come from North and West India. We have a mother plant in South India, which is in Bengaluru. Keeping in mind the growing demands from customers we were running out of space and therefore decided to shift to the West. The objective was to be closer to customers and to setup a plant as per the guidelines which would provide international standard inks.

PWI: You already had a plant in Bengaluru. Was there a need to move from Bengaluru to here?

UR: Yes. As I said it takes time -  transit time from Bengaluru to the North is at least seven to eight days. From here, we can cater to 35%-40% of our customer base within three days, which is a significant reduction in transit time. The other reason is, Savli offers us the opportunity to expand our business, get more of our products to cater to the Indian market, especially the packaging market.

PWI: So what happens to the plant in Bengaluru?

UR: For now, Bengaluru continues to operate, however we do not manufacture from this site. We have another facility in Hosur, about 40kms from Bengaluru which currently serves the South Indian market as well as Sri Lanka and again we will continue to operate from this site. There is, however, significant scope with the new facility given its increased capacity to better serve our markets and we continue to transition manufacturing to help improve our value proposition for customers

PWI: Will this plant be the mother plant in India?

UR: Yes. This will be the mother plant but we also have smaller mother plants like the one in Hosur. One thing is that the Hosur plant initially was the export unit, catering to the Sri Lankan market, but we later converted that into a local unit, which also exports. The Hosur plant will continue to cater the Sri Lankan as well as the South Indian markets. It will also act as a blending unit catering to South Indian customers.

PWI: In terms of capacity, how much do you produce in India?

UR: Given our current manufacturing capability - we certainly believe that we have enough capacity to cater to the Indian market for the foreseeable future.

 PWI: Will it also serve the market outside India?

UR: Our aim is to ultimately strengthen our position in India and its surrounding markets. This is the primary objective. But right now our first focus is on the Indian market.

PWI: Since you are not comfortable in sharing the numbers, I will put it this way. Was 2012 a satisfying year, in terms of volumes?

Antoine Fady (AF): There is always room for improvement however, we have done better given the recent transition from Bengaluru and have grown extensively over the last two years.

PWI: In terms of percentage, how much is that?

UR: We have witnessed double digit growth within the market.

PWI: In terms of printing, one thing that comes out very strongly is the enormous sense of ownership in the print plant particularly when we talk about ink kitchens. Do you manage ink kitchens in India?

UR: When you say ink kitchens, I assume you are talking about the ink management at the customer’s premises. Yes, we have been there for the last five to six years and last year we had a significant increase in that.

AF: We have more than 600 people working at the customer’s premises across the world.

PWI: Does this concept of ink kitchen excite you?

UR: Yes. Because that’s one way which helps not only us but also the customers. It enables us to not only manage the inventory better but also helps better returns. There is significant improvement in uptime. It helps in getting the right recipe for use, as well as helping manage the colours better. The customer does not have to go through the difference and rectify that.

PWI: While coming here, I asked a few printers if they would like us to ask any specific questions to you. There is an apprehension among printers regarding the grade of inks available in the Indian market. Are the grades of various inks supplied in India as good as the ones available in the US or as close as those available say in Dubai. How do you allay those fears?

AF:  If you mean the quality of the products is not the same in India as compared to the market outside India, let me try to tackle that. First you need to look at the differences from market to market and application to application; also in some regions legislation can vary wildly. For example, in packaging, a majority of converters are using solvents which are different from those used in India. So the ink requirements are not the same, and so is the pricing. This makes any such comparison almost impossible.

In our market we see no difference. We supply those types of inks which suit the particular applications our customers want to produce. I will give you an example. The supplies of plates to customers who use our plates come from one part of the world. It’s the same with blankets and chemicals.

We met one of our customers who is using our plates. These plates come from one part of the world and they are the same. The formulations for news inks manufactured in India, are more or less the same. For some specific applications in packaging, they could be different. So I will not give one answer to all the applications as we operate in more than 15 different sectors. It has to be taken as an individual case study.

PWI: Is the grade of label ink manufactured in India comparable to what is produced outside of India?

AF: We operate in 10-15 different sectors, so what you call an ink for one sector is different for another. If you go to any packaging unit producing carton mould, you will see they use water-based inks as it would absorb into the substrate. But if you print on plastics, then it would require completely different technology (using solvent) as plastic absorbs nothing and needs curing. If you take each of the sectors then sometimes you got the volumes, high value-added or low value-added. So there are some products which have to be made locally. So you don’t make news ink outside of India for India. In case of packaging inks, you make them in India. Labels are a specialty ink and we make them in one place in the world. We have 40% market share of the entire label market worldwide coming out of one factory. These are very high technology products and we want to make sure that if you make labels for large FMCG companies, then the colour of their brands would look similar around the world. So there are products which we make centrally but also ensure that products for the local market are served locally. It is the balance between quality and the cost management.

At the same time, there are sub-products which we buy in India for the world, for example blue pigments, which are supplied to our operations wherever in the world. We have our own factories for red and yellow pigments in China, which supply to the rest of the world.

It is a pretty complex supply chain and it is our aim to serve the customer with cost effective and high quality products. We respect our high standards whether it is safety, pollution or environments.

PWI: Is label the sunrise sector and in what direction are the major trends going?

AF: We definitely see labels as a technology sector. For example, bear in mind that the first communication you have when you buy packaging is the label. So the brand communication is extremely important.

The important trend we saw last year was in shrink sleeves, which cover the entire products – you print it either on the can or the label. This trend is very high tech. You need to design the label properly before it can go on the product. To enable this you need to provide software and the inks which will make the design and when you shrink it goes on to the can.

Another trend is safety. People will handle the product and hence the ink needs to be safe.

The third trend we are seeing is the focus of multinationals in attaching quality with their brand identity worldwide. The brands are ensuring that they represent the quality wherever people buy it in the world.

PWI: Which segments in label (for example: self-adhesive / water based) are you bullish on?

AF: Self-adhesive has been more and more popular because of its productivity. As soon as people go for the high productivity, they opt for self adhesive except for the shrink sleeves. When you don’t require adhesives you simply shrink it by heat and save on adhesive.. But as soon as the product goes on in high market self-adhesive is the best option.

PWI: In India what is the trend?

UR: Self adhesive seems to be growing very aggressively.

PWI: When you compare the label industry with the other forms of print, what are the things that you would like the label industry to emulate?

AF: I think we are not the best people to say that. At the end of the day we all work for brands, protect them and enable them to grow. We satisfy marketers in order to generate business.

India is becoming an increasingly more important market for trade, more and more consumers will be exposed to brands. In such a scenario, it is absolutely necessary for the brand to communicate with consumers, what it wants to. The products from these brands should be safe and should be consistent in the message. There are some enormous brands that are well known for their colour – if that colour is printed using a bad ink then the consumer will immediately reject it as it could result in huge fall in economic equity. It is all about equity value more than what you have in the factory or asset. 99% of the brand is the goodwill. Colour is the first thing that the consumer sees and enabling printers to produce the exact colour is one of Flint Group’s core strengths. It is our aim to ensure that the labels for the product brands will have the highest standard and that we will support the brands worldwide.

PWI: We took a walk of the plant and one of the things I observed was the clean environment. Is there any advice that you would want to give to the industry in terms of the best practices that they need to follow.

AF: We believe in one thing and that is, whatever is done should be done in such a way that it is good for years to come.

PWI: Raw material prices have been increasing dramatically, which makes price adjustments inevitable. You are probably the first ones to hike ink prices. Correct? Are the hikes justifiable when others are able to manage their resources without any price hike;  and won’t these price hikes impact your business?

AF: I will put it in this way. I mentioned sustainability. I am going to be honest.. We pride ourselves on having values however, if we don’t make profits we will not be in a sustainable industry.

If the circumstances force us to hike prices, then that is what we must do . We need to be profitable to be able to invest – this facility is just one good example of  how we have managed to re-invest funds to ultimately improve our service and offering to the market.

In 2011, raw material cost increased tremendously. We have a very strong system to forecast our cost for the 12 months. We continue to make every effort to mitigate cost increases by process optimisation and a leaner organisation -  but are sometimes being forced to pass on increases. However, these can be delayed as it takes time for the full effects to pass through the supply chain

PWI: A lot of the manufacturing companies are investing on sites, R&D and staff. On the digital front anything that Flint Group is doing?

AF: We do many things, But again we need look at this sector by sector. In the ink area, the total consumption in digital would be less than 4% of the world demand. We believe that the trend is moving towards combination printing

In the case of labels, conventional printing will continue. But  you also need a digital printer to print the expiry date.

We are looking at digital inks as part of our plan, though it will be complementary in nature, not a substitute. We see it more as a service to the customers.

PWI: You spoke about the FDI in your inaugural speech. Your outlook on the flow to the Indian market and how do you rate the Indian market versus the other market.

AF: We are present in more than 110 countries and I would not like to compare markets as I think, every market must be looked at in its own right. So I will not talk about comparison, I will talk about India. India is absolutely an attractive market. Not only for tomorrow but for years to come.

First, India is being driven by large middle class population which is a positive. Second it enjoys a stable political system,. . In the long run it is very important for business to have stable political system. Third, the availability of educated and competent manpower to invest in is a huge bonus. Fourth, you see the market changing and it is evolving.

The FDI in retail, when implemented, will have a tremendous impact on the printing and packaging industry in India.

For us this plant is not an investment for the next few years. It is a long-term marriage with the print and packaging industry.

PWI: How would you describe the overall situation of the printing industry? Because, in spite of bagging awards, Indian label converters do not figure in the top 50 firms in the world. How do you view that and what do you think are the reasons for this?

UR: I am not qualified to answer this. But I feel it is not that the Indian label printers can’t produce high quality labels, they are capable- a lot of the label printers you met today have won international awards . Maybe the organised retail sector in India is very small as compared to the other countries

PWI: Would you be making specialty inks for non-paper substrates?

AF: We look at all substrates. From the outside - I have the feeling that the non-paper substrate is more prioritised by printers in India. India is more of a software country than a hardware country. So every market has its peculiarities. We have the luxury today to be amongst the world leaders in inks for the label and packaging industry.

PWI: Any green initiatives by Flint?

AF: I will change the word from green to sustainability. It can be achieved through social duties, for environmental duties, for people, for customers. We ensure that we operate ethically -anybody in the organisation can directly get in touch with the top management in case of emergency. This is another dimension. When we sell our products we make sure that the products are of high standards, always in line with the laws and regulations.