The little brown box

The retail boom is paving way for automation in the largely old-world Indian corrugation industry. The growth of 12-15% per annum in the next five years is an expert estimation. Are we ready to handle this? Tanvi Parekh takes a closer look at what is transpiring on the ground

25 May 2015 | By Tanvi Parekh

Today 225-250 (this is an industry estimate; with the number of automatic lines in operation in the country varying between 225 and 350) automatic lines are churning high-volume high-quality corrugated boxes and trays for both the domestic and the international markets. 
Consider the past two years.
The Indian corrugation box manufacturers have brought home top-line corrugation lines and added capacities. Bengaluru-based Pyramid Packaging’s (a part of corrugation major Horizon Packs Group headed by Kirit Modi) investment in Bobst FFG 618 Quatro flexo folder-gluer in 2013 is the first in India.
Earlier this year in January 2015, Ahmedabad-based CanPac Trends inaugurated a brand new corrugation box plant in Tirupur, Tamil Nadu. The investment includes a semi-auto die-cutting model 1450MPD with stripping and stacker, an automatic die-cutting model 1060MPB-II with stripping and an automatic flute lamination model BZJ-1450S from a Taiwanese manufacturer (represented by SLKCG), four-colour flexo press, Bobst gluer and other finishing machineries. The company’s total investment amounted to Rs 40-crore. By converting about 25,000 metric tonnes, CanPac’s projected revenue is Rs 125-crore in the next three years, i.e. from the new plant alone.
Delhi’s Meghdoot added capacity to its existing production capability of 5000 metric tonnes per month, with investment in India’s first HP Scitex FB10000 industrial printing press, in addition to the HP Latex 3000 and Kongsberg XP cutting table. The corrugator forayed into the point-of-purchase (POP) business with this.
The most recent in the list is Ahmedabad’s Astron Packaging, which has invested in a highly configured six-colour flexo folder-gluer line from Bobst; the FFG 1228 NT RS. With this investment, Astron has plans to achieve a turnover of Rs 300-crore in the next two and a half years. 
According to PV Narayanan, chief executive, Indian Flexible Packaging and Carton Manufacturers Association (IFCA), the number of fully automatic lines; which are able to take in corrugated sheets and perform cutting, slotting printing, and stitching operation inline, are only about 15-20.  
Pankaj Shah, chairman (R&D Centre) at Western India Corrugated Box Manufacturers Association (WICMA), rates the corrugation lines basis its make. 
In the quality grading, the European machines tops the chart and the Indian machines appear at the last spot, with the Chinese, Taiwanese and Japanese manufacturers in the between. 
The corrugation county
As per a study by Ram Kumar Sunkara, the chairman of R&D Committee (FCBM), “The annual production of corrugated boxes in India is 4.60 million tons.  Interestingly enough, five plants with a captive consumption of more than 15,000 TPA are producing 10% of the boxes in India.” 
These 225-250 automatic converting plants, according to Shah, caters to one third of the market which is dominated by big players like HUL, Pepsico, LG, Samsung etc. In addition, there are 2750 semi-automatic lines. To put it in plain terms these would be lines with a single facer and no automatic splicer. 
Today, 35% of the entire corrugation box production in the country is produced in North India, followed by 30% from West, 25% from South, 6% from the East and 4% from Central India. 
Kirit Modi, who is the president of Indian Corrugated Case Manufacturers Association (ICCMA), during the India Corr Expo – SinoCorrugated show in 2014, stated that the corrugated packaging industry in India is steadily growing at 10% per annum. The e-commerce, automotive sector, export-oriented units, fresh farm produce etc are the major user industries which would contribute maximum growth impetus.” 
All it takes to…
With GST being approved in the Lok Sabha and its comprehensive implementation to begin from April 2016, the sentiments of the industry are optimistic. Multi-brand retail FDI inflow is next on the cards. This means the Indian companies will have to adhere to standard practices and regulatory reforms. Plus better quality, better printing, better practices. This will be demanded from all those in the supply chain; the paper mills, the box makers and the brand owners.
“The trend is towards automation. A decade ago, one could count the number of automated lines in the country on the fingers. But today, the number has reached anywhere between 200 and 250. Automated lines mean faster production, better quality and better printing,” says Shah.
Astron’s senior vice president, Niraj Darji says the shift towards automation and technology adoption is largely driven by the end-customer. “We have been exporting high quality corrugated trays and boxes to various developed as well developing countries. We observed that their needs include accurate die-cutting and graphic boxes with high-quality printing.” 
So is the case with CanPac. Nilesh Todi, managing director at CanPac, says his company wished to be in tune with its customers. “We saw a need for high quality shipper cartons. And though the market is not very large in that area, we expect a boost in the coming future.”
Shah hastens to add there is room for both the automatic and the semi-automatic lines. “The larger players (brands) demand automatic lines to ensure high quality products to the end-users but the small-sized players, say the fresh food producers, will settle with the semi-automatic line converters.” 
As the capacity of production upsurges with an automatic plant, the closing down of the smaller players seems inevitable. But with the 8-10% growth in the Indian industry, we are able to absorb some of the slack. The industry survives with the crossover of business between the automatic and the semi-automatic box makers
Pankaj Shah, WICMA
About manufacturing attractive corrugation boxes, Shah says most of the four-colour printed boxes are facilitated by offset printing. The automatic box makers have now started investing in three to four-colour machines. 
And now with six-colour printing topping the trend chart, Astron has invested at an opportune time. “There is a big market for fruits industry in India. Apart from this, there is a big gap in the consumer packaging market, where litho-laminated cartons govern the market. We hope to capture this segment with six-colour printing on a single line operation, where the intermediate operation of offset printing will be eliminated, thereby providing the same or better result than offset and products produced inline in one shot,” says Darji.