SMI story: well begun, and almost there

In conversation with PrintWeek India, Mehta duo of SMI Coated Products discuss the company’s growth trajectory and trends from the Indian label industry and at Labelexpo Brussels.

10 Dec 2013 | By PrintWeek India

PrintWeek India (PWI): SMI has been one of the leading labelstock manufacturer in India. When was SMI established? How has been the growth trajectory?
Ajay Mehta (AM): SMI was started as a proprietary concern in 1993 and we put up our coating machines in Daman. SMI had a modest beginning with half a metre wide machine. We gradually upgraded to one metre wide machine and then the hotmelt coating machine.  We have integrated backwards and also have a silicone coater at our premises.  Currently, we have two acrylic coaters, one hotmelt coater, two silicone coating machines, two slitting machines. This has happened over the last two decades. The growth has been averaging 25-30% per annum since our inception. If you trace the genesis of SMI, at the beginning we took care of the sheet market, however, today sheet market is one of our least priorities due to lack of technical parameters required as well as very cheap rates required for sheet market. Most of our products cater to the roll market.
Mehta(l) with son Rohit
PWI: SMI has over 200 products. Please give a brief on your product portfolio.
Rohit Mehta (RM): If you look at our product portfolio, we offer more than 200 products which is a permutation and combination of various grades of face stock, adhesive and release liner. Like every other label stock manufacturer, chromo paper is our top running item, since it is the bread and butter of the industry.
In exports, we cater to the filmic market; although the demand is low in India, it is in great demand in the export market. This is because export customers are willing to take that plunge into using the filmic material after having used chromo stock. SMI’s domestic to export market sales ratio is 1:1. We have been exporting to UAE, South Africa, Australia, European countries etc. In India our sales are largely using paper as a face material , however films volumes are picking up very well.
We also have security solutions which includes destructible vinyls, tamper evident materials. The percent growth will always remain high in the security segment. However, the volumes will be low. Today our portfolio is a mixed bag of paper, films, thermals, speciality and security solutions. Accordingly we have developed a new product catalogue which is application based.
PWI: If you can briefly explain the catalogue...
RM: The catalogue highlights 70 different face stocks, a combination with various grades of adhesives and liners that make our entire portfolio of more than 200 products.
We have developed a product selector software, which we provide with our catalogue. It helps the user to select the right product for the right application. It has been designed specifically for the printer and the end-user, wherein the user has to answer seven leading questions, which are application-specific and the software will derive the best suited substrate for the application. Before selecting a label stock you must scrutinise these seven leading questions that will decide the characteristics of the label stock solution provided by us. It goes with our motto, ‘Your application our label stock solutions’.
Our first perspective today is to spread the education that is required and is missing in the industry. What are the requirements of a label? Why and how does a label function ? And that you have got to stick to the basics. These are the parameters on which it works.
PWI: The exhibitors and visitors at Labelexpo were talking a lot about PET and PP labels in the narrow-web flexo segment. How much of this trend do you foresee trickling down to India?
AM: 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 the self adhesive industry and then of filmic label.
PWI: At Labelexpo in Brussels we saw a lot of buzz about linerless. What are your thoughts?
AM: Linerless technology is something which has been there for the last 15-20 years. The movement towards linerless that was visible at Labelexpo is more because of the environmental issues that are being raised in foreign countries. It involves additional investments in dispensing and additional capabilities of the employees that handle dispensing. Because it sometimes involves micro-perforating, die-cutting etc, it makes the process more complex and more capital intensive as of today. I believe that whatever involves an additional capital expenditure and is restrictive by nature, it takes a longer time  to percolate enough to create an impact.
In India, it will take some more time for us to move in that direction. It has an inherent problem of having to cut labels. We have some technologies that are developing now, which allows you to have special shapes.
PWI: What are your views about thinner labels? Is the technology relevant for India?
AM: As far as thinner labels are concerned, SMI is equipped to offer solutions in this sphere. Using a thinner film as a release liner means you have to have special well maintained equipment. And at the end of it, the cost of the label doesn’t change so drastically to really get excited. If you are going from a 23 micron to 12 micron polyester the cost of the labelstock per say would change by 10% to 12% and hence the cost of label would change by 5-7.5%. If you want the consumer to use the thinner material, knowing the tendency and understanding of people, he will expect some price difference. So for the printer, he gets the business but not the higher profit. And as far as the user is concerned, he is restricted to buy the material from few particular vendors. So when we are looking at 2-3%, it is not going to happen unless environment is the criteria and cost is not the criteria.
PWI: What do you think about the EB and LED technologies?
AM: Today across the world, whether it is a paper mill, labelstock manufacturer or a label converter, I believe majority of them have over-capacity. The objective of EB and LED is to make the machines run faster. When the current capacities are not being optimally utilised, I don’t see the requirement of these technologies in large numbers in the near future.
PWI: What are the major trends that you see in India?
AM: With each passing day M&A is becoming by and large an 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 wrongly assumed that whatever that is made in India will be substandard. We are wrongly 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 widely and visited international print centres and adapted the work patterns in their facility. Today, we are an industry that is made up of entrepreneurs who are self-driven to create global products. The need of the hour is to make this into a full fledged industry and this is the reason why M&A will happen. As this will infuse more funds and there will be shared risks and responsibilities.
PWI: 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?
AM: 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 four times by next 15 years, if it was 15% growth we will grow by seven times and so on 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.

SMI Coated Products
Location: Ambernath near Mumbai
Established: In 1993 as a proprietary concern, SMI was registered as a private limited company since July 2004
Kit: Two acrylic coaters, one hotmelt coater, 
two silicone coating 
machines, two slitting machines
ISO: 9001:2000