SMI Labels and Packaging Materials

Friday, October 26, 2012

Joint Ventures, Mergers, Acquisitions & International Partners, still Positive in labels.

Joint Ventures, Mergers and Acquisitions, etc. seem to be the topic of discussion when different members of the self adhesive label industry meet these days. These takeovers and alliances happen or become predominant in different situations and circumstances. In a particular scenario when times are bad, demand is down and business owners find that operating margins are low, demanding a need to restructure, look for an exit route or join partners who can bring in value to the operations. In another scenario when the going is very good, the growth is consistently in double digits and larger players are eyeing the market, at this time business owners either get a good price and call it quits or partner with the larger players with global presence to achieve a situation of monopolistic leadership. In India the situation is slightly different, the basic concept of double digit growth is relevant yet the industry is in a rather nascent stage as compared to international markets. Single owner companies, who are rather small as compared to large international label printing entities, are at the forefront of this industry offering a readymade platform to those who wish to enter the Indian markets. Big international label printing and packaging products manufacturing companies who realise that the large Indian literate population is turning out to be one of the biggest consumer product segment in the world, are considering investments in ventures here, to access these markets. To get a slice of this lucrative market they are on the prowl looking for ventures they can acquire or partner with, for an immediate entry into Indian label printing industry. It happens to be the quickest route as they take over or partner with existing successful label companies, already servicing large fmcg and multinational users.
International players have been in India for long. Johnson & Johnson are linked to history of label in India. They started to produce labels way back in 1978. Then there is CGPPI at Goa and Birla 3M in Bangalore but these were planned ventures set-up long years ago. The Joint Ventures, mergers and acquisitions in the current scenario all started when Kusum and Kartar Dunglay of Goodwork Company Delhi met Marc Reynders at a show in New Delhi. They eventually started their joint venture Reydunn at Manesar, Gurgaon in 2005. Unfortunately the partners later fell apart and both went their own ways. Reynders now run their wholly owned label unit at Chopanki in Rajasthan and Reydunn is a part of the Goodwork group operating from Naraina, New Delhi. In 2006 Brady Corporation headquartered in Milwaukee USA employing 6500people and  sales of 1.34 Billion US dollars setup a wholly owned company Brady Company India Pvt. Ltd. in Bangalore to produce labels for safety, security, identification, die-cut profiles, and specialty products. A little later my friend Mikael Dahl of Nordvalls Sweden joined hands with Venu Ayyar of Laxmi Compugraphics to enter into a JV. Nodvalls is an over 100 year old company with a turnover of over 19 Million Euros and over 105 employees. This venture too did not take off. I quote Mikael in an email received on 12th October 2012, “Unfortunately we had to terminate the cooperation with Laxmi, press is for sale”. In the meanwhile Nordvalls has bought over one of their national competitors  to grow further and become the No.1 label company in Sweden. Just a year later in 2007, Printcare Srilanka, a 27 Million Dollar Company started their unit Printcare India Pvt. Ltd. at Coimbatore. The unit as I understand is doing well. Until this time, given the track record and business model of such JV endeavors, the growing and enterprising label printers were not worried.
 It was only on the 21st of March 2011, that a press release from CCL Label Worldwide ruffled many feathers and set the ball rolling towards the current trend of JV’s and acquisitions. CCL label headquartered in Canada, employing 5800 employees at 61 locations around the world, acquired 50% stake in Dubai based Label Co. Pacman. In the same press release a line read; “The partners have also agreed in principle to a prospective future Greenfield investment by Pacman- CCL in India.” If the world’s largest label company was planning to invest in India, it was time for Indians to take stock. They had to consider partnering with other international partners to face the challenges coming from such large entities. Though CCL has yet to announce their entry into India in label production, yet leading Indian label manufacturers have opened their doors by either selling out or partnering with larger players.
Early this year in February 2012 the industry was surprised by the news that Bangalore based Wintek Flexoprints had been acquired by Hyderabad based ITW Signode, ITW India Ltd. a subsidiary of multi-billion dollar fortune 200 global industrial products company ITW, with headquarters in Illinois USA.
A few weeks later one of the Europe’s largest label producing company Skanem with headquarters in Slavanger, Norway, acquired 51% stake in India’s largest label company, Mumbai based Interlabels with sales of over 19Million Euros and 220 employees. The new entity is renamed as Skanem Interlabels. This has definitely triggered a trend in the label industry. Just six months later, we have the news that Bangalore based SGRE labels, has been fully acquired by Mumbai based Positive Packaging Industries Ltd. the flagship company of Enpee Group, an international conglomerate with over 50 years of business experience. Positive Packaging is a pioneer in flexible packaging with state-of-the-art facilities located strategically in India, Nigeria and the U.A.E. They offer packaging solutions to customers in various countries through a robust international sales and service network, catering to diverse sectors including FMCG, Agro products and Pet food.  The acquired business is now named as Positive Labels. This trend seems to be on the increase, more and more Indian printers are looking for partners. Some admit it others like to keep everything secret. However there are quite a handful of them who would like to have international partners to expand their businesses with global presence. Meanwhile constituents of the label industry are talking in hushed tones about another deal that has taken place but since the stake holders do not confirm publically, it remains gossip that goes on.
The industry is undergoing a fast transformation from being small, single owner, mostly first generation entrepreneur owned enterprises with one or two label presses to larger companies with diverse product offerings like labels, flexible packaging and cartons. These companies have made huge capital investments and are in the forefront of the label industry. The single owner family managed companies who have made rapid strides by investing in multiple label presses to expand and grow to meet the current demands of their end users include companies like Update Prints, Regal Creative, Syndicate labels, Anygraphics and Zircon in North India, Classic Images in East India, Webtech, Ajanta, Mudrika, Mahrishi, Letragraphics, Renault paper, Unique, etc. in western India and Seljegat in South India. Two of the others who expanded in South India have been already acquired. Larger professionally managed companies who have presence in offset printing, flexible packaging or carton manufacturing, who have invested in label printing include Uflex, PPL-Huhtamaki, Positive Packaging, Shree Rama Multitech, ITW, Pragati offset group, ITC, etc.
Definite segmentation has taken place in the Indian label printing industry. At the lowest end is the biggest labelstock consuming segment of the industry. These include companies who produce plain labels, barcode labels, gun labels, computer labels, EDP/VIP labels, etc. In the middle are the printers who cater to the unorganized sector and smaller manufacturers of consumer goods mainly in the MSME (Micro Small & Medium enterprises) sector. The top end that drives in the highest revenues caters to the larger companies, FMCG sector, multinationals, pharmaceutical companies, organized retail, etc. They are the ones producing the highly decorative and complicated labels on their state of art equipments. It is this top end of the label companies where all the JV’s or acquisitions are taking place. With FDI(Foreign Direct Investment) in multibrand retail permitted in India, growth rates in label consumption will rise.
With volumes expected to increase and come from the need of packaged goods that will be retailed to a young and large population, the sentiment in the industry will remain “Positive in labels”.
Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited, New Delhi-110008 October, 2012

Saturday, October 20, 2012

Show time and Celebration time, in Label industry!

The festival season in India begins by the end of September and goes on till the middle of April. This is a time when people in general are in mood to celebrate. The weather also gets cooler and helps. During this time the Label printing and packaging industry also has a series of events in their industry to keep them busy because it is show time!

The biggest label show in India, Tarsus UK owned Labelexpo-India is to be held in New Delhi’s Pragati Maidan from 29th October to 1st November 2012. The show is just days away, the hype is already there and the Label printers are looking forward to a good show. The virtual who-is-who of the label and packaging industry in India and the surrounding countries will converge to meet at this four day event. The show intends to empower the visitors with knowledge of the latest trends and technologies evolving around the world. State of art label presses, inspection systems, equipments, toolings, software and materials will be on display. As many as 23 working presses are likely to be showcasing their printing capabilities at this international event. The last edition of the premiere show was held in 2010 when the economic slowdown was just tapering off and the indulgence of printers may have been a little restrained. The industry is now buoyant, growing and expecting a surge in demand due to a spate of economic reforms initiated by the present Government of India. FDI (Foreign Direct Investment) in multi-brand retail has been allowed and is expected to bring in an imperative need for shelf ready attractive packages. Labels are the face of any fast moving branded product and better labels with good aesthetics not only liven up the shelves but also tempt the consumers to lift the products and add to the retailer’s turnover. The Label printer has to continuously invest in upgrading his capabilities to print, decorate and convert. The general sentiment indicates the printers will be serious this time around and exhibitors will woo them with their best offerings. The event also accords opportunity to label printers and other stake holders in the industry to meet their peers in the industry share thoughts and knowledge. It is also time renew the bonds of friendship.

Harveer Sahni Weldon, Mohd. Nadeem CEO Paharpur-3P,
Alan Barreto MD Nilpeter India
Less than two weeks before Labelexpo opens another event was organized also in New Delhi. “Packaging Summit-Challenges and Opportunities” by Assocham (Associated Chamber of Commerce and Industry in India) and supported by the Ministry of MSME (Micro, Small & Medium Enterprises) on the 17th of October 2012.  Assocham is the highest body of the Chambers of Commerce of India, providing a forum for dialogue between business and government. The summit had speakers from the label, packaging industry and the Government. Speakers from Labels and packaging segment were Allan Baretto MD Nilpeter India, Asim Dutta Head of packaging development at JubilantLife sciences, Mohd. Nadeem, CEO, Paharpur – 3P, V B Lall, V.P., Indian Plastics Institute and Director, SCJ Plastics Ltd., myself; Harveer Sahni from Weldon Celloplast Limited and N C Saha Director Indian Institute of Packaging. Senior officers from the Ministry of MSME and other departments also spoke at the event.  One week after Labelexpo ends in Delhi, International Packtech, organized by Messe Dusseldorf will be held from 6th to 8th of December 2012 at Bombay exhibition centre, Goregaon, Mumbai. This event has a limited participation from suppliers to label industry. Therefore I do not expect many label printers travelling across the country to visit the show. However the packaging industry including suppliers and end users are likely to visit the show.

“Printpack” is the largest show for printing and packaging industry in India and also the 4th largest in the world. This time the show is being held at the Greater NOIDA Expo Center from 23rd to 28th February 2013. It will be the first time this show is not being held at Pragati Maidan in New Delhi. Generally shows get popular and recognized with the venues that they have found success at. This is an important show that caters to the printing and packaging industry, demand in which, according to the organizers is likely to cross 27 Billion US Dollars. At their last showing at Pragati Maidan, they reported a visitor turnout in access of 50,000 in numbers. I wonder if they can repeat that success at a changed venue, only time will tell. In between the shows that I mention above, there are a lot of small regional shows in smaller towns spread over North, West and South India. With the number of shows going on increasing coupled with already existing successful and important shows in Europe, USA and now China, the pressure on printers, suppliers and visitors has also increased. Signs of discontent are already showing. Competition and market demands create paucity of time. Printers need also to invest with caution. The no. of genuine visitors to shows is likely to decline. Drupa is a classic example of falling No. of visitors and if this trend continues, it may lead to losses for organizer and deterioration of standards at these shows. However for growing economies like India and China, the show culture has become a must for entrepreneurs wanting to expand. The better organized shows at popular venues are more likely to succeed. The content and visitor profile of any good show ensures good bookings for the following edition and vice versa is also true. We do hope that these shows deliver the promise to empower the label and print packaging fraternity with technical up gradation and opportunity to select technologies for their future expansion.

Narendra Paruchuri, M D Pragati
Pragati Offset Hyderabad celebrated their Golden Jubilee recently at Hyderabad. Being invited to the event I was surprised by the commitment, involvement and participation of the entire team. I have already written about them in this column last year. The team Pragati is now 1800 in numbers! The founder Mr. Hanumantha Paruchuri and his wife were on stage. At this age the man was in the midst of the party enjoying his guests which included customers, suppliers, media and friends in the industry. The evening saw almost 1000 guests sharing the joy of having excelled in print for 50 years! Pragati’s trophies, awards and works of excellence over the years were also on display. The following evening another party for the team Pragati with 1500 employees in attendance is the real essence, of celebrating success with those who contributed to the excellence that delivered.

The Indian Label press manufacturers are creating another story that is unfolding and appears to be having a bright future. Leading the pack is Amit Ahuja of Multitec Aids, a qualified design engineer. His last showing at Labelexpo 2010 Delhi, then Labelexpo 2011 Brussels and now in Labelexpo 2012 Delhi later this month is all the firsts that any label press manufacturer in this country could dream or achieve. He is producing machines that stand up to challenges and exacting demands in the international marketplace. I am not allowed to disclose but as he says he will surprise the label industry with his latest offering on display at his stand at the show. I look forward to the product that he will showcase. He has installed 14 machines in the last twelve months.
Jandu Label Press
Baldev Singh Jandu from his modest beginnings has come a long way. He has catered to the needs of the label industry in more than one way. His label printing machines are a must for any small entrant in the industry. Barcode labels, gun labels, computer labels EDP labels, toll tickets, etc., Jandu is the name that will deliver. He also supplies coater laminators, slitters, sheeters and other converting machines. He too has installed 14 label presses in the last twelve months. R K Machines in Ahmedabad is another machine supplier who continues to service the entry level printers. I will attempt to estimate imported presses including the used ones at another time as it is a difficult exercise. The agents of foreign press manufacturers do not like to disclose the figures for obvious reason. Considering the installations of these three Indian leaders in label press manufacturing,  and if I add another similar figure coming from other smaller regional players, the Indian label printers seem to have sold over 50 label presses! Truly the Indian label industry is shifting gears!

Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited, New Delhi-110008 October, 2012

Friday, October 12, 2012

SGRE Labels Bangalore, acquired by Positive packaging!

Mumbai based Positive Packaging Industries Ltd. the flagship company of  Enpee Group, an international conglomerate with over 50 years of business experience, has in a recent move acquired Bangalore based SGRE Labels Private Limited. Positive Packaging is a pioneer in flexible packaging with state-of-the-art facilities located strategically in India, Nigeria and the U.A.E. They offer packaging solutions to customers in various countries through a robust international sales & and service network, catering to diverse sectors including FMCG, Agro products and Pet food.
This acquisition is a part of a series of moves in the Indian label industry, which seems to be undergoing a transformation by partnering with larger players to meet the challenges of globally active label printing companies indulging in domestic markets. This also provides the companies so acquired an access to international markets. I reproduce below the press release from Positive Packaging;

Positive Packaging continues growth and diversification, acquires Label manufacturing business: Move to address demand for superior, multifunction labels, from existing clients and add new customers.
Mumbai, India, 18 Sep 2012: Positive Packaging Industries Ltd. is pleased to announce the acquisition of Label manufacturing business of “SGRE Labels Pvt. Ltd.”, in a bid to offer its customers single stop packaging solutions. This acquisition follows the recent integration of ICM Packaging and is part of Positive’s vision to have the ‘Preferred Supplier’ status with its customers and equips Positive with state-of-the-art label packaging equipment and infrastructure.

Pranesh Kankanwadi, Group MD Positive
 Explaining the strategic acquisition, Mr. Pranesh Kankanwadi, Group Managing Director, Positive Packaging says, “We have observed the increased scope of requirements of our customers, who prefer to deal with a single supplier for a wider range of their packaging requirements. One of the requirements is labels. Being prompt to react to our customers’ needs, we clinched the opportunity to provide superior labelling solutions at par with global standards that Positive is known for.
The label manufacturing business of “SGRE Labels Pvt. Ltd.” is located at Bengaluru. The Company has state of the art European machines with additional equipment scheduled for commissioning in March 2013. The company has in house design facility, managed by a experienced technical team. To facilitate the quick turnaround of short run jobs and product sampling, company is also equipped with HP Indigo Digital Printing/Converting equipment.
The continued significant investments underline Positive’s commitment to all stakeholders to grow the relationship in a mutually beneficial manner.
Positive Packaging, a part of the international conglomerate, the Enpee Group; is a one-stop source for quality, printed and laminated, barrier-grade flexible packaging with manufacturing facilities in India, Nigeria and U.A.E. In India, Positive Packaging is a leading player in the flexible packaging space.
To know more about Positive Packaging, visit the website: Media Contact: Mr. Nem Kumar Jain - Sr. Manager - Corporate Communications | +91 – 22 – 39211400