SMI Labels and Packaging Materials

Thursday, April 30, 2020

"Label industry- post lockdown @covid19"

The Indian label industry has been quite resilient to market oscillations over the years. It has constantly been registering a positive CAGR (Compounded Annual Growth Rate) and attracting investment over the last two decades. Even in the time of economic slowdown or the great global recession of 2007-2009 the Indian label industry was still growing, though at a lesser rate. The investment in new label presses and equipment that were technically more advanced offering automatic registration control, faster job change overs, short web path and reduced wastages was never stopped, it may have paused for a couple of months but would bounce back. This has been primarily due to the growing demand of consumer products sale emanating from an increasing number of literate young people with gainful employment and higher disposable incomes in their hands. A large population, predominantly rural and which is second in numbers only to China has a middle class that is getting urbanized being exposed to changing lifestyles courtesy the TV channels or networks and mobile telephony is adopting the modern day global living and shopping standards. From buying essential needs from neighborhood stores in lose condition they have been shifting buying packaged commodities and consumer goods from organized retail outlets and fancy malls offering an amount of safety mentioning manufacture and expiry dates with price and product safety information. This culture has continuously provided fillip to the growing demand of consumer goods and subsequently to demand of good labels and packaging. Unfortunately, the present situation created by the spreading Covid19 virus has put everyone in a state of worry, high alert and caution.

The virus has caused colossal loss of lives around the world besides infecting millions who are fighting to recover from the effects of this life-threatening pandemic. Originating in Wuhan China the first lesson learnt to contain this virus also came from there, to curtail the spread one must resort to complete lockdown of the city. Once the fatal consequence of this fast spreading virus was witnessed in countries like Italy, Spain, Iran and many others, the Modi government in India took a timely decision to put the entire country in a state of lockdown initially for three weeks. This may have slowed down the spread to a great extent but since the danger loomed over the large population, the lock down was extended for another 3 weeks. The initial days of lockdown was like a vacation but when the reality of its impact on life at all levels of humanity became evident it has surfaced as a nightmare. On the 3rd of May 2020 when the extension of lockdown ends, we are left wondering if the lockdown will be lifted completely or partially and when life will return to normal. With Malls, airlines, transport, bus services, restaurants, markets, industry and business at large all closed, life has come to a standstill. The imagining of job losses, no revenues coming in, salaries and expenses payable for businesses and receivables for the salaried, not coming makes one sit up and wonder how will life move ahead like this?

Paruchuri family, owners of Pragati Pack Hyderabad
The impact: Most label companies are family owned and run on the rotation of funds model with extraordinarily little funds parked anywhere for such contingencies. Now with no payments coming in due to lockdown and customers having a valid reason that they are closed in a similar situation the result is evident. It has a cascading effect on the industry. The workforce consists of temporary, casual, permanent helpers, skilled and management staff. Most of lower and middle level workforce are migrants who have travelled long distances from their villages and live in rented accommodation on what they get each month getting their rations on credit from neighborhood stores. In the current scenario and no permanent solution in sight they are left with no option but to return to the safety of their homes in villages where they have roof on their heads and meagre agricultural incomes to feed them but without the fear of getting infected. Since Government directive says salaries and wages must be paid in full during lockdown label printers are in a dilemma, how to pay when no revenues are coming in. Production is stopped, receivables are not coming in, both fixed and recurring expenses are accumulating, bank instalment and interest adding on, maintenance is needed to restart, security personnel have to be in place, minimum electricity charges have to be paid, imports are attracting customs duty and incurring demurrages, all together the situation seems to be grim.

Consumer spending for the present is going to change completely and buying will be restricted to bare essentials. Visits to malls and markets or such public places will be restricted to avoid getting infected. Travel by air, rail or state roadways is virtually stopped and will be immensely hit, this will also similarly impact restaurants, cinemas, shows and events. Biggest sales of garments originate from shops in malls and dedicated markets, these are likely to be impacted adversely. Label is one item that finds usage in all business segments, may it be product labels, Garment labels, Barcode labels, Baggage tags, Automotive labels, Lubricant labels, Computer labels, etc. The garment labels that account for almost one third of the total usage of labels is likely to see a big decrease in demand. Baggage tags is another area that will hugely impacted until air travels picks up to pre-Covid 19 levels or more. With all these indicators pointing towards a shrinking demand, printers are a worried lot and for this reason they have put on hold expansion plans for the time being and at least for the current financial year we do not expect any major expansion decisions coming in. Those deals made earlier may have to be honoured and installations may happen. However still the printers would like to put on hold these deals so as to wait and watch. Since the entire supply chain is affected the resources also become limited, supplier credit may reduce on the other hand customers demand for more flexible terms will arise. The industry will be looking at government support to keep afloat.

With most travel plans shelved print shows postponed or cancelled; it is evident that this downturn will have its full impact during the current financial year which for Indian companies is up to the 31st of March 2021. Hopefully by then a vaccine has been developed and life may start returning to pre-covid state. Until then investment will remain extremely low or on hold and customer visits will also be limited, alternate business strategies will have to evolve and ways of doing business will change for good. One thing is sure that eCommerce will emerge a winner in this fight against the pandemic. People will try and order things online and receive at their doorsteps, sanitize them and use. The system may become a habit for all time and a large part of the buying will happen that way. Labels and packaging for ecommerce may also undergo change as the imperative need to tempt the buyer to pick up the product off the shelf at point of sale is not there, so embellishment that increase the price of labels and packaging can be cut for ecommerce.
The brighter side: The Pandemic is not going to last forever. The one that came over a hundred years ago was at a time when science was not that advanced, to day when the technical capabilities and research is extremely advanced it will not be long before a vaccine is invented and the world is freed of this menace. All the earlier epidemics also came and went away so we must look at things positively and wait for better days to return soon. This pandemic has brought the global opinion against China as it is believed that this was created by them, one must wait and see if there is any proof of such a thought process. Meanwhile global multinational companies have started to consider moving their international manufacturing hubs. India does look to be a preferred destination being a democratic, English speaking country with one of the largest educated and technical workforces. The Indian government needs to create conditions to make the full use of this opportunity by simplifying the entry procedures and ease of operations without unreasonable red tapism. This will attract foreign direct investment and also expand the economy and facilitate return to continued growth.

The way forward: Our label printers need to positively use this lockdown time to make strategies to revive their business, list their strength and plan to put them to effective use to grow their businesses and make it future ready. Create an entity that is resistant to external contingencies. The business must be reinvented to be system driven rather than human driven, integrated workflow automation and distant operation possibilities need to be evolved. All segments of customer service from development, planning prepress, production planning, printing, logistics, servicing and up to point of sales support need to be brought to a unified electronic platform to make it an extremely satisfying experience for the customer reducing the human involvement to minimum once an order has been initiated. In coming time dependence on online business is going to be the future. Selling via ecommerce model, creating labels from computer to either digital print or initiating the other processes will have to become the operational way in future. Printers need to keep reviewing their planning, updating themselves with latest techniques and processes. They need to create free time to make human contact with important customers when the situation warrants that also through online meetings until things are back to normal

Hugs from a friend!
Vinesh Bhimani Kimoha Dubai with author
So that we realise and feel that we are human beings and not machines or computers; Once we are back to normal do go over to your customer for a natural desire of meeting personally and giving a warm handshake plus a big hug!!!

Written by Harveer Sahni Chairman Weldon Celloplast Limited New Delhi India April 2020

Friday, April 24, 2020

“Who has done it?” Covid-19!

As the few days of staying at home in lockdown extend to weeks and now looks like it is going to be months, what appeared to be a small intermission in life has now started to appear a massive traumatic challenge to daily existence even to the upper middle class of the Indian society. The initial days of this pause in life went like a small vacation, spending time with family, indulging in hobbies. I have detailed some of these in an earlier blogpost. Time was being spent playing with children or grand-children, reading, surfing on the net, meditating, praying, working out at home and when the thought of business at a stand still gave rise to stress many like me busted it by trying creativity in cooking. Anuj Bhargava of Kumar labels shared his singing talent on social media. My own cousin and best buddy since childhood Mohanbir Sahni, chairman and managing director of Elofic Industries Limited, India’s largest automotive filter manufacturers, in response to my twitter/LinkedIn/blog post  which read, “Cooking seems to be the best stress buster during lockdown!” sent to me a WhatsApp message, “I agree cooking is the best stress buster…The cook inside me is getting active!” Sudhir Jain of Jain Transfer products is reading biographies of successful businessmen, Sanjeev Sondhi of Zircon Technologies, a devout follower of Lord Shiva spent a lot of time in prayers, meditation and cooking staying alone stuck at his manufacturing hub at Dehradun, LMAI President Kuldip Goel found time to reignite his passion for writing poetry, my school friend Rana Gurjeet Singh former minister Punjab and MLA Kapurthala spent time and money sanitizing his constituency, distributing food and supporting development of cost effective ventilators”. These are just a few examples of how people have used their time, but as we reach the end of the second part of lockdown; worries of time, money and business lost, looms large on our minds. Also worrisome is the fate of the workers and staff that face loss of jobs.

A growing number of organisations around the world have already started shedding jobs. Some of international Label industry equipment suppliers in Europe and USA have already cut down on the number of senior executives, especially those posted at foreign locations. It would be unethical to mention any specific names in this difficult time until the companies themselves announce. Suffering is not just from infections due to covid-19 but also from its impact on jobs and lifestyles. In India, as you go down the lower rungs of society the difficulties grow exponentially. See the plight of migrant labourers who travelled hundreds of miles away from home to make an earning to feed their families and now they are without a shelter and without food. Many of them are daily wage earners who earn during the day to have money to buy food for the next 24 hours. They also have no transport to go back to their homes in villages faraway. They cannot pay the rentals and do not know what the next day has in store for them. For those who managed to reach their homes in villages are not sure if they will be accepted back at work. Even the employers will be hesitant as they are not sure who maybe carrying some infection. At this, one is tempted to wonder, “who has done it?”

The origin of Corona virus, everyone knows is Wuhan in China, then who originated it and who brought it to India? While the western world is convinced it is China’s doing and the Chinese say it is American plans to defame them. Only time may tell the truth if it ever surfaces. Meanwhile it is obvious that the travelers are the ones who spread it inadvertently. In India it is either the foreigners travelling in or the outbound Indians returning home. Almost 3 million Indians travel out of India every month and the arrivals into India are less than a million every month making it a total of 4 million per month. If we take the total arrivals into India from January to march in 3months it should be around 12 million or 1.2 Crore people. Now is it not strange that less than 1% number has put 135 Crore Indians into problem. On the flip side, even just one percent of these travelers if infected, could have spelt havoc for the country. But then no one carries the infection intentionally. Who passed it on is not in the know of the unsuspecting traveler, one cannot really blame them? However, the timely lockdown by prime Minister Modi seems to have stemmed the fast spread to a great extent.

While the industry is still to realise the actual impact of this unprecedented occurrence, the very thought of the time ahead sends a shiver down the spine. India has been adversely impacted due to continuous changes which may have been brought about with good intentions, Demonetization, GST introduction, Slowdown and now the Lockdown due to Corona Virus. Except for essentials for survival, all spending has been on hold, trade and industry is at standstill, expenses of businesses have ticked on while earnings have vanished. Even when the lockdown is lifted it will be a very slow process and may take many months to return to normalcy. Lack of demand for fmcg and other non-essential consumer goods will impact the industry negatively. The travel trade, organized retail and restaurants will face a crisis as it will be long before people gain confidence to travel or venture out in public places. Schools are not likely to open for a few months, unemployment is likely to rise. Life must go over a complete change. However, as they say there is light at the end of the tunnel. India may appear to become the preferred manufacturing hub for the world and when things improve (may be next year) the economy may bounce back to greater heights. It would be pertinent to mention here that in view of the imperative need for social distancing ecommerce is likely to grow immensely. Instead of crowding in shops and malls, home delivered shopping with safety measures will be opted for. On a brighter note; the pollution is down, the cities are cleaner, the rivers are clean, the sky is clearer, the birds are back and chirping and the world is united in its stance against this pandemic.

Coming back to those who lose jobs and homes (due to non-affordability of rentals), life may put forward many difficult parameters. The daily wage earners or those companies who are forced to shut shop due to being unviable will be asking themselves why this happened to us for no fault of ours? Who has done it? The government has been putting some small amounts of cash in their accounts that does not cover all and moreover the amount is not enough to feed families of 4 or 5 persons. They are not sure how many will be able to return to their erstwhile jobs and whether they will be taken back or not and what precautions they have to take and whether life in cities will remain affordable here on. The poor and the worst effected will be left wondering the meaning of residual part of life, they will for sure be looking towards government for help. The constitution of India provides for a right to life. Article 21 of the constitution reads as: “No person shall be deprived of his life or personal liberty except according to a procedure established by law.” Elaborating on this the Supreme Court of India has put forth that, “The right to live includes the right to live with human dignity and all that goes along with it, viz., the bare necessities of life such as adequate nutrition, clothing and shelter over the head and facilities for reading writing and expressing oneself in diverse forms, freely moving about and mixing and mingling with fellow human beings and must include the right to basic necessities, the basic necessities of life and also the right to carry on functions and activities as constitute the bare minimum expression of human self.”
So, it is an imperative for the government to come to the rescue of the affected citizens. The lockdown is not the brainchild or imposition of business owners or the trade. It is a result of a pandemic over which neither the workers nor the business owners have any control. At this time the government needs to come to the rescue of their citizens to exercise their right to life. Each time one tries to ponder over the impact of this virus and its deadly nature that has affected millions around the world, the question that is beyond a common man’s comprehension keeps cropping up, “Who has done it?”

Written by Harveer Sahni Chairman Weldon Celloplast Limited April 2020

Print Magazines are free to reproduce this article by giving credit to the author.

Tuesday, April 14, 2020

Life of Label converters/Suppliers in Covid-19 Lockdown

One wonders if social media were not there how we could have spent these days of lockdown. WhatsApp, Facebook, Zoom, Instagram, LinkedIn, Twitter, etc. have kept the public bonded globally sharing news, jokes, experiences, hobbies and so on. With nothing else to do, businesses shut all over and an eerie silence on roads coupled with the underlying fear of an escalating spread of the deadly corona virus, time has brought the strongest economies of the world to their knees. The fear of contracting the infection that has no known vaccine has put the global population on a defensive and protective mode fearing the impact on their near and dear ones. Spending the unending days within the confines of one’s home has weighed down quite heavily on the minds and life of people. The label industry globally trying to put a brave front, stays bonded with industry peers through telephony and social media platforms. The worrying impact of this lockdown stirring at the back of their minds, they do discuss the pressures building up and that they will have to face the reality of a huge setback when they eventually open, yet trying to relax and bide their time they have taken up hobbies like cooking, singing, meditating, praying etc. Social media is packed up with pictures and posts of their creativity in the kitchen from those who probably never even boiled an egg or made a cup of tea. Anyway, it is good that they are still in the innovating mode which will help them in their mindset when back to business.

Indian label industry is mostly family owned and largely MSMEs. Most of the entrepreneurs started their label businesses as first-generation entrepreneurs at very modest scales and have gradually scaled up. These printers have a hands-on approach in running their businesses. For them it is a day to day way of reviewing and deciding on ways of operating business effectively. Many of the entrepreneurs have experience of having worked in other label companies as employees before deciding to venture out on their own and set up label manufacturing entities. They have limited resources but as mentioned due to the hands-on approach they decided on the money rotation model to work and grow. All financial outflow is dependent on their inflows each month. They have hardly any parked resources. A lockdown like the one we are experiencing could not have ever been imagined when suppliers, printers and customers were all shut and not allowed to move out of homes but the operating expenses, salaries, interest, repayment, rent and statutory dues would keep ticking on and remain payable, also attracting interest. The issues when dwelled upon stir up a storm within and then the colleagues in the industry start calling each other and association leaders in hope that they will be able to communicate with powers that be, to get financial relief to the industry. The worries are a plenty but since Label printers are locked in at home, they have been able to put their worries at rest at some point of time and then find ways to relax and make the best of their time.

LMAI president Kuldip Goel revisited his passion for writing poetry and posted his work on WhatsApp groups and Facebook to receive immense appreciation from friends. Rakesh Mahajan Joint Managing Director and the man behind all the production at the fast-growing Prakash Labels Noida was learning how to bake a cake when I called him last. 

India’s largest indigenous Labelstock producer Ajay Mehta Managing Director SMI Coated Products Mumbai has now an ardent fan his 4months old grandson Ivaan for whom he is required to sing to, otherwise too he has a busy schedule as follows:
Morning Yoga 45 minutes.
Then breakfast 20 minutes
Time with Grandson. 2 hours.
Attend to emails and WhatsApp for 3 hours.
20 minutes meditation before lunch
5.00 pm Gayatri mantra chanting with friends online for 25 minutes.
6.00 workout under guidance of daughter Nikitaa
7.00 to 8.30 Grandson time.
Dinner and some Netflix.

Sanjeev Sondhi of Dehradun headquartered Zircon Technologies got stuck at Dehradun while his family got caught in Delhi Lockdown on the day, they were to travel to join him. A firm disciple of Lord Shiva and deeply religious, he spent the first 9 days in prayers due the auspicious period of Navratri. Now since most of his senior staff are on leave due to lockdown, he spends some time managing a few things for the limited functioning of his factories and then he says besides trying his skills at cooking, he prays and does introspection of what life should be beyond labels. Until now all his time was consumed by his growing the label business. Lockdown has made him sit back and think of life in another perspective.

Ajay Agarwal of Syndicate labels Delhi says, “Meditation, Online courses, Cooking, Netflix and long hours of sleeping. Most importantly staying positive has been the hallmark of the lockdown for me”.

Manish Desai past President of LMAI and heading Mudrika Labels Mumbai says, “It is a very difficult time for all of us and for the entire economy of the world but still we have to deal with it.” He further adds, “There are mainly the following ways that I am spending my time; 1) I am giving good time to my family by playing cards/watching movies, playing games as per wishes of my parents and children. 2) I am trying to learn typing on laptop keyboard more efficiently by using both hands as one used to type on traditional typewriters, normally I type with my single finger. 3) I am very week in making PPT presentations, my daughter is teaching me how to make presentations on the laptop. 4) I have given task to my marketing people to think of new products that we can develop for the industry. 5) lastly, I am also doing physical workout for 1 hour daily.

Anuj Bhargava heading Greater Noida based Kumar Labels is spending his time enjoy leafing through old albums refreshing memories, enjoying the pollution free air, playing with children, chatting with school friends on Zoom, Cooking and Singing. Surprisingly, he shared a link where he is singing in tune without musical instruments to aid!

Mahendra Shah of Renault Paper part of Manohar Packaging Group is also staying at home and in constant touch with his factory which is catering to labels for essential supplies. He says his wife is happy that he is helping in household chores besides working out and strategizing for future of his business. Sudhir Jain of Jain Transfer Products Noida has subscribed to online channels for meditation and has now time to spare so he has been reading extensively, presently he has been reading biographies of many successful people. Rajesh Nema of Pragati Global Indore says, “No business talks these days!” he interestingly elaborates his schedule further, “After morning rituals, go for walk, cycling and pranayama (Yoga). Then watch TV serials of epics Ramayana and Mahabharat. In between and during the day I help my wife in household work like “BJP:  Bartan, Jhadu, Ponchha” (Doing dishes, sweeping and mopping)! In the evening again walk, cycling and pranayama. After dinner sit with family members for some games like Tambola, Antakshari, Quiz etc.

The Coverage would be a little wanting if despite being a part of the Indian Label industry for over 40 years I, the author of this article, do not mention my own time spent in these days of lockdown. Well I have stuck to my regime of walking 10,000 to 13000 steps each day(Now in the drive of my house), cooking also being a passion I imagine recipes and try them out to share with friends and family over Facebook and WhatsApp, the additional time that I have I am using to compile my book on “History of Indian Label Industry” and the best and most lovable part is to spend the maximum time playing with my two and half year old grandson!

Obviously Cooking seems to have been the universal stress buster and a hobby that provides opportunity to the colourful label manufacturing industry to experiment creativity of another kind. A type that delivers taste, colour and presentable plating drawing some parallel to the wonderful labels they create. They have been able to push away for the time being, the worries of how the lockdown will impact their business or future by bringing quality and constructive thoughts to their mind finding a new meaning to family bonding.

Industry in India has been facing a difficult situation in the past few years. First it was the demonetization then the switchover to GST and followed by a general slowdown, despite the issues India’s label industry maintained a double-digit growth rate which may have oscillated a few digits up and down. India is a young country having more than 45% of its population in the age group of 20-35 years of age with the median age at 27-29 years and literacy rate at over 74%. The youth is knowledgeable, well informed, resilient and has attributes with energy to put past behind and move on to recover from adversity. It is estimated that in coming years over 70% of the consumer spending will be coming from the bulging middle class that is almost 45% of the total population of 1.35 billion. Moreover, it is now gradually becoming clear that given the global need for a more democratic industrial and IT hub to produce cost effectively, India may well become the preferred destination. This is so because the availability of a huge technical and educated manpower available. The “Make in India” process will surely get a boost once we overcome the pandemic and need for materials and equipment starts picking up. The western world already appears to be looking at India for creating an alternative hub where resources, materials and technical manpower is available in abundance, additionally with an English-speaking population. It is a good sign that despite the national lockdown the mood is still not negative and God willing India will emerge strong and successful not only in fight against the Covid-19 pandemic but even turn the adverse situation to become diverse, offering opportunities to create new success stories.

Written by Harveer Sahni Chairman Weldon Celloplast Limited, New Delhi April 2020