SMI Labels and Packaging Materials

Tuesday, January 12, 2021

Labels industry bouncing back to normalcy!

When the way printing world changed due to the impact of widespread proliferation of internet, the printers specially those into commercial printing producing catalogues, brochures, leaflets and posters saw a downslide adversely affecting their businesses. Books and magazines also witnessed a slowdown for some time but fortunately due to customer preferences for print, the demand in this segment became somewhat stable. Many printing companies changed course and moved to other printed products or went in for digital printing to cater to very short run demands of customers and augment their revenues. There were others who saw the growth in packaging, since in a big country with a large population the essential needs would always keep growing and packaging for the consumer goods would also see an upsurge in demand. Over the last few years, we have witnessed a gradual and steady move by the printing fraternity into packaging. According to the Indian Institute of Packaging, consumption of packaging in India increased 200% in the past decade, from 4.3 kgs per person per annum to 8.6 kgs. The industry is expected to reach US$ 204.81 billion by 2025 from US$ 50.5 billion in 2019 growing at 26.7% annually. Labels being the face of any package are an important but miniscule part of the large packaging industry also registering a robust double digit growth over the years. Due to the innovations needed and being undertaken by label printers the industry has already attracted talent and investment to create labels that help generate better demand and sale due to the aesthetics which labels deliver to the products that adorn them. 

The onslaught of Covid-19 and its rapid spread crossing all global borders to become a pandemic lead to lockdowns that brought the world to an almost standstill. Like most industries label industry also was left dumbfounded and wondering about the future. With no work, no revenues and cashflows coming to a halt, jobs were being lost, worker migration started adding to the woes of the industry. The essential needs of a suffering population had to be taken care of, after the initial couple of weeks government allowed those catering to food, pharma and essential supplies to start production. There seemed to be rush of new business coming out of the emergent need for sanitizers and therefore labels and packaging for them. Since these industries needed labels and packaging, a substantial part of printers were back to work. The Indian label industry consists of largely family managed MSME units with limited access to borrowed capital, the lockdown brought with it unprecedented financial hardships and stress. As the world started to live with the reality that for the time being the pandemic was a way of life, with utmost caution the industry started limping back to work and salvage the loss due to the long closure and lack of revenues. By end of the difficult year 2020 the label industry started showing the resilience that it has, by getting back to normalcy. The author travelled to many printers in the North and Mumbai in the West of India to assess the situation; the industry seems to have bounced back to normal working though with and underlying financial stress. Some of expressions of the printers are listed below;

Amar Chhajed, President Huhtamaki PPL Mumbai: “Yes the working is back to normal and we have grown” expressed Amar.

Anil Namugade with his new HP Indigo

Anil Namugade, Managing Director Trigon Digital Mumbai:
They have moved to a large new premises, installed another wider format roll form HP Indigo for labels, flexible packaging, etc. Anil says, “We have eyes on big achievements and we are on way to fulfilment of our aspirations”.

Himanshu Kapur, Director J K Fine Prints Pvt. Ltd. Mumbai: Though they are working to capacity yet Himanshu says, “ It is not as usual and we need to move with caution.” New investment are on hold and they prefer to wait and watch. Consolidation is their preference at this time.

Sandeep Zaveri, Managing Director Total Print Solutions: Sandeep says that the initial days of lockdown were very challenging as worker were not there and at times he himself had to operate the press. The lockdown and after has taught lessons to work with less. They have in place management systems and are implementing workflow and process automation to achieve more with reduced strength. Sandeep Zaveri says “Orders are there as usual or more and we are at almost normal working however we have to be very cautious with credit sale as financial duress is evident everywhere.”

With Vidur & Vivek

Vivek Kapoor, Managing Director Creative Labels Mumbai: They are another example that prove the normalcy, as new investments have been made to augment capacity. Vivek says there is no dearth of business. His young son Vidur is finishing college and has started coming to factory for the interim period before proceeding for higher studies. They have ambitious plans to scale up production.

With Manish Desai

Manish Desai, Director Mudrika Labels Mumbai:
“We are not only back to normalcy but have also registered growth but 5-7% growth is not worth a mention. Only when we return to double digit rate of growing, we feel the growth is evident.” He further adds that the present situation warrants to implement strict financial control and restrict further sale to people who delay payments.”

With Kapil, Aditya and Aditya's father 

Kapil Vaidya and Aditya Ojha Partners Sonic Solutions Vasai:
“We are fully booked and working to capacity!” says Kapil while Aditya nods in affirmation. They plan to wait until the vaccines bring relief to a suffering mankind, before indulging in expansion. They are confident that the industry is back to normal working.

With Prasanna

Prasanna Sahu, Director Barcom Industries Limited Vasai: With ten label presses, a digital press and a host of allied equipment Prasanna says, “We are operating only 2 shifts presently owing to caution. Financial stress is evident in market and suppliers have started restricting supplies in case of delayed payment. We have maintained a strict financial discipline and that is the reason we are comfortable.” Regarding expansion he says we have run out of space at present premises and will wait for the effects of pandemic to recede before considering expansion.”

Ajay Mehta

Ajay Mehta, Managing Director SMI Coated products Mumbai: “We have been working right through except for the first few days of lockdown and capacity utilization is back to earlier levels, our team has handled the affairs very efficiently”.

Sudhir Jain, Managing Director Jain Transfer Pvt. Ltd. Mumbai: “If we talk of monthly sales, it is normal but as regards annual sales, we still have 3 more months of the financial year. This has been a difficult year. By November sales had come up to normal levels”. Sudhir is normally very conservative with his expressions yet he says we have already invested in a new factory and will consolidate our position for this year.

Deepanshu Goel

Deepanshu Goel Managing Director Creative Graphic Solutions Pvt. Ltd. Noida:
Making polymer plates for the label and packaging industry Deepanshu still feels the working of the industry is erratic. It was almost normal in November but December was not really what was expected, this maybe because of financial stress aggravated due to year ending of some multinationals plus the tax and repayment to banks that were deferred due to pandemic causing monetary tightness.

With Kuldip Goel

Kuldip Goel Managing Director Any Graphics Pvt. Ltd. Noida: Kuldip and his son Naveen are hardworking positive minded entrepreneurs. As per Kuldip, “We are back to normal, our new factory of 250,000 square feet is also in full construction mode. We have used the time for development and creating innovation in labels and packaging. Financial discipline helped us tide over the difficult times and we have three months more in the current financial year that ends 31st of March 2021, we are keeping our fingers crossed to end it on a positive note.”

Raveendran, Director Seljegat Sivakasi: “Business is good and all is well” says Raveendran. They remain indulged in upgradation of their business all around. They are making investments in building, capital equipment and new technologies!

The suppliers to the industry have realized the underlying lack of financial liquidity in the industry and have tightened the strings of their money bags. During the lockdown and the period following has been difficult but passed by using savings and the moratorium or additional finance by the banks. Now when it is time to repay loan installments, interest, pending salaries, personal and sale related taxes, cash flows have reduced bringing shortfalls in working capital requirements. All this does hinder the free growth but a resilient label industry is fighting back bravely to normalcy with hope that the vaccines will bring an end to the pandemic and life returns to safety and normal functioning. We do hope the ensuing days will bring more news of fresh investments and installations which are the real indicators of normalcy and growth. The process has begun as we know that many deals are in way indicating “labels industry bouncing back to normalcy”.

Written by Harveer Singh Sahni Chairman Weldon Celloplast Limited New Delhi January 2021

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