Why is Parksons Packaging investing? - The Noel D'Cunha Sunday Column

On 11 July 2018, Parksons installed a brand new KBA Rapida 106, a seven-colour plus coater, its fifth six-colour plus configuration press at the plant in the last eight years.
 
At the Daman plant, Kejriwal discusses Parksons’ investment strategy, machine selection, trends in packaging, and why the plastic ban will be a boon to carton packaging

PrintWeek India (PWI): Congratulations. Yes, another installation of the new KBA Rapida 106 seven-colour plus coater press. Thank you for taking the PrintWeek India team around your Daman plant. We saw all the functions of production – man, machine and materials at play.
Ramesh Kejriwal (RK): This plant has been our first plant and right from the beginning, when we were small, we set up the culture of maximum utilisation of the three functions of production, and that’s how we have grown our business.

We set up the culture for our people and how they will be working incorporating discipline and productivity. That culture now has been built across the organisation which comprises of six plants – this one, one in Chakan, two in Pantnagar (Uttarakhand), one each in Sricity and Guwahati.

PWI: When talking about quality and productivity. How do you ensure that they are performing as they are meant to?
RK: We have all the quality checks, right from the input to the finished goods. Over the last few years in this plant, we have machines with modern technology, whether it has been in the printing, die-cutting or the gluing side.

With the advancement of technology, more and more quality control features are added to the machines. Like our Heidelberg Speedmaster CX 102 on which we have the Inpress Control technology or the new KBA Rapida 106 installed today, which has the Qualitronic colour control feature. These are the firsts in India.

At the same time, we have trained our people to run these new machines effectively. We have a full training programme, right from the induction on the machine, how they can perform all the features in the shortest time. We have also sent our printers, supervisors to Germany at KBA or Heidelberg to get fresher courses from the German engineers. So we have a training programme, we continuously monitor, and adopt modern technologies.

PWI: We also saw the logistics built around the material management, conveyors that transport material to and from the press...
RK: Logistics is helpful on two counts: one you reduce the time you’d spend on feeding the paperboard on to the machine. You are also reducing the manpower required.  

If you deploy too many people on the shopfloor, it becomes crowded and messy. So we put the logistics on the printing machine in terms of not losing the productive time and also reducing the extra manpower on shopfloor. Where we have large runs, there are many advantages of continuous feed. You don’t have to stop the machine, it is a non-stop feeder.

PWI: Three questions on your machine investment? One, when one looks at Parksons, every second or third year, you make some solid investments. Sometimes two or three presses at one go. What is the strategy behind such investments?
RK: Investment in equipment is primarily based on two strategies: one is geographical expansion. For example, we started with the Daman unit in 2001. Then we felt the need to cater to the demands of the western market, so we set up a plant in Chakan. We then set up the Pantnagar plants in North and in last year we put up two new plants, one in the South (Sricity) and another in the North-east (Guwahati).

One strategy is clear that you go where the customers are, and that’s where our expansions are. So when you expand, you have to put in the machines.

PWI: Brand new machines?
RK: Yes, that’s been our thought process – always invest in brand new machines because the quality control and productivity that we obtain from new machines cannot be obtained from secondhand machines.

The only criteria while investing in new machines are that you should be able to feed your machines because they are expensive. With our pan India presence and customer approach, it is not difficult for us to built capacities quickly, as long as the market is positive.

PWI: Most of the machines that you invest in are a replacement for existing machines?
RK: One strategy is expansion as I told you, where you have to invest in new machines. Second is a replacement.

The way technology is upgrading itself and if you continue to run the machines which are more than seven to ten years old, we will have the disadvantage of productivity plus, the high cost of spares. We will not be able to keep pace with the quality checks which the newer machines offer.

So our strategy is not to use the machines which are over ten years old. Again it depends on the market dynamism. Like in Daman, from two-colour machines in all, we have eight machines two-colour machine but majority of production is being the carried out by the other newer six six-colour-plus configuration machines, only one of which is a 2006 model. All other machines were brought after 2010, in stages.

We have seen a lot of advantages in terms of high-productivity, lower wastages, better quality.

Expansion and replacement are the two strategies.

PWI: The second question on machine investment is the selection part. Some of your past investments have been multi-companied machines. So what’s your rationale behind that?
RK: We started our high-end machines with Heidelberg. Over the period as we grew, we thought it would be strategically advantageous to have two manufacturers, hence we invested in the first KBA in 2005.

PWI: Is it a balancing act?
RK: Over the period of time, we have been dealing with Heidelberg or KBA depending on our strategy of the location, what kind of jobs we want to do and between the two major equipment machinery manufacturers, we try to balance them both.

We don’t say, we like or dislike a particular machine manufacturer. It is always better to balance and not put all eggs in one basket.

PWI: The third question is about machine stabilisation. When we were at one of the KBAs, you spoke about machine stabilisation. You mentioned there are several steps before you get the machine stabilised? So could you explain to us what machine stabilisation is? 
RK: These modern machines have a lot of features which must be clearly understood by the crew. It takes time for them to understand, and we adopt a slow approach. After they learn the features in a month or two, we feel the machine stabilisation is achieved. Then they can utilise the machine to the full optimum level.

The second stabilisation, which is done when a hybrid press (with both conventional and UV features) is installed. The rollers and blankets in these presses are hybrid types, which can accept conventional or UV runs. It is always better to run conventional jobs first because the swelling of the rollers, etc happens and you start running UV in the next.

If you do not stabilise the hybrid rollers, you can encounter ink-water balance problem. So you run the conventional for it to stabilise, and this is the second part of the stabilisation.

PWI: In terms of material?
RK: I don’t think much is needed. We have enough experience of what kind of materials to use, for example, in terms of input which are paper, inks, and coatings; all consumables like blankets, and washing; we have a lot of experience in that. That part of stabilisation doesn’t take much time.

PWI: Not many Chinese machines?
RK: We don’t have any Chinese printing machines. In converting we have few Chinese machines from Brausse. But they are more support machines.

In post-printing, we started with Bobst and the majority of our operations are carried out on Bobst, both the die-cutters as well as the folder-gluers.

PWI: At this plant, more than 95% of your machines are running. And there are quite a lot of machines. That brings in the overall equipment efficiencies factor. How do manage to keep running these machines?
RK: It all depends on what kind of customer range you have. For us at this plant, we have loyal customers which we have developed over the period of time. They help us feed the machines to keep them running.

As far as the runability of the machines is concerned, we have been able to manage our short-run jobs along with long-run jobs. For example, we have a Komori six-colour plus coater, which is a small-format press. We use it for small run pharma jobs. If we run those jobs on big machines, we will be wasting energy in terms of the size. Similarly, on Heidelberg CX which has got the Impress control feature, we balance quick job changeovers. In that aspect, we know what kind of job profile we have and we balance it out with various machines. We have the advantage of using various machines; we are not dependent on one.

PWI: Also to keep all these machines running is not an easy task?
RK: Of course, we have to keep them very well maintained. We have a strong preventive maintenance team. We have a strong team in-house team plus support from the machine manufacturers. We take a continuous update from them regarding maintenance techniques. We engage with them regularly. We also have AMCs with some of the companies. Maintenance of machines is very crucial.

PWI: This would mean precise production planning. How important is the production planning when you are running multiple machines at multiple sites?
RK: Depending on the job profile, we plan the jobs in terms of the machine utilisation. We have a robust planning system. When the job is released, the whole plant gets into action and plans the production schedule. We have a three-day planning cycle in place for different machines, and we would not like to change that too much.  But in whenever there are urgencies, we have to tweak a little bit, but still, try and maintain the schedule. But that’s about it.

PWI: And also does it happen that for one particular job, the particular customer is catered simultaneously from different locations?
RK: Yeah, absolutely. For example, certain jobs from brands like Unilever or P&G which are required to be delivered in North or South or West, are planned at plants closest to the location of delivery. We get an advantage of time and logistics.

PWI: You have six plants, do you have a hub from where you have this production planning happening?
RK: It’s not a hub, but we have sales planning team at the headquarters in Mumbai and a supply chain team who decide how to distribute the jobs. In terms of location, it is pre-decided.

The supply chain team makes sure that there are no bottlenecks in terms of material or other consumables required. They have the orders released to the respective plant.

However, the plant where the jobs are to be done, decides the planning in terms of delivery.

PWI: There’s the looming ban on the use of plastic. It’s already in place in a few states. We saw a lot of MetPET jobs, so what percentage of your production is MetPET?
RK: So MetPET is lamination. Generally, we don’t do too many after-print lamination jobs. As far as MetPET is concerned, we were the first one to start printing on MetPET in a very dedicated and a very serious manner. That about 10%-15% of our print packaging jobs.

PWI: And the plastic ban, how will it affect that?
RK: The State to implement the ban very recently is Maharashtra. However, as far as I know, where plastic is the main ingredient in a multi-layer packaging then it will have an impact.

In our case, plastic is not the main ingredient. The main ingredient is paper. So the only thing we have to take care of is how the wastage is disposed of.

We dispose of most of the waste to paper mills. They take out the plastic film, and use the paper for pulping, and the plastic is burned for energy generation.

So I don’t think we are going to be affected by this plastic ban a lot because we are not in a pure plastic items business.

PWI: But it’s still a fluid situation. You have customers, rather brands, who are the decision-makers, and going ahead they not want to do lamination at all?
RK: I don’t think so, and it’s too early for them to take a decision. Because a brand is known by the appeal it creates. You can’t change it overnight. Plus, in our case where the major raw material is paper, I don’t think it’s going to have a huge impact.

PWI: Let’s talk about your six plants. Which is the best and why?
RK: Well, each plant has got its own dynamics. And purely on two factors – one is from the location itself and secondly, the kind of years we have taken to build that plant.

Daman is the oldest plant, and the newest plant is in Guwahati.

In terms of systems and processes, all the plants are on the same plain. There is no big difference. In terms of capacity, there could be a difference. Today, the Daman plant has the highest capacity because it is the oldest plant and is also located in the west.

So in short, I would say that the systems and processes we follow in all the plants are equal only the quality of the plant depends upon the capacity we have and the value-added jobs.

PWI: Ok, in terms of productivity or profitability, which is the best?
RK: I think the measurement of profits depends upon two things. One is what kind of customers you are catering to and whether you are getting to domestic market only or you are getting to export market as well.

So, I wouldn’t say that a particular plant is best or is better.

PWI: Do most of your new product development happen in the Chakan plant?
RK: I wouldn’t say so. Chakan is our designing centre. A lot of product development does happen there. But then each plant also has their own development team but they don’t guarantee to some kind of pro-active development.

It all depends upon the customer need. So, if the customer is doing some job in say Daman or Chakan or Pantnagar, and he wants to develop that job then maybe they would develop that job at that plant, because we have a team in each plant.

But I think if there is a pro-active or a big innovation to be done, it’s all done in Chakan.

PWI: So, what are trends that are happening in packaging that the brands are looking at?
RK: The brands are looking for or have been always looking for high impact value-added packaging.

Maybe three trends in packaging?
RK: We are seeing smart packaging on the horizon, but it’s still to come in a big way. But in terms of value appeal, I think the appeal of the carton is growing and it is one of the trends which is continuing. It is not a new trend, but it is continuing in a bigger way.

The second trend is automation by customers. So the product packing, which was happening say 100 units per minute, now it’s going up to 200 to 500 to 700. Companies like Colgate or Unilever are packing their soaps and toothpaste at a very high speed of 600-700 units per minute. So I think that automation also helps in engineering the packaging product.

PWI: How does that impact packaging?
RK: You require very precise die-cutting and gluing to let the packaging lines run at high speeds.

PWI: And the third trend?
RK: It not driven by the brands buy by the question on plastic ban you put forth. We will are looking to more use of paperboard packaging.

In the last few years, flexible packaging has seen a much higher growth percentage in comparison to folding cartons. With the plastic ban, cartons will catch up in terms of growth percentage. It will be driven by the customers, suitability and environmental concerns.

Paper is still a biodegradable, and for every tree that is cut, two are planted.

PWI: We haven’t seen any investment in a digital printing machine by Parksons. What is stopping you from getting one?
RK: It’s not about getting one. Right now, if you see the investment to the output ratio, we are still not convinced. But at the same time, there is definitely a requirement coming from the customers for promotions and stuff like that.

However, we are studying the digital technologies very seriously. We will definitely take a look when we are convinced that we have the right price to return on investment (ROI) ratio.

PWI: When PrintWeek India visited the Daman plant in 2010, it was not as big as it is today. You have added a good number of presses including a screen printing unit, as well as corrugation. What are we going to see next in Daman?
RK: At Daman, I don’t think we can have more space. We have acquired whatever space we could around the plant. At Daman, we can only up our output with the placement of new technology.

PWI: Would Daman plant be the first of Parksons’ plants to go digital?
RK: I can’t commit to that at this point in time, but I think Daman could be a starting point.

PWI: What's the progress with gable-top containers for liquid packaging?
RK: It is progressing well and thanks to the plastic ban we anticipate a boost in the adoption of this technology. Under the present circumstances, we will see liquid packaging move from plastic-based to gable-top packaging, which is paper-based.

PWI: And what kind of liquid products do you see moving to gable-top cartons?
RK: That would be milk, water, juice, cream, all dairy products, as well as value-added products. So hopefully this year we would be selling more number of filling machines. Additional filling machines mean a multi-fold increase in carton requirement.

PWI: What’s the number of gable-top filling machines you have sold so far?
RK: A total of 10-12 machines. This year we have already sold around three to four machines.

PWI: And Parkson’s turnover...
RK: We have almost touched Rs 800-crore in 2018.