“Customisation is the key for UPM”

Ramu Ramanathan (RR): UPM’s presence in India for last seven years has been low-key. Why?

Shailesh Nema (SN): We have been active in the market and we are the first company to launch products with PP liner in India. This was well received by printers and end users especially from the Pharmaceutical industry. This year we have launched a range of global products designed to meet the local needs,targeting  select end use segments with the intention to grow our market share in India. The new range of products began with a family of mid-gloss papers with newly innovated  liners and adhesives, followed by other product ranges like thermal transfer, uncoated, direct thermals, as well as films. The new thin glassine liners, WG45 and WGC4 are not only cost effective, they can also improve productivity. 

 

RR: What is the status of your terminal in Navi Mumbai, where we are seated? You seem to have outgrown it ...

SN: Yes, we are also relocating our Mumbai terminal to a new location which is double in size, to allow increased slitting and warehousing capacity. The new Mumbai terminal will also service  the west and the north markets of India, while Bengaluru will remain to serve the southern markets. 

 

RR: Can you quantify your market share?

SN: It would be difficult to quantify our market share. However since we have been growing (approximately) at substantially higher rate than market growth this indicates an increased share in the market.

 

RR: What is UPM Raflatac’s strategy for India?

SN: Our strategy is to stay committed to this very important emerging market and grow our market share with customised solutions.  We are here to offer global solutions and help converters grow their share of self-adhesive labels. A larger market size provides opportunity for all; and we shall ensure printers have a level playing field with the backdrop of healthy competition.

 

RR: Is it possible in today’s tough marketplace? 

SN: Rupee devaluation and other macro economic scenario is not very positive. However, we believe the fundamental growth drivers of our market are strong and shall deliver a sustained growth. Customisation is the key. Many industry segments do not require product features such as shelf life of four years and high tack. Therefore, we design products to suit the application and provide a cost-effective solution. 

 

RR: How do you cope with tweaks in applications?

SN: For  example, if a product requires a barcode label, we design the product, accordingly. The adhesive is designed to suit the particular application which is thencombined with our new innovative liner. Our new light weight liners have been developed without reducing the liner caliper and because of this our converters are able to use the same flexible dies used for their standard liner products.

 

RR: Tell us about your unit in China and in Malaysia?

SN: We have manufacturing units in China and Malaysia. Our factory in China is one of the biggest in UPM Raflatac. 80% of the growth is coming from emerging markets. This is  visible with many manufacturers in developed countries shifting their idle capacity or capacity that is not optimally utilised to emerging markets.

 

RR: A factory in India, soon?

SN: We are truly committed to the Indian market. We are constantly looking for ways to expand our products and services to serve the local label market better. In this sense, relocating to a bigger location in Mumbai is also part of that. 

 

RR: The M&A in the past one year has lead to international players entering the Indian market. 

SN: Currently, there are few label printers who are on the edges of signing deals with international printers. This will definitely help in bringing equity in the market. Apart from that it also helps bring capacity, technical know-how and best practices to the market. These international companies are bringing the idle western capacity and shifting it to the emerging markets in India. Many European printers who have acquired Indian companies are shifting their idle assets in Europe to India and help these companies to become internationally successful.

 

RR: What do you think are the repercussions? 

SN: In India, while we have high-end machines, we also have machines that are bought very cheaply from India or from China and they are in use. There is a place for such asset due to diverse market segments which requires multiple strata quality assets. For instance, if you have brought a machine to cater only to retail market whereby you have to supply only blank labels, then you don’t actually need an eight- or ten-colour European-make machine, because any local machine designed for this will suffice, however this changes when you target a high end personal care market label. 

 

RR: What are the growth drivers for the labelling industry?

SN: The self-adhesive label industry is currently driven by home and personal care product segments. Of course, there is demand from the automobile and retail industries but the home and personal care is leading, with the increase in organised retail from an average of six percent. This rapid growth rate is also helping the industry. 

 

RR: You say, that in “retail the product needs to sell itself”. 

SN: In retail, the product needs to sell itself. This  is what India is learning. I still can say that we are a very different market from Europe and many of our products are unique. In pharmaceutical industry the penetration of self adhesive labels is less than 10%. In Europe it is 100%, so we cannot follow the trend with what European pharmaceutical companies are doing or what converters in Europe are doing for the pharmaceutical companies. We have to make efforts to convert these applications, which use wet glue technology to self adhesive labels. These are the challenges. 

 

RR: What about home and personal care products?

SN: In India, as we have home and personal care products that are prevalent in European markets, we also have products that are absolutely customised for the regions. For instance, hair oil is a multi billion dollar industry in India with virtually no existence elsewhere. So there are a few lessons to be learnt from the western economy but customisation is the key.  As regards, food packaging , I think, it has just begun. Once it grows, this will fuel the market size substantially. 

 

RR: What are the bottlenecks for the self adhesive label?

SN: If you look at the pharma industry, there are not enough drivers for these companies to change their decoration medium from wet glue to self adhesive labels. Now, the real driver that we see is the export market.  The organised retail is still very low at 6% and there are challenges in its growth. Till recently, self adhesive labels used to be imported in India, but that trend has eroded with modern machines and high quality label stock available in the market and the developments in the Indian label industry.

 

RR: What other change you have seen in the last few years?

SN: Thanks to the competition in the personal care segment, the design of label is becoming more complex. These are complex labels, which use 12- or 14-colours with multiple screens and multiple foiling options. This motivates UPM Raflatac to design robust products which can be optimally used by label printers and product manufacturers. Historically, UPM Raflatac is strong in designing and developing filmic products and that has really helped us to grow in this market. 

 

RR: Trend or forecast for Indian label industry.

SN: In India, acceptance of high technology products is happening but when it comes to execution we find that there very few takers. So I still see that there is tremendous scope for these range of products in India as of now the penetration of the product is very low. The fundamentals are in place – and this  will provide sustainable growth.