Demand for good container boards with better strength driving investments

Rahul Kumar (RK): The government of India target is a Vision Five Trillion Economy. What is the opportunity for the corrugated box industry - and Bobst - in India?
Venugopal Menon (VM): It took the Indian economy eight years to double to USD 2-trillion in 2014 and another seven years to grow just under USD 3-trillion currently. The vision to make India a USD 5-trillion by 2025 seems a bit unfeasible, especially due to the Covid pandemic, but we feel by 2027, the USD 5-trillion India should be there. This definitely translates to the growth of all forms of packaging. Even if India was to grow at the rate of 6-7% Y-O-Y, packaging will grow at 12-14% which is normally a rule of thumb. With the Make in India push and Local goes Global vision, the government of India envisages USD 1-trillion in merchandise exports (where packaging will play a key role) and USD 700-billion in services export by 2028.

With the circular economy talks, reduction in single-use plastics, sustainability driving the use of recycled material, I feel, the corrugated board packaging is in the driver’s seat, as it addresses all the above concerns and factors driving the environment. Going forward the eCommerce market in India is expected to reach USD 350-billion by 2030 (just to compare, US is currently at USD 600-billion), corrugated usage in packing fruits and vegetables, which is miniscule, toys and shoe box, electronics, food and FMCG manufacturing and growth will also drive the corrugated board packaging, which forms the primary or sometimes tertiary packaging in the above categories.

RK: The size of the industry in terms of kraft paper being converted is 8-million MT per annum. Today, there are about 500 automatic plants having a capacity ranging from 6,000 TPA to 60,000 TPA. How many automatic lines have you installed?
VM: The requirement of good container boards with better strength and crush resistance by brand owners drove the corrugated board industry to invest in better corrugated board lines over the last decade. In fact, many of the corrugated box manufacturing companies invested in high-end European lines and better quality Far East lines with bigger width, more automaton, higher speeds, better control of paper warp and moisture control to produce better quality board, which is the primary requirement to produce a quality box and produce flat surface board with less wash boarding if someone has to print high graphic flexo printing.

This onset of better quality and high-performance board lines also made converters invest in better quality and high-performance case makers which we also call FFG lines. The trend became to invest and opt for inline machines, which offer higher productivity, fast set ups, and achieve almost no loss of BCT values. Better quality in terms of squared boxes became a critical factor when brand owners moved towards automatic case erectors in their factories at the end of line packaging. With the first Bobst FFG line sold in 2013, we have come a long way with 30+ FFG lines by the end of 2022.

RK: The corrugated board packaging industry by value is estimated at Rs 28,000-crore plus. It has been interesting to watch a highly fragmented industry transition gradually from an unorganised to a semi-organised and now ushering into an organised sector over the last decade. In this sense, how do you see the industry grow in India? 
VM: The corrugated board industry as compared to folding carton, flexible packaging and labels, in terms of infrastructure and in adoption of technology was lagging. One reason was that the corrugated board industry was not given due respect and priority by the buyers since it was seen as a transport material from one point to another. What they forgot was that product safety, pilferage, stacking in warehouses, had a lot to do with the quality of the corrugated box. Also, the industry was locked with the SSI bondage up to almost 2010-11, wherein there was a Capex limit in investment.

But it has come a long way and the industry has started to invest and upgrade their factories to meet the growing demand, quality and JIT deliveries. The growth for us, is being seen with companies looking to adopt better technology and move from offline to inline operation and become more efficient with less dependence upon labour. But with investments coming in paper, consolidation within the industry, growing demand with investments in the manufacturing sector; and going forward the China +1 philosophy by many companies to have one leg in India, it will automatically drive the requirement of corrugated board packaging.     

RK: Stability of prices and volatility of raw materials have been the two major themes in recent times. Today, in 2022, what is your message for the Indian fraternity?
VM: It is true that paper prices were quite volatile in 2021 and early 2022, but it seems to be tempering down. But this was a global trend and CB companies across the board were hit, resulting in having to run from pillar to post asking brand owners to adjust the price due to the hike in input costs. This also ended up with many companies investing their working capital to increase inventory to nullify volatility.

But we saw that companies who were better managed in terms of their operations, had better cash flow management, did not undercut their prices just to win orders. Companies which had better control over their wastage, low variable costs and better utilisation of their assets could tide over these tough times. We feel this is what the fraternity will have to follow even in the normal course too and demand true value for their product. Unless this is done and buyers and brand owners alike do not recognise this fact, the industry cannot grow, remain profitable and invest in better technologies and keep up with the growing demand of the market.        

RK: What is the role FFG plays in the following? Automation of Indian box factories? Minimising manual steps, touchpoints, and communication. And above all, increasing throughput and reduction of waste to increase profitability. 
VM: As my colleague David Arnaud put it aptly, the FFG 820 lines offer versatility, high productivity, quick setups (we have customers in India having job change setup times under four minutes), full automation with just 5-6 people managing the complete line, minimal fish tailing and gap producing fully squared box. The FFG 820 Discovery lines, which we have sold with 4CL also has the capability to print multi-colour basic graphics on un-coated white top; the RDC top rotary die-cutter having capability to die-cut flaps, vent-hand holes and with the added feature of BC bottom creasing unit you can enhance the capability of die-cutting and off-creasing with perforation possibility on inside the box.

The current Indian market of corrugated box is 90% RSC brown box with one or two colours, making the FFG 820 from Bobst stable an ideal kit. It is a real workhorse offering full automation and with its MPC - four console the machine can be fully connected for remote helpline and troubleshooting. With the Bobst Connect services, we also offer remote monitoring and downtime tracking. It can be connected to their MIS and ERP offering full visibility of machine production and performance.

RK: In India, too many business owners talk about their machines and investments. Too few, focus on soft power. For example, culture, team-building, delegating, housekeeping, plus how to get optimum conversion costs and be much more efficient. Your view?
VM: I agree to an extent that job does not end only with machines investment and building a factory. A lot has to go with the organisation around the machine, workflow design, investment in people training, quality tooling, safety parameters in the factory, following the best practices without adopting any short cuts.

Efficiency just does not come by investing on a machine, in fact all the above aspects also play a key role to get best out of an asset which also leads to being more productive, minimise wastage and downtimes. 

Getting trained operators, maintenance staff is a big challenge for the industry and Bobst in India has taken steps in this direction to train operators on both machines and processes on-site and off-site and also plan to have a certificate course on FFG going forward. 

Also going forward, being compliant and governance will become a major topic of discussion if you want to be a preferred supplier to global multinationals who are looking at India to set up manufacturing with global standards, thus needs to be aware and be prepared for this to take the next big leap.