Packaging is the name game for printers

Ramu Ramanathan (RR): You have added Mohr and Bowe Systec to your portfolio. If you can give us an update about Redlands?

Ashlyn Antony (AA): Yes, we have added both brands to our stable. Mohr is in the process of diversifying their product portfolio and reducing their dependence on Heidelberg. Their new 3-knife trimmer for the digital market is their latest offering. They are in the process of appointing their own distributors worldwide. We signed an exclusive distributorship agreement with Mohr in 2014 and launched it officially at the Sivakasi show in September. 

 

RR: What about Bowe Systec?

AA: Bowe Systec from Augsburg, Germany, is a mailroom solutions company. We are looking at a very good growth potential from mailroom inserting segment. I feel this technology will be relevant with the increasing labour costs, sophistication and hike in volumes. Furthermore with India expected to grow steadily for the next 10-15 years, the mail volumes are expected to grow vertically. The switch to notifications through the internet is going to take time as small and medium town and village clientele take time to catch up. So postal mail would be a part of the game for the time to come. There’s no escape.

 

RR: What is your target audience in India?

AA: Mainly, telecom companies and banks. If we look at The Bank of America, they have 20 of the latest mail room solutions from Bowe Systec. In India, it’s after such a long time that its percolating down to the banks. Indian banks are realising this, albeit slowly, that their clients database are their biggest asset and something they should never compromise on. That clients are the biggest asset. Without automation, disasters can happen.  Traditionally, banks in India have contracted or sub-contracted their mail despatches. Banks outsource out their credit and ATM card operations to contractors who maintain high standards of security. But handing over your entire clientele to a single contractor is like trying to kill yourself with three swords at the same time.

 

RR: Coming to Champion, how did it come to being and what is the manufacturing process at Shanghai?

AA: We started Champion operations through a joint venture Shanghai Loretta  Machinery Manufacturing in 2007 with the semi-automatic thermal laminators. Today we have a line for the UV coaters, thermal laminators both automatic and semi-automatic. Plus we have an additional line for envelope-making machines and rigid box making machinery.

 

RR: It’s been nine months since you introduced rigid boxes to your portfolio. Right?

AA: That’s right. We already have four installations of the rigid box machines in India. With the ability to produce high quality boxes at lower costs than the current manual processes and an ROI in less than 24 months, rigid box has become the next big thing for printers who are looking to diversify their product mix. 

 

RR: So all in all, a good vibe?

AA: Today what we do is, present different revenue streams and prove that business autonomy exists among those printers who are willing to think differently. Many of the biggest printers invest crores into equipment. This happens around the world and in India. Yet these printers are at the mercy of advertising agencies or jobbers who have probably spent a few lakhs on their office and infrastructure. But these people have the authority to  dictate terms to the printers. The point is, you can invest in crores or millions but at the end of the day you are a tailor; and your business is to churn out customised products with very little contact with the actual clients. That is the harsh reality. They give you a job, so, you have to do it as they want. But if you have your own products and your own brands; you stand on your own feet.

 

RR: Are you suggesting that print firms are putting all their eggs in one basket? Especially players in commercial printing? 

AA: Yes. The name of the game is print finishing and packaging. Today, commercial printing is a dog eat dog market. And then you always try to undercut your next door neighbor. For example, in Coimbatore, most printing press have their printing jobs down on what only can be described as a menu card. It’s a joke. A A4 glossy four-colour catalogue, one side costs Rs 1.70. That’s right, one hundred and seventy paise for which you print a four-colour single set catalogue. The rate goes up by 20 paise for a double side. Every single job is listed on the menu card. Under such circumstances, a printer needs to find innovative ways to add value to products or he is doomed.

 

RR: And so without print finishing there is no hope ….

AA: Absloutely. For example, we have a print firm that purchased a case-maker from us. This firm used the case-maker to produce and market personalised box files to corporate clients. Today this client has at least 12 banks on his client list. Besides being able to source a lot of other businesses from the same clients, they created a whole new demand for a product. The process impressed the client that they got other businesses as well. This print firm hit a sweet spot by generating business from a traditional product by packaging it better. I feel, this is the way printing establishements need to go.

 

RR: But printers in India baulk to invest during a slow down. As we saw in the last two years.

AA: That’s business. It goes through highs and lows. But the important fact that every print business owner needs to do, is give thought to, that in a recession, one of the first businesses to take a hit on the frontline is print. Yes, print faces the first cost reductions. So why would any business want to stand in the front line? That’s what we ask our customers. Why don’t you do something in packaging and print finishing.

 

RR: But everyone cannot be eyeing packaging…

AA: We don’t ask them to go to hard core packaging like corrugation or folding cartons. There are a lot of other light packaging solutions like box-making or fast-food packaging.  From what we have seen, those presses who have a 40-50% mix in packaging and printing have fared better than other printers. These firms have done much better because they were into packaging. There is only so much spend a big brand can reduce on packaging especially food packaging. You can’t say there’s a recession on so let’s eat less or let’s sell our products in plastic bags or jute bags. That’s not going to happen. There is only so much you can slow down in the food packaging or pharma industry.

 

RR: Tell me about envelope-making. You have been quite successful with it in China and now you are making a headway in India. What is the profile of your customers?

AA: Things are moving quite quickly in India. Initially it was very very difficult. Now many traditional envelope manufacturers are switching over to machines as there are huge benefits in terms of cost reductions and product quality. Consider the statistics: 8000-10000 envelopes are produced in an hour. So scale of operation comes into the picture. For instance, during a state election, a client needs 50 lakh envelopes to be delivered within a month. With our machines he can complete the job on time and accurately. Plus he can brand it. We advise most of our clients, don’t let your products go into the market, unbranded. Put a brand on it. As time passes by, your product can have a value, an equity, and you can start encashing it. This is possible with a brand. 

 

RR: Will this happen in India?

AA: Why not? Today most people in the Middle East demand envelopes by “a brand”. I sense India will also go the brand way in the next 5-10 years. Standards are constantly going up, so people will have benchmarks in terms of what they are going to buy. In such a situation, brands will thrive.

 

RR: How many CF510 do you have in India?

AA: 20-30 machines. We also have other small machines in the market. Most importantly, we are transferring some of our production to India. This is because China is no more a cheap destination. There is a myth that Chinese labour is cheap. 

 

RR: So where will Redlands shift its production in India?

AA: Coimbatore. As you know,  we have a largish agricultural machinery manufacturing setup in Coimbatore. We are not only shifting production but also upgrading equipment for automation.

 

RR: Why Coimbatore?

AA:  We already have a whole range of vendors for the agricultural machinery and with Coimbatore being a centre for light and small machinery there are many benefits that complement each other.

 

RR: When will that production be in place?

AA: By the second half of 2015.

 

RR: In terms of manufacturing what will be the line of production you will shift to India?

AA: It would be double side thermal laminators and envelope making machines.

 

RR: In terms of your print team size, what is it like in India in terms of both sales and service?

AA: 26 is our current number. We put a lot of emphasis on service and client satisfaction so we have far more people in service than sales. Service has always been our USP.

 

RR: Is that also the reason you have created a setup for demo and training with an envelope-making machine; die-cutting machine and cutting machine...

AA: The demo centre, on the ground floor, was set up two years ago. What we do is when a machine is sold and if a customer and his team are not familiar with the machine, we give the operators training. This eases our installation procedures and minimises problems on the customer shopfloor. Quite often we see that in India, even the bigger printers don’t recruit a professional operator. Most of the times the favourite floor assistant or tea boy is promoted to be an operator. So it makes sense for us to train the guy before he runs the machine.

Behind the scene with AA Top reads: Sidin Vadukut’s The Skeptical Patriot - It is an interesting book in which the author unplugged the 10 myths about India in the name of pop patriotism ...  And the books by the Brazilian author Jorge Amado …. Favourite wheels: BMW X3, small and powerful Favourite destination: I can’t get over Kerala. Every time I visit any other part of the world, I love the feeling when I return to Kerala. It’s one of the cleanest and greenest place in India.   If not heading Redlands: All my family members are in business. One of our group companies has biggest market share for XRFs or non-destructive gold purity testing machine. I started the company. Now my wife runs it.   A thing to enjoy: I enjoy my work. It is the biggest relaxation. Specially because we are both in agriculture and this machinery of design. We have a very strong design department.

 

RR: What happens onsite?

AA: We do onsite training as well. 50 % of the customers prefer it. Others don’t agree so we have no choice. That’s when we do training at the site.

 

RR: What next?

AA: We want to increase automation since labour is going to be harder to find and costlier. That’s the way to go. China is going to take a back foot. I feel this is India’s opportunity; at least for the next 8-10 years. Indian industry has to get into the space that China will vacate shortly. Simply because we can do much better. And I think we should.

 

RR: How so?

AA: Today in our factory in Shanghai, the minimum CTC is Rs 60,000. In India, our service engineers will work throughout the night because they know the client needs to get the machine running by eight in the morning. This kind of work culture is currently absent in China. Indians as of now have this work culture. Once upon a time, China’s advantage – due to the Chinese communist or socialist background – was low profits and cut throat competition. Therefore  the Chinese factories saw volumes as their only bet. My assessment based on 15 years of work in that country is: it’s not going to be low cost destination any more. This is a big problem in China.

 

RR: Some of your interesting installations, I know about the folder-gluer in Olympic in Chennai...

AA: We have installed the versatile Petratto fold gluer at Olympic Cards to cope up with their need for quick turnarounds and frequent short runs. Apart from that we had envelope making machines and automatic glue laminator installations there. But India has not yet gone to the levels of the Middle East. Be it: print finishing or packaging by commercial printers.

 

RR: Is this a limitation of the Indian market or issues with your outreach?

AA: 50-50. Logistics is an issue. The Indian market has been in mourning mode for a long time. This is with reason and without reason. My belief is, in business you always make a move forward or else you get left behind. 

 

RR: People are wary. Nothing is trickling down…

AA: We are surviving on low prices. But we are about to get going. But this is India’s moment in the sun because China is not going to get out of the current rut anytime soon. Korea stumbled after hosting the Olympics. So did Japan. Next is China.

 

RR: So moral of the story is, don’t host Olympics (laughter). So UK will be in further doldrums?

AA: Its not their first Olympics so perhaps it won’t be so bad. 

RR: But China has government support... 

AA: True. For example, when a machinery manufacturer or even a trading company participates in an exhibition outside the country they get a subsidy ranging between 50 - 70%. Our trading company in Shanghai got a subsidy of 70% during recession period. India doesn’t have those things. On the contrary, when we sent agricultural equipment to Thailand for an exhibition, it took us three weeks in the port to complete the clearing process. We get the short end of the stick just because of the red tapism everywhere. Everything is on the record and yet….

In China if you come up with innovative instrument you get a sizeable amount of subsidy from the government. But in India look at what the collective governments did to the Tata Group for the Nano. They put India on the world automobile map but see what happened. We just don’t reward innovation or top quality engineering work. What should we do to be extra special? Today, look at agriculture. In India, the automation levels are below 10%. In China it’s about 70%. The biggest problem we faced when we started with agricultural machinery manufacturing was indifferent quality. Our design people were being flexible on quality, which  I could not accept. It is not about the money. I feel if you create a product, it has to have the highest quality possible and it doesn’t happen in a day. If it doesn’t have the quality I don’t want to get involved in it. It was the biggest challenge for us in the initial years. Now we have a good base and our people have learned not to compromise on quality. The best thing is: everyone down the line has understood this.

 

RR: So what is the big story? Agriculture or print?

AA: Agriculture, definitely.

Redlands at PrintPack 2015 Redlands will be showcasing Mohr paper guillotines, hamburger box making machine, automatic rigid box making lines, folder-gluers and box-making: The emphasis is on fast-food packaging. At Redlands, we feel the current average percentage consumption of paper packaging products is quite low in India. When the consumption patterns increase, print firms will have to graduate to semi-automatic and then to fully automated solutions. Today in the print industry retaining personnel at higher level is much easier than holding onto staff on the shop-floor. With many of them ready to move with a pay hike as small as Rs 500; you lose an important worker on the shopfloor. Attrition is going to be a bigger and more consistent problem in the future. And automation is the only solution.