Phenomenal 15-18 % growth in India
Subhasis Roy of Bobst, visited the PrintWeek India office. During his interaction with the editorial team, he highlights Bobst's path of ascendancy and the future of packaging in India
24 Nov 2010 | 2308 Views | By Samir Lukka
It’s been a great year for Bobst in India. You are nearing close to 100 unit sales in India. What is your first reaction?
Yes, we are very proud to be part of this phenomenal growth in India for the folding carton industry. I feel India is blessed with a large domestic market and a culture which values entrepreneurship. So far, Bobst is playing a very important role in ensuring that India makes a global footprint in the packaging industry. To that extent Bobst is keen to play a positive role and ensure that India creates a vibrant and robust print economy.
What do you attribute Bobst’s success in India to?
What matters is the cost of production, quality of end product and reliability in terms of delivery. Bobst has proved to be the best choice in spite of apparent high cost of ownership. This gets offset by high uptime and high productivity of machines. In India, customers run 24x7. Therefore, reliability is equally important in addition to the above factors. Customers have understood that it is a better proposition considering the life cycle cost vis-à-vis investment.
Do we tend to sweat our machines, much more than the rest of the world?
Yes. But having said that, machines in India are run more efficiently than China. Even when you compare with South East Asia, the Indian packagers use their machines well. But compared to Europe, there’s still room for improvement. The machine environment, operator skills, workflow are better managed in Europe. This results in higher machine uptime and utilisation.
Why so?
It’s a cultural phenomenon and has to percolate from the top right down to the operator level; each one has to be fully committed on maintaining the machine. It is not just about the machine, it’s also about process knowledge, workflow, peripherals, tooling and even material handling. Ultimately, everything matters.
Where do you see the growth in this industry coming from? Scalability? Automation?
For the large players, there are two ways to grow. One is going multi-locational; and the other way is to increase the existing area of conversion. What has changed in the last seven to eight years is that customers from the C and D tier cities have started to realise that land is becoming expensive. So production accrued per sqft of production area is becoming much more important. Packagers are looking to produce more in the limited space that they have. For this they require automated, high production machines.
How do customers get engaged with pre-owned Bobst?
We provide assistance through our service engineers as well as through local Bobst dealers in the country of origin. Recently, Bobst has started a portal called www.bobstexchange.com which is a worldwide platform for buying and selling used Bobst machines.
Is the global scenario for Bobst, encouraging?
Since the beginning of the year, we are witnessing a positive evolution of our business set due to healthy order booking in USA, Latin America and South East Asia. Italy and France have shown good trends. Even Germany has been positive in recent months. Although there is optimism, we are cautious in our business forecast. Results of the first six months as compared to the prior year reflects better sentiments.
Coming to India. Your manufacturing Pirangut unit, near Pune seems very busy ...
Yes. Apart from our various machine modules for group export, we have started manufacturing folder-gluers since January 2010 for the global market as well as the domestic market. We have launched three of the four range of folder gluer produced by Bobst in India. This includes Ambition, VisionFold and ExpertFold.
You’re inaugurating the Competence Centre in Pirangut?
We believe that Bobst has to play a lead role in development of competence of operators by imparting the right kind of training, through process knowledge, development of tooling and all these aspects. The self-funded Competence Centre in Pune will achieve three things. One: operator training. Two: demonstration. Three: trial of new products. When it comes to demonstration, we intend to achieve how a customer can convert their printed jobs faster. The Competence Centre in India will have a die-cutter and folder-gluer production kit. We hope to highlight best practices and improve productivity.
What are the key trends in the Indian converting segment?
India is converting roughly 1.5mn tonnes of folding cartons annually. Of this, 40% is in the unorganised segment. The packaging converting sector is growing at 15-18% and there is a marked shift from the unorganised segment becoming more organised. The industrial growth in India has seen top players in the A and B tier segments reap high benefits. More importantly, this growth has acted as a catalyst for the aspirations of the C and D tier packagers who are making a concerted effort to move from unorganised to organised operations; from manual to automation. This has led to greater demand for converting machines.
What about your plans for the corrugated segment in India?
In the corrugated segment there is some way to go. But we have made a humble beginning to understand the needs and aspirations of the end-consumer industry and how these gaps can be filled up by better and cost effective technologies.
Is there a hurdle, especially in the corrugated segment?
Yes. Until 2007, this industry was reserved under SSI. This limited the expansion and scalability. As the market has opened up we are seeing more and more automated machines coming into India. But still we have a long way to go as far as paper quality, converting technologies and mindset of the buyers is concerned. Some of the buyers are still living in the good old days of overspecs for jobs which are not relevant to the present market condition. The mindset that corrugated box is a carrier box has to change. It has to become a point of sale tool with better graphics supported by better structure and quality.
But what matters is the cost of production?
Longevity and ability are the important differentiators between Bobst and other machinery. High uptime and high utilisation delivers high productivity which in turn becomes highly profitable for our customers and a big reason for the success of machinery. Lifecycle cost of the machine is important and not the cost of the machine.
This brings us to the Bobst theme of profitability with Zero Fault Packaging.
The basis of business is to be profitable. It’s the same with packaging. Packaging is a very competitive business. One has to understand that more than 70% of the cost is raw material. Therefore any wastage will put pressure on the profit margins. Focus should be on minimising wastage within the organisation. That’s the reason Bobst has mooted the Zero Fault Packaging theme. This leads to minimal rejection, internal improvement. Bobst believes that for packagers, return on capital comes not from just gross margin of the products they sell, but from operational efficiencies. With minimal inventory, better planning (MIS), better capital management and better utilisation of the machine. These are the performance indicators for the success of a business.
What about financing the machines?
Financing of machines, new and pre-owned, has become easier than it was a few years ago. The finance agencies are taking a lenient view towards the print and packaging industry. What is interesting to note is that a few private finance companies have started to fund projects. This is very encouraging. Customers who want to avail finance for their projects, have avenues, other than banks.
Indian converters prefer one high-end Bobst which is supported by a Chinese or Taiwanese die-cutter ...
First of all, Bobst is not only high end it has four technology platforms. It starts with the NovaCut which is at 8,000 sheets/hour ending up to 12,000 sheets/hour which is the MasterCut. However, the key is: capacity matching with full flexibility between converting machines. That is why we feel that a Bobst should be the standby for a Bobst. All our machines are compatible in terms of toolings and being operator friendly. Even if one cannot afford an entry-level new machine from Bobst one can choose a pre-owned Bobst.
So you admit, you sell products which are high on cost?
True. But what is important is that what is printed must not lie around for want of capacity shortfall in the die-cutting department. So you need to find a balance to avoid a capacity mis-match. For this, you need to have a mix of machines. It is crucial to have interchangability of jobs between the machines. Because at the end of the day, if you have the volumes, Bobst is the cheapest per 1,000 sheet die-cuts. Be it: the entry level or high end Bobst
The India versus China story has reached its ‘sell by’ date a long time ago. At the risk of flogging it, what is happening?
In terms of market share, Bobst is better placed in India than in China. We have a very healthy market share in India. Customers in India appreciate quality as well as the ability to produce. In China, besides being the home turf to our competitors, the concept of cost of fund is not understood. Converters keep adding machines. The tendency is to see the initial investment. Very few examine the cost of ownership and the productivity of the machine. That’s one of the reason Bobst has been less successful in China in the recent years.
What is the future of packaging in India?
We are bullish. The growth is sustainable. The per capita consumption of paper is much lower as compared to China and even lesser developing countries. I marvel at how far India has come since the early nineties. It has done so despite problems of infrastructure, poor governance, availability of raw material and inappropriate manpower. But India has a habit of turning its problems into opportunities.. This has boosted growth. The Indian converter has tasted success and the sense of confidence is palatable.
The manufacturing of folder gluers in India started in January 2010 in Pirangut, Pune which is an export-oriented unit. The three levels of technology manufactured are – the Ambition, VisionFold and ExpertFold. It is a global manufacturing unit with an exclusive team.
The above feature is a part of a special Packaging Supplement included in the printed issue of PrintWeek India magazine dated 5 November 2010.
The Packaging Supplement was powered by:
Yes, we are very proud to be part of this phenomenal growth in India for the folding carton industry. I feel India is blessed with a large domestic market and a culture which values entrepreneurship. So far, Bobst is playing a very important role in ensuring that India makes a global footprint in the packaging industry. To that extent Bobst is keen to play a positive role and ensure that India creates a vibrant and robust print economy.
What do you attribute Bobst’s success in India to?
What matters is the cost of production, quality of end product and reliability in terms of delivery. Bobst has proved to be the best choice in spite of apparent high cost of ownership. This gets offset by high uptime and high productivity of machines. In India, customers run 24x7. Therefore, reliability is equally important in addition to the above factors. Customers have understood that it is a better proposition considering the life cycle cost vis-à-vis investment.
Do we tend to sweat our machines, much more than the rest of the world?
Yes. But having said that, machines in India are run more efficiently than China. Even when you compare with South East Asia, the Indian packagers use their machines well. But compared to Europe, there’s still room for improvement. The machine environment, operator skills, workflow are better managed in Europe. This results in higher machine uptime and utilisation.
Why so?
It’s a cultural phenomenon and has to percolate from the top right down to the operator level; each one has to be fully committed on maintaining the machine. It is not just about the machine, it’s also about process knowledge, workflow, peripherals, tooling and even material handling. Ultimately, everything matters.
Where do you see the growth in this industry coming from? Scalability? Automation?
For the large players, there are two ways to grow. One is going multi-locational; and the other way is to increase the existing area of conversion. What has changed in the last seven to eight years is that customers from the C and D tier cities have started to realise that land is becoming expensive. So production accrued per sqft of production area is becoming much more important. Packagers are looking to produce more in the limited space that they have. For this they require automated, high production machines.
How do customers get engaged with pre-owned Bobst?
We provide assistance through our service engineers as well as through local Bobst dealers in the country of origin. Recently, Bobst has started a portal called www.bobstexchange.com which is a worldwide platform for buying and selling used Bobst machines.
Is the global scenario for Bobst, encouraging?
Since the beginning of the year, we are witnessing a positive evolution of our business set due to healthy order booking in USA, Latin America and South East Asia. Italy and France have shown good trends. Even Germany has been positive in recent months. Although there is optimism, we are cautious in our business forecast. Results of the first six months as compared to the prior year reflects better sentiments.
Coming to India. Your manufacturing Pirangut unit, near Pune seems very busy ...
Yes. Apart from our various machine modules for group export, we have started manufacturing folder-gluers since January 2010 for the global market as well as the domestic market. We have launched three of the four range of folder gluer produced by Bobst in India. This includes Ambition, VisionFold and ExpertFold.
You’re inaugurating the Competence Centre in Pirangut?
We believe that Bobst has to play a lead role in development of competence of operators by imparting the right kind of training, through process knowledge, development of tooling and all these aspects. The self-funded Competence Centre in Pune will achieve three things. One: operator training. Two: demonstration. Three: trial of new products. When it comes to demonstration, we intend to achieve how a customer can convert their printed jobs faster. The Competence Centre in India will have a die-cutter and folder-gluer production kit. We hope to highlight best practices and improve productivity.
What are the key trends in the Indian converting segment?
India is converting roughly 1.5mn tonnes of folding cartons annually. Of this, 40% is in the unorganised segment. The packaging converting sector is growing at 15-18% and there is a marked shift from the unorganised segment becoming more organised. The industrial growth in India has seen top players in the A and B tier segments reap high benefits. More importantly, this growth has acted as a catalyst for the aspirations of the C and D tier packagers who are making a concerted effort to move from unorganised to organised operations; from manual to automation. This has led to greater demand for converting machines.
What about your plans for the corrugated segment in India?
In the corrugated segment there is some way to go. But we have made a humble beginning to understand the needs and aspirations of the end-consumer industry and how these gaps can be filled up by better and cost effective technologies.
Is there a hurdle, especially in the corrugated segment?
Yes. Until 2007, this industry was reserved under SSI. This limited the expansion and scalability. As the market has opened up we are seeing more and more automated machines coming into India. But still we have a long way to go as far as paper quality, converting technologies and mindset of the buyers is concerned. Some of the buyers are still living in the good old days of overspecs for jobs which are not relevant to the present market condition. The mindset that corrugated box is a carrier box has to change. It has to become a point of sale tool with better graphics supported by better structure and quality.
But what matters is the cost of production?
Longevity and ability are the important differentiators between Bobst and other machinery. High uptime and high utilisation delivers high productivity which in turn becomes highly profitable for our customers and a big reason for the success of machinery. Lifecycle cost of the machine is important and not the cost of the machine.
This brings us to the Bobst theme of profitability with Zero Fault Packaging.
The basis of business is to be profitable. It’s the same with packaging. Packaging is a very competitive business. One has to understand that more than 70% of the cost is raw material. Therefore any wastage will put pressure on the profit margins. Focus should be on minimising wastage within the organisation. That’s the reason Bobst has mooted the Zero Fault Packaging theme. This leads to minimal rejection, internal improvement. Bobst believes that for packagers, return on capital comes not from just gross margin of the products they sell, but from operational efficiencies. With minimal inventory, better planning (MIS), better capital management and better utilisation of the machine. These are the performance indicators for the success of a business.
What about financing the machines?
Financing of machines, new and pre-owned, has become easier than it was a few years ago. The finance agencies are taking a lenient view towards the print and packaging industry. What is interesting to note is that a few private finance companies have started to fund projects. This is very encouraging. Customers who want to avail finance for their projects, have avenues, other than banks.
Indian converters prefer one high-end Bobst which is supported by a Chinese or Taiwanese die-cutter ...
First of all, Bobst is not only high end it has four technology platforms. It starts with the NovaCut which is at 8,000 sheets/hour ending up to 12,000 sheets/hour which is the MasterCut. However, the key is: capacity matching with full flexibility between converting machines. That is why we feel that a Bobst should be the standby for a Bobst. All our machines are compatible in terms of toolings and being operator friendly. Even if one cannot afford an entry-level new machine from Bobst one can choose a pre-owned Bobst.
So you admit, you sell products which are high on cost?
True. But what is important is that what is printed must not lie around for want of capacity shortfall in the die-cutting department. So you need to find a balance to avoid a capacity mis-match. For this, you need to have a mix of machines. It is crucial to have interchangability of jobs between the machines. Because at the end of the day, if you have the volumes, Bobst is the cheapest per 1,000 sheet die-cuts. Be it: the entry level or high end Bobst
The India versus China story has reached its ‘sell by’ date a long time ago. At the risk of flogging it, what is happening?
In terms of market share, Bobst is better placed in India than in China. We have a very healthy market share in India. Customers in India appreciate quality as well as the ability to produce. In China, besides being the home turf to our competitors, the concept of cost of fund is not understood. Converters keep adding machines. The tendency is to see the initial investment. Very few examine the cost of ownership and the productivity of the machine. That’s one of the reason Bobst has been less successful in China in the recent years.
What is the future of packaging in India?
We are bullish. The growth is sustainable. The per capita consumption of paper is much lower as compared to China and even lesser developing countries. I marvel at how far India has come since the early nineties. It has done so despite problems of infrastructure, poor governance, availability of raw material and inappropriate manpower. But India has a habit of turning its problems into opportunities.. This has boosted growth. The Indian converter has tasted success and the sense of confidence is palatable.
The manufacturing of folder gluers in India started in January 2010 in Pirangut, Pune which is an export-oriented unit. The three levels of technology manufactured are – the Ambition, VisionFold and ExpertFold. It is a global manufacturing unit with an exclusive team.
The above feature is a part of a special Packaging Supplement included in the printed issue of PrintWeek India magazine dated 5 November 2010.
The Packaging Supplement was powered by: