Thursday, August 25, 2016

LMAI'S LABEL COST RESTRUCTURING SESSION!



The label industry in India has in recent times been facing intense pressure on costs and reduced margins, making it difficult for label printers to sustain the required rapid growth. Leading FMCG companies continue to pressurize their purchase and sales teams to be aggressive so as to firm up their bottom line as also their top line. As far as printers are concerned both these measures are adversely affecting them. While a better top line for end users of labels even though it translates into higher sales, yet it means that the sales team will be offering freebees and schemes to customers putting pressure on the bottom line, so eventually the pressure is passed on to the purchases to maintain margins. The print buyers tend to squeeze the label suppliers to the maximum so as to prove their contribution to the bottom line. When suppliers started to resist reduction in prices, buyers have now unleashed the dreaded tool of reverse auction thereby putting label industry peers in confrontation amongst themselves. Despite despising the process and most printers agreeing that it is a very big dent on their balance sheets yet to retain the sales volumes that they need to project to their bankers, they still participate in reverse actions in hope that they will get a piece of this large pie which may not be as sweet as desired but will at least add to their sales. In earlier days it was a simple thing for them to pass on the decrease in price to labelstock manufacturers but intense competition, increasing paper and polymer prices have pushed even the labelstock producers against the wall. With wafer thin margins they have their hands-up in despair already.

Modernisation is another imperative that has to be indulged in on an ongoing basis. Print buyers show preference to suppliers who possess top of the line label presses with enhanced capability to print convert and decorate labels with multiple printing technologies. Capital equipment acquisition costs continue to escalate and indulgence in it brings increased debt to be serviced on depleting margins. ROI (Return on Investment) is now a word that stirs in worries for most printers. A growing market makes economies of scale a necessity to retain market share and margins needed to service increasing liabilities and expenses. Increased sales means higher inventory levels and larger working capital requirements, further increasing the borrowings. Indian label printers decided to huddle together in an effort to dwell on this dilemma and try to find a lasting solution that would facilitate faster growth and stem the depleting margins. Sensing the mood and needs of its members, Industry association LMAI (Label Manufacturers association of India) organized a COST RESTRUCTURING SESSION IN MUMBAI ON 19TH AUG. 6 PM onwards at Courtyard Marriot Andheri.

Normally in such meets the supplier members are not called as it is evident that the first attempt will be to try and reduce the cost of the inputs which may put the suppliers in an embarrassing situation or in direct confrontation with their customers. However the LMAI management thought differently and considering them as stake holders in the industry they invited suppliers to join in, witness the proceedings and understand their situation. It sure was interesting to note that leading suppliers of materials and equipment like Avery, UPM, SMI, Gallus, Labelplanet, Weldon, Genius, Fujifilm, HP, Electro Optic, Henkel, BST, Multitec, SKumar and many others attended this meet. It was appreciable that many of the leading suppliers gave their suggestions and inputs on how they felt the printers could produce more cost effectively and add to the receding margins or stem the slide. The meet was attended by over 100 delegates out of which, almost 70% were printer members. Stalwarts in the Indian label industry from all zones marked their attendance at the event, some of the most prominent seen there were Arvind Shekhar from Sai security Bangalore, Chandan Khanna-Ajanta, Manish Desai-Mudrika, Vivek Kapoor-Creative, Sandeep Zaveri-Total Print, Denver-Janus, Gautam/ Venkataraman-Skanem Interlabels, Rajesh Nema-Pragati Indore, Mahendra-Manohar Pkg, Amar Chhajed-Webtech, Karan Kapur- JK Fineprints, Sandhya-Synergy, Jigesh Dani-Maharshi Ahmedabad, Sanjeev Sondhi-Zircon and many more.






Rajesh Nema the host for the evening welcomed the guests and called upon Sandeep Zaveri, President LMAI to give the opening address. 





Sandeep stressed the imperative need for printers to put their minds together on this crisis like situation facing them. He stressed the need to shun reverse auctions and demand from customers a basic per square meter price below which no one should sell. He impressed upon members to debate, discuss and arrive at a consensus if not now then at least at the next meet that they plan on the issue. There is a pressing need for formulating a costing pattern that incorporates essential inputs besides labelstocks to justify the resultant profit to be enough to service their operations.

Satish Wakchaure of Saicom Systems and Samir Patkar from Gallus took the stage next. Their joint
presentation listed the pitfalls at length and shared the dangers of low pricing in competition amongst themselves. While Satish listed the difficulties and shared the envisaged consequences in this path, Samir Patkar went about listing solutions to produce cost effectively with lesser downtimes, lower wastages, and stemming the outflow due to not using expensive equipment to optimum capacity.




They summed it up by suggesting to printers the steps that would definitely help them improve their profitability. These included demanding development costs from customers, either shunning reverse auction or learning to say no beyond a certain point, investing in expansion wisely and planning reachable ROI with new generation equipment, using full capacity of machines, reducing wastages, produce better quality-not larger quantity, learn to say NO if it is unviable, do not settle for too long credit periods, do all finishing online as offline converting adds to cost and finally try to get a higher price for your work. 

 




Taking the topic further Ajay Mehta MD, SMI gave his suggestions for label printers to drive in better margins and tighten their belts to stay in the reckoning.




An eye opening presentation on the label printing companies was made by chartered accountant Deepa Lodha who was commissioned by LMAI to carry out this investigation. She had in-depth perused the financials of 77 label companies in India. The largest percentage at 42% of these 77 companies are located in the west followed by 27% in North, 23% in south and mere 8% in central and east India. Only 9% or 7 companies have a turnover of over Rupees 50 Crores, 31% are less than 5 Crores, 38% are between 5-20 Crores and 22% between 20 -50 Crores. The revenue growth of these 77 companies from 2013-14 to 2014-15 is 14% however this cannot be reflecting the exact growth rate in India as these companies are only printing in roll form. There is a huge, almost similar volumes coming from plain VIP labels and the sheet market. That market is experiencing substantial growth due to extensive use of barcodes in organised retail.  All the details of this report are difficult to reproduce in this article however I will share some key conclusions as below;
1.    Not enough Profit: Six companies out of 77 do not generate enough profit to pay their interest. One in every five reported loss at net level.
2.      Low asset turnover: 41 companies reported sales lesser than total assets.
3.   ROE: 6-8% improvement in ROE (return on equity) needed to make returns meaningful for promoters. They need to get 5-7% higher prices, tighter management of receivables/inventory and better utilization of assets.
4.      Efficiency needed: Few inefficient or loss making companies could exit business.

 





Pankaj Bhardawaj of Avery Dennison spoke briefly about better profitability and also dwelled on sustainability. Immediate past president 









Vivek Kapoor took the interactive session inviting printers’ opinion and thoughts on the subject they were discussing. Renuka Uchil informed the gathering about forthcoming label awards and appealed to label printers to participate in big numbers. 





 


Harveer Sahni of Weldon on behalf of editorial board of Label Legacy, the LMAI publication, informed that the next issue would be released at Labelexpo India and would be a preview of the label event. He also appealed to the members to send in their news and articles that could be of interest to the industry. 



Finally Rajesh Nema secretary LMAI gave the vote of thanks.

International Label Guru Mike Fairley commented on my above report! I reproduce his full email as below;


Hello Harveer,


An interesting report. Shows the challenges the industry is facing. But it’s not just in India. A recent study of financial performance in the UK label industry gave the following:

       Over 30% of label converters were placed in the caution or danger segments in a financial analysis study of  the label industry (Plimsol report)

        
       More attention needs to be paid to financial management. Do companies really know the full cost of indirect costs/overheads


   

       Attracting new (profitable) business has become a major challenge


I’m working on writing a new handbook in our Label Academy series on ‘Management Information Systems’. Has key chapters on Estimating, Job Costing and Financial Management. Looks at how automated workflow through the label production chain from estimating, order processing, production planning, inventory control, quality control, costing and accounting can today eliminate time consuming data entry, planning, management time and work towards improved profitability.
I would expect to see more MIS systems being installed in India over the next few years. They can pay for themselves.
Hope you are well.
Best regards
Mike
 

Note for international readers: Rupees 1 Crore is equal to 10 million Rupees or at present rate of conversion approximately 150,000 USD

Note for print publications: Magazines may reproduce the above article by giving credit to the author.


Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited, New Delhi. India August 2016

Sunday, August 7, 2016

Chandan Khanna; I am different!

Exactly 6 years ago on the 7th of August 2010 I wrote an article titled “Chandan Khanna; I wanted to be different!” He has more or less proved that statement and has worked hard to excel in his journey to grow in labels. The last line of that article was, “He is committed to excel in labels and reach the topmost slot in five years from now and would still be doing something different!” Rarely one sees people committed to their aspirations and achieving what they wished. Today Chandan Khanna lead  Ajanta Packaging is now one of the top three label companies in India with wholly Indian ownership and qualifies to be the only Indian owned multinational label printing company having manufacturing presence in three countries i.e. India, UAE and, Thailand. In the last couple of months I have had the opportunity of visiting his two overseas units in Sharjah (UAE) and in June 2016, I visited his unit in Thailand. I was very impressed! I was tempted to question him, “Chandan how do you manage?” The answer he gave appeared to be in continuation to where we left in the last article in 2010. He replied, “I am different and will continue to be so.”!

Ajanta Packaging’s Thailand unit is on the highway from Bangkok to the tourist destination of Pattaya. Infact it is almost on the outskirts of Pattaya. After spending the night at an amazing airport hotel Novotel Bangkok, we i.e. I and my wife, were picked up early morning by Ajanta’s car to drive to Pattaya. After checking into another outstanding property The Dusit Thani and freshening up we left for the Ajanta factory. As we arrived at the unit we witnessed a Thai Spirit temple adorning the entrance, further inside was also an Indian temple with Lord Ganesha and Laxmiji, displaying the owner’s deep faith and religious values. We were welcomed by an extremely hospitable staff with TV monitors displaying a welcome message for us and traditional “SwasdeeKha!” by the ladies who welcomed us.



After a briefing in the fully equipped conference room we took a round of the unit. The unit is immaculately clean and self sufficient. They have their own design department, plate making department and quality control laboratory. 







The pressroom has one Nilpeter MO Combination Flexo/Offest presses and two Iwasaki intermittent offset presses besides flatbed registered die-cutting machines and a host of slitting, inspection and finishing equipment. A 12 colour Nilpeter Flexo/Gravure combination press will be installed later this month in August 2016. 













It was interesting to see that the space provided for further expansion and installation of new equipment was also kept spotlessly clean and gleaming. The dynamism of Chandan Khanna and his endless efforts to grow was evident by his personal indulgence in every aspect of this unit.












After lunch arranged by them in the unit’s dining room we left to meet yet again to experience Chandan ‘s excellent hospitality that evening at an open air restaurant on the seashore serving amazing seafood and local beer. I am still in awe of Chandan having made this trip memorable for us.






Ajanta Packaging owes its inheritance to a very renowned printing family of Mumbai that owns Ajanta Printarts. Ajanta packaging is headquartered in Mumbai and has manufacturing facilities in Daman (Near Mumbai), Baddi (North of Delhi, in Himachal Pradesh), two units in Sharjah (UAE) and this unit in Thailand. A very dedicated and ambitious technocrat, Chandan wants to extend his foot prints globally. He travels extensively to achieve his goals. He is now looking at moving his business to the western world as well. He is already evaluating investments in Europe by either taking over an existing unit or by entering into global alliances. 




Through ups and downs coming his way, Chandan moves on tirelessly to achieve his ambitions because he wants to reach the pinnacle in the next five years before he starts to slow down to enjoy the fruits of his labour and let the company grow and prosper by the inertia set in by him and led by his team of seasoned professionals in each and every plant. Will he slow down? It is a question I am not sure I have the answer to…


Note: Magazines may reproduce the above article by giving credit to the author.

Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited, New Delhi. August2016

Saturday, July 23, 2016

PackPlus 2016: Heading for unprecedented success!

On July 21 2016 when I received information that PackPlus 2016 had been sold out I tweeted; “Sold out! PackPlus 2016 July 27-July 30 Pragati Maidan, N Delhi Show heading for unprecedented success http://www.packplus.in  @PackPlus2016

The show PackPlus, a complete packaging show, has grown more than 30 percent over the last edition with many more exhibitors, product launches and running machines. While there, one can learn about Package 4.0 at the AIA knowledge pavilion (stall no. 12A.40). There are free seminars on Next Generation Automation, Flexible Packaging, Open & Smart HMI, and Integrated & Vision Guided Robotics & Vision System for Quality. Register at: www.aiacampus.in/index.php/industry/automation-pavilion/click-to-register HP is planning free seminars for brand owners at their stand in Hall 12. The timings are at 4pm on 27 and 28 July and at 11 am on 29 and 30 July. In the gross area of 14,000 sq.mtrs., PackPlus will be happening alongwith SupplyPlus and CartonTech. The Show has positioned itself as one of the most sought for exhibitions for the display of latest innovations & developments from the industry. Some of the leading companies including Uflex Limited – Engineering Division, Pelican Rotoflex (P) Ltd., Ishida India (P) Ltd., Global Link Impex, Zhongke India (P) Ltd., Clearpack India (P) Ltd., Autoprint Machinery Manufacturers Pvt  Ltd., Hewlett – Packard India Sales Private Ltd., Intralox India (P) Ltd., AnyGraphics (P) Ltd., Domino Printech India (P) Ltd., Uflex Limited – Holography Division and many more have booked prominent stalls to showcase their wide range of equipment and to disseminate information. Visitors will get an opportunity to experience the running machines and have one-on-one interaction with the representatives from international companies

PackPlus is founded and organized by the husband wife duo Neetu and Anil Arora. They also happen to be the founders of India Label show which was subsequently acquired by UK based Tarsus and renamed as “Labelexpo India”. A decade ago I wrote about Anil Arora’s journey upto Labelexpo 2006. In 2007 it was acquired by Tarsus and for the 2010 edition they renamed it as Labelexpo India. I reproduce that article after moderate editing;

The path traversed by Neetu and Anil Arora:
It was during one of my visit to Mumbai in the year 2001, while planning a trip to Labelexpo Brussels with friends from Industry, I expressed my wish that we should have a label show in India. Immediately one of the label printer friends informed that one Mr. Anil Arora was already working on the project and had approached many in the industry in Mumbai. Since the subject was of interest to me I investigated and got Mr. Arora’s contact details. Before leaving for Delhi I called Anil Arora to enquire about his plan for the show. From the small chat with him I found him very convincing. I felt this man was committed to the show and would make success of it. I told him I would support him and if any help was needed I would be available. Three days later Anil was in my office in Delhi and we were discussing plans to make the show a big success.

By end of the year the whole industry was excited about the show and the first India label show was completely sold out. So much so that the organizer had to vacate their own stand to make room for demanding prospective exhibitors. The show was a big success.  It brought the industry closer and it was first time in the history of self adhesive labels in India that such fellowship was witnessed. It was also during the run-up to the show that the LMAI (Label Manufacturers Association of India) was formed.

The show then moved on to a much bigger Pragati Maidan. Anil Arora and his better half Neetu Arora worked hard to make the show bigger and better. The promotions were so well planned that road shows which gave insight on what to expect, were held in cities and towns all over India. There were road shows held in Srilanka and Bangladesh also. The second show in Delhi was bigger and better with the Tarsus group organizer of Labelexpo taking a big portion of the show. The India label show brand was fully established not only in India but also internationally. There are nostalgic memories of the awards nights and the parallel dinner meetings during the last show.

The third show in this series was held on (6-9 December 2006); the excitement in the label industry had built up. The show was bigger and attracted a much larger foreign attendance. The importance of the show was reflected by the fact that the Finat sponsored “Indo-European label Exchange” was held alongside the show. FINAT, the self-adhesive label trade association acted as ‘matchmaker’ between European and Indian labeling industries to create a forum to give small and medium sized member companies in both regions better chances of doing business with each other. The forum was supported by the EU’s Asia Invest programme and was organised in cooperation with the national trade associations VskE (Germany) and LMAI (India). More international presence, more working presses and a series of product launches from an industry that was waking up to global challenges confirmed the show’s resounding success. A conference was also held alongside the show, and was organized under the aegis of the world renowned Alexander Watson Associates (AWA).

Alongside the Show, International Packaging Conclave will happen on 29 July at Pragati Maidan Conference Centre. It will focus on Print Optimisation & Colour Management for Flexible Packaging. 25+ experts from the industry will unite for a daylong session where more than 200 delegates including Brand Owners, Package Converters, Packaging Technologists, Procurement Professionals, Print Specialists, QA, Managers, PrePress & Media Professionals, Designers, Material &Equipment Suppliers and Consultants will attend the programme. We are all set for a record-breaking edition,” said Neetu Arora, President, Print-Packaging.com (P) Ltd., the organisers of the Show.



Neetu and Anil have two children, a son Nauroze pursuing his management studies and a daughter Garima Arora who is a celebrated Chef. After training in Switzerland and France she has worked in the famous Gordon Ramsey’s restaurant in Dubai, then in the world’s number one restaurant Noma in Copenhagen and is now working at the best Indian restaurant recognized globally; Gaggans at Bangkok. She is soon expected to open her own restaurant in Bangkok with support from Gaggans.



Note: Magazines may reproduce the above article by giving credit to the author.
Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited, New Delhi July2016

Monday, July 4, 2016

Inline Hot foiling: Pantec Open House!

VICTOR HUGO, a French Poet in the mid nineteenth century, once remarked: “You can resist an invading army; you cannot resist an idea whose time has come. When mobile telephony came in, one could not imagine the reach it will provide to a common man who would not have means or will to reach out to the world at large. Telephones with internet connectivity have transformed life magically. No one could imagine that the only communication link that people had, “the landline” would one day become just a show piece. Such ideas, whose time comes by, evolve with such speed that the generations are left in awe of the change. Label industry is now faced with many such ideas like the move from conventional to digital printing, linerless labels and now evolution of in-line converting. Given the large investment in space and manpower, sheet offset, over a period of time is surely going to evolve to inline printing, decorating and converting using multiple technologies with lesser space and just a few people. At the recently concluded Drupa 2016, many such types of equipment were displayed attracting interest of printers. If it was just printing, the offset presses are doing a great job. It is the decoration and finishing that needs space, manpower and a host of different machines spread over a large shop floor. In modern retail highly decorated labels and packages are an imperative for consumers to reach out for the products. Hot foiling is one of the many processes that catches the eye of a consumer and becomes the preference of many a brand owner. So far most of the hot foiling is being either done offline on flat bed hot stamping machines or in-line with slow intermittent presses. It has been the wish of label printers who are so used to doing the conversion from start to finish in a single pass on their high speed rotary presses, to do the hot foil also in the same pass without compromising on the speed and quality.   
On the 3rd of June, Peter Frei, CEO Switzerland headquartered Pantec GS Systems AG pulled me out of a busy Drupa to take me to the premises of Gewa Etiketten located on the outskirts of Frankfurt some three hours drive, for an “open house” to showcase their in-line hot foiling application equipment “Rhino”, that can be integrated into flexo label presses without really compromising too much on speed. Pantec GS Systems AG is an independent subsidiary of Pantec, a worldwide operating technology supplier for industrial applications and medical devices offering services, products and solutions in the field of machinery and medical engineering. They provide sophisticated in-line refining solutions. Their dedicated equipment for rotary and flat bed hot foil stamping & embossing, high performance vacuum foil savers, high speed & precision hologram placement is made to provide efficient high quality refining, directly in-line.

The company hosting the Open House, Gewa-Etiketten is leading producers of labels for Wine, Sparkling wine and spirits in Germany and Europe. The family owned enterprise was founded in 1931 and the third generation headed by Mathias Walter is still in control. The company operates from a total area of 7000 square meters and a production area in excess of 50,000 square feet. With 170employees at two locations, one that caters to sheet offset segment for wet glue labels and the other for self adhesive labeling, they achieve sales of 23 million Euros. The unit that we visited had 6 Gallus combination presses and one HP Indigo digital press besides a range of other complementary equipment. They cater to customers demands from 10,000 to half a million labels per day. As we reached the venue of Open House, Uwe Reflinghaus, CEO of Gewa-Etiketten welcomed us with lunch and introduced us to his team. Some more printers and suppliers were also present. 


Peter Frei




All visitors after introducing themselves heard Peter Frei, CEO Pantec GS Systems give his presentation. He said “I do believe  that single pass printing  and converting of packages is the real new opportunity for label printers having such web machinery already” He further added, “ I think there is a ‘huge opportunity’ that arises for label printers in packaging after integration of Pantec Rhino in an existing label press, as you will see being done here at Gewa”. After his presentation it was time to go to the shop floor for the demonstration of Rhino inline hot foiling system. 





Oliver Jung
Oliver Jung, the printing expert handling the Pantec implementation project at Gewa took charge to explain and demonstrate the equipment and its technology.The Pantec Rhino was integrated in line on a Gallus RCS combination press to demonstrate In-line package printing and decoration as alternative to sheet fed package conversion. A label press was being used after integration of Pantec Rhino to produce highly decorated cartons. Contrary to the rotary web operation where the web continuously moves, this equipment has web Stopping-Stamping-Moving on, giving sharper images of stampings. The interesting part is that while the stop start operation is limited to the Rhino, the web otherwise keeps moving steadily and continuously at regular machine speed without stop and go motion. The equipment shown was capable of making 18,000 strokes per hour however they now have one that can do 25,000 strokes per hour. The movement and stamping is well portrayed in the video at https://www.youtube.com/watch?v=OA6SWgTqI-g&feature=youtu.be 








In one demo they ran a Pantec Rum Chocolate carton with printing, embossing, hot foiling and die cutting all running at 120 meters per minute in a single pass. 
















In another demo they ran a carton with also placing of registered hologram, printing on it and embossing around it. The equipment has advantage of speed in roll and as compared to sheet it has no wastages that occur at grippers and at gaps.













Rhino system brings the quality of sheet fed hot foil embossing, attractive patch placement for prestige markets and hologram stamping for security into web presses;
·      Consistently designed for in-line economy
·         High frequency stamping for high press speed (up to 25´000 strokes/h)
·         Quick job change (no format parts) for high press availability
·         Crosswise foiling and multistroking allow single pass production of multifoil designs
·         Reduced per-unit costs (no off-line preparation, less maculation)
·         Up to two foil saving servos
·         Significantly reduced cycle times for orders

Note: Printing magazines and publications may reproduce this article giving credit to author.

Written by Harveer Sahni, Managing Director, Weldon Celloplast Ltd. New Delhi India July 2016