Friday 30 December, 2011

Polymer prices reduced twice in December

The current economic slowdown has spurred the RBI to lower its GDP growth forecast for the financial year 2011-12 to 6.9%. While our company IppStar thinks that this is a premature downgrade for the GDP forecast, there are signs that the Indian industry’s high growth over the past three years is softening. The index of industrial production showed a sharp deceleration with a growth of only 2.79% between July to September 2011. The IIP figure for October 2011 was 0.3% and there has been a sharp rise in the November 2011 IIP figure to 6.8%. Reasons cited by experts for the slowing down of growth are softening domestic demand because of high interest rates and rising inflation. However, at least food inflation seems to have moderated in December.

Polymers which are used in six key industries (agriculture, automotive, infrastructure, healthcare, appliances and flexible packaging) are affected by the economic slump. In India flexible packaging is the biggest consumer of polymers using more than half of the entire production. The ban on polybags and the ban on flexible packaging for gutka (chewing tobacco) has affected flexible packaging although monolayer polybags are being replaced by multilayer polybags and polymer based non-woven fabrics.

One outcome is that since January 2011 till the third week of December 2011, the prices of all variants of polymers have been revised 5 times. Between January to November 2011, prices of polymers were increased thrice. In November, major Indian polymer manufacturers — Indian Oil Corporation, Haldia Petrochemicals, Gas Authority of India Ltd and Reliance Industries have increased the prices of polypropylene and polyethylene by Rs. 3 per kilogram and Rs. 1.50 per kilogram respectively. These prices were raised to keep pace with surging global prices of naphtha, the key input used in manufacturing polymers. In addition, the sharp devaluation of the Indian Rupee in comparison to the US$ has made imports more expensive, which in turn triggered the upward movement of domestic polymer prices.

In December, polymer prices have been reduced twice — first by Rs. 2 per kilogram in the first week of the month and the second time by Rs. 2.50 per kilogram in the third week. These price decreases are an attempt to spur domestic polymer demand. Polymer demand has slowed both because of the slow local industry growth as well as low global demand especially in America and Europe because of festive and holiday season. The lower prices are expected to increase polymer export, which has fallen drastically as China, a major polymer importer from India, has stopped import in the recent past.

On the other hand, IppStar’s ongoing research of the Indian print, packaging and publishing industry shows continuing double digit growth in most of the packaging segments. Polymer based packaging including labels continue to add blown film lines and high speed printing and converting equipment.

Monday 19 December, 2011

Tough times for web-offset manufacturers

We have written in earlier years about the inevitable consolidation of the offset press manufacturers and particularly about the leading international manufacturers of high speed web offset presses. As we wrote after the last drupa in July 2008, “The top two manufacturers in the 70,000-plus-cph markets are manroland and KBA and our estimates put manroland ahead of KBA by about US$ 300 million in this category. Together they currently command almost 60% of the market and the other five players share the balance 40%with Goss, perhaps the sales leader of this group in these type of presses. With most of these manufacturers hovering between US$ 250 to 325 million in sales of 70,000 cph plus presses, will all five survive in their present structure on their own?”

In the ensuing years the downturn of the newspaper market in Europe, North America and Japan has continued while new developments such as tablets (iPads) have just been around for less than two years. Some parts of our forecast of consolidation have already come true with Shanghai Electric acquiring Goss International in 2010. In the meanwhile with intermittent interventions by the German government, unsuccessful consolidation discussions have taken place between almost all of the European offset press suppliers: Heidelberg, KBA, manroland, Solna and Wifag. Although unsuccessful thus far, one can reasonably expect some consolidation of the European press manufacturers coming out of the insolvency filing of manroland on 25 November 2011.

The state of the Indian web offset manufacturers
Too often the Indian machinery manufacturers think that they are immune from what is happening in the rest of the world or even in the Indian economy. This is partly a function of their relatively small size whereby they can subsist even lean years when sales plummet to half as they did in the 2008-09 financial year. Nevertheless it is safe to say that over the past decade the Indian web offset manufacturers led by Manugraph and The Printers House have grown into a R600 crore (US$ 125 million) industry. This has happened on the back of increased editions, pagination, circulations and particularly the rapid rise of 4-colour pages of the Indian dailies. Although our newspaper industry can be safely expected to continue to grow in the next decade, it would be foolish to ignore the possibility and need for increased consolidation among the publishers and ultimately some consolidation by the more than 20 local web offset press manufacturers.

Another factor that has kept many of the Indian web-offset press manufacturers alive has been the increased expenditure by the government and by the economy as a whole on education. A good percentage of the web presses bought in recent years are producing educational books. Moreover, as exports of presses have fallen, domestic consumption has taken up the slack.

This is true even for organised manufacturer-exporters such as Manugraph and The Printers House. Both companies have turned their attention on the emerging markets in Asia, Africa, and Latin America and to some extent the Middle East. While one enjoys a good market share in Russia, the other does well in China. Manugraph has, notably, begun the sales of Chinese manufactured converting equipment to the local board packaging industry. Manugraph of course has also taken on the big players by launching and installing its 4 x1 presses in two newspapers which is the first real challenge to the European and Japanese manufacturers from an emerging economy web-offset manufacturer in the 70,000 cph segment.

While both the newspaper and the book printing market will remain healthy in India and the outlook is not gloomy for its web press manufacturers, they will nevertheless also be compelled to think about consolidation. Many of them have not been able to professionalise their companies and they can expect generational issues to impact them as much as they are being impacted by the increased costs of raw materials, engineering inputs and extremely competitive markets at home and abroad.
— Naresh Khanna
editor@ippgroup.in

Wednesday 14 December, 2011

How can the packaging industry be greener?

Vijay Gupta of Siegwerk India

“Change management is always difficult, but industry has to lead, especially if there is no law that insists on change for the better.” – Vijay Gupta of Siegwerk India

Mostly, most of us do not think. We tend to repeat cliches and slogans that put us in a helpless situation in which we are always waiting for the other guy (or the government) to do something. Thus it was refreshing to talk to Vijay Gupta who admitted that industry has to lead on environment, health and safety issues. Well some of you might say Gupta or the ink company he leads has a ‘vested interest’ in talking about environment – that he wants to sell more expensive ink. Well you would be wrong.

First of all, many of you already happily buy his ink and indeed inks from the other excellent ink companies who have state of the art plants within India – DIC, Sakata, Huber-Micro, Flint, Toyo and others. All of these companies manufacture safer and more environmentally friendly inks than we generally buy in India. Unfortunately neither packaging buyers are insisting on greener and safer inks, nor is the government able to go into the entire gamut of complex technical, social and administrative issues which it needs to address to come up with a total cradle to grave packaging life-cycle program. The industry associations are also on the defensive about issues which are indefensible instead of coming up with a plan or a solution in which the end-users, the packaging converters, the suppliers of equipment and consumables and the government can apply their creativity and their extensive assets.

Secondly, come out of your denial of facts. Stop denying that we do every day does not have intense environmental, health and safety implications. Packaging uses the overwhelming majority of paper, paperboard, plastics and films consumed in India. Fact – The Indian packaging industry will use more than 7.5 million tonnes of paper and paperboard and more than 5 million tonnes

of plastics and films in the 2010-2011 financial year (source: IppStar Indian Print Industry Survey 2011 www.ippstar.org). In comparison to the rest of the world this is not a huge amount in per capita terms. This is precisely why we could be one of the greenest packaging industries and countries in the world. But take a look at the garbage strewn everywhere; at the lack of separation of various waste materials; at the almost total absence of collection and waste recycling systems.

Thirdly, act now. Use sustainable materials as much as you can. Convince your customers to lightweight and to use materials that can be separated for recycling. When environmentally friendly fountain solution concentrates and recycling systems are available in India why not use them? When process-less or low chemistry plates are available, why not use them? When low-chemistry processing and recycling systems are available why not use them? When low solvent inks are available in India why not use them? When solvent recovery systems are available why not use them? When sustainable forest sourced paper and paperboard is available why not offer to use these at least for customers who can be pursuaded? And then no matter what materials you are using right from the oil for the lubrication of your machines to your film and plate chemistry to the water for dampening solutions – these are the wastes in your factory and it is your responsibility to reuse, recycle and reduce these – to treat and ultimately dispose these not in some drain or nala but responsibly. There is a lot you can do and are already doing. Speak out and send me an email about what you are doing at editor@ippgroup.in

- Naresh Khanna

Environment and Packaging

The 'informal' recycling sector in India

The environment discussion in India is in danger of not being a discussion at all. The government’s ban on plastic for gutkha packaging in March 2011 first of all mixed up the distinct health hazards of tobacco with the environmental hazards of the extensive use of plastic packaging without any clarity on its collection, disposal or recycling.

Leave aside packaging the entire issue of waste disposal in India is a huge scandal. In the capital we have sewerage lines that actually do not reach the treatment plants. The collection of garbage and its dumping in overflowing landfills is totally haphazard. Needless to say there is no separation of plastic, glass, metal or organic waste in the municipal waste collection system although this is being done by some of the neighbourhood residential welfare committees. This is actually a shocking state of affairs and many responsible persons blithely make statements about waste recovery by the informal sector — a euphemism for children who are compelled or forced to work as scavengers.

We have become aware that the debate in packaging is not really about plastic versus paper — all waste is an issue and the ecosystem has to deal with all materials and products. For instance in board packaging, MetPet which is board laminated with polyester is gaining in strength for FMCG and other packaging due to its attractiveness and high shelf appeal. When rational and systematic environmental laws and practices come into effect (it will happen eventually) MetPet will also pose severe environmental consequences and regulation. At present MetPet seems almost indispensible as it is difficult to achieve the same attractive packaging in a cost effective manner since the other available alternatives like cold foiling, cast and cure do not seem either viable or widespread options.

Unlike PET, PVC or HDPE, which are comparatively easier to recycle, the biggest hurdle in recycling MetPet lies in the difficulty that one faces in trying to separate the metallised plastic films from the board. In a recent discussion with Saket Kanoria of TCPL, we discovered that paper mills today can use 5% MetPet in the waste recycling process for for paper production, but making paper from 100% MetPet waste is very difficult. Naturally, the biggest chunk of MetPet is either incinerated or ends up in landfills. Proper legislation is required to check the MetPet explosion and alternatives like metallic foils being transferred only on the required surface need to be promoted.

The label industry meanwhile has of late managed to take a green turn with the introduction of siliconised PPE substrate for label facestock, as opposed to the earlier siliconised glassine that has been in use globally for decades. Unlike siliconised glassine which becomes practically useless once the facestock had been removed and has to be incinerated, siliconised PPE is completely recyclable. Also the PPE substrate is much lighter and has helped in reducing the overall weight of labels thereby reducing transportation costs.

Another printing process that is being hailed as being sustainable and environment friendly and is being used for anti-counterfeiting applications as well as to achieve holographic effects is Cast and Cure. In this process UV inks and coatings are used instead of potentially more hazardous VOC based inks. Cast and Cure also seem to have removed the dependability on unrecyclable metalised substrates and foil boards that play an important role in similar processes. The films used in the process to render the designs can also be used more than ten times.

- Avinandan Mukherjee

Monday 12 December, 2011

Gearing up for drupa 2012


As I write this, a presentation from the organisers of drupa 2012 is taking place in Bangalore. The Bangalore event today will be followed by a similar event tomorrow at the Hotel Taj Mahal Palace in Mumbai, which will be covered by Indian Printer and Publisher. Both these events have already received massive registrations reflecting the importance of the event for the Indian print industry.

Indian Printer and Publisher is honoured to be a drupa media partner again. For us this has meant that we have tried to maximise and optimise the participation of both Indian visitors and exhibitors at the single largest and most important printing show in the world. Right from the first drupa in which we were media partners, we developed the concept and brand TeamIndia@drupa. We have also tried to present an Indian and Asian point of view to an industry that often seems obsessed with the gloom and doom for print in the developed economies in the West.

The idea has been that we must turn this important event into a knowledge event so that those who visit and those who cannot for various reasons should get the most out of the time, effort and expense to the industry as a whole. And also that we need to support the Indian exhibitors in their efforts to present and export their equipment to the rest of the world. Our manufacturers are strong because the Indian printers are a good market for them to develop and test their equipment. And their equipment improves to a large extent because they have to have a benchmark standard in order to export.

Thus, apart from being the technology window for Indian printers we want to be the platform that presents Indian equipment, software and consumables to the world print market. Our magazines and our websites are seen by the whole world as the collective and quality platform of the Indian printing industry. Our magazines can be outspoken and critical but together with our conferences, research and ethical consultancy activities they have contributed greatly to the print community of the subcontinent.

As drupa media partners we will fully participate in various press events where international companies share what they will bring to the event. Additionally we will create a Facebook community led by Indian printers and manufacturers for the event and an Print Asia@drupa blog for ongoing discussion before and after the event. The idea is to optimise the effort of the entire industry and the need for it to act responsibly and maturely — to foster the spirit of helping each other to realise the goals of growth and excellence. We look forward to your feedback.

We would also like to encourage the Indian printing community, especially those who are going to drupa '12, to come together and start using the TeamIndia@drupa logo on their websites, brochures, catalogues and other products. We believe this would help promote the Indian print industry as a whole on an unified platform, and project us as an active, ever-growing and fast evolving community to the world! You can click here to download a high-resolution version of the TeamIndia@drupa logo.

- Avinandan Mukherjee