Winds of change!

When I sat down to write this column I was in a nostalgic mood. The Indian narrow web label industry has completed 40 years of existence. It was toward the end of 1971 that Jeetubhai now of Finearts, Mumbai and his partner P P Bhagat took the pioneering step of installing a flat bed narrow web label press in their concern, International Trading Company at Kalyandas Industrial Estate in Worli, Mumbai. Four decades have passed and I feel it is time to take stock of an era gone by and the path traversed. The industry has tr
ansformed over the years. Those days, that was speed! From manually made screen printed stickers to machine made labels in roll form on a flat bed label press, was a path breaking change. Then, from the times of those slow flat bed label presses to state of art technologically advanced combination presses with decorative capabilities in wider widths and running at speeds in excess of 200 meters per minute shows the ever-changing nature of this industry. I had in my article, “History of the Indian Label Industry”, chronicled the events that lead to its growth to present levels since inception. Every decade has witnessed conspicuous changes.

The Label industry has evolved from being the one that originated out of screen printing in the middle 1960’s, transformed to print in roll form in the 1970’s and till the decade of 80’s the industry was producing self adhesive labels largely on flat bed label presses. It was during the nineties one saw a major shift when the label industry started using high speed flexo rotary machines. As we entered the new millennium, high end modular presses with decorative capabilities were replacing the outdated and slow flatbeds. With a growing new literate generation, the market for labels in India saw rising volumes. As organized retail became order of the day, demand for high-end labels and sophisticated packaging also grew. The last few years have seen faster changes and adoption of global technologies. Printers have opted for enhancing capacities and attaining technologies matching their global counterparts. Presses using diverse printing processes like Gravure, screen, flexo, cold foil, hot foil and embossing all in a single pass are being acquired by some of the leading printers. From printing simple labels to booklet labels, Braille labels, scratch cards, security labels, etc. Indian printers are now adapting themselves to deliver all. At this time I am reminded of Guru Nanak’s saying, “Eh Marag Sansar Ko, Nanak Thir Nahi Koye” means in this journey through the world, nothing is stationary, everything changes. The winds of change keep the label industry on the move!
 
Last month we heard of two international companies investing in Indian label ventures. The news has caused quite a stir in the label fraternity. It is time for them to evaluate the way forward. These are happenings that this industry which was concentrated with local players, will take time to adjust with. Suddenly they find these foreigners with deep pockets in their midst. It appears to be a matter of time when other players will move in. Privately, industry constituents talk of rumours of more investments happening but it will be a while before we hear some concrete news. India is a big country with large population and growing economy. Still we do not have large label companies with 20 plus presses. Due to this reason there appears to be space at the top end of the market which tempts the investors to indulge. In a scenario where large international label companies with their global tie-ups with FMCG buyers come to India, it is natural that they will take away business from these buyers, depriving the midsize label printers of opportunities. Most of the printers feel FDI is good and may give rise to more opportunities and create bigger demand yet there are others who feel insecure and uncomfortable by these developments. I discussed with many printers that people who are operating with one or two presses may face the brunt of this and suffer. Mahendra Shah at Renault feels it is not a level playing field and that printers here will be impacted adversely, these foreign companies have access to cheaper credit, existing tie-ups with buyers and due to their large buying capacities, raw material prices are lower for them. Moreover with economies of scale they become more competitive in prices. Himanshu Kapur at J K Fine Prints, Mumbai airs similar views while Jigesh Dani at Mahrishi Labels Ahmedabad says, “This is not going to happen overnight but in long run with foreign players coming to Indian market and investing huge sums, small players will have to either merge or close down or come up to the level to compete in terms of technology, price etc.” Amar Chhajed at Webtech Mumbai too agrees, this may have adverse effect on our midsize printers but feels these foreigners will go where the market is, if it is India, they will come here. The industry he adds is growing at a steady pace of 15% but growth should have been more and in that case by now, these worries should have receded. Anuj Bhargava at Kumar Printers, Delhi says segmentation of the markets will take place. India has a huge unorganized market which these foreign companies will not service and will become the mainstay of the midsize printers. Sudhir Jain of Jain Transfer feels if smaller players exist in advanced economies like USA and Europe, India should not be different. Chandan Khanna of multi location Ajanta Packaging says, “As long as the 100% Indian companies have done a good job on service, quality and expectations, volumes will actually grow”. With comments from these friends I too feel that that the markets will evolve, segmentation will become identifiable and people will eventually settle down to accepting ground realities. The bottom of the triangle will get bigger and competition will be intense there. The middle segment will perhaps become more innovative and very specialized to retain profitability. The top end printers will keep catering to the niche and large volume FMCG buyers.

Stagnation in business is not good and leads to struggle for survival. It is imperative for a healthy business to move on. Innovate, expand, invest, diversify, etc are passwords to a growth and health of any business enterprise. Offset printers who are involved in package printing have been the biggest investors in the self adhesive label industry. There are two main reasons for their moves in this direction. One that labels are a part of a package and second, the industry has been having a steady double digit growth for years together. The reverse investment by label printers in sheet fed offset presses was not visible on a substantial scale till now. In recent times, many narrow web label printers have either already drifted, or are planning their shift or are expanding their existing activities in the sheet fed offset segment for package printing. This is so as to get a share of the large packaging industry, growing at a rapid pace in India. Sudhir Jain lead his company to evolve, on lines with the industry changes, over the years. He had started off being a screen printer who graduated to narrow web printing with Flatbed label press and then on to Flexo rotary label printing. Few years ago he foresaw the growth in packaging and realized that offset printers were likely to get into labels to take away his customers. He came to the conclusion that users prefer a one stop shop for their packaging supplies. So he invested in a sheet fed offset. The gradual but slow expansion of narrow web label printers into offset or more aptly I would say packaging is becoming evident and visible. Why I say packaging rather than sheet fed offset is explained by Amar Chhajed who also has expanded into sheet fed offset. The narrow web label printer is used to doing all conversion online on a press in a single pass. For him it is difficult to imagine shifting materials from machine to machine to complete one job. This was always a deterrent but need of the hour is prompting the label printers to move in this direction. Fortunately with advances in technology now the possibility of making folding cartons on an online press has become a reality. No wonder there is an overwhelming interest and response of printers both narrow web and offset in package printing to attend the Weldon hosted Omet Open House at Pragati Pack, Hyderabad in April 2012 where an inline folding carton press with combination printing and converting capabilities is being displayed. Mahrishi labels, Seljegat and Sandeep Sondhi lead Zircon technologies are other printers who have moved in this direction. I would like to make a point that Zircon is one company that has been on the fast track and moves on unruffled by the foreign investments. His continuous investments and expansion moves into the narrow web label and offset segments are creating ripples. We need Indians to indulge and create infrastructures that are able to stand up to international competition.

Drupa, the Mecca for offset printers is just a few weeks away. Package printing companies from India will of course be there as also will be, the commercial offset printers to witness the developments and changes in their industry. Narrow web label printers will also now be visible to consider the adoption of technologies that are in synergies with their business. There is an imperative need for the label industry to innovate and diversify into related fields. Most of the printers that I spoke to in the last couple of days believe that innovation are the way forward. Although the response is unanimous on the need for innovation, R&D and product development yet everyone agrees enough is not being done. While asserting that innovations has been the way forward for them, Chandan Khanna feels industry should grow, label converting and packaging will also grow. Innovations are complimentary to growth. Rakesh Kukliya from UPSL Chennai, a Gautham Pai lead Manipal Press group Company, says, “This is an area that requires immediate attention and involvement. It is the bedrock of any organization. Apple is an excellent example. IPods & IPads are not inventions, but are innovations. It is time we looked at, not what we can do with what we have and find clients, but to look at what the client wants and ensure we are geared to meet this expectation.” Time has come when the label industry needs to rise to the need of the hour and indulge in introspection. Printers need to research and decide the way forward and move ahead. Creation of infrastructure adding newer capacities, investing in newer technologies, creating wealth is the way forward in this growing industry. It is necessary to bring the much needed change in the Indian label industry. The industry has come of age and ready to experience the “Winds of change!”.