Packaging industry [Oct 2011]

“Indian  packaging industry is lagging behind developed countries by more than 10 years. However, with changing lifestyle and increasing consumer consciousness, the trend is to follow new, hygienic and world class decorated containers to build brand image for the products”, said Laxman Rao, MD, Moldtek Packaging in an interview with OEM UpdateDiscuss about latest advancements in packaging technology and your capabilities.In mold labelling is the latest development in packaging industry all over the world. Though developed countries use IML decoration for last 5-10 yrs it has been brought in recently to India by Moldtek. IML technology involves ROBOTS placing pre printed labels inside the mold with plastic material flowing underneath the label, fusing it to the top surface. Thereby IML label becomes integral part of the containers, hence irremovable. As decoration happens while molding itself, the containers do not require any post operations, thereby avoiding contamination or human touch.
We at Moldtek have not only established the robotic facilities but also established in house IML labels manufacturing and even in house ROBOT manufacturing to quickly expand capacity and control costs.
Keeping pace with rapid progress in packaging technology how did the packaging industry in India transformed?Indian packaging industry is lagging behind developed countries by more than 10 years. However, with changing lifestyle and increasing consumer consciousness, the trend is to follow new, hygienic and world class decorated containers to build brand image for the products. IML decorated thin wall containers are going to rule the rigid packaging in coming years.
In which are the sectors you find maximum business opportunities for packaging business?The purchasing power and the disposable income in the Indian economy has grown rapidly in the last few years. Changing lifestyle patterns has shifted consumer preference towards branded, well packaged and presented products including packaged /ready to eat food products. In this sense, packaging plays a crucial role in the marketability of a product. Having said this, we see a huge opportunity for the packaging business, especially rigid packaging, in food, paint and FMCG space.
Currently, the major clientele at Moldtek consists of players in the paint and lubricant industry but we have initiated entry into the Food and FMCG space by supplying packaging to players in the food industry. We are discussing with manufacturers of Ice creams, Food products, cosmetics, Chocolates, T Shirts and many other FMCG to move to In-Mold label (IML) decorated containers. In Europe alone the consumption of IML containers crossed 10 billion pieces a year and even a part of this is adopted in India mean huge business opportunity where we are positioned as the front runner in India.
India’s FMCG sector is poised to reach US$ 43 bn by 2013 and US$ 74 bn by 2018. Within this the packaging demand will be about US$ 2.5 bn. These numbers are enough to give an idea about the business opportunity in the FMCG segment.
Having acquired the in-house ability to manufacture moulds, labels and robots, an advantage no other packaging company can offer, we plan to go full haul into this segment in next few years.
Can you discuss your export market strategy? Which are the countries you are looking into?World over IML is the only decoration accepted for food and FMCG rigid containers. This system requires high capital investment due to import of robots and high product costs due to import of IML labels. Moldtek has not only created in-house label manufacturing but its Tool room team has developed robots in house to cut costs and make IML affordable for food and FMCG  industry in India. This opens opportunities to export or set up units outside India.
Ability to develop labels and molds in-house to has enabled us to tap markets in Europe, Japan, USA and other developing countries due to cost advantage
How did your company performed during the last year? And what is your target for current fiscal? This year, for the first quarter ended June 30, our net sales surged 34 per cent to Rs. 55.88 crore compared to Rs. 41.78 crore in the corresponding quarter last year. Net profit during the quarter grew by 34 per cent to Rs. 3.51 crore as compared to Rs. 2.60 crore in the corresponding quarter last year and EBITDA improved by 28 per cent to Rs. 7.18 crore as compared to Rs. 5.17 crore in the corresponding quarter last year.  The annual projections are to reach a turnover of 220 crore with a PAT of around 14 crore in FY12 as against 165 crore and Rs. 8 crore respectively in FY11.
We are one of the few players in the organised segment and a leading company in rigid plastic packaging, specialising in both standard and made to order packaging solutions for leading brands of paints, lubricants, pharmaceuticals, cosmetics, FMCG etc.
Do you have enough manufacturing facilities to support achieving your target? Our present capacity is at 15,000 TPA. We plan to expand this by another 40 per cent with our planned expansion in Daman. Apart from this, seeing the increasing demand for quality packaging, we are planning to add additional capacity by setting up two more units, though these plans are still at preliminary stages of discussion.Apart from opening a new facility in Daman, what are the other expansion plans you have?We have acquired around 3.5 acres land in Daman and are setting up a plant in the area at an investment of Rs. 15 crore.  The construction of the facility is progressing rapidly and is expected to go into production by December 2011. Post completion, production from the Daman facility will enhance our capacity by more than 40 per cent.
Our present capacity is around 15,000 TPA and is expected cross 20,000 tons by end of December 2011 after the Daman plant expansion. We have plans to expand further by another 50 per cent next year by setting up plants in 2 more new locations. On anvil is also a plant outside India the details  of which are being worked out. Given the present demand situation, we foresee a need to expand our capacity by another 40-50 per cent p.a. over the next few years.

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