INDIA – Harveer Sahni, Managing Director of Weldon Celloplast Limited in New Delhi, India, takes a look back at the Indian self adhesive label industry in 2013, and the possibilities that this new year could bring.
With low or almost flat growth in Indian manufacturing sector and economy estimated to grow just 4.25% according to IMF forecast, as against the government projection of 5.5%, it is indeed a trying time for the industry.
The year 2013 threw in some thought provoking challenges to the self-adhesive label industry in India:
- Shrink sleeves were continuously taking a significant share of the label market;
- Offset printers were diversifying into labels and packaging due to the slowdown in commercial printing, thereby creating more competition;
- The expected market expansion due to FDI, foreign direct investment, in multi-brand retail did not happen;
- Environmental concerns have been highlighting the adverse impact of liner waste and pressure-sensitive adhesive waste matrix going to landfills, with alternatives becoming evident and initial investments made to move towards linerless materials and labels;
- Growth rates, though still positive, have slowed; and
- Raw material prices have risen while selling prices have not seen any improvement.
There is still need to cater to an increasing market size so capacity enhancement is an imperative that we cannot deny. This appeared to be the silver lining but the exchange rates making purchases go up by over 15% in value became the spoilsport, causing many printers to put their purchase plans on hold.
As we move into 2014, things appear to be crystallizing: printers have started to invest in label presses with multiple capabilities as they understand the need to expand the range of their offerings as well as the necessity to have a wider customer base; and have started to consider high-end equipment to reduce waste, achieve faster production to achieve economies of scale, offer innovation in their products and reduce dependence on operators to meet the competition head-on.
In the third week of December 2013, we had news that FDI in multi-brand retail is finally here with Tesco tying up with Tata to be an active player in the ever increasing consumer product retail industry.
While they were shrugged off in the past, environmental friendly alternatives are now being seriously looked at, and the trend will continue in 2014, while the general feeling around India is that economic growth will return after the general elections.
In 2014, I do not see any reduction in raw material prices nor do I expect any escalation of selling prices in a competitive growing market. Printers will have to tighten their belts, achieve better productivity, reduce wastages and, to top it all, they will have to innovate.
The industry has to expand in capacity to cater to the needs of growth in demand in a country with a huge population. So we can safely expect more quality investments in the year ahead.
Article contributed by Harveer Sahni, Managing Director of Weldon Celloplast Limited in New Delhi, India.