Better days ahead – focus on innovation and sustainability!

- Communicate leaders from ink industry

While digital printing share is increasing gradually, particularly in commercial and packaging segments, printing industry seems to be reeling under pressure. But, with the change in government and other dynamics, the printing industry, especially the packaging industry, is set to see an upward curve. The printing ink manufacturers are already gearing up for this growth in terms of new offerings and newer targets. Here, we bring you views from spokespersons of five ink manufacturers.

What has been the growth in various segments of the industry? What are the future prospects? How is ink industry faring and what are the future prospects? These are just a few questions we asked VK Seth, MD, Sakata Inx; RY Kamat, director-sales, Micro Inks (huber group); BS Kampani, president and managing director, Toyo Ink; Prashant Atre, business head, Arets Graphics (a Toyo Ink company) and from DIC. The views portray a perfect picture for the industry and indicate that all segments of the industry will see growth in the coming years.

Industry statistics…

VK Seth, MD, Sakata Inx-India“The global recessionary trend continued to affect the Indian economy. As a result, we had sluggish industrial growth. With a GDP at close to 5 percent and weakening of Indian rupee, top line growth took a major hit. This has also affected consumer demand and as a result slowed down the growth of printing and packaging industries in India. Previous year saw a flat growth. This effect is particularly visible in growing and developing markets like India. We feel printing industry had a growth of about 8 to 10 percent and ink industry would be 4 to 5 percent,” told RY Kamat, Micro Inks.

According to VK Seth, MD, Sakata Inx, “The printing industry had a very sluggish growth in 2013-14. Packaging grew by about 5-6 percent, publication by 3-4 percent and commercial had a negative growth of about 2 percent. This was a direct reflection of GDP growing less than 5 percent.”

While, spokesperson from DIC opined that growth would be about 8 percent for the printing industry and about 6 percent for ink industry. So what had been the reasons for such poor growth? “Indecision at governance level, poor investment sentiments and election year contributed to lower growth. FDI in retail could not be implemented, leading to lower growth in packaging. Due to high interest rates, investment in capital goods and new projects were low leading to lower spent on advertising which affected publication industry. So all three major segments of printing industry had sluggish growth. The industry was adversely affected by escalating raw material prices and US$ becoming stronger. These increases could not be recovered through price increase and hence the bottom line of major ink companies was lower than last year,” explained Seth as a matter of fact.

Effect of global sentiments on Indian printing industry…

As such, the global economic scenario did not change much in the past year. US and Europe, though stabilized, did not have any significant growth. “The printing industry in India has a very small export business; hence the global economic scenario did not affect our industry much. However, strengthening of US$ meant higher cost of imported raw materials, which adversely affected the profitability. At the same time, stronger US$ helped exporters to be aggressive in their pricing and showed growth for the ink industry. Over all, we would still say it had no effect on the industry, explained Seth.

RY Kamat, Director Sales, Micro Inks IndiaSimilar views were shared by DIC spokesperson, who said, “Sudden appreciation of US$ against Indian currency has caught the industry unprepared, pushing up the cost of some major imported raw material to a large extent at the cost of the bottom line of business. The appreciation also had a negative impact on the indigenous raw materials which have high dependency on imported input. However, companies having higher export exposure got benefited from this appreciation and could negate a part of negative impact through better realisation from export.”

While, BS Kampani, shared, “The global economic scenario has definitely affected the ink industry in terms of marginal profits and the necessity to invest in modernisation. A tight rope to walk on!”

Similar views were shared by Prashant, who feels that, “Print industry has over 80 percent as domestic consumption; global economic scenario affects the sentiment & money flow; thus affecting the FMCG sales and the print budgets.”

Year 2013-14 for ink companies…

Despite all odds, the ink companies are doing well. At Micro Inks, Kamat is hopeful of achieving their targets. “We are fairly on our target and hope to exceed during upcoming seasonal growth,” he said.

“Sakata Inx has recorded a decent growth in sales despite the downturn. We registered a growth of 14.5 percent primarily riding on the growth in export sales and our offerings in offset products,” told Seth. “Considering the downturn of the economy, we had scaled down our targets and we could achieve our revised numbers.”

While Kampani told, “Toyo Ink India Pvt Ltd is a very young company in India, with an upper edge on technology globally. Our first factory in Greater Noida started manufacturing in July 2008. And after three phases of expansion in offset, we had to shift to a bigger manufacturing base in Dahej (Gujarat) operational from July 2014 as we found it difficult to cater to Indian printers thirst for growth, quality and service. It’s a state-of-the-art global manufacturing plant for offset, out of Japan and China. Similar is the growth story for flexible packaging inks, wide format digital inks for the OE suppliers and master batch manufacture in Ankleshwar (Gujarat).” He, however, says that achieving targets for them has never been a problem as they touched only the quality sector which has seen a lot of growth for all to survive. “But profits are definitely below expectation because of the raw material prices fluctuating on the upward side and our depreciation rate ever increasing owing to four fresh investments to meet the ever growing demand in the country,” he added.

While, economic sluggishness and increased competition had put a pressure on DIC’s top line as well as bottom line. “Although we did retain our leadership in publication sector, packaging sector performance was below par. We did achieve the annual milestones for some product verticals although overall we did not. This was mainly due to the under performance in the packaging sector,” told company’s spokesperson.

Prashant told that Arets Graphics, with its manufacturing unit in Belgium, has completed 10 years in India and the growth has been good so far.

Ink industry – basic parameters…

BS Kampani, president and managing director, Toyo Ink-India“With major emphasis on environment and energy cost, besides the payroll cost and the US$ appreciation, in India and China the basic manufacturing cost of the raw materials for the printing industry have been constantly increasing, leaving very minimal margins to be able to invest in R&D, machinery and manpower. Quality-wise today the industry produces to standards owing to up-gradation of the pre-press, press and post press to meet the ever increasing volumes and shorter lead times of supply chain, told Kampani.

While, Seth added, “The raw material costs have been increasing along with all other manufacturing costs. Availability of pigments is becoming difficult as no new production facilities have been planned in recent times.” Kamat echoed his views and shared, “There is a constant pressure on the raw material cost. This is not really getting offset by the price increase and hence bottom lines are shrinking. Continuous spurt on cost is due to dependence on imports for the high quality raw material.”

While DIC spokesperson added, “Raw material cost was stable during the first half of 2013 while in the second half the cost went up significantly due to a strong US$. The cost of Rosin also went up quite significantly in the second half of the year. Availability of few pigments was a real concern due to reduced output in major manufacturers due to enforcement of stringent environmental restrictions by Government.”

Looking forward…

However, looking forward, the picture looks rosy. “With a new government in place for atleast next five years and their commitment towards deliverance, growth, controlling inflation, creating jobs and promising higher GDP growth, the sentiments have changed to optimism. Opening FDI in various sectors will lead to fresh investments and more jobs, hence more demand for consumer goods and hence packaging is expected to grow,” told Seth.

Kamat is also hopeful that the economy will turn around after the new government budget and overall improvement may come for the industry.

Packaging – max growth area!

“Amongst all the segments, packaging is the most dominating segment with the highest growth. Food packaging is a dominating segment and flexible packaging is on a high growth path,” shared Kamat. Similar views were expressed by Kampani, who added, “At present the fastest growth appears to be in flexible packaging for food. Considering that it is an innovative, economical packaging concept leading to branding, its recognition and recall, replacing rapidly the heavier and not so robust packaging methods of yesteryears, expected growth is approximately 15 percent per annum. Having said that rigid containers, offset UV and non UV too are having an approximate growth of 12 percent in India.”

“Packaging segment of the market is growing at a fast pace fueled by growth in consumer durable and non-durable sector. Growth can also be attributed to higher penetration of organised retail in rural area,” added DIC’s spokesperson.

Sustainability and innovation is the key to growth. “Whichever process offers most innovative and cost effective method to print, will continue to remain in business. Packaging will definitely continue to grow, commercial may change their form of printing and may continue sustain if offered with innovative ideas, same goes for newspaper,” added Prashant.

While Seth says, “Packaging, be it offset or flexo/gravure, will have the highest growth as it is estimated that almost 30 percent of our food production is wasted due to no or improper packaging. With the government wanting to control inflation, the wastages have to be stopped so that the costs come down. Better packaging will also lead to higher shelf life of the packaged goods. This would help in ensuring the products reaching the nook and corner of the country at reasonable prices. Semi-urban and rural manufacturers of food products will also offer products in packaged form to compete with national brands leading to higher demand for packaging.”

Growth in commercial printing…

The commercial segment has shown a steady decline due to advertising revenue shift to electronic media. “Growth in publication sector has also stagnated,” told DIC’s spokesperson.

“The commercial printing will be the slowest mover. On one hand, digital is eating into its share of business and on the other hand, electronic media is also affecting its growth. However offset printing area connected to packaging industry is likely to grow at much faster rate,” told Seth.

On newspaper industry…

Prashant Atre, business head, Arets Graphics-IndiaNewspapers in India cannot be ruled out for at least few more decades. “Newspaper will surely re-invent themselves to remain more innovative and meaningful,” told Prashant. “Newspaper readership in rural and urban markets is growing including the penetration in local languages because of the literacy rate and increase in per capita earnings in the rural areas. The flip side of the story for ink makers is that the number of pages printed are decreasing and because advertisement growth continues the shift from black-andwhite to colour pages is now approximately 45 percent black and 55 percent colours. The growth in ink consumptions as such is approximately 6 percent per annum,” told Kampani.

Similar views were shared by Seth, who added, “With the improvement in literacy rate, demand for books and periodicals is increasing. Since India has moved from joint family system to nuclear family, the number of newspapers consumed by a family has increased and will continue to increase as more joint families split into nuclear families. Regional and vernacular publications will have better growth than English and national newspapers, as these papers will face competition from alternate media.”

Growth in digital printing…

Digital printing in India is growing faster than the conventional offset printing but at current levels of printer speeds, it is still not suitable for mass production. “However, change is inevitable; we will continue to see digital print growth in packaging segment compared to commercial printing. We will also continue to see its growth in education printing. Printing is all about substrate & ink; so ink industry will continue to have its growth in synchronisation with print industry,” added Prashant Atre of Arets Graphics. “The major players had a very marginal increase of less than 3 percent in volume and around 5 percent in value,” told Seth. “Digital printing has many years to catch up with the conventional. Both have their strong points of growth, positioning and commercial reasons to be viable in their areas of application,” added Kampani.

Latest offerings from ink manufacturers…

Micro Inks plans to offer new inks for food packaging which are eco-friendly. “For Rigid Packaging, we will offer inks with faster setting. For flexible packaging, inks free from toxic solvent are the new offering. Inks for high printing speed and Eco friendly with good aesthetic is what printing industry expects in the near future,” added Kamat. DIC also plans to focus on packaging inks. “The growing segment i.e. packaging segment has been our focus throughout the year and we would continue to put together our Group’s strength to bring value to this segment. Innovations in food packaging segment and brand protection would be our focus areas in near future and the industry can expect a lot of exciting products & services from us in this area,” told DIC’s spokesperson.

While, Sakata Inx plans to offer new technology in the newspaper industry by bringing in new products like low or no misting inks. They are also looking at offset inks to be used without the use of alcohol on high speed machines. Also, on offer would be UV inks for offset and flexo.

“Toyo is a company turning from a chemistry company to a science company, with value addition to the products it has to offer its consumers - be it Toyo Ink, Toyo Chem or Toyo Color. We are launching very high standard odourless offset process inks in various price categories, bio solvent based Flexible Multistar and Dynastar Inks range so that the dependence on Alliphatic petroleum based solvents can be decreased. In digital, we are further enhancing our Eco product range for the OE buyers. In Master batches too we are further enhancing the product range for the packaging and the moulded industry. In Toyo Arets we are further increasing the availability and capacity to cater to the ever growing UV inks and varnishes, beam curing and LED inks and coatings. For the Heubach Toyo Color, the state-of-the-art Azo pigments would be made available to the industry from the Heubach new plant in Ankleshwar,” shared Kampani proudly.

Future projections…

On asking about growth projection in the next five years, Kampani shared, “Growth at present is a by-product to the parent company for India, as we are so busy investing in newer product technologies and also the markets are absorbing the same with a vengeance. So at least in the next 5-10 years, we would have brought in various technological products and partners for the printers and suppliers, who are our partners to see, feel and dream what a different company Toyo Ink SC Holding companies in India and globally are. This all would not have been possible without the vision and mission of our group chairman Sakuma san and group president and CEO, Kitagawa san and their respective team members and the Toyo Ink family.”

While, Arets also focuses on innovative products and ideas in UV inks & varnishes. “Even after 5 years from now; we would like see ourselves a very happy company who remains meaningful and most dependable radiation curing company for our customers,” added Prashant.

At Micro Inks, Kamat anticipates 3 to 5 percent volume growth, year on year. While, Seth at Sakata Inx says that though they have not yet decided (at the time of interview) on growth projections, their focus will remain in offset products and growth for exports in their licensed territories. While DIC spokesperson concluded, “Considering the stable Government at Centre, we are optimistic that the India growth story will come back to track through reforms, infrastructure development which should bring back confidence among investors and industry should to get benefited immensely. We expect to grow at a higher pace than the industry growth and increase our market share year over year.”

- Varsha Verma

Group Publications