A council of the printing and packaging industry organized by the Bombay Master Printer Association (BMPA) took place on 24 June 2023 in Jaipur. This was the second such event (the first took place in Goa last year). The format was that after a couple of presentations on the prospects of the Indian economy going forward by Rajiv Batra and one on IppStar’s research of the publishing, printing, and packaging industries, by Naresh Khanna, 30 leading industry owners and professionals invited to the event shared their growth mantras in a pit consisting of two rows facing each other.
Rajiv Batra’s realistic evaluation and forecast of the Indian economy anticipated some ups and downs but on the whole a strong upward trajectory with several engines firing. “If you ask me,” he said, “India is the first choice for global capital investment. And if you would ask me what is the second choice, that would also be India.” The audience was particularly motivated by a slide showing the total global investments seeking a shift from China, in which Vietnam was in first place at 28% and India was placed second at 18% as an alternative investor and manufacturing destination.
The IppStar presentation surprised the audience with its revelation that the Indian publishing, printing, and packaging industries, although fragmented, represent a significant share of the economy. It showed that even though just 15 leading pharma companies represent two-and-a-half times the revenues of the 67 leading publishing, print, and packaging companies, this is merely a reflection of the latter’s fragmentation.
The combined revenues of the print and packaging industries remain almost twice that of the much better-organized and scaled Indian pharmaceutical industry. This prompted Ankit Tanna to say at one point, “If we can have a Nifty pharma index, why can’t we have a Nifty index for our industry?”. He also seemingly endorsed the point made by the IppStar research presentation that forecast shortages of raw materials such as publication and liner paper to meet growing demand. “Size does matter, and why can’t we grow from being an industry to a sector, and have PLIs (production-linked incentives) for our sector to enable it to meet upcoming growth in demand,” he added.
This, of course, was the whole point of the VisCon conference, and indeed the Mumbai event on 25 March 2023 also, which had an important session on mergers, acquisitions, and joint ventures. Why do many of our companies seemingly hit a wall, when they reach levels between Rs 80 and Rs 500 crore (US$ 10 million to US$ 65 million)? Although there are seemingly several global and domestic companies and investors interested in acquiring a stake in Indian publishing, printing, and especially packaging companies.
Recent acquisitions have included those by Warburg-Pincus in Parksons Packaging, which led to several more acquisitions in the carton industry; JK Paper’s acquisition of the Horizon corrugated carton group; TCPL’s acquisition of an Indian packaging company and a joint venture with a European company for specialist paper cup manufacturing; and, also, Premji Invest taking a major share in SB Packaging, which in turn has led to SB Packaging taking over the majority share of the Indian assets of Constantia Flexibles. As R Senguttuvan, the operating partner of Premji Invest said at the Elite Conference in Mumbai last year, there is no shortage of investment capital for the packaging industry in our country.
As far as the diverse industry leaders facing each other at Jaipur, the capable moderator Mehul Desai, who had done his homework regarding each participant, queried them in the context of the necessity of scale. He prefaced this almost three-hour marathon interaction by saying that the BMPA had already discussed and decided that there is no alternative to scale – the industry and, hence, each of its leading components, needs to become larger.
An implication is that the fragmentation of the industry needs to be overcome both because of the upcoming domestic and export demand in which these verticals play a significant role and because achieving efficiencies, technology absorption, optimization, sustainability, and compliances require more companies that are larger. The participants represented both geographic and industry segment diversity as well as youth and experience. Desai cajoled the two rows to share their stories and perspectives on the necessity, prospects, and avenues of growth.
The perspectives were several and although, at times, seemingly contradictory, merely reflected the deep commitment of the participants to meaningful, structured, and sustainable expansion. “Customer centricity and holistic sustainability,” said AVPS Chakravarty, while forecasting that the industry leaders would likely grow by 10 to 15 times in coming years. Others strongly endorsed the need for automation and new technology, speaking about their current investments in energy efficiencies and the reduction of carbon footprint.
Several participants expressed the idea that merely size doesn’t matter. “It won’t necessarily be the big eating the small, but perhaps the faster to adapt will eat the slower.” C Jassawala suggested that instead of focusing on growth and size, a focus on the customer will lead to growth as an outcome. “Be concerned about cash flow and net profit, growth will crawl to you on its knees.” Some made bold their aspirations to connect a fragmented industry to improve the efficiency of the entire supply chain.
Bimal Mehta said that while India has the scale and can deliver, “It will be difficult to scale unless we up our game on transparency and governance. We have to think long term.” He added that he is confronted by two existential options – to grow organically or get acquired. Narendra Paruchuri asserted that mergers are important.
Overall, the Jaipur iteration of the think tank demonstrates the maturity of an industry that can converse, one that can share not merely anecdotes of success but implementable ideas for the future. It has the semblance of a think tank that can emulate other successful sectors of the Indian economy and take the entrepreneurial talent of print and packaging to the next level.
Purva Rai Dwivedi research@ippgroup.in
