Rajesh Khosla is the president and CEO of AGI glaspac, a part of the Packaging Products Division (PPD) at HSIL. Khosla speaks about the packaging and glass container industry and its post-pandemic prospects to Packaging South Asia’s editor, Naresh Khanna
Packaging South Asia – Will the second lockdown impact the demand for glass manufacturing in India?
Rajesh Khosla – The demand for glass packaging is growing exponentially. While Covid-19 has dented demand for many businesses, the glass industry, on the contrary, is working overtime to meet demand. In addition, there is an increase in demand from pharmaceutical verticals for vials, bottles, and ampoules.
Let’s speak specifically about the glass sector. The problems that the industry may face with the second lockdown include the supply of raw materials and inputs for manufacture, the transportation of finished goods, and in some cases, the inability of employees to come to the place of work.
PSA – With uncertainty looming, how do you see the future of the packaging industry?
Rajesh Khosla – Even with the uncertainty ahead, I believe the packaging industry has been doing better during the pandemic than the other sectors in the economy. This is because consumers are now more focused on adopting healthier lifestyles. We also see an increase in the demand from eCommerce, pharmaceuticals, and the liquor industry for glass packaging.
PSA – How is the global packaging market performing in these challenging times?
Rajesh Khosla – The global packaging market is expected to reach $1,652.28 billion by 2027, growing at a CAGR of 7.5%. The global packaging industry is expected to grow in the coming years. Due to Covid-19, the demand for pharmaceutical packaging has increased. Similarly, with the increasing eCommerce sales and increase in the food packaging and liquor industry market, the packaging industry will see new growth avenues despite the pandemic. This industry is facing a transformation, with new demographic conditions and new customer demands.
PSA – What are the learnings from the first wave, and how are you applying those to the current situation?
Rajesh Khosla – The pandemic has shown us how modular and agile automation is needed. Many automated methods have historically been very stagnant – deployment was expensive (in time and money), and it is difficult for them to adjust to new settings and workflows after being deployed. During Covid-19, this rigidity was a problem since installations needed to change operations and workflows to meet lower headcount and updated limits on social distance. The most successful deployments were those that could occur remotely and be customized to serve a facility’s needs from day one.
At AGI glaspac, we believe that technology and development will continue to build a better future for everyone. For example, the pandemic of 2020 caused enormous disruption in almost every part of our lives, particularly in our supply chains. However, our technological improvements have helped decrease the shortages created by our own and our customers’ broken traditional supply chains. One of the great lessons learned is that supply chains using this technology will become more agile and robust. While still enabling responsible, more efficient production, which is less harmful to our world, technology provides unparalleled digital opportunities for the current and future manufacturing challenges.
PSA – How do you see AGI’s performance in the past year, and what are your expansion plans?
Rajesh Khosla – While other companies are trying to consolidate themselves, AGI is in the expansion mode. We invested in expanding the facility in Telangana to cater to the increasing demand for container glass. We also plan to invest in the eastern parts of India in the future.
AGI glaspac did significant expansions last year by setting up a greenfield facility to make specialty glass at Bhongir in Telangana with an investment of Rs.220 crore raised from its parent company HSIL Limited. The unit will be commissioned by early 2022, and it will generate 4,000 jobs.
This year we invested Rs 55 crore of the Rs 220 crore to build a new furnace of 154 tons per day with technology from HORN Glass Industries of Germany at the AGI Speciality Glass division. With a manufacturing capacity of 154 tons per day and five manufacturing lines spread across 15 acres, the plant will cater to high-end pharmaceuticals, including vials, and other segments such as perfumery and cosmetics. In addition, it will focus on exports to the US, Australia, and a few markets in Europe.
PSA – What are the challenges faced by the glass container industry?
Rajesh Khosla – The glass container manufacturing companies faced much trouble when it came to logistics during the lockdown as it curbed the movement of goods in and out of the districts. However, the government eased our efforts by including the glass manufacturing sector under essential services.
Limited access to raw materials was another challenge faced by the glass industries, but most companies stored enough raw materials beforehand to run their business. On the other hand, since customers cannot forecast the demand due to the uncertainty in the economy, we are also not able to plan our things normally.
PSA – What is the size and growth of the Indian glass packaging market?
Rajesh Khosla – The glass industry in India is quite old and well established, although it remained largely a cottage industry for a very long time. In recent years, the industry has transformed from using rudimentary mouth-blown and hand-working processes to adopting modern processes and automation in a big way. However, the Indian per capita consumption for glass packaging (1.8 kilograms) is much lower than other nations. The following graph shows it.
The demand for glass packaging is expected to grow exponentially by next year. AGI glaspac has already installed additional capacity to meet the rising demand. The narrow neck press and blow (NNPB) process can produce the best glass bottles. The current trend is towards tempering, using appealing colors and other value addition that will overcome the shortages and create a good supply chain for the consumer. The industry is experiencing a surge in demand, owing largely to the growing purchasing power, urbanization, modern retail, and increasing awareness about health and hygiene among consumers.
Glass containers have been a direct substitute for plastic containers. With plastic phasing out in the coming years, the demand for glass bottles is expected to increase substantially. Also, it is observed that even end consumers now prefer glass over plastic. Therefore, when it comes to prices – only if the raw material cost increases, the price of the glass bottles will also be expected to rise. However, it is also crucial to note that all these estimates were made before the Covid-19 pandemic. Hence, it is a possibility that the current pandemic situation may bring unforeseen changes to these forecasts.
PSA – Thank you.