Jindal Poly Films acquires 100% of SMI Coated Products

Indian label industry update – investment, resilience & consolidation

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Jindal PolyFilms turnover
Jindal Poly Films turnover in the past five financial years to 2020-21 in Rs Crore Graphic Moneycontrol.com

While the pandemic has not gone away, the world is opening up and overseas visitors keen to interact with Indian publishers, printers, and label and packaging converters are arriving. India is the first place they visit when released from their confinement – it could be our low Covid-19 numbers or the high growth projections and investment pipeline, especially in the flexible packaging industry. 

The interest is not merely confined to equipment salespersons. Investors are also coming. Japan’s Toppan bought out the Max Films plant in Punjab a couple of months ago, and Canada-based Brookfield has invested Rs 2,000 crore (approximately US$ 266 million) for a 25% stake in India’s largest film producer Jindal Poly Films. Private equity interest means that structured investment is looking for stakes in the Indian flexible packaging, carton, and label industry.

Numerous label converters have been sized up by several potential acquirers and investors but they haven’t bitten for a variety of reasons. Nevertheless, structured investment capital will likely keep looking at our industry – and this will likely lead to both money coming and consolidation to create more professionally managed and viable companies. 

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The entry cost is relatively low for label production, tempting new entrants to jump into the industry every week – especially with the local manufacture of narrow web flexo and digital label presses. However, while raw material prices have risen, the brand owners are not easy to convince to pay more. The label converters who have been able to get price increases are the mid-segment technically sound converters with several presses and robust infrastructure. In many cases, they are specialists in some product segments. Their track records and reliability have built bridges in the pandemic years to brand owners no longer keen to visit plants to monitor or interfere with production.

Thus the supply chains from raw materials to design, approval, and finished product have improved during the pandemic. An overseas visitor that we met recently had an insight into the resilience of Indian label converters. “It’s great to see – all the label printers seem to be busy. They are active and many of them seem to have a second business that has made them more resilient in these two years of the pandemic.”

SMI acquired by Jindal Poly Films

On the morning of 29 April 2022, as we finalize the pages for the May issue of Packaging South Asia comes the news that the aforementioned Jindal Poly Films has acquired Mumbai-headquartered SMI Coated Products which is the largest homegrown Indian labelstock manufacturer. The company, a sterling advocate and supporter of the rapidly growing Indian label industry has in the past decade become an organized exporter of pressure sensitive labelstock with an office and distribution center in Dubai for the Middle East and African markets. From reports received thus far, SMI’s turnover for the financial year 2020-21 was Rs 273 crore (approximately US$ 37 million) and the acquisition cost to Jindal Polyfilms is Rs 195 crore (approximately US$ 26 million). Jindal Poly Films’ turnover for the 2020-21 financial year was Rs. 4082 crore (approximately US$ 544 million). This is considerably lower than its highest turnover on record in the 2016-17 financial year in which it achieved Rs. 7,014 crore (approximately US$ 935 at current exchange rates).

While it has not taken long for Jindal Poly Films to put the capital it recently raised from Brookfield to work, our view is that the deal is very positive for helping SMI grow in an industry where strong local suppliers for labelstocks are needed. It is a logical horizontal diversification for Jindal as well, since it is a global supplier of filmic face-stocks as are other Indian film manufacturers such as Garware, Cosmos, and Uflex. The Mehta family is pleased by the Jindal acquisition and to have helped the Indian label industry grow and for the benefits it has been able to bring to the country’s brand owners and the economy. Ajay Mehta, SMI’s managing director says, “We have always wanted the industry and country to prosper – that has been our only aim.”

Note – This is the editorial article from the May 2022 issue of Packaging South Asia to be printed and distributed on 6 May 2022.

The impact, resilience, and growth of responsible packaging in a wide region are daily chronicled by Packaging South Asia.

A multi-channel B2B publication and digital platform such as Packaging South Asia is always aware of the prospect of new beginnings and renewal. Its 16-year-old print monthly, based in New Delhi, India has demonstrated its commitment to progress and growth. The Indian and Asian packaging industries have shown resilience in the face of ongoing challenges over the past three years.

As we present our publishing plan for 2023, India’s real GDP growth for the financial year ending 31 March 2023 will reach 6.3%. Packaging industry growth has exceeded GDP growth even when allowing for inflation in the past three years.

The capacity for flexible film manufacturing in India increased by 33% over the past three years. With orders in place, we expect another 33% capacity addition from 2023 to 2025. Capacities in monocartons, corrugation, aseptic liquid packaging, and labels have grown similarly. The numbers are positive for most of the economies in the region – our platform increasingly reaches and influences these.

Even given the disruptions of supply chains, raw material prices, and the challenge of responsible and sustainable packaging, packaging in all its creative forms and purposes has significant headroom to grow in India and Asia. Our context and coverage engulf the entire packaging supply chain – from concept to shelf and further – to waste collection and recycling. We target brand owners, product managers, raw material suppliers, packaging designers and converters, and recyclers.

In an admittedly fragmented and textured terrain, this is the right time to plan your participation and marketing support communication – in our impactful and highly targeted business platform. Tell us what you need. Speak and write to our editorial and advertising teams! For advertisement ads1@ippgroup.in , for editorial info@ippgroup.in and for subscriptions subscription@ippgroup.in

– Naresh Khanna

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Editor of Indian Printer and Publisher since 1979 and Packaging South Asia since 2007. Trained as an offset printer and IBM 360 computer programmer. Active in the movement to implement Indian scripts for computer-aided typesetting. Worked as a consultant and trainer to the Indian print and newspaper industry. Visiting faculty of IDC at IIT Powai in the 1990s. Also founder of IPP Services, Training and Research and has worked as its principal industry researcher since 1999. Author of book: Miracle of Indian Democracy.

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