Sakata INX inks for the food industry

Margin pressure for both packaging and inks

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Sakata
VK Seth, managing director of Sakata INX India. Photo PSA.

Sakata INX is a Japanese ink supplying company with manufacturing plants in Bhiwadi and Panoli in India. The Bhiwadi plant in the North was Sakata’s first plant in India in operation from 1998 and it produces liquid inks for flexible packaging there. It also has an offset ink facility primarily for sheetfed inks and also for cold-set web offset inks in the same plant. However, the cold-set offset ink production has now been shifted to the much larger Panoli plant in Western India that also supplies inks to the Central and Southern regions of the country.

We met with Sakata INX India’s managing director VK Seth at the company’s head office building in Gurgaon since 2009. According to Seth, after demonetization, the entire economy has suffered which has especially setback the FMCG sector. Sakata India has grown since at an average of about 10% or 11%, but this is a significant drop from the 15% and 17% growth of five years ago. Nevertheless, the company which is a supplier to major packaging converters has been trying to adapt and evolve to a challenging economic environment.

Profits under pressure

However, profits have been under pressure,” says Seth, “This is because of the trimmed growth of the industry. Converters ordered machines prior to demonetization and even then capacity was not fully utilized. After the demonetization, there was great stress to somehow maintaining capacities. When the customer is running at 60% to 70% capacity, there is pressure on profitability.

Even the packaging converter who runs a single machine or line wants to undercut the bigger converters. Moreover, the bigger companies came under pressure and this took a toll on their profitability. In the same way, in inks, if there is too much capacity available, profitability comes under pressure.” The selling price of inks has been under pressure. Although Sakata has grown 10% to 11%, there has been a sharp decline in profits. Flexible packaging consumes 60% of Sakata’s overall ink production, while 40% is sold to offset printers including newspapers.

Sakata’s food-grade inks in India

Speaking of food-grade inks in India, one generally refers to flexible packaging inks used in rotogravure and CI flexo presses. Sakata, on this front, is ahead of the pack according to Seth, as its ink products are compliant to international norms. He says that international ink manufacturers have to rely on Japanese standards, UAPIA standards, and Swiss regulations which cannot be taken for granted. While the awareness about food-grade inks has recently grabbed the limelight in India, the brand managers are still only looking only at the price of ink.

In villages, people use newspapers for packing sugar and salt and many other products that are sold loose. People don’t realize how poisonous this is. The ink is used in a newspaper that is sold for Rs. 3 generally has all kinds of carcinogenic compounds. Ironically, in the same country, you have people using newspapers for packaging and on the other hand, you have MNCs which are looking at food regulatory compliances. This is a huge contradiction. There is a huge segment of middle and local brands that need to be reminded about the strict norms that are being or need to be followed or else the malpractices that we see are going to continue,” explains Seth. Sakata is aligned with its Japanese parent to achieve sustainable development goals and its management is working day in and day out to incorporate the right technology and look at the various applications that its products can be suitable for.

Anti-counterfeit inks in demand

In the food industry, anti-counterfeiting measures with special inks are the norm and more brand owners are now asking for inks that can help them avoid counterfeit or spurious and dangerous products in circulation. Seth says, “There is more stress in the BIS regulation that there must not be direct contact. The package integrity is such that no part of the ink comes in direct contact with the packaged food. We have been coming up with toluene and ketone free inks for more than 5 years now. We have close to 45% of the market share for these inks in India.”

Sakata offers inks in the food industry that are consistent throughout the run with high bond strength, low solvent-retention and no odour. Most importantly, Sakata’s toluene and ketone free inks can print easily on a variety of substrates. In using these better quality inks, skill and knowledge sharing is needed – and this is what Sakata has been able to do with its customers over a period of time.

Flexo versus gravure

India, with its 1.3 billion population is the ideal market for gravure which has been the dominant technology for packaging printing for food as well as non-food applications. “Flexo is now growing. Even though more machines are coming in, but even the converters who are importing these expensive presses from Europe and other parts of the world still don’t have a clear idea about the applications in which they may come handy. Most of them are running at 30% to 40% capacity. India is primarily a gravure market and I don’t see much changing in the days to come.

Despite all the claims of flexo press manufacturers or plate manufacturers, the better print quality is still on the gravure side. It has been there for long and frankly, the brand managers have gotten used to this technology. It will be extremely difficult to shift from one technology to another especially considering that the technology has been firmly established within the country,” Seth explains.

The run lengths in India are higher compared to Europe or America. Even the argument on the flexo plate making cost compared to the cylinder cost is invalid in India. “In India, if you want a substantial market share, you have to have big run lengths. Thirdly, over the past so many years, gravure technology has also evolved in India. Over time, the inks, cylinders, and machines have also evolved. The traditional way of saying that flexo is cheaper, doesn’t hold true anymore because if you look at the per square meter cost, gravure is more often than not able to overshadow flexo,” Seth concludes.

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