Indore-based Inoflex is on an investment drive. The company recently ordered a new 9-color Pelican Cerrutti shafted rotogravure printing press. The installation of the press was delayed because of the Covid-19 lockdown. For converting, Inoflex purchased a solvent-less laminator from Pelican Rotoflex and an SP Ultraflex 700 meters a minute rewinder-slitter.
“We were exploring both CI flexo and rotogravure options and looking at market feedback. Based on the feedback and our evaluation, we concluded that a CI press is still a couple of years away from becoming a viable option in Indian conditions,” says Saurabh Doshi, owner-director of Inoflex. “Currently, FMCG brands in the Indian market prefer rotogravure printing. Hence, we decided to go ahead, although we will not hesitate a re-look at market conditions and consider an investment in flexo technology in the future.
“Our monthly production has fallen by more than 50% since the lockdown. There was a brief rise in demand from FMCG majors during the initial days when people were stocking up groceries. However, the situation normalized within weeks. We supply to pharma, FMCG, confectionary, and non-food segments. While the demand for packaging in pharma and FMCG segments is holding, in the other two sectors, it has dropped considerably. We used to supply 1,000 tons of packaging every month before the Covid situation, which fell to around 250 tons a month in April. This drop in demand is because of the country-wide lockdown.
“Nevertheless, we have no complaints. We laud the government for taking the right step at the right time. I’m sure the lockdown must have saved many lives in our country.”
Labor exodus a challenge to re-scaling production
Soon after the lockdown, many packaging companies faced a decline in demand or a loss in business. While the government took steps to open up or allow specific industry segments to operate, there were still gaps in the supply chain. Converters were on tenterhooks right from raw material sourcing to the logistics of supplying their customer’s plants.
Doshi says that while most of March and April saw less demand, the market showed sharp signs of recovery in May. By then, much migrant labor had left, posing severe challenges for Inoflex to scale-up production. “Getting permission to operate during the lockdown was not a problem at all. However, nearly 40% of our employees returned to their hometowns or villages during the lockdown, although we were ready to pay and retain them despite having less or no work.
“The fear of falling prey to this mystery-virus made workers flee in a matter of days. Most of them left because they were afraid and had no clue about the disease. Nevertheless, we continue to pay them based on their past performance. Labor migration didn’t affect us in March and April since there was hardly any work. However, as we are witnessing a sharp increase in demand in May, the lack of skilled labor is becoming a problem for us. I believe many of them will come back to join us in July,” Doshi explains.
Change in consumers’ consumption pattern
The Covid-19 situation led to many job losses and pay cuts across the country. While the common-man was in a state of distress, packaging converters experienced an interesting change in consumer behavior. “Earlier, the large quantity packs were consumed more. However, be it because of the job-losses or less spending due to pay-cuts, we have witnessed a growth in the consumption of smaller packs. This pattern may continue till the end of this year or until the situation normalizes,” adds Doshi.
Smaller brands reluctant to pay for toluene-free packaging
Inoflex uses inks from the Flint Group and Sakata INX for its food packaging materials. “Toluene is not safe for food packaging. India is a vast country that has still not placed any ban on toluene-based inks. On the other hand, a smaller country like Sri Lanka has successfully banned toluene inks. No FMCG brand in Sri Lanka, big or small, is allowed to use toluene-based inks.
“The change has to come from the consumers’ end. Once the consumer asks for it, regulatory authorities will take the matter more seriously, and brands will focus on eliminating toluene from their packaging. While many major brands have made significant developments to discourage toluene, smaller brands are still hesitant because of the price gap. There is a big 5% difference in cost in toluene-based and toluene-free packaging. The bigger brands are willing to pay the difference, but the smaller ones aren’t. Although we educate them about the importance of toluene-free packaging, the higher cost is a major roadblock right now,” Doshi concludes.