Modi: "There is an urgent need for the industry to remove waste and inefficiencies from the shopfloor"
Ramu Ramanathan (RR): Sir,
has the biz environment improved?... How does one explain the investment and
new projects in the corrugation box industry in the past two years...
Kirit Modi (KM): Business
environment has definitely improved to some extent as we all have left behind
the temporary disruption caused by demonetisation and GST last year. Investment
in new projects which has been done over the last two years in the box industry
is mainly on the hope that Indian economy will improve substantially post GST
implementation as India consumption story starts showing the results.
RR: Since I visited
your plant at Peenya, there has been a surge in automatic plants in Bengaluru
and Mysore. Why so? And how what is your assessment of the situation?
KM: Fresh
investments in the Karnataka region in last two years is definitely some cause
of concern as the total installed capacity has gone up substantially in this
region. It is sincerely hoped that demand increases in this region to absorb
this extra capacity.
RR: What is the
ICCMA view on the plastic ban policy by the Maharashtra government?
KM: It
will soon spread and ultimately many other states will follow it. It will
definitely create positive impact for paper-based packaging industries
including corrugated box packaging.
RR: Does our
industry need to seriously re-look at shopfloor ops to minimise the waste? What
are the potential areas of loss?
KM: There
is an urgent need for the industry to remove waste and inefficiencies from the
shopfloor. This is one of the important topics which we are covering during the
conference.
RR: Expertise in the
corrugation industry is under-rated…
KM: Automation or upgradation undertaken by many players in
the industry has still not been given its fair and due recognition by the
users. Although most of the brand owners have slowly begun to understand the
value these investments generate as their supply-chain transit losses are
reducing on account of better quality boxes being supplied now.
RR: Skill shortage:
Therefore how does one hire a candidate? Is ICCMA contemplating a module for
short-term training?
KM: Box
industry has traditionally recruited its human resource requirements from
within the industry. Of late, however, the leading players are utilising
various other platforms bridge the skill-gap. ICCMA is in talks with some of
the established training institutes to integrate industry-specific training
courses which would provide the skilled manpower that is badly needed by the
industry.
RR: Has our industry
seen a shift in the manner in which contractual agreements are drawn between
vendor and client? What kind of monitoring and evaluation systems are in place
now?
KM: The
industry has recently seen a shift in the manner in which the brand owners are
engaging with the vendors. There is a strong emphasis by almost all brand
owners on 100% compliance and audits conducted by them before enlisting any new
vendor. Quality and service expectations from the brand owners are getting
tighter by the day.
RR: What sort of
yields should a corrugator target while creating an operating model? In terms
of a profitability tree, are the existing models sustainable?
KM: The
real challenge before the industry in protecting its operating earnings is
perfect execution of any projects/initiatives. Not only in the stage of
implementation but also in day-to-day operations. Investing in new machines or
equipment is not that hard, the real challenge is to manage overall costs,
wastage reduction and shying away from accepting business at ridiculously low
and unsustainable prices. Unhealthy competition in my view is the biggest
challenge the box industry is currently facing.
RR: Final question:
If you gaze into the crystal ball, where do you see the industry in five
years?
KM: Unless
all the players in the industry act wisely as far as a fresh addition to the
capacities is concerned and on top of that than marketing it at unsustainable
pricing; the risks of sickness percolating in the industry cannot be wished
away. Otherwise, the industry as well as the entire packaging sector will
definitely benefit as India consumption story plays-out fully over next a
decade at least.