German packaging ink major Siegwerk plans to double capacity in India as economy grows
With the demand of packaging ink growing in double digit in India in sync with the country's economic growth, Siegwerk Druckfarben AG & Co, a 200-year-old German company clocking an annual turnover of over ₹1,000 crore in India, is planning to double it's capacity in the country in 5 years as rising consumerism has given rise to growth in branded products needing safe packaging.
To cater to the domestic demand and achieve it's target, the company has decided to add capacity at it's existing factory in Assam and plans a new factory in Western India to cater to the southern & western markets where packaging printing has picked up over the past years.
'In the last 5 years, we have grown at an annual compounded growth of more than 12% to 13 %. And we see the same continue in the future. We plan to double by 2030. In the next 5 years, we would cross ₹2,000 crore revenue,' said Ashish Pradhan, President, Asia, Siegwerk in an interview.
'The macroeconomics is helping us. The GDP growth in India which is one of the largest and fastest growing economy in the world and the demographic dividend is helping us,' he said.
'The capita consumption is a fraction of what we have in the developed world and there is still a lot of head room to grow here,' he added.
Stating that the market economics were favorable, he said the company was hopeful of achieving upto 20% market share from about 12% now in India.
On the capacity expansion he said, 'We have one large plant in Guwahati, which is the second-largest plant in the whole Siegwerk group. We are making it bigger now with more capacity, which will take us to 2027-28. And then, we will invest in a brand-new facility in the West either in Gujarat or Maharashtra.'
'We are also continuously looking for acquisitions in the Indian market. Over the next five years, in India, we will see at least 50% more investment than what we have already had so far,' he added.
'Our growth is linked to packaging. Typically packaging grows a little faster than GDP. So, if India's GDP is 6.5%, we can expect packaging to grow at about 8-9%. And we are growing at 12-15%,' said Mr. Pradhan.
'It indicates that there is a strong, robust consumption of consumers of all kinds of FMCG products. And the numbers tell us, that the market is becoming more brand-focused rather than an unbranded market. And that will aid packaging,' he said.
The company with 800 employees accounts for about 13-14% of the Group's sales. It produces about 25-30,000 tons of ink a year.
As far as sustainability & recycling is concerned coatings will be a very, very important for the company.
'Because globally, circular economy is a big topic. We have invested heavily into getting top-notch scientists to work on this in Germany and India,' he said
'So, that also tells you how much importance India has, not only just manufacturing and supplying, also in developing technology,' he pointed out.
Mr. Pradhan said the company would contribute more for safe packaging as the awareness on health and nutrition has increased.
'In 2020, the government had banned the use of toluene as a chemical in inks used for food packaging. And that has really helped us grow because we were the pioneers to get toluene-free inks into the country,' he said.
'Today the generation Z is very very careful about these things, so that will be the other big driving factor that the industry has to take care of, and I think we are very well placed because we are the global leaders in safe packaging,' he added.
On the policy related changes that could help the industry grow he said the biggest thing in everyone's mind is what is going to happen on the circularity and recycling front.
'Today paper cups has a PE coating and that PE coating on the paper prevents that paper to be recycled. So now we have come up with a coating to replace the PE and then we put it on the paper, and all this has to be driven by regulation,' he said.
'This whole regulation push in circularity and sustainability is what I would look for. That is for the future for packaging industry whether it is paperization, use more paper, less plastic' he emphasised.
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