Slowdown! What's That?
While recent recession has had a domino effect across the globe and most do not expect to come out of it soon, experts world over still predict India to be one of the few countries to come out of the whole thing unscathed. Does our Industry agree?

Indian Packaging industry caters to the daily need of masses. You talk to anyone, the reaction is that the market is slow, but when you ask how they are doing, the answer would be \'We have not seen better times!\'” says Sunil Jain, President, Rajoo Engineers. “People have cut down on luxury goods to an extent but not on items of daily use. Thus, the slowdown is more sentiment related.” he asserts. Working its way the domestic market is already looking upwards and has begun gaining strength with a clear shift in focus to core sectors like power, construction, manufacturing and retail. It is the latter two segments that are gearing up to see the industry through the downturn.

“India\'s growth story is domestic driven. Though export demand for packaging, particularly for luxury goods packaging from North America and Europe, is taking a hit, the market slowdown is just a spill over effect, and not a recession,” says Amila Singhvi, MD, International Print-o-Pac Ltd (IPP). The robust GDP growth might have come down from 8-9 percent to a mere 6 percent, but that does not rule over the fact that India still is one of the fastest growing economies in the world and our industry seems to feel secure standing parallel to the much discussed word \'Recession\'

Hindustan National Glass & Industries Ltd (HNGIL), which has a market share of over 65 percent in India\'s container glass segment, has seen comparatively better sales in first half of the year 2008-09 than the previous year. “The sales in the 3rd quarter of the current financial year have been better than in the same period last year,” says Vinay Saran, VP-Marketing, HNGIL.

Though there are segments of the industry, which have felt the pinch this season, the trend yet remains positive. “The demand for packaging films dipped sharply in November due to stock correction but it is steadily rising through December and is expected to normalise by January. Also Pet film and BOPP film prices will ease out shortly. We expect a growth rate of 15 percent,” says Sameer Banerjee, Whole Time Director, Jindal Polyfilms.

The general sentiment prevails that once things get back on track it will get better not only for the industry itself but as well as for organisations and their employees. Leader of the tin manufacturing segment, Tata Tinplate Co. India Ltd. carries the same opinion on the professed slowdown. “First half of the year 2008 was extremely good for sales and much better over the year 2007. Though we feel the slump this quarter we in fact have very high hopes for the fourth quarter,” says B. Ramanathan, Business Dev. Manager, Tata Tinplate.

Highlighting the plastic packaging segment, S.D. Krishnamurthy, Sr. General Manager, Futura Polymers opines, “The impact is more on mind than on the material. We have seen 10 percent growth despite the general downward trend. Present quarter sales is roughly 11 percent and the 4th quarter is expected to have 10 percent growth rate.”

Interestingly, across various segments of the industry the input cost have remained directly related to that of the product. In other words, if the input price is increasing, the product price also tends to increase and vice versa. “Prices have come down due to fall in prices of raw materials. We are into three segments; fibres, polymers and preforms and we have seen no major impact on the slowdown from our customers end,” says S.D. Krishnamurthy, Sr. General Manager (Marketing), Futura Polymers. Meanwhile things have gone the other end for Santosh Kumar, Area Sales Director, UPM Raflatac. “The product price and the input cost definitely go hand in hand. As the slowdown has brought in a rise in input cost, price of the product has also increased,” he adds.

Therefore, even if the overall business growth in some cases might be slow at the moment, companies and organizations have not been incurring losses as overheads have remained the same. “Although the projected volumes are not achievable due to volatility in demand we are expecting an over all growth of 5-6 percent in volume terms for the current financial year,” says Saket Bhatia – Sr. Vice President Marketing, Hindustan Tin Works Ltd.

Championing the cause of automation and technology for the industry has been the example of Rajoo Engineers. “Being in the machinery building business, the price, which our customers pay are more technology related and less input price dependent. We have largely been untouched by any price fluctuation due this very reason,” reveals Jain.

Though predictions for the year 2009 are positive, there is always the word of caution. “We expect the same results as growth rates in this quarter as well as the upcoming ones,” states Kumar of UPM Raflatac. “The outlook, however, would also depend on the global crude oil situation,” alerts M.K. Banerjee, Reliance Industries, “Packaging converters in general are reporting buoyant demand but are under pressure on process and payments from customers,” he says.

Well, the word is out. This ‘perceived recession’ will end. For the Indian Packaging Industry and the country it might be sooner than the rest and also, with a positive outcome!

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