Indian corrugation industry on a growth path

The Indian corrugation industry is growing fast, and there are several reasons behind this growth. Bijendra Sharma, managing director, BHS Corrugated India, explains the reasons.

“First, the country’s per capita consumption is still low. There is consumption in the metro cities, but most of our population still lives in small towns/villages. There is a lot of potentials, and I believe the pandemic came with a new opportunity for the corrugation industry,” he says.

Second, the eCommerce sector is growing fast, and most products need corrugated boxes to be packed. Buying habits are changing because of Covid-19, which creates a huge scope for the corrugation industry. “Look at the dairy products market, the grocery market. Look at the metro cities, especially in high rise buildings. I don’t think 10% of the population there goes out to buy something. They order online, as you can get everything online nowadays,” he argues.

Third, plastic, especially single-use plastic, is not suitable and has challenges in recycling. But corrugated boxes are 100% recyclable.

According to the International Corrugated Case Association (ICCA) estimation, by 2030, the Indian corrugation industry and the board produced in India may get 70-80% growth.
In the US market, the corrugation market was 200-billion sqft per year in the 1980s, and it became double, roughly around 400-million sqft per annum in 2000.

Sharma says that while the American market is stagnant, the Indian market will get a lot of momentum. “So, we are now equivalent to the US of the 1980s. Our economy is growing fast. Yes, we got a hit during the Covid crisis, but we are back again. Things are moving fast,” he says.

Fluctuating prices
At the same time, Sharma adds that kraft is the major input (around 90%) in corrugation and its fluctuating cost is the biggest pain point in the industry, globally.
To combat this, automation can be a solution. Sharma says, “With the fluctuating input cost and the growing market, customers have to upgrade themselves towards more production, and for that, they can optimise their processes. Post-Covid-19, retaining good manpower is a challenge. So, it is vital to move towards automation.”

India’s current production of corrugated boxes is around 10,000-million sqm per annum, with about 12,000 total corrugation plants. Among them, approximately 350 are automatic or semi-automatic.

He reasons. “In the coming years, the market for the conversion of kraft will double, without any doubt, and consolidation (mergers and acquisitions) will happen. In this process, you will see corrugators with automatic lines grow, and others will have to upgrade.”

The government is implementing reforms such as GST. The overall infrastructure is growing. The road infrastructure is growing. The rail infrastructure is growing fast. The government is coming with small airports. Many economic corridors are coming up in cities such as Delhi, Mumbai, Ahmedabad, and others. All these will help usher in growth.

Team BHS Corrugated India at India Corr Expo 2021

He gives an example. In the US, in the 1980s, the top five corrugators or top five business groups had around 30% market share, but today the top five do more than 70% of the market share. The leading 10 Indian converters may be covering 50% of the market share in the coming decade. So, those players will be varied,” he says.

So, the opportunities are huge, and people will be investing more in the coming year. “We have seen the same trend in China as well,” Sharma says. “As the paper prices are volatile, only big players, and players that can accommodate this volatility, will survive; small players need to upgrade. So, if we consider all this together, there is a bright future for corrugators and machine manufacturers.

BHS Corrugated
Talking about machine manufacturers, BHS Corrugated India, a 100% subsidiary of BHS Germany, offers complete corrugators, corrugated rolls, single machines like splicers, service, spares and training and upgrades to existing non-BHS corrugators also. The company has three business verticals in India — sales, a service department and a data-engineering centre.

“We have a unique centre in India. We hire top professionals from IT companies who are involved with our product design departments and software development departments internally in Germany,” Sharma says.
He adds, “Today, the company has 32 employees. In 2019, we had 13 employees. So, in the last two years, we have grown 300%. In terms of resources, we have big plans. We have 11 fully automatic corrugation lines operating in India. Many more machines are coming.”

Today, customers are becoming demanding, and they need fast delivery. There are time limits, and requirements are different. Today, the trend is ‘boxes on demand’. Soon, short-run and personalisation will be in demand.

This puts the onus on machine manufacturers to develop a suitable solution, and Sharma says BHS is ready. “We have faster order changes on our corrugator, and hence better average speed is possible, and that is the real production," he says.

“Multicolour printing is picking up especially in eCommerce and ready-to-eat food packaging. In this segment, we have developed our own complete inline inkjet printing solution with Screen Japan. Our solution is in production in Europe,” he adds. “Here, you can print on the bottom liner, which becomes the outer surface of the box. So, you can print inline on that."

To conclude, Sharma says the Indian market is ready for new corrugators or upgrades of existing ones. “I told you that 70% or 80% of the market is supplied by the top 10 corrugators in the US. In those markets, you don’t have any place for the new entrants. But, in India, people are growing in pockets. So, there are still opportunities for new corrugators,” he says.