FCBM: India is handicapped by lack of High-quality high strength Paper for non-packaging use

-FCBM: With evolution of very large players only a few niche players will survive
-Conditions are very dynamic these days with continuous evolution of business scenarios

The Federation of Corrugated Box Manufacturers (FCBM) of India is a leading & vibrant association representing all Corrugated Box Manufacturers. Over Last 50 years FCBM has rendered yeoman’s service for betterment of its members and promotion of Corrugated Box usage & corrugation industry.

Recently, The Pulp and Paper Times got the opportunity to have an exclusive interview of FCBM’s new president Mr. Vineet Jain, over various issues related to recession, raw material crisis and massive investment into corrugation industry by large corporate players. Here is his full interview:
Q: What is FCBM’s quick review for the present state of the market? demand is sluggish and price for raw material (Kraft Paper) has dropped down, is this a beneficial situation for corrugators?

FCBM monitors & updates its members in evolving business scenario on a continuous basis. There are constant changes in the demand & supply of Boxes, Kraft Paper & downstream items. Awareness of market forces in play is a vital component for making informed business decision for growing. With market forces working at many facets, it is difficult to predict which particular one is good or bad. Also the conditions are very dynamic these days with continuous evolution of business scenarios.
Q: Paper mills and the corrugators organization have been playing the victim card since the COVID pandemic regarding the kraft paper price hike that was artificial, the skyrocketing cost of wastepaper, logistical difficulties, etc. How does FCBM rate this situation? 

The Fact that paper segment of the supply chain is very well organised and works for betterment of its fraternity has been recognised even by Competition Commission of India. Most of their decisions not based on pure commercial developments. Yes, due to Covid not just paper, all commodities prices skyrocketed but have cooled down to pre Covid levels. However, the Ukraine war has pushed fuel costs to unreasonable levels. Now the Covid alarm in China is creating another negative wave in Global business scene.
Q: what initiatives does FCMB think should be adopted in order to make paper mills and corrugators' relationships more healthy and trustful?

FCBM has been striving continuously for long to create new bridges with not only their customers but also suppliers. FCBM is willing to take two steps forward for every step taken by paper mills for a healthy and congenial business atmosphere thus creating a win-win situation.
Q: The associations related to paper and corrugations are seeking the Government's intervention in the raw material crisis. Do you think the Government can really regulate the prices and excessive export of Kraft paper in the open market dynamics?

The Government Cannot and will not get involved in price regulation unless situation is alarming. But there is little they can do to make prices move in one direction.
Q: Recently, A big Paper Mill – JK Paper has stepped into the corrugation segment investing INR 150 crores for box making with the latest technology. Don’t you think that large investments will trigger consolidation in corrugation industry? How does FCBM review this move, especially when most corrugated box manufacturers are small and medium entrepreneurs?

Consolidation is now a reality and here to stay. It has happened all over the world across all products and corrugation industry in India must be prepared for this ultimate fact. With evolution of very large players only a few niche players will survive, and rest will be victim of attrition as has happened elsewhere.
Q: What is the current growth rate of the corrugation industry in India, and how will it take shape in the next five years?

Growth of any industry depends on:
1. Growth in GDP.
2. Rise in income of & consequent living standards of public at large. These determine growth in consumerism.
3. Balance of exports and imports.

Fortunately for India most parameter determining growth of industry are very positive and medium-term projections do look very good. Till now Imports of finished goods led to subdued manufacturing in India but now with make in India policy of India, glaring gap between imports & exports will shrink. Auguring well for demand for corrugated boxes. In view of these the Corrugation industry should have growth at 10%+ PA.
Q: There has been a prediction of a recession in 2023, which may cause a reduction in packaging demand; already in Europe, paper mills are shutdown due to the energy crisis, and waste paper will start going to landfills. India is also facing high inflation. How does FCBM is drawing its strategy for the members in order to curb recession impact?

There could be a possibility of some waste going to land fill if the prices do drop more. But that does not look imminent as Energy cost in EU has dropped down to pre-war levels. There is strong likely hood that west will go through a period of almost 0 growth but to early to raise alarm bells. There is huge addition to paper capacity in India & SSE Asia which will increase demand for fibre ensuring some stability in prices.   
Q: Increasing demands of Kraft Paper suppliers to specify RCT ( Ring Crush Test) instead of BF & adhere to it consistently. Box manufacturers have started differentiating mills based on consistent quality.  How would FCBM evaluate the Kraft paper quality of the Indian Paper Mills on various parameters?

There is a very old adage that mother feeds a child only when it cries. At association level FCBM has been raising issues of quality & standardization of paper supplies for over 30 years. There has been considerable improvement in some parameters with a lot still to be achieved. Mills particularly the newer larger ones with better process control must come forward to engage with their customers on these issues as such improvement is beneficial to all.
Q: European Union policies place a strong emphasis on the role of packaging in the circular economy and its design to be recycled and/or reused, whereas, In India, there is no much emphasis on the circular economy of packaging. Do you think that any Legislative proposals may ensure that any packaging placed on the Indian market should go for recycling?

It is not right to compare EU conditions with India.
1. There is huge variation in degree of problem. Consumerism in EU has reached a very level with many practices such as portion packs leading to humongous generation of packaging waste. One can surmise EU is a waste generating society.
2. India is still very largely family units having different requirements of purchase, very low degree of packaging penetration, etc. Slowly India too is moving towards EU habits leading to more packaging waste.
3. However, being a late starter has its advantage. India has become aware of the harm packaging waste can cause and has started regulating use.
4. Many technologies to recycle / upcycle waste is rising on horizon daily. Many compostable packaging materials as a replacement / substitution are becoming economically available now.
5. Also, still affordable labour costs make recycling in India more economical proposition.
Q: The construction of many items utilised in day-to-day living, including as furniture, homes, workplaces, hospitals, and other locations, is another creative endeavor of the corrugation industry. India is lagging behind in the use of products constructed of corrugated material. How does FCBM want to encourage "corrugation formation" in Indian society, which might create a significant new source of income for corrugators as well?

Non-Packaging use of Corrugated is evolving opportunity globally. India is handicapped by lack of High-quality high strength Paper normally required for such applications. This in turn is caused by lack of locally available good quality fiber. Rising consumerism & social media will ensure these areas too will soon catch up with global level.  
Q: Research & Development is a core exercise to develop a value-added product for the end-consumers securing product margin.  How do you evaluate the R & D activity being conducted by FCBM member companies? If we see the last decade of corrugation operations, what major R & D outputs have been delivered to the end consumer market?

R&D in Packaging more a top-down syndrome in India with consumers pushing same. Still withing limited means Indian corrugation industry has risen to demands of consumers with new developments & ideas. With increasing sizes of corrugation companies impetus to R&D will gain.

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