North India’s largest flexible packaging producer, SB Packaging, prides itself on leading the pack with its hi-tech, quality offering. Formed in 1993, SB gradually built up capacity, running mainly locally made Indian equipment, such as extruders, gravure presses and bagging lines for stand-up pouches, bags, zip-locks and laminates. By 2000, both business and the Indian economy was picking up and SB -based on the outskirts of New Delhi - began a confident expansion programme.

It built a completely new factory on vacant land behind the existing facility to bring its total built-in floor-space up to almost five acres. Into the new building went a complete power generating plant; since the National Grid is unreliable at best, most packaging operations have to install their own power generation – not as back-up but as the main supply.

SB then installed India’s first foreign-made flexo press, and solventless laminator, both from Italian machine manufacturer, Schiavi (now part of the Bobst Group).

SB Packaging then obtained Procter & Gamble certification - a first for a converter in India.

SB Packaging was on a roll as India’s organised retail sector was taking shape and SB’s investment was beginning to give a reasonable ROI.

Iraq fall-out

The US-led invasion of Iraq put the breaks on almost everything. “We were probably four years ahead of the market, and we hit a pretty bad patch,” says Amit Banga, SB director. “We had bought new equipment, the retail sector didn’t take off as expected and polymer prices seemed to be on a never ending upward spiral.”

The invasion fall-out hit India badly. “Oil prices went from US$11 to $30 a barrel. This didn’t just mean an increase in polymer prices, but in our power generation, and it affected the entire country’s transport system, stifling growth.” This was a major issue in a country of more than 3,287,590sq km, says Banga.

“When we began our investment, PE prices were $450 per tonne, while today the price is around US$1,500 per tonne

When we began our investment, PE prices were $450 per tonne, while today the price is around US$1,500 per tonne

This is virtually impossible, since buyers tend to consider the historical price while doing their costing, which can be accommodated when prices rise a couple of times each year. But when they change in an accelerated sine-curve the time-lag between costing the job and buying the material to delivering converted packages, the converter ends up the loser.

It isn’t possible to do costing based on a future price because even if it was possible to predict, the customer won’t accept future projections. The result: compromised margins.

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