The printing industry has always been at the receiving end, not only because of rising prices, but also because of paper shortages, and also when demand is rising. The printers suffered losses due to the prolonged lockdown caused by the Covid-19 pandemic; they hardly breathed a sigh of relief because the situation began to improve and prices began to rise, followed by a shortage or unavailability of key inputs, which increased their Operational issues.

The self-adhesive label printing and processing industry is an extension of the sheet-fed or unsupported web printing industry.

Four label experts, Saurabh Agarwal of Avery Dennison, Ajay Mehta of SMI Coated Products, Prashanth Raveendran of Seljegat Printers, and Manish Desai of Mudrika Labels shared their insights. The webinar was initiated by Rajesh Nema, President of LMAI, and Jaideep Singh, Secretary of LMAI, and Anurag Mohan, member of the management committee, were responsible for coordinating the event.

Mehta, the inventory angle of SMI Coated Products, reveals the seriousness of the situation, due to price increases. Although paper mills do not meet all their material needs, they often announce price increases. "The forward contracts are signed with the paper mills, but these contracts are for the required quantity. Generally speaking, the paper mills charge the current price at the time of shipment. However, the increase in international freight, the decrease in the supply of raw materials from the factory, and the increase in demand are all caused Had an adverse effect," he said.

Mehta also stated that although the steel mills have given the applicable date after the new price increase, the adhesive supplier did not even give the time for the price increase, but announced the new price immediately. "Paper mills that supply release base paper either face a shortage of pulp and therefore provide less material, or in order to make up for the losses caused during the shutdown period, their materials are introduced to the market, where their products are more valuable."

Mehta warned that according to moderate estimates, the label inventory industry will lose more than 2.5 billion rupees every year and cannot absorb this loss. "We have no choice but to pass on the price increase to printers. They have indeed received resistance from some quarters, but if they have to survive and keep the company healthy, there is no way to compromise on this."

Agarwal of Avery Dennison agrees with Mehta. He said that after the impact of the pandemic has improved, demand has increased significantly, especially in the world’s large economies. The supply environment continues to be restricted and has been the biggest cause of severe inflationary pressures. "Rising oil and energy prices and the widespread shipping crisis have exacerbated the impact, and it now affects almost every region. At Avery Dennison, all our efforts are to continue to do the best in these turbulent times. Our customers provide services while keeping them informed about the current situation."

Buyers do not listen to Mudrika Labels’ Desai said that printing buyers strongly resist price increases, saying that there are other printers preparing to supply at lower prices. "The key is to become a supplier that does not allow buyers to choose to go elsewhere, but still maintain healthy profitability."

Desai further stated that narrowing the profit gap by reducing the weight of the base material and the weight of the adhesive coating will reduce product specifications, but this will only lead to poor quality and substandard. However, he said, "Many printed buyers now mention the standard brand label materials used in the labels provided to them, so printers have not chosen the option of replacing suppliers."

Desai suggested to label inventory manufacturers that as they interact with print buyers to obtain approval for their materials, they should also in turn push for approval of price increases that are consistent with the increase in raw material prices. "It is also prudent for label manufacturers to sign forward contracts with raw material suppliers, so that they can give printers some breathing time to adjust to the new prices."

In economic growth, price increases are a continuous process, and eventually the industry stabilizes within a three to four month time frame. "Unfortunately, the times are full of challenges, and the price of raw materials has become more frequent," Desai sighed.

Desai cited a case where the label purchasers were private companies and they amicably accepted the new price approval because they could deal directly with senior management and justified the need for higher prices. "In contrast, the approval of multinational companies takes three to six months, because they have multiple levels of management, and price approval is a long process. By the time of approval, prices may have risen a little..."

Raveendran of Seljegat Printers said more intently that they have achieved certain success by continuously investing in the best equipment to manufacture labels that meet international standards and create innovative products. He said that failing to obtain suitable and profitable prices for their products will hinder their growth and fail to justify their huge investments. "If some print buyers don't understand the situation and don't agree to give a suitable price, we will have to give up such orders. After all, we must fulfill our financial commitments," Raveendran said.

Participants commented on Priyank Vasa of Ahmedabad-based UnickFix-a-Form: “The recent increase in the price of raw materials and inflation makes us want to know that while continuing to provide our customers with the best prices and quality How long can we maintain a healthy profit margin. Affected by the epidemic, production efficiency has been affected in the past two years. From the current situation, it is difficult to increase efficiency to offset the increase in raw material costs. Labels have become a commodity, unlike the past , People can benefit from years of joint development of products.

Product diversification may be the key, it can provide a good balance between profitability and quantity. Current market conditions do not provide many niche market segments that can enable business to thrive. Compared with sales, the sustainability of profits will dominate. The expansion model must be easy, because the nature of our industry requires repeated investment with interest burdens. "

Mahendra Shah of Renault Paper of Palghar, a subsidiary of Manohar Packaging Group, said: “We call ourselves label manufacturers, but technically speaking, we just don’t have any converters for consumer brand values, which can be realized in the later stages of our business. Due to the rapid changes in technology, our current or past investments will not last long. If you do not capitalize your investment in the first thousand days, then your time and energy will only be wasted on recovering the completed investment .Really, is this why we become entrepreneurs? Competition has always existed and will exist in the future. The only difference is mentality. Now, with the rapid development of technology, we need to achieve return on investment at a faster rate. The first generation of entrepreneurs, we have accepted the harsh appeal and achieved success, and now have a huge price impact on our investment, we all need a fearless attitude to fight for customers' prices, lest it is too late. We Some customers may be lost, but with a clear idea, I believe we can all make our business profitable and sustainable." 

Anuj Bhargava of Kumar Labels asserted that price increases must be passed on, which is a necessary condition for survival. Another point he mentioned is that the industry did not realize that people are necessary for companies to work efficiently, and that after Covid-19, personnel costs have increased sharply. "This cost plus the increase in raw material costs is a killer. If the label printer does not pass on the impact of the overall cost increase, it is definitely a way of suicide."

Conclusion The PSA or self-adhesive label industry is already at a crossroads, and this evolution has led to a large demand growth shifting to different evolving technologies such as shrink sleeves, in-mold labels, surround labels, and direct product digital printing.

Capacity expansion coupled with commercial and other offset printing presses are facing pressure from online communication. At the same time, investment in label manufacturing has also brought fierce competition and pressure on profit margins.

Label manufacturing also faces another worrying challenge, and that is waste management. The adhesive-coated waste matrix and release liner that form more than 50% of the laminate are either landfilled or incinerated.

Faced with pollution control and environmental concerns, printers must now invest in measures that support sustainable and environmentally safe production processes.

When this increase in input prices puts profit margins under pressure, their dilemma continues to escalate, prompting them to unite as an industry and think about feasible solutions to deal with the concerns that arise.

On the positive side, in India, a large country with a large young population, the growth is obvious, and all label manufacturing technologies are sufficient.

(Harveer Sahni, Chairman of Weldon Celloplast, main member of LMAI)

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