THE PACKAGING INDUSTRY IN INDIA An Industry Presentation

THE PACKAGING INDUSTRY IN INDIA An Industry Presentation from Mc. G - A Demopack of Select Slides - Madras Consultancy Group, Chennai

Contents * v Packaging Industry : Global v Packaging Industry : India v Rigid Packaging Metal Containers Glass Bottle Rigid Plastics Paper Cartons v Flexible Packaging v Caps & Closures v Labels v Secondary & Bulk Packaging v Packaging Machinery v Profiles of Packaging Companies v Consumer Packaging : Select Users v Regulatory Environment * Note : This demo pack has only a few select slides of the contents Mc. G 11/29/2 2

Packaging Industry : Global v Size of Packaging Industry Worldwide (est. ) : USD 600 Bn. ( 2002 -03 ) (excluding machinery) v US packaging market accounts for about 24 % v Western European packaging industry is dominated by Germany, France, Italy & U. K v Paper & Board leads with 36% of the world market followed by Plastics v World packaging industry has been growing at a rate of 3 - 5 % per annum Mc. G 11/29/2 3

World Packaging Market by Region : 2001 Region Mc. G Value USD Bn Market Share (%) Western Europe North America Japan Asia- Pacific Latin America Eastern Europe Rest of World 125 120 65 65 30 15 30 28 26 15 15 7 3 6 Total 450 100 11/29/2 Annual Growth (%) 2 -3 1 -2 8 7 6 7 2 -4 4

Indian Packaging Industry Mc. G 11/29/2 5

Packaging Industry : India v The Indian market for all types of packaging materials is estimated variedly between Rs. 280 & 300 billion per annum • Of this, the consumer packaging market has been estimated at around Rs. 140 billion v Consumer Packaging is highly fragmented, with only a small percentage of companies above Rs. 1 billion sales revenue mark v Bulk packaging is primarily in the small scale sector, mainly on account of the Government’s reservation policy for the SSI sector v In the packaging sector, there are very few foreign firms operating in India on a JV basis or as subsidiaries v On the packaging machinery side, while a wide range is manufactured in India, the industry also imports machinery, especially at the high end Mc. G 11/29/2 6

Market for Consumer Packaging : India (2002 - 03) Product Value (Rs. Billion) Flexible Packaging Rigid Plastics Printed Cartons Glass Bottles Metal Cans Caps & Closures Labels Others 32. 0 28. 0 24. 0 16. 0 11. 0 10. 0 6. 0 21. 0 Total • Mc. G 148. 0 Note : The above excludes bulk packaging, tiny sector and plain films 11/29/2 7

Market Share of Packaging Media : 2002 - 03 (by value ) Mc. G 11/29/2 8

Indian Packaging - Notable Developments v Metal cans and glass bottles have lost large markets to rigid & flexible plastics and printed monocartons v Flexible packaging has replaced all forms of rigid packaging; the flexible packaging segment has seen many new innovations – the concept of the single use unit pack is now globally acknowledged as a marketing first v Laminate tube has almost entirely replaced the aluminium collapsible tube for toothpaste packaging, now making inroads into the pharmaceutical sector v PET bottles & jars have made a spectacular entry into the Indian market, recording annual growth rates in excess of 20 % per annum; in its wake, the demand for a whole new range of plastic closures has also emerged replacing metal closures • Mc. G PET bottles are used for mineral water, edible oil, carbonated soft drinks and a host of other products 11/29/2 9

Metal Cans in India v The market for Metal Cans in India was around Rs. 10. 2 Billion in 2001; tinplate accounted for well over 90 % of the market v Tinplate packaging, in India, includes Open Top Sanitary (OTS) cans, 3 -piece General Line cans & seamless cans - all manufactured within the country; Aluminium 2 -piece beverage cans as well as limited quantities of OTS cans are imported v The market for metal packaging in India has been nearly stagnant over the past decade owing to the high cost of raw materials and consequent shift to other packaging media v Tinplate is produced in India; large imports take place as domestic production is inadequate v 2 -piece beverage cans have not yet made an impact Mc. G 11/29/2 10

Tinplate Consumption : India v Estimated consumption of tinplate for OTS, 3 - piece and seamless cans was : Year Consumption (000 tonnes) 1985 1990 1995 1997 2000 2001 2002 130 155 146 150 143 155 v Note : Tinplate for 15 Kg bulk packaging is reported to have accounted for an additional 120, 000 tonnes in 2002 Mc. G 11/29/2 11

Select Metal Can Manufacturers : India Tinplate (OTS/ GL) Cans Aerosol Cans v Comet, Silvassa v Asian Cans Pvt. Ltd. , Mumbai (Tinplate) v Hindustan Tin Works, Sahibabad v India Tin Industries, Bangalore v Kaira Can Company, Anand v Metal Impacts Pvt. Ltd. , Bangalore (Aluminium) v L & T, Hyderabad (contract mfr. ) v Petrox, Mumbai v Shetron Metal, Bangalore v Standard Tin Works, Mumbai v Western Cans, Mumbai v Zenith Tin Works, Mumbai Mc. G 11/29/2 12

Glass Packaging : India v India has a well developed glass bottle manufacturing industry v Production of glass containers : Year 1980 1985 1990 1995 2000 2001 2002 Mc. G Production (000 tonnes) 320 510 700 730 1100 1170 1220 11/29/2 13

Trends in Indian Glass Packaging v Industry growth rate has been around 4 to 5 % per annum v Industry has been under cost pressure in recent years v Profitability has been low historically v Loss of markets to PET containers, cartons, and flexible packaging v Industry has succeeded in making light weight glass bottles, glass bottles of fancy shapes, frosted finish, etc. Mc. G 11/29/2 14

Global Market for PET Containers : by User Segment Mc. G 11/29/2 15

Market for Printed Cartons : India (2002 - 03 ) Total Market : 420, 000 Tonnes Mc. G 11/29/2 16

Flexible Packaging Market : Global v The Global market for flexible packaging is estimated at USD 65 Bn. v The US flexible packaging market is valued at USD 20 Bn. v The main end user being food industry at 50 % v Western European flexible packaging industry is valued at around USD 8 Bn. Mc. G 11/29/2 17

Manufacturers Of Lamitubes : India Manufacturer Essel Propack Ltd. (2002 -03) Capacity (Mn. No. ) 2, 800 Sri Rama Multi Tech Ltd. 640 Courtaulds Packaging 120 v Essel Propack is the largest lamitube manufacturer in the world Mc. G 11/29/2 18

Caps & Closures : India v The Indian market for Caps & Closures is valued at Rs. 8. 5 Billion (2002 - 03) v Industry is characterised by large number of small and medium sized manufacturers and a few large manufacturers like Manaksia Group, L & T, and Oriental Containers v Plastic closures has registered an impressive growth in recent years and is fast substituting metal closures in many applications Innovations in recent years : ROPP Plastic Mc. G : : Bulged / embossed caps, pressure holding caps Guala caps, pressure holding caps, tamper-evident caps, pourer caps 11/29/2 19

Caps & Closures : India Type of closures & applications…. . . Mc. G Type Major Applications Crown Cork Carbonated Soft Drink (CSD), Fruit Juice, Beer, Ketchup ROPP Cap Pharmaceutical, Liquor, Processed Foods, Hair Oil, Stationery Lug Cap Jam, Pickle, Condiment, Cheese Spread, Other Foods Plastic Closures CSD, Mineral Water, Lubricants & most products packed in PET, PP, HDPE containers 11/29/2 20

Market for Labels : India v The Indian label market for packaging applications is valued at around 5 billion in 2002 - 03 • Rs. Including holograms and barcode labels, the market size would be well in excess of Rs. 5. 5 Billion v Annual growth is around 15 % v Printed label industry is highly fragmented with a vast number of small printers, spread all over the country; however the label industry in India is nearly on par with its global counterparts v The leaders in the industry are today manufacturing labels that can be compared with the best in terms of graphic design and print quality. v The industry has the capability to print on a wide variety of substrates Mc. G 11/29/2 21

Market for Labels : India (contd. ) v In recent years, there has been a shift from simple paper labels to more sophisticated products such as self adhesive labels, shrink sleeves & heat transfer labels v Sophistication within the category of paper labels has also taken place in terms of high quality of printing, use of special varnishes, coating, laminating with films v High end printing machines and pre-press equipment are now visible multi-station flexo and letterpress machines with stations for screen printing or hotfoil embossing and with in-line die cutting facilities, are now being imported v Barcoding and holograms have recently entered the market, adding to the excitement in the labeling sector Mc. G 11/29/2 22

Mc. G Madras Consultancy Group VI - 2, Habib Complex 3, Durgabai Deshmukh Road R. A. Puram, Chennai 600028, India Tel : 91 (44) 24939161 / 24936321 Fax : 91 (44) 24934862 email : mcg@vsnl. com www. indianindustryprofiles. com www. consultmcg. com Mc. G Copyright © Madras. Consultancy. Group 2004. All rights reserved 11/29/2 23