UFlex packaging allows maximum branding visibility and allows manufactures to use more than 11 colors, making packaging more aesthetic, says Rahul Akkara, Vice President (Strategy & Brand), JSW Cement.
How important is packaging for the cement industry?
The Bureau of Indian Standards (BIS) has clearly stated that the cement sector should adhere to the 50 kg bag packaging rule. Now, within the stipulated rules set by BIS, there are essentially multiple packaging options available. There are three types of packaging: HDPE, AD Star and Uflex. On a larger scale, most cement manufacturers use HDPE or AD Star packaging. However, there are a few regions which are driven by traditional packaging like paper bags. For instance, in the southern market, use of paper packing is more than HDPE and AD Star. But now there has been a lot of improvement in packaging.
Today, there is also a choice of using UFlex packaging. Advantage of UFlex packaging than others such as HDPE and AD Star is the cement manufacturers can use digital graphics on UFlex for branding purpose. If compare to others, UFlex is 11-colored packaging, whereas as HDPE is six-colored and AD Star is seven-colored packaging. UFlex packaging allows manufactures to use more than 11 colors; hence, the packaging appears to be more aesthetic and premium.
What part of your manufacturing expenses is taken up by packaging/bagging?
In terms of price comparison, HDPE packaging costs around Rs 8-9, AD Star costs Rs 11, UFlex costs Rs 19 but, paper bag cost Rs 21. That said, depending on the market traction, and the product a manufacturer is selling, it might want to tweak the packaging also. So if I consider an average costing for HDPE it will be around Rs 220 per tonne, for UFlex it will be Rs 380 and paper will be little costlier at Rs 400 per tonne.
For instance, for our Portland Slag Cement (PSC) we normally use AD Star and HDPE. However, for the Chennai market we use paper bags, as we don’t have any other options available. That said, for concrete HD, since it’s a premium product, we use UFlex packaging.
How much of your cement is sold in bags and how much in bulk? What is the industry average (bag-to-bulk ratio) in this respect?
As far as JSW Cement is concerned, 70 per cent of our trade is in bags, which is in proportionate to trade-non-trade sale that takes place. Bulk trade is either through bulkers or through wholesalers which comes in white colour bags. But that is minimal as compared to HDPE and AD star packaging. So in India, bag-to-bulk ratio comes to around 70:30. However, the ratio can change depending upon demand from big projects, which requires cement in bulk. But brands which are looking at retail presence and have a fair bit of visibility on the retail front would be at 60:40 or 70:30.
What is the future trend in bag vs bulk? How does India compare with its global peers in this connection?
Globally, it is bulk packaging which is dominating. This is mainly due to lesser number of retail outlets and continuous use of RMC. Here, in India, use of RMC is evolving, but it is limited to major cities like Pune, Mumbai, Bengaluru, Pune, Delhi and Chennai.
However, the same phenomenon is not repeated in semi-urban cities which still depend on 50 kg cement bag because an individual house owner may not have the financial capacity to install an RMC machine.
What is your preferred choice for bagging? Is it paper, HDPE, AD Star or UFlex?
Personally, I would love to use UFlex packaging; however, the company should be able to absorb the cost incurred in production (Rs 140 per tonne packaging to Rs 380 per tonne of UFlex). At the end of the day, in a quest to make my product more presentable and premium at the point of sale, I may invest, but it has to have its own impact on my cost of production and profitability. Today, any increase in cost of production would hamper the company’s profitability.
But at the same time, for products, where I am commanding a better price, I would like to maintain or enhance or sustain the premium position of the product. In that sense we have used Uflex for a product like concrete HD. If we take a closer look at Uflex versus paper, today Uflex packaging is waterproof packaging. Whereas, in paper, the spillage and clotting of cement is more.
What is your experience in complete automation of bagging of cement and loading of cement bags? Have you invested in such automation systems and by how much?
It is imperative. Considering the amount of cement production per month i.e., 8,000 tonne per day, cement manufacturing plants require automation systems for swift operations. As far as investment is concerned, it takes around Rs 10 crore per line.