The Coronavirus pandemic, which began in November 2019, is expected to push the global economy into a recession. Even as India takes measures to minimise the impact of the pandemic, the GDP forecast for FY 21 reduced from an estimated 4.9% in FY 20 to 0.8%. One of the major factors for this decrease is an exponential reduction in consumer spending. Most small businesses are expected to close due to high market volatility, liquidity and operational issues, with the exception of essential goods companies.
During these unprecedented times, the essential goods industry is expected to survive although with issues such as stock piling, price volatility and transportation. Consumer and producer priority at this time is the consumers’ health and safety. As consumer preferences shift from loose packaged products, a stability in demand is expected for the flexible packaging industry.
A Max Speciality Films kiosk at the Label Expo Brussels event
The global market for Bi-axially Oriented PolyPropylene (BOPP) films in FY 20 was 9 Million Tonnes Per Annum (MTPA), of which India contributes just 380 Kilo Tonnes Per Annum (KTPA), about 4% of the global demand.
Apart from increasing health and safety concerns leading to a disproportionate increase in demand for certain segments of BOPP packaging such as Anti-microbial film, another noteworthy trend is the rising awareness around climate change, as a result of which governments and organisations are slowly yet steadily leaning towards a circular economy with a focus on recyclability. This is also trickling down to the packaging industry as multiple brands aspiring to implement recyclable packaging by 2025 are evaluating BOPP-based laminates to meet this objective.
Max Speciality Films Limited (MSFL), a leading supplier of specialty packaging, labels, coating, and thermal lamination films, is a 51:49 strategic partnership between Max Ventures and Industries Ltd. (MaxVIL) and Toppan, a US $13 billion Japan-based global leader in printing. MSFL is renowned globally as a producer of quality specialty packaging films, including graphic lamination films for print finishing, luxury packaging, and labelling films.
The Company exports approximately 25% of its total output. Its largest overseas market is in Europe. Its presence in demanding markets such as Japan and the Americas is also on the rise. MSFL has established a reputation over time for partnering with convertors and brands to develop cutting-edge packaging, labelling and graphic lamination solutions. The Company works closely with convertors and brands to develop new packaging solutions, covering a range of attributes, namely barrier, sealing reliability, special surfaces, haptics and optics, sustainability and others. MSFL’s ultramodern facility in Railmajra, near Chandigarh, has four BOPP lines (one commissioned in Q1 of FY 19), three extrusion-coated lines, three chemical coating lines, and four metalliser lines.
MSFL has ordered a new state-of-the-art metalliser with alox coating in FY 20, which is expected to be commissioned by the end of FY 21.
In addition, MSFL’s quality lab has been awarded the coveted NABL accreditation. With its state-of-the-art technology, today MSFL can offer multiple advanced solutions for high-barrier requirements with sustainability at its core by focussing on thick monolayer films to support recyclability. For example, in an effort to reduce aluminium foil litter, MSFL has developed a range of metallised BOPP films which combine the flexibility of BOPP with the high oxygen and water vapour barrier characteristics of aluminium as a superior replacement of aluminium foil. The fast-growing food industry accounts for 66% of sales and output in India. Though the Company constitutes only 8% share of India’s installed capacity, the specialty films segment makes up to 40% by volume and is expected to reach 50% in FY 21. To sustain its strong market position, the Company strives to meet customer requirements through innovative customised solutions and through customer engagement initiatives.
FY 20 has been a favourable year for MSFL in terms of market pricing and volume offtake. A positive market initially coupled with brand connect, increased specialty sales, improved product portfolio and cost improvements helped the company move from a net loss of ₹18.6 Cr. in FY 19 to a profit of ₹22 Cr. in FY 20. MSFL has seen an EBITDA increase of 110% in FY 20 from FY 19.
Volumes for Q4FY20 stood at 15,001 MT as compared to 16,169 MT in Q3FY20. Volumes for FY 20 stood at 62,958 MT, a growth of 9% YoY with EBIT margins at 8% expanding by 590 bps on YoY basis. Further, value-added specialty films contributed 42% to total volumes in FY 20 as compared to 34% in FY 19. Revenue contribution from more profitable value-added specialty films (BOPP + Coating) was at 40% in Q4FY20 and 38% in FY 20.
In FY 18, MSFL commissioned a state-of-the-art BOPP line with the world’s first inline BOPP coater. It’s a five-layer line with an inbuilt capability to produce thicker films. Apart from capacity augmentation, the intent was to enter the technology labelling and packaging space and improve recyclability of the films. The new production line opened a plethora of opportunities such as better quality with online inspection, better line efficiency, and seamless speed. The strong foundation of R&D, coupled with management drive, has aided MSFL to develop solutions, which include Biaxially-oriented Polyethylene (BOPE) foil replacement, high barrier label films, Biaxially-oriented Polyethylene Terephthalate (BOPET) replacement, and metallised BOPET replacement films for various packaging requirements in line with the recyclability trends.
MSFL’s differentiator is its ability to sense the pulse of the industry when it comes to technological requirements and recognise the need for a holistic packaging solution. MSFL is able to do this with the help of its strong connect with end user brands as well as converters. Backed by the Company’s traditional strengths in customer service, each solution is derived from an interactive process that involves understanding, collaboration, responsiveness, reliability, trust, and world-class quality. Customer satisfaction is paramount and is deeply embedded in the Company’s culture and celebrated in the value system. The mantra of ‘Customer Comes First’ is followed by everyone without any exception. MSFL conducts various customer-centric initiatives throughout the year, some of which are:
FY 20 was a favourable year for MSFL in terms of market pricing and volume offtake. A positive market initially coupled with brand connect, increased specialty sales, improved product portfolio and cost improvements helped the company move from a net loss of ₹18.6 Cr. in FY 19 to a profit of ₹22 Cr. in FY 20.
The Max Speciality Films team bags the ET Best Brand award at ET Best Food Processing & Packaging Brands event
MSFL also believes that the people are its biggest asset. The Company is continuously striving to improve its work environment by practising an inclusive, transparent and ethical approach, with strong feedback systems such as safety satisfaction survey and employee satisfaction survey as part of its work ethics.
MSFL has institutionalised robust internal controls as well as management systems and processes through Enterprise Resource Planning (ERP) as well as manual safeguards. These are periodically audited by accrediting agencies. The performance is also reviewed with reference to the Company’s budget, y-o-y variances and competition. The statutory and internal auditors also review the internal controls every year and the reports are shared with the Audit Committee for further evaluation.
MSFL is deeply committed towards its responsibilities in the ecosystem as a producer of polymer films, an employer and a corporate citizen. In FY 20, MSFL took the initiative to enter into post-consumer plastic waste recyclability space, contributing towards a shift to circular economy. Further, in collaboration with the Max Group’s CSR arm - Max India Foundation (MIF), MSFL contributes generously to local communities in the areas of healthcare, nutrition, education and environment. The Company has taken steps to improve the sanitation and poor drainage system in the Railmajra neighbourhood. It also follows a strict Green Policy and has signed the code for Ecologically Sustainable Business Growth formulated by the Confederation of Indian Industry (CII). The safety of its employees and visitors is also of paramount importance, and MSFL continues to systematically identify and eliminate risks and hazards.
Technicians in action at the Max Speciality Films’ research labs at its factory in Rail Majra, Punjab. The company is an innovation leader in value added specialty films
With increased awareness around hygiene and the threat of invisible health hazards, MSFL looks forward to serving the nation through a continued supply of its plastic packaging film to essential industries. The changes in consumer behaviour coupled with an increased focus on recyclability would result in increased demand for BOPP plastic packaging, and MSFL is fully geared to fulfil it with its specialty segments, technology, and human resources.
MSFL will continue to focus on research and innovation led speciality products. While the demand from international markets could be uncertain due to the ongoing economic disruption, MSF predicts that a strong in-house demand will compensate for it.
Moreover, no major capacity addition is seen coming on-line for next year in the industry. Raw material prices which are crude oil linked are expected to remain soft for the next year. With increased realisation for our products, better demand-supply situations, improved raw material prices, our continued focus on innovation and increase in the speciality product mix, MSFL is well on its course to maximise profits, contribute to the society and save the environment.