Introduction:
“Packaging can be theatre. It can create a story” – Steve Jobs
The Indian packaging industry scenario is one of great intrigue. Being introduced to this niche industry at an early age motivated me to dig deeper into it. The industrial bags manufacturing industry in India is mainly divided into two unequal parts: Paper bags and Plastic bags. This paper aims to evaluate the situation of both the parts while exploring various problems related to each with the help of case studies. 4 different entrepreneurs (2 from the plastic industry, 2 from the paper industry) were sought after and their manufacturing details were observed in great detail. After confabulating with all the entrepreneurs, I got a better sense of the problems and norms faced by them. I acquired multifarious business details and thereafter took their opinions on various related topics of importance to the packaging industry.
The packaging industry is one that operates in the background and is generally regarded as less important than the product itself. While industrial bags are nowhere as close as shopping bags in terms of being flashy, showy and marketable, it can be argued that they are of greater importance to their users. Despite this, this industry is unbeknownst to everyone other than manufacturers, distributors, consumers, and a few others.
Despite all known hazards of plastic pollution, India is showing no signs to stop production or consumption of plastic. Polythene bags are major contributors to it. Polythene bag production is easier and cost-effective as compared to its eco-friendly alternatives of which the primary one is paper (Daundkar and Savant 2016). Aquatic life also has been jeopardized greatly by the consumption of plastic bags with the figures of the perishing of whales, turtles, and seals reaching 100,000 globally every year. While single-use plastic has been banned in most of the countries including India, the industrial packaging plastic bags do not fall in the extent of this ban. However, many people falsely believed that these bags too fell under the ban. Paper bags received a boost when this ban was implemented. There are many misconceptions regarding plastic bags
In this paper, I will try to address this problem along with others using the industry as an example.
Research Question:
- How much of a shift is occurring in the packaging industry from plastic to paper? What is the economic impact of it on the manufacturing units under consideration? What is the environmental impact of the transposition? Is the government supportive of this disposition?
- What economic norms are in place in the plastic and paper packaging industry?
I will try to answer these questions with the help of various inputs from the manufacturers.
I will also be perusing all the manufacturing units closely and analyzing their business models concerning their company size. With the help of these intricate details, I will also be shedding some light on what industries are the highest users of these bags and their role in the industry.
The type of machinery used as well as its impact on the production, sale, efficiency, environment, and economy will be covered. Along with machinery, the time, cost, amount of raw material and overhead costs required to produce bags will also be covered for each of the companies in the study.
Secondary literature analysis:
Paper is considered to be a ‘greener’ alternative to plastic. Research shows that plastic bags take 400-1000 years to decompose (Bell and Cave 2011). Paper is better than plastic in terms of degradability which is a proven fact. That being said, there are 2 other important questions we must answer:
1. How much energy goes into producing each bag?
2. How easy is it to recycle?
3. Can it be re-used?
Firstly, it takes 4 times as much energy to manufacture a paper bag as it does a plastic bag. Paper bags generate 70% more air pollutants and 5000% more water pollutants when being manufactured versus plastic bags (Bell and Cave 2011).
Plastic is made from the waste products of oil refining. It makes sense to use waste products than to use ever-depleting water resources or vegetables to make plastic. (Bell and Cave 2011).
Secondly, Recyclability.
This section will mainly consist of explanations of different plastic bags and paper bags and the processes involved in their production.
Paper Bags:
Primary Research:
4 companies will be observed in-depth and a very clear and absolute conclusion will be obtained, with the help of the data collected and the valuable inputs of each of the entrepreneurs.
A questionnaire survey was done with 3 sections:
1. Personal Details
2. Business Details
3. Opinion Based Answers
The manufacturing plant of 1 of these companies was also visited for further research and insight.
Case Study I:
Company Name: A B Paper and Packaging:
Company Turnover: 5 cr
Company Size (employees): 30
Company Location: Gujarat
A company that started as a bobbin and paper tubes trader, A B Paper Packaging has come a long way to becoming the first company in India to use fully automated, state of the art technology to manufacture multi-wall paper fabric bags. They also manufacture fiber drums made out of paper in their manufacturing unit located in Gujarat. During my visit to the plant for further research, I acquired multifarious other details about their manufacturing process.
This company manufactures 8000 bags daily with fully automated imported machinery. 40 metric tons of raw material are used monthly by this paper fabric bag manufacturing company. The cost of manufacturing a paper bag is 18 rupees which I found to be the average cost amongst all paper bag manufacturing companies for this size of the paper bag. They have a selling cost of 28 rupees considering all overheads and profits. Using their principally patented technology, they require 1.2 minutes to manufacture 1 paper bag. They plan to reduce the time needed to produce 1 bag by improving the other processes involved in manufacturing 1 bag which includes roll-mounting, tubing, printing, stitching, folding, bottom-pasting, drying, packing
The weight of a bag was found to be 220gms. These bags were transported in thousands to numerous different industries, principal of them being the chemicals industry. A B Paper Packaging sells an average of 25000 bags to chemical industries every month. Chemical powders are stored in these paper bags which are the best repositories to store powders and chemicals due to the non-reactive nature of the paper which is used to make these bags.
Thereafter, I also took the entrepreneurs’ opinion on various topics ranging from the environment to the government. He believed that plastic bags were much easier to produce in India. However, he saw a great scope for improvement in our country regarding the paper bags scenario. He strongly agreed that there should be a transposition from plastic to paper in the industry which would lead to great economic gain for the industry and everyone within it. He was also under the conception that the shift would benefit the environment and help in pollution control. The economic norms regarding the paper industry were sub-standard and needed updating and improvement.
The entrepreneur gave some suggestions to make this industry better. First and foremost was the need to reduce taxes around paper and machinery. There was also an increased need for more awareness regarding this industry and its benefits. Lastly, to improve the financial situation, better subsidies for paper rather than plastic were required along with export subsidies to facilitate more exports and increase money flow in the current market.
Case Study II:
Company Name: XY Polyplast
Company Turnover: 25cr
Company Size(employees): 200
Company Location: Surat
This polyplast company was established in 1993 with a singular aim – Complete Consumer Satisfaction. It would be more than fair to say that they have more than overshot that aim.
Sprawling over a massive 25000 ft., this state-of-the-art facility produces upwards of 1.5 crore bags monthly while using 170 tons of raw material monthly. During our telephonic conversation, I also asked him for permission to visit the manufacturing plant which he politely declined for confidentiality purposes.
XY Polyplast has an extremely low production cost of 7 rupees per bag due to the automated machinery and an extremely dedicated workforce. Adding overheads, fixed costs, and profits, they sell their bags at 10-14 rupees, depending on the size and material used. The bags manufactured have an average weight of 95 grams however that is subject to change based on size and materials used. Furthermore, XY Polyplast supplies the most to the food industry, providing 1 crore bags to that industry alone.
The entrepreneur was also of the popular opinion that plastic bags were much easier to produce in India than Paper bags. However, he did see great scope for improvement in both the industries. Having said that, he was against the occurring shift from plastic to paper and also went on to say that it would not lead to any economic benefit.
He was quite satisfied with the economic norms regarding the plastic bags industry but he did say that export was cumbersome and not promoted in India.
Upon further inquiry about environmental side-effects of plastic and its manufacture, the entrepreneur busted a very popular myth. While this is yet to be confirmed, he explained,” People are under the misconception that paper is better for the environment. Plastic is bad for the environment but to make 1 plastic bag, it takes very little energy to produce as compared to paper bags. The plastic that we use isn’t single-use plastic. Moreover, it is reusable and also biodegradable in a shorter time than single-use plastic-made shopping bag”.
Case Study III:
Company Name: NM Paper Pack
Company Turnover: 25cr
Company Size(employees): 100
Company Location: Chennai
NM Paper pack is a subsidiary paper bags manufacturing unit of a larger group that has been involved in the Packaging industry for 55 years. Having been printing and packaging pioneers for 55 years, they decided to add another feather to their ever-enlarging cap with the installment of their state-of-the-art, fully automatic paper bag making machinery. They feature various sizes and thicknesses (GSM) of paper bags, along with a flexo multi-color printer to satisfy all the customers’ demands. However, the entrepreneur was unwilling to let me visit the site for further observation and research for confidentiality purposes.
The company produces 1600000 paper bags monthly while using 70 tons of paper. The cost of producing a paper bag comes up to 10 rupees for the smallest sized bag which he then sells for 18 rupees adding overheads and margins. Prices increase according to size and thickness. The weight of the bag is to be 100gms which again changes according to size and weight both of which are customizable.
Standard sizes are also available.
Various industries are catered to by NM Paper Pack, with the most bags being sold to the textile industry. Only 1/16th of the total bags, i.e. 1 lakh bags are sold to the textile industry, making NM Paper Pack a truly diverse company while also confirming its status of being a trusted name amongst its peers and customers.
The entrepreneur was also of the opinion that plastic bags were easier to make in India.
Not only was he quite unhappy with the economic norms regarding the paper industry but he was also skeptical in his views on the growth of the industry due to said norms. Despite being in the paper industry, he opined that there should not be a shift from plastic to paper in India and also stated that this would lead to no economic benefit of any sort.
Furthermore, he commented, “Bring back plastic for convenience and inexpensiveness”.
Case Study IV:
Company Name: PQ India Plastic Packagers
Company Turnover: 200 cr
Company Size(employees): 200
Company Location: Delhi
2020-3-31-1585657798