Samir Patkar, president of Heidelberg India, says that Covid-19 is going to impact the economic growth in FY21 in significant ways, apart from eating into the last month of FY20 across print and converting industry segments. When it comes to the graphic arts industry packaging segments like pharma, healthcare, and personal care, food, and dairy and fast-moving consumer goods, he says these currently show better recovery potential. Patkar’s views on several questions are given below in an interview conducted by Harish Penumarthi.
While the demand comes back, the key challenges would be to manage operational problems arising out of new rules for work safety while balancing production speed and social distancing simultaneously. We are all subject to a new domain of operation with absolutely no prior experience – this is new territory.
Challenges arising from sustaining operations and selling costs will be much stricter and would lead to enormous financial discipline while managing operations. At the same time, if you decide to get leaner, the challenge would be to get the human resources back when the business improves. Scaling down and ramping up operations are usually very challenging processes, and it would be interesting to see what economic curve we develop on recovery, which will largely depend on government guidelines on operations.
While China has shown it can come back and recover, there is every hope that India can do that too, as both the economies are largely driven by domestic consumption. We cannot underestimate our economic strengths, which can bounce back in action from a crisis. Let us not forget that during the Lehmann Brothers crisis, which hit the world in 2008, India was least impacted. Also, know, while the world could slide into recessions that are predicted by all economic surveys, India’s growth outlook is still positive and still projected just under 2% GDP for FY21.
The Covid-19 situation will cause more damage than the cancellation of Drupa, as customers who want to buy new technologies will visit suppliers for demos and move ahead with their plans when the situation eases. Almost every manufacturer has introduced a digital platform to bring a closer look and feel of their technologies, webinars, with live demos and testimonials. We are living in a digitally well-connected world, and information is available at our fingertips.
Drupa being postponed to April 2021 will not impact FY 21 business as we can plan for the year accordingly. Unfortunately, as far as Covid-19, there is no indication or time frame when it will be controlled or eliminated. If we can handle the outbreak’s effect in time, then the drupa postponement is not a bottleneck in decision making. Those who have the need and wanted to invest will do so anyways!
Many innovations and technology changes to be displayed at drupa 2020 have already been implemented in machines being shipped as of April 2020. Nevertheless, at drupa 21, we will still have some curtain-raisers on newer technologies for sure.
Nevertheless, it is a bit too early to comment on this year’s investments as everything depends on the timeline of the settling of the COVID crisis. For sure, the Q1 outlook for FY 21 does not look good. With the lockdown extended until 3 May 2020, we have lost the production of all of April. Things might not accelerate in a big way until 20 June, which means a drop in Q1 projections. We then have three quarters to cover the gap. New government policies would define recovery speed. There are too many activities happening with sudden demands in some segments.
Also, we need to watch the development with China closely. As some reports suggest, we can see some shift in some businesses in commercial and packaging moving to India. This can open a whole new world of opportunities for our Indian converters. We are carefully evaluating this development and surely see some positive signs for the Indian industry. I hope our government catches on to this opportunity and opens the door for new investments. Right policies and timely execution will be the key.
We see business scaling up from Q2, and since domestic consumption is vital, we have to bring back domestic demand. Getting back to work as quickly as possible and maintaining social distancing together shall be the critical factor. We cannot stretch this too far as I have already indicated that we need to bring a balance between lives and livelihood.
Heidelberg & Gallus steps
We are constantly in touch with our customers, especially those who are still operating under the lockdown. We have serviced some of our equipment during the Covid-19 crisis and while in lockdown. We all know it is not easy to obtain relevant government permissions to carry out these repairs. I have immense respect for our technicians who have volunteered to extend their services and attend such service calls as they come in these challenging times. We call them our ‘HIN Bravehearts.’
We provide service as we also see our customers are fighting the times with the same intensity, and we also get inspired seeing their passion for supplying materials to maintain essential supply chains. We have made use of our digital platforms and remote services, too, for supporting our customers remotely. We have used the time under lockdown to communicate and educate our customers on how to carry out maintenance, especially during and after lockdown eases.
We are fully aware of the fact that there will be a lot of service requirements coming up on equipment once the lockdown is lifted, and have structured a good plan to offer immediate support to all customers. Apart from the guidelines already issued, very soon, we will be releasing the guidelines for the start-up of the machines after the lockdown is phased out.
Gallus investment campaign from May 2020
To ramp up business in the label segment, Gallus has come with a campaign to motivate investment decision making. It is a limited duration campaign supporting converters who invest in Gallus presses at exceptional prices. Heidelberg Gallus India will announce the unique campaign in early May 2020 for the Gallus ECS 340 and Gallus Labelmaster series of presses that have attracted good demand in recent years.
We are confident that this will especially push demand for packaging segments covering food and dairy, pharma, FMCG, and health and personal care. As an industry leader in this segment, we have to start now thinking out of the box of how to support our customers and bring back the motivation and push the demand and investment cycle earlier.