Digital labels improve Wonder Pac’s profitability

Gurugram, April 2020: Wonder Pac India, the Sonipat-based label printer, earns nearly 35% of its revenue from exports. Apart from its customers across the country, it exports labels mainly to the neighboring Saarc countries. “The export market is great for packaging. China is a heavy consumer of labels. But it already has many label converters and is even an exporter of labels to other countries,” says Trilok Mittal, managing director of Wonder Pac.

A narrow-web flexo label press user, Wonder Pac, bought a Mark Andy in 2003. It made repeat Mark Andy investments in an 8-color, and another 6-color narrow web flexo in 2011 and 2012, respectively. The 2012 press replaced its oldest label press. “We didn’t purchase a conventional flexo press after 2012. We are a significant supplier to cosmetic companies. The SKUs in cosmetics are more than in any other industry. However, the run lengths are significantly shorter – we get orders for 10,000 labels at most.

“There is a greater demand for embellishments, such as foiling and textured varnishes from cosmetic brands. Hence, such jobs are not viable on a flexo press because of the high relative wastage. The JETSCI ColorNovo label press that we purchased from Monotech Systems comes with additional flexo stations that allow for a flat white on films and embellishments too. The flexo station is followed by an intermittent die-cutting unit, inline slitting, and a rewinding unit. It is a digital hybrid press,” Mittal explains.

Mittal visited the Labelexpo Europe 2019 show in Brussels. He says, “The trend this time, shifted from conventional narrow web flexo presses to digital presses. With increasing SKUs, it makes sense for a label converter to operate with a combination of flexo and digital presses. Even in the alcobev segment, every company has longer runs for only one or two of its products, and we get demand for shorter run lengths for all other products. Hence, this is the right time to invest in a hybrid or a digital press.”

“As this segment has just begun to flourish, it was best for us to invest in JETSCI ColorNovo right now. This press offers more flexibility and quality as compared to any other press in this segment and hence we decided to invest in it. We have also made this investment keeping the future demand for embellished labels in mind. With short-run work increasing, there will be greater competition in the market, and press suppliers will then think about offering solutions at a viable price-point,” adds Mittal.

Digital is more profitable
Moreover, Mittal says that compared to narrow web flexo, the profit margins in digital are higher. The profit margins for a run of 2,00,000 square meters on a flexo press are slimmer compared to a run of 50,000 square meters on a digital press. Wonder Pac’s average monthly turnover stands at Rs 1.75 crore. The company performed relatively well in the first two quarters of FY 2019 – 20, but saw a sharp decline in Q3 sales. “Because of this, we expect our overall growth not to exceed 10% in the financial year. Our investment in the digital press paid off well,” Mittal concludes.

Short runs help cash flow
Mittal’s wife, Minakshi Mittal, a partner at Wonder Pac India, says, “Since the last one year, we’ve encountered numerous payment issues. Most of the companies are not able to pay on time. However, since digital allows us to take some part of the payment in advance, it has helped us in this turbulent time. We usually take 50% of the total amount in advance for any short-run label printing work. These advance payments help us maintain the cash flow. The failure in payments is mainly due to the economic slowdown. It looks like the market will improve towards the end of Q1 in the next financial year.”

Source: Packaging South Asia