The generation and disposal of waste is an inevitable part of any industry or developing society. Every time we buy something from any store, we keep the product and dispose the packaging material, which eventually leads to the generation of waste if the packaging is created with sources that are non-recyclable.
As soon as most of the companies realized it, they started using the solutions like replacing plastic bags with paper bags, boxes made from cardboard, which is helping in recycling the waste material and has controlled the increasing volume of waste globally.
We can experience a solid impact of adopting these solutions and contributing towards the goal of creating a sustainable world. Creating a difference with a sustainable vision is made by a few companies, and those companies are worth appreciating and acknowledging since they are immensely contributing towards the betterment of the universe.
Adeera packaging is one of India’s first and largest V bottom paper bags manufacturer and is a prime example of such companies. The company contributes towards a sustainable environment with an effective solution of manufacturing plastic-free paper bags. These bags are made from resources that cause no harm to the environment for the manufacturing process and are recyclable.
In an exclusive interview with Insights Success, Sushant Gaur, Founder of Adeera packaging, sheds some light on the journey of the company in the packaging industry. Below are the highlights of the interview.
Please describe us about Adeera packaging in detail.
Adeera packaging is the largest manufacturer of paper bags (based on the number of bags) in India. It has the largest capacity, 60,000 sq. Ft of space for manufacturing V bottom Paper bags. Adeera pack is the first paper bag manufacturer to have a plastic-free, non-wax water barrier coating which is also heated sealable. We have spent a lot of resources to develop this and is now a very successful product for us.
We also manufacture aluminium-lined paper bags that is a replacement for the paper stand-up pouch, with a layer of PE coating. Our products use no plastic anywhere.
What kind of offerings does Adeera provides to its clients?
Adeera delivers to more than 30,000 pin codes on time. Our deliveries are done on a relay model where the driver of the vehicle does not spend more than 4-5 hours at a stretch and not more than 12 hours in a day. This reduces road accidents and ensures the trucks are constantly moving, which eventually lowers the delivery time by 40% in long routes and makes delivery timelines more predictable and reliable.
Due to guaranteed five-day supplies to most of the locations, our clients no longer take delivery in their DC but ask us to supply to their stores directly. This decreases the carbon footprint by irradicating the need for a large warehouse and removes the need for re-shipping.
How was Adeera affected in these pandemic times, and what were the steps were taken by you to curb the damages, all the while helping your clients and maintaining the safety of your employees?
Due to the global shortage of good quality, light grammage paper most of our customers have acquiesced to our price increases. Everyone understands the issues faced by our industry – container shortage, shipping delays, the paper raw material being unavailable, etc.
Even though customers are supporting the price increases, sometimes the process for getting price revisions takes seven days; by then, the price goes up further. This is the first-time spot pricing has come to paper.
Earlier, we used to maintain no stock, our mills would provide us with daily deliveries, and in return, we would dispatch our FG the same day. Now due to delays, shortages, our working capital requirements have shot up.
India gets the bulk of its imported paper waste from the USA; shipping rates from the USA were between $1,600 to $2,000 pre-pandemic and are currently at $15,000 – $18,000. A 40 ft container can have 25 tons of paper waste; this implies a cost increase of Rs 48/kg on imported raw material.
However, most paper mills use domestic waste; with the closure of factories during the lockdown, the supply of local paper waste dried up, and the prices of domestic paper waste shot up from Rs 14 to Rs 26/kg and have not yet come down.
Since we have experienced these price hikes, our first initiative was to conduct our business in a properly organized manner. During the first lockdown, our supportive HR policies helped us retain all our labour during the second lockdown. Due to the increase in demand, we have done the CAPEX that was required to increase our capacity by 100%, and we will be continuing our four-year record of 100% YoY growth this year as well.
Where do you envision Adeera to be in the long run, and what are your future goals? How do you plan to embrace the changes happening in the packaging industry?
The bulk of our export orders have come due to these sustainable commitments. In India, we are experiencing an increasing demand for products made from sustainable paper.
We are looking to expand by doing joint ventures, contract manufacturing deals, backwards and forward integration with new and current players in the paper bag industry. We have global ambitions, which we wish to see to fruition in the next four years.
We have a target of 250% inorganic growth in 2022-23. The seeds of which have been sown. Our target is to create a globally relevant company in paper bags by integrating forward, backward, and side-ways.
Adeera pack is working to make the world environment friendly by promoting recycled paper or agro-waste-based paper bags. In time, we will be manufacturing re-sealable paper courier bags to our customers by doing proprietary modifications to the machines.
Over 130 countries across the world have pledged to bring an end to single-use plastic by 2030; unless there is enough manufacturing of sustainable replacements, this ban can never be successful.
We are committed to use paper from sustainable and traceable sources, our inks are all water-based, and adhesives are food-grade and starch-based. We use 100% plastic-free water and oil barrier coating, which is also heated sealable.
In the future, we are working towards developing soya-based inks, we are in the process of setting up a 100 ton per month output unit for e-commerce paper packaging in South India and will be manufacturing re-sealable paper courier bags to our customers by doing proprietary modifications to the machines.
We are exploring to set up a manufacturing unit in the USA and are also exploring to take over a plant in Africa, and by March 2022, Adeera will have one of the largest factories manufacturing paper SOS bags.
What is the current industrial scenario of the packaging industry?
Self-regulation is better than enforcement. Brands must realise that their customers care about what they are doing for the environment. International brands are ahead of sustainable initiatives. They are not only looking to reduce their carbon footprint but are also going into the minutia of recycling by demanding a minimum of 40% post-consumer waste in the paper they use.
Indian brands are catching up fast. Brands are demanding usage of PE-coating free paper for cups, compostable plastic for garbage bags, and a multitude of other initiatives are being done to be more environmentally responsible. The bulk of our export orders have come due to these sustainable commitments. In India, we can experience an increasing demand for products made from sustainable paper.
Most Indian mills make profits cyclically, and the industry has a very high NPA rate. I don’t think it’s too bad for them to make good profits. I think the end customer needs to make prices sustainable for the mills because currently, there is a severe shortage of good quality paper. Unless large players have the motivation to grow their production lines, we will lose our global competitive advantage on recycled paper to some other country leading to the loss of linked businesses.
There are less than 30 Indian mills with a turnover of more than Rs 100 Cr that are listed on the BSE. Only three mills in India have sales of more than 1000 Cr. The largest mill in the world has sales worth Rs 1.11 Lakh Crore. Although west rock has manufactured other packaging goods as well, it has acquired those businesses through active M&A activities, which is a mark of an evolved sustainable market.
A Dynamic Leader
For six years, Sanjay Gaur managed the operations for Urja Packaging as a one-man show, and Urja started to grow extremely fast. He decided to partner with their biggest client Atulya Bhatia from Cartonwala, and Adeera Packaging Pvt Ltd. was founded in 2019.
One year later, Ashish Agarwal joined as a co-founder to complete the team. Adeera Packaging Pvt Ltd. has two Co-Founders, Atulya Bhatia and Ashish Agarwal. It was founded in 2019, and it took over Urja Packaging, a proprietorship firm registered in 2012 by Sushant Gaur.
