Switzerland-headquartered SIG Group, an integrated packaging solutions provider to companies such as Pepsi, Coca-Cola, and Amul, among others, is investing around €100 million (Rs 900 crore) in setting up its first aseptic (free from contamination) carton plant in Ahmedabad, Gujarat.
The plant will have an annual manufacturing capacity of 4 billion carton packs that will go towards packaging of non-carbonated products such as dairy, beverages, and food items (soups and ingredients) catering to the Indian and Bangladesh markets.
“We, at present, supply our cartons and bag-in-box packaging products to companies such as Amul, Pepsi, Coca-Cola, Parle Agro, ITC, and Milk Mist, among others, in India,” Samuel Sigrist, CEO of SIG Group.
“We expect our Indian business to grow at a compounded annual growth rate of 15-20% over the next few years, and if that happens, in the second and third phases, we will ramp up the manufacturing capacity to 10 billion carton packs,” Sigrist said.
The €3.1 billion company hopes to start production from the Ahmedabad plant in the next 12 months, he said.
The planned investments in the first phase will have a capex component of €60 million, while €40 million will go towards a land lease for the plant in Ahmedabad.
The company hopes to initially target the Indian and Bangladesh markets, which Sigrist believes are bound to grow with the rising disposable income of the middle class and demand for packaged foods that are hygienically safe and last longer without refrigeration.
The company doesn’t believe they will compromise on margins because of the smaller packs and competitive landscape in the country, as they hope to make up for it through higher volumes.
“India, unlike other developed economies, has a large middle class that is beginning to spend on quality and premium-packaged products. Also, the smaller packs like Rs 5 pack will help our clients even penetrate rural areas,” Sigrist said. Hence it is going to be a game of volumes, he said.
SIG Group provides services across innovative system filling machines, packaging products such as carton packs, bag-in-boxes for large gallons, and maintenance of machines.
“That is our differentiation that stands us apart from competition. Our filling lines can fill large as well as small packs on the same platform and can achieve 100 million fillings on a single machine,” he said.
The company will initially import the raw materials—paper, natural forest-based polymers and aluminium—but from second phase, will start to source them domestically, he said.