The packaging market in India is growing: Max's Analjit Singh and Toppan's Shingo Kaneko

Analjit Singh (left), founder and chairman emeritus of Max Group, with Shingo Kaneko, president of Toppan Printing
Image: Amit Verma

In February, the $2-billion Max Group roped in the Japan-based packaging and printing solutions behemoth Toppan Printing as a strategic partner of Max Speciality Films, the flagship manufacturing business of Max Ventures and Industries Limited (M-VIL). While this will pave the way for Toppan to make an India foray with an investment of Rs 200 crore, it will also bolster Max’s speciality films business. Forbes India caught up with Analjit Singh, founder and chairman emeritus of the Max Group, at his office in Lutyens’ Delhi, where he is joined by Shingo Kaneko, the Toppan president. Edited excerpts:

Q. How has life changed post the demerger of the erstwhile Max India? Could you also reflect on the joint venture with Toppan?
Analjit Singh: On January 15, 2015, we announced the demerger where one listed company was proposed to become three listed companies. Around this time last year (April-May 2016), the process was completed. Max Financial Services at that time had an established business of Max Life Insurance below it. A few months later, the merger was announced with HDFC Life. Max India was formed with three businesses and to be honest, they were a little shaky back then. Max Healthcare, a little less and Max Bupa and Antara (Senior Living), a bit more. The purpose of combining these three businesses in a cluster was to get the business of ‘health’, ‘care’ and ‘people’ together.  A year later, Max Healthcare is flying, while Max Bupa is profitable—something we were sceptical about last year. And Antara is due to start soon. M-VIL, too, was a sluggish and stagnant business then. There was vacuum in terms of leadership, strategy and future. But today, several businesses under it such as real estate (Max Estates) and education (Max Learning) are on the verge of taking off and the investment arm (Max I) has also started. As far as Max Speciality Films (under M-VIL) is concerned, Toppan has come in.

It’s actually like a knee replacement surgery plus a cardiac procedure and a kidney transplant. Toppan is an $7-billion company, among the top two in Japan, and has a substantial platform linked to BOPP films (biaxially oriented polypropylene), to packaging solutions outside BOPP as well as a substantial platform linked to non-BOPP, non-packaging. Together with Toppan, we can leverage our BOPP business, extend into the world of packaging that is non BOPP, find avenues which are non-packaging and non-BOPP, which is what MaxVIL was born for. But we did not have leadership back then. Like in the life insurance business, M-VIL too has a current value of current business, its future value and future value of future business. Toppan is taking the current value of current business, extending the value of the business from the current business and finding new value from new business. That’s what the joint venture is all about.

Q. What prompted Toppan to invest in India? And why Max Group, when there are other bigger players such as Flex, Jindal, among others, in the packaging business?
Shingo Kaneko: We have been in the packaging business for long and have been laying emphasis on globalisation. The Japanese domestic market is shrinking. We have very good technology, so we now want to go global. The packaging market is witnessing a global growth rate of 4 percent CAGR, while India is witnessing a growth rate of 18 percent. We were already present in Indonesia, China, Thailand, Europe and America and now we’ve entered India. Why Max? Well, it’s a conglomerate with many verticals. Toppan, too, has many business divisions. While we have invested in films for now, we will be discussing other solutions as well. We feel that through the joint venture, we can synergise our strength collectively and find solutions for the Indian market. Besides, we also saw a lot of commonalities in terms of corporate ideals which brought us together.

India is an important market for us as consumption here is only going to grow.

Q. Japanese firms are increasingly evincing interest in India. Why do you think that’s happening?
SK: India has high potential and has been witnessing a steady economic growth. But there are many areas that are totally untapped. At Toppan, we have solutions that are meant for developed nations. But India is an important market for us as consumption here is only going to grow. In the years to come, more refrigerators will be sold, more ACs will be sold and, as people get busy, they will also need pre-packaged food and other things. In this area of business, advanced nations have reached a peak. We did a survey on India and found that it holds a lot of potential. But we also realised it would be difficult for us to enter on our own.

Q. What is your view on the [Narendra] Modi government’s economic initiatives?
SK: Before Abe [Japanese PM Shinzo Abe] took over, there were frequent changes in the government. Abe’s tenure is much longer; he has been able to provide a politically stable government and is also laying emphasis on economic growth. On the other hand, India has a similar situation where the Modi government is also focusing on reforms and deregulation. So when both heads of states met, they emphasised on forging stronger economic ties. There is tremendous potential for both countries to cooperate.

Q. Through the joint venture with Toppan, will you focus only on India or the global market as well?
AS: In joint ventures, where partners are international, that’s always a bit of a tricky question. Going forward, we have to find joint solutions. We have to see if our films are more competitive compared to what Toppan already exports from Japan. We would think that Toppan would like to supply to those markets from here. But the answer to your question would be, on a ‘case-to-case’ basis. Our joint venture agreement does not specify where you can supply or lays no limitation on where you can’t. It says we can exploit all opportunities based on economic rationale.