Good evening, today we have Mr. Ashok Goel with us, President of Plastindia
Foundation also Vice Chairman and Managing Director of Essel Propack.
Plasticsinfomart: My first question is about your background, bit about your education, from where you started to where you are now?
Mr. Ashok Goel: Well, I was born and brought up in a place called Hissar in Haryana and did my graduation in commerce from Kurukshetra university. In the beginning of my professional life I was entrusted to turn around the businesses of the group which were going through the rough phase. Turning around business teach you the disciplines of running a business and it was great learning for me. Afterwards my journey with Essel Propack started in 1987. From starting the business and building it where it is presently took me around an eventful 22 years.
Plasticsinfomart: What was the key position you were holding when you get associated with Essel Propack?
Mr. Ashok Goel: Initially I was executive director, afterwards managing director. Currently I am Vice Chairman & Managing Director.
Plasticsinfomart: Could you shed some light on the global laminated tubes industry in which Essel is globally number one. How big is the industry size and what percentage share is hold by Essel Propack?
Mr. Ashok Goel:
The laminated tube business globally is about 16 billion tubes. Essel Propack holds about 1/3 of the share.
Tubes as a form of packaging began with aluminum tubes all over the world. Laminated tubes systematically began replacing aluminum tubes world over, with its advent in the packaging arena approximately three decades ago. The earliest one at that time to replace was the oral care market and continues to be one of the major markets. The conversion from aluminum, which began three decades ago, is now virtually complete. In laminated tubes next growth sectors are toiletries, hair care & pharmaceuticals. The increasing usage of Toiletries and Hair care products globally has led to accelerated growth of laminated tubes. These products are moving from aspirational platform to mass market platform and thereby fuelling demand for laminated tubes. Globally there is gradual shift in the Pharmaceutical ointment tubes from aluminum to laminated tubes.
Plasticsinfomart: And Essel has ventured in all these particular domains?
Mr. Ashok Goel: Yes Essel is present in all the segments of laminated tubes. It has 25 plants in about 13 countries covering all major continents. It is present in both laminated and plastic tubes segment catering the local markets as well as surrounding geographies.
Plasticsinfomart: Today Essel Propack is ranked number one in laminated tubes, would you like to shed some light on key hurdles that you faced in achieving this success since you joined Essel Propack?
Mr. Ashok Goel: Initially when Essel first introduced laminated tubes in India in 1984, the people were not ready to accept the product as the concept of using plastic laminated tubes was so high-tech that no one could think that such a product could me made in India. There were lots of difficulties to change that impression of the customers. Also customers had to change the packaging lines which involved capital expenditure. Result was loss for first five years and entire capital got wiped out. But the management was convinced about the product and carried on. The perseverance paid off and the upward journey of Essel begun. During that tough period Essel learned that to be supplier of multinational customers, other than having a superior product, the internal systems and processes need to be aligned with global standards.
Plasticsinfomart: In one of your interviews you said “Never tell the target company things will be good or better. You are there precisely because they are not. Tell them that things could get tougher before it gets better.”
Mr. Ashok Goel: This must be in the context of acquiring a company, or even post
acquisition of a company and what you tell the people as to what Essel brings on the table and how it could impact the employees of that target company. So there the intent was that, when you acquire a company the normal tendency would be that you go around and tell everybody that things would be very good. But the fact may be contrary to that. It means that given the fact that company is sold out and the chances are they were either sick or on brink of getting sick. And for you to succeed, things have to be set right. And in order to set things right, it require a lot of change management. And the change is something that human mind does not accept easily. Therefore it is always better to go and tell that there is lot of things that are required to be changed which will have its own toll on the people before things could get better. So that’s the true statement which one could make to the target or to the acquired company.
Plasticsinfomart: So you probably have stuck to such situations while some of your acquisitions?
Mr. Ashok Goel: When we acquired companies, we went ahead and told people that things may get tougher before they get better. And that’s exactly happened in some cases. The fact is that I personally went ahead, discussed with concerned people and informed them that things could go worse before they get better, to prepare them psychologically.
Plasticsinfomart: China is being favored as one of the priority investment destination for plastics and packaging, is it an alarming situation for Indian anyhow?
Mr. Ashok Goel: Truly speaking China has been favored as one of the priority investment destination for all manufactured items. Plastics & packaging form a part of it. The primary reason is the cost of production is comparatively lower than other parts of the world due to various government initiatives and incentives. The infrastructural backbone also plays a big role in promoting China as a manufacturing destination. In recent past China has invested heavily on technological infrastructure and right now focusing on R&D. In these context India has to gear up, remove infrastructural bottlenecks invest on up gradation of technological man power to compete with China for attracting investment in Plastic industry.
Plasticsinfomart: Essel also has a very big unit in China, so easy exports from China were one of the reasons for setup?
Mr. Ashok Goel: Strategically when Essel sets up a unit, it is generally based on local demands not export market. So for China it was the local demand which prompted our move not the export demand, though currently we export from China to other continents.
Plasticsinfomart: In 2004 you were President of OPPI (organization for plastic processors of India), and presently you are President of Plastindia Foundation. I would like to have your outlook on the impact of global economic slowdown on the world and Indian plastic industry?
Mr. Ashok Goel: The economic meltdown affected most of the industries globally in two ways: demand destruction and credit market squeeze. So while the export-driven economies were at risk, the Indian plastics industry remained largely unaffected as it is domestic demand driven. Now, if we look at the Indian credit market, the impact of economic slowdown was evident but due to timely intervention from the government and RBI, India was able to weather the storm.
Further, the Indian plastics industry took several measures to optimize its resources, increase productivity, improve the manufacturing processes as well as supply chain management to successfully face the challenges posed by the recent economic downturn. The current run rate for growth for Indian Plastic industry is around 24%.
Plasticsinfomart: Do you believe Indian government is taking good enough steps for the development of the plastics industry and supporting the same?
Mr. Ashok Goel: Primarily the plastic processing industry is SME in nature. The parent ministry, Petrochemical ministry is doing its best to come out with policy documents and also look at possibilities of cluster development.
But on the other hand there is lot of buzz going around on the environmental aspect of plastic and it is being termed as eco unfriendly in nature. Lot of regulations are being contemplated in the use of it, which can stifle the growth of the industry.
But truly, plastics by its nature are not eco-unfriendly; it is the disposal that creates problem. So the real challenge is waste management. Pragmatic partnership with all stakeholders – with support from state and central government – can help meet the challenges posed by careless disposal of plastic waste.
The plastics industry can be termed as a sunrise industry and I believe that easy availability of credit, lower interest rates, comparable power tariffs and its availability could be more encouraging.
Plasticsinfomart: So are there any ventures or activities in function by the bodies like OPPI and Plastindia Foundation to strengthen industry in current situation?
Mr. Ashok Goel: As mentioned before one of the current challenges is to change the perception that Plastic is not eco unfriendly and in India, 65% of disposed plastics is recycled,
one of the highest anywhere in the world. This is without any specific efforts by the government; the small Indian entrepreneurs are recycling and processing waste plastic. The plastic waste can be a good source of energy and ICPE has shown that waste plastic in cement kiln can generate more energy than coal. I wish in this coming months ICPE will act more proactively as a bridge between the plastic industry on the one hand and the policy makers and the society at large on the other hand so that responsible, technically defensible and rational actions are taken in the overall public interest and environmental welfare.
Plasticsinfomart: So as per your suggestion what more steps could be taken like any regulations or autonomous body to take this concern?
Mr. Ashok Goel: See as far as regulations are concerned, there are plenty. The answers lie in realistic implementation of them. And therefore the industry, the raw material manufacturers and the policy makers all three have to come together and formulate a strategy and a plan whereby we can deal with the issue effectively and efficiently and mitigate the environmental concern.
Plasticsinfomart: Would you like to suggest any key areas in Indian plastic industry where tremendous growth is possible?
Mr. Ashok Goel: The Indian plastics industry has a current growth run-rate of 24 per cent, which is far higher than the nation’s GDP figures. The segments that hold the greatest growth potential in Indian plastics industry include agriculture, healthcare, defense, infrastructure, automobiles, consumer goods and packaging.
Among all these segments, agriculture has the highest growth potential. Further, plastics can play a pivotal role in increasing per hectare productivity and conserving scarce water recourses. Further, by offering cost-effective solutions, the Indian plastics industry can usher in a second green revolution.
The Indian healthcare system too needs cost-effective solutions to make it affordable and effective across the country. The Indian plastics industry with its cost-competitive approach can help usher in the healthcare revolution in India.
The Indian government has adopted the path of self-reliance as far as the defense sector is concerned and is co-opting the participation of private players. The plastics industry, with its potential to innovate, can take the lead, and reduce the sector’s reliance on imports.
As far as the packaging is concerned, it is growing at a rate of over 15 per cent since the last five years. This is due to the fact that plastics can help in controlling adulteration, besides preserving the quality of packaged foods & pharmaceuticals products.
Similarly, consumer goods are growing to keep pace with India’s growth and are another promising sector for the continued growth of the Indian plastics industry.
Furthermore, as far as the global automotive map is concerned, India has emerged as a hub for small cars. What is interesting is that most of the major auto giants have identified India as export base for small cars that use more plastics compared to other cars.
Further, the Indian government’s economic stimulus package is primarily directed towards the infrastructure sector, i.e., building roads, ports, power plant and revival of realty sector. All these are indications that the Indian plastics industry has a bright future.
Plasticsinfomart: you were rated among ‘one of the 25 truly world class managers from India’ by ‘The Smart Manager’ publication. Would you like to share any thumb rules for new entrepreneurs who can make or break success?
Mr. Ashok Goel: For the new entrepreneurs, first thing is to have common sense. Two, have an eye for details. Three, have fire in the belly, which means have a curious mind. Four, perseverance, if they have these four, then the chances are there will be less disappointment in the professional life.
Plasticsinfomart: Any one thing you would like to change in the current scenario of the Indian plastic industry?
Mr. Ashok Goel: The one important thing the Indian Plastic Industry should change is the mindset in adopting best practices. It encompasses lean manufacturing, six-sigma, the GMP, the HMP, and people need to start benchmarking the best in class industry or sector and trying to adopt to be ready to face any future challenges. .
Plasticsinfomart: what is your vision for plastic industry of India in 2020?
Mr. Ashok Goel: Vision of plastic industry should be that India becomes global sourcing hub for the processed goods. For the Indian plastics industry to succeed in the long-term, there is a need to adopt world class systems and processes and attract talents to build competence across the industry.
We need to create world class institutions, where we can create world class human resource. All these will not only help us be globally competitive, but make the industry a profitable one. Thus, it is no longer a choice but a necessity to implement global standards, if intend to survive in the current global environment.
This ends the small session of interview with you. We are highly thankful for your time and knowledge you shared with us.