The Economics of Glass Packaging & Why India needs to Mature in its Recycling Behavior!

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AGI Glaspac
AGI Glaspac
  • Improvement in glass recycling infrastructure would help reduce the cost of production and carbon footprint in the manufacturing process
  • Compared to 10kg and 88kg per capita usage of glass in China and the US, India has only 1.8kg per capita consumption
  • In India, FMCG companies opt for plastic bottles solely due to the cost economy of Indian consumer over its effect on the environment
Rajesh Khosla, CEO & President, AGI Glaspac

Every individual has a social responsibility to not litter and segregate wet, solid, recyclable waste from the household, but the ground reality even in Indian metros is very pathetic. When it comes to recycling of glass, the primary responsibility comes down to the manufacturer, but they are helpless if other stakeholders, including the government, refrain from bringing a cultural change in the society and greater awareness about the importance of glass recycling and its importance in preserving our environment. 

AGI Glaspac has been a forerunner, in the business of manufacturing glass packaging for a variety of industries since 1972. In conversation with Machine Maker, Rajesh K Khosla, CEO & President of AGI Glaspac elaborates many aspects of glass in the global and Indian packaging industry. A veteran with vast experience in the steel industry in India and abroad, Rajesh is changing the dynamics of glass manufacturing in India and is a forefront advocate of glass recycling in the country. 

Leveraging his experience in the steel industry, Rajesh has brought competitiveness to the company and implemented the effectiveness of using state-of-the-art technologies. Sharing an instance, he mentioned how collective brainstorming resulted in increasing the efficiency level of existing machines from 84% to 92% within a short period of time. He opines that compared to the steel industry where 70% of the process is mechanical and manual and 30% is automation and technology, the presence of automation and advanced technologies in the glass industry is the opposite. Hence, the Indian glass packaging industry is well advanced, and so is AGI Galspac. 

At present, AGI Glaspac has a 20% market share in the Indian glass packaging industry rivaled only by HNG with a 35% market share. The rest are mostly unorganized clusters from Firozabad and Gujarat. AGI Glaspac has two manufacturing units in Bhongir and Hyderabad, both of which have the world’s best manufacturing facilities and technologies. According to Mr. Khosla, AGI Glaspac’s production capacity has increased from 180 Tonnes in 1981 to 1550-1600 Tonnes per day in 2020 which is an 8-9 times increase in capacity and is expected to double its capacity in the very near future. Today, AGI Glaspac generates a turnover of around ₹1300 crores, offers a wide range of glass packaging from 5ml to 4000ml, and has a motivated team of 3000 employees.

Recycling of Glass Bottles: an area Government, Industry & People to Focus

Recyclability is the need of the hour when it comes to the manufacturing and the entire glass packaging industry. However, the recycling infrastructure is still underdeveloped in India as compared to other countries. “In India, the percentage of recycling is only around 35%, and in Europe, it is around 80%,” said Mr. Khosla. For the production of recycled glass, AGI Glaspac also uses cullet from broken glass sourced from waste disposal sites. But compared to regular production from quartz sand procured locally as well as from its captive quartz mines as the primary raw material, the recycling of glass bottles needs to improve. 

According to him, more cullet will be an added advantage because it would mean reduced sand mining which will lead to less ecological and environmental damage. Citing an example, Mr. Khosla explained that to generally make 1 tonne of glass 300 kgs of cullet and 700 kgs of sand are used, however, if more cullet is sourced then these values can be reversed and that would make the products much cheaper and feasible. 

“In India, the cullet percentage is very low only because our recycling behaviour is very poor,” ruing the fact Mr. Khosla said. He highlighted the fact that our consumption and waste disposal patterns are flawed which results in less cullet gets collected. Almost all households dump their waste in a single bin instead of segregating glass, organic, metal, paper wastes, and hence all these ends up in landfills which makes it difficult to get the cullet.

Furthermore, he also highlighted the problem of collecting glass for recycling in a country like India. “A ragpicker in India goes and picks up a bottle of glass and a bottle of plastic, the bottle of glass is around 400gm and the bottle of plastic will be 40 gms and light, so the economics of rag-picking or the economics of recyclability doesn’t work.” Development of indigenous recycling technology would also play a huge role as currently the recycling machines and technologies are mostly imported from Europe, feels Rajesh.  

Mr. Khosla elaborates further that the packaging material’s life has 3 major points, first is manufacturers where it is made by companies like AGI, the second is the FMCG who uses it and the third is the people and government whose onus it should be to help recycle it. However, since this is not the real scenario all stakeholders should come together to improve the recycling economy of glass to the benefit of nature and preserve our limited natural resources.

However, Rajesh believes that glass can be made much more affordable because not only is it less toxic for nature but can be more easily recycled than plastic as there are multiple types of plastics not all of which are recyclable. It is the role of the government, manufacturers, and common consumers to bring about a change in social and consumer behaviours regarding glass and plastic and embrace glass as a better lifestyle option. “More accountability of players in this supply chain and seamless logistics and transparency among all parties involved would ensure that glass becomes a feasible and viable option not only for consumers but also manufacturers of FMCG products,” adds Rajesh Khosla.

Plastic Vs Glass Packaging: Economics & Applications

Gone are the days when our favourite Coca Cola or Pepsi used to appear in those typically designed glass bottles, the clinking of which before gulping down from them was a sheer delight to celebrate. Their place has been taken over by alternative plastic bottles available in their pocket-size to jumbo family pack avatars. Still, when it comes to aesthetic design and packaging, glass bottles and containers are irreplaceable. 

When asked about what his opinion was about plastic and glass and how glass can overcome the dominance of plastic as a reliable and feasible packaging source, Mr. Khosla admits that glass and plastic in their properties have some overlapping features and each has its own advantages. While glass is more suited for rigid packaging, plastic is more suited for flexible packaging. And plastic is single-use or single-serve packaging almost always where that is not the case with glass. “Is it possible to get your favourite potato chips packed in a glass packaging? Packaging material change with every product,” adds Mr. Khosla.

In India due to the price sensitiveness, mass consumers prefer a soft drinks bottle of INR 20 made of plastic instead of a glass soft drink bottle which is sold at 5 times the price in European and American markets. The purchasing power and product determine the packaging option chosen by the FMCG’s who use glass and plastic packaging most often. 

India & Global Market for Glass Manufacturing

Per capita consumption of glass in India is around 1.8kg which is 10 times lower than China whose value is 10kg per capita and 80 times less than the USA which has 88kg per capita consumption. One of the major reasons for this huge gap is the huge consumption of processed food in other countries compared to India. Still, there is a huge opportunity for the improvement of glass consumption in India once the market matures over time, and also the economic spending capability of our people improves feels Rajesh.

Exporting glass containers and bottles loses out on the offshore market dynamics, and hence is restricted primarily to the domestic market. The major factor he points out is that export value is very low since the space utilized by empty bottles while transporting to other countries does not make much sense and economically it is not feasible as well. But whenever a product which requires glass packaging gets exported from India, the export business of a glass manufacturer also increases. 

Going Ahead: Golden Silver Jubilee of AGI Glasspac

AGI Glaspac is approaching its Golden Jubilee Year in the next two years, and the company has set its vision on expansion and acquisitions. The immediate expansion plan of AGI Glaspac is focused on doubling its present capacity in the next six years. The company will also explore possibilities to expand in the Eastern part of India. Being a highly energy-intensive industry, AGI Glaspac already has some of the world’s best manufacturing equipment and processes at its two plants.

The current structure of the Indian glass industry offers a great opportunity for AGI Glaspac to increase its production capacity. Currently, India has the capacity of producing 9000 tonnes of container glass out of which AGI Glaspac produces 1600 tonnes per day. So, even an overall increase of 20% in demand would push AGI to double its capacity and go for 100% growth in capacity addition.

The COVID situation has put expansion plans of the company on hold at the moment however, as for the COVID situation, the company also took stringent safety measures for the daily operation to ensure the safety of the workers like regular sanitisation of the plant, regular thermal checkups, safe working distancing, etc. For more information visit: www.agi-glaspac.com

1 COMMENT

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