A True Pioneer: Mold-Tek Packaging

Company Description:

Mold-Tek Packaging, has made its mark by being on the top rungs of the ladder in the supply of injection-moulded rigid packaging in India across FMCG, Paints, Lubricants and Food industries. In the packaging sector, it has one of the best operating performance track records. Mold-Tek occupied a dominant share in the lubricant industry in  the 1980s where, equipped with  in-house mould designing capabilities, the company brought into the market plastic pails. The plastic pails contained its patented ‘pull-up spout’ with a leak and tamper free feature for lubricants. In current times, the company’s growth in revenue and profit can majorly be accounted for by its introduction of In-Mold labelling (IML) technology for the Food & FMCG industry.

Mold-Tek’s Critical Success Factors:

Mold-Tek occupies greater margins than its peers in the packaging industry owing to the cost advantage that results from backward integration. This growth in margins can also be attributed to the growing shares of the Food & FMCG (F&F) sector which occupies higher margins than the lubes and paint sector. Owing to all these factors, Mold-Tek has been successful in maintaining a healthy RoCE.

Moving up the Value Chain: Mold-Tek’s backward integration forms a large basis of the company’s competitive advantage. While its competitors mostly depend on imports, Mold-Tek is perhaps the only Indian packaging company which has developed its own in-house moulds, labels, and robots. These factors greatly contribute towards the company’s cost advantage. For example, the company has been successful in developing up to sixty in-house robots at a 60% lower rate than the market price. The company’s in house mould making capabilities also acts as a catalyst to quicker product development and market introductions. IML requires a high degree of dependance on automation including robots and the company’s in-house mould making capabilities significantly aids this process. Mold-Tek continues to widen the gap in expertise in this domain with investing in advancements in IML like Square packs, QR coded, Tamper proof packs, etc, while its peers struggle to adopt the IML technology.

Innovative packaging solutions: Another critical success factor of Mold-Tek is its innovation in product development. The company comes up with valuable innovative products regularly which has aided its increase in share of business with existing customers while also helped with new customer acquisitions.

Plastic containers with pull-up spout for lubricant sector: Mold-Tek occupied a dominant share in the lubricant industry in  the 1980s where, equipped with  in-house mould designing capabilities, the company brought into the market plastic pails. The plastic pails contained its patented ‘pull-up spout’ with a leak and tamper free feature for lubricants. Over the years, this patented innovation has helped the company garner around 70% share in major lube companies.

Plastic pails for Painting Sector: Mold-Tek’s 1990s innovation of plastic pails for the paints industry has been a huge success as these pails have replaced tin containers in most cases with solvent based paints being an exception as they continue to be sold in tin containers to avoid reaction with plastic.

In-Mold Labelling: Although IML has had a good penetration in US and European markets over the last two decades, it has recently taken over Indian markets becoming the latest decoration technique in the Indian packaging industry. The company continues to be a pioneer of IML technology in India. The main advantage of IML over various other techniques include:

• Better hygiene owing to minimal human contact (a factor critical to Food and FMCG industry)
• Superior durability and aesthetics
• Removal of the labelling process and the labour and storage needs it requires

Loyal customer relationships: Mold-Tek’s customer loyalty as preferred suppliers for leading organisations in Lubes, Paints, and Food & FMCG industries, owes to its proven track record of reliability and quality of supply. It is among the very few companies to have received the  ‘green channel clearance’ from Asian Paints. Being IML pioneers also enables Mold-Tek to integrate into the supply-chain ecosystem of significant businesses like HUL at an early stage of IML adoption in the food and FMCG industries. As IML adoption continues to grow, Mold-Tek continues to make profits.

Potential Threat:

A plastic ban on packaging is becoming more and more popular as governments all around the world move to outlaw specific types of plastic materials. Currently,  India has a prohibition on plastic that is smaller than fifty microns.  However, Mold-Tek appears to be in safe hands due to the absence of feasible alternatives, the better grade products that differ from the ones that are already banned, and the fact that their products have recyclable properties.