All about clusters, collectives and printer partnerships - The Noel D'Cunha Sunday Column

In this day and age of declining margins, there’s a dire need to find solutions that will let print companies survive and grow. The roundtable discussion during the AIFMP meet had members speak about leveraging volume purchases, cooperatives and buying power. This Sunday Column looks at a few partnership initiatives that have shaped up or caved in

30 Oct 2015 | By Noel D'Cunha

What goes up must come down. It’s a phrase we’ve learned when we were in schools. But when it comes to print-packaging, this does not play up, it hurts. While input costs keep steadily rising, customers demand lower pricing.
 
Rising raw material costs have put the print community under pressure. Like commodity buying, the printer can’t go around shopping to reduce their input bills. But some really big savings can be achieved when such materials are ordered in large quantities, something that small- and medium- sized printers can’t do.
 
During the All India Federation of Master Printers (AIFMP) roundtable meeting held on 27 September 2015 in Chennai, one of the discussions centred around consumption patterns, be it paper, ink or adhesives and whether community buying or cluster development can reduce the printers’ bills by buying collectively.
 
There are few examples where printers, prompted by the need of the hour, intended to form groups.
 
G Venugopal, managing director, Sterling Printers, cites three examples in Kerala, which took off but could not become successful because none had a volunteer coordinator, who could manoeuvre the project. “He needs to be unselfish, a project champion who can spearhead the project, and convert experiments into success.”
 
Kerala’s capital city, Kochi, where 20 printers came together, held a couple of discussions and decided to buy land. This Venugopal says, was a big way of investing, which did not work. “Now who will purchase land, in which facility and which printing press? What kind of investment has to go?  Some wanted commercial and some packaging printing,” he says. “There were many voices, making points and counterpoints. This did not help.”
 
The second project Venugopal spoke of was in Calicut, where a new Komori press was ordered, again a big investment, which did not work, because of many voices.
 
The third project, where the government has sanctioned Rs 10-crore towards the Rs 18-crore project has so far been on the course. “There’s a printing press, about 80% of tool and Rs 10-crore grants sanctioned,” says Venugopal. “Right now, they are very optimistic, and looking at setting up a packaging plant.”
 
Venugopal completed by saying, “I am very clear about one thing. When you have too many directors on boards who argue on everything, the project will fall flat.”
 
But there places like Lucknow in Uttar Pradesh and Pune in Maharashtra, where the initiative of community buying has been working.
 
Last year, the Lucknow Printers’ Association (LPA) joined hands with Toyo Ink India, where it fixed the ink prices for a year. There were no quantity barriers, says Harjinder Singh, general secretary, LPA. “Since, we are a very small second-tier city we did not know, how many people will be buying. Moreover, printers were conscious of sharing their figures and of what quantity of ink they are buying.”
 
Singh says, the printing ink prices offered was 25% less compared to the open market, and obviously that made a difference to the profits. “But the success of the initiative came in the form of other companies reducing their prices, some wanting to sign a similar agreement with the LPA.”
 
That done, LPA is not preparing a project for a print city, where five printers will join hands, work separately under their banners. For example, one will specialise in the design, the second will invest in CTP, third a four-colour press, fourth in an embellishing kit and fifth in post-press. “Being a two-tier city, Lucknow gets a limited number of jobs. If printers invest in what one needs, they can maximise utilisation of the equipment as well as offer better prices to the buyer.”
 
Ravindra Joshi of Pune Press Owners Association (PPOA), says, the concept of collective bargaining and purchase on the lines adopted by Pune Sahitya Bhandar has been a win-win for printers in Pune. “Mudran Sahitya Bhandar is a store that was set up by the print pioneers in Pune to help printers source raw material,” he says. “It was a perfect combination of two parameters, top quality at low price. We surveyed our ink and paper used, analysed it and ordered what we need.”
 
The Pune printers negotiated the cost, committed purchase three tons of ink per month, with each printer buying a minimum of 20kgs. “This was strictly followed and has been in practice for the last seven years,” says Joshi.
 
Pune printers are now trying to negotiate pricing for paperboards and ink, but will leave paper out of the gambit, because of the varieties it’s available in.
 
The rise and fall of the Book City
The seed of the Book City was sowed during the National Book Printer’s Conference (NBPC) held in November 2011. Top book print firms such as Gopsons Papers, International Print–o–Pac, Jayant Printery, Kalajyothi Process, Lovely Offset, Manipal Technologies, MultiVista Global, Nutech Print Services, Rekha Prints, Replika Press, Repro India and Thomson Press were a part of the process. “The endeavour is to make book printing industry in India a well-directed, income and profit generating industry – and capable of handling global requirements,” Pramod Khera of Repro India had said.
 
There was and is competition from China in the book printing segment. There was also this need to and clamour that if India needs to compete with the big giants around the world then it will have to scale up and be better prepared.
 
Bhuvnesh Seth of Replika Press, who was present at the AIFMP roundtable meet says the first experience of community initiative came at the Frankfurt Book Fair where we had the united stand, but unfortunately, we did not have the union mentality and of course competition played a part. “The clients were very smart; they were to take best out of it. So we were not prepared for that.”
 
P Sajith of Welbound, host of the NBPC, and a key catalyst for the Book City says, the Book City lacked a plan where the big ten working together could have built up something big to challenge China or build an organisation that would give end-to-end publishing solutions from typesetting to shipping. “We hired a consultant who failed to come up with a plan.”
 
The Manipal idea
The Rs 2,700-crore Manipal Group has given the collective approach a new twist, given it a totally corporate down approach. The Group’s Manipal Technologies has established a new department called Print Management Solution (PMS) with around 160 printers registered with the group. There are 18 printers from Mumbai, some from Chennai, Coimbatore and few other cities.
 
Manipal has tied up with State Bank of India (SBI), HDFC for very big volume print for next three years, and will be the sole supplier for every banking requirement. The company will be inking a deal with Oxford University for book printing, and there are few online sellers in the pipeline too.
 
Manoj Mehta of Manipal Utility Printpack, says, “If you are serving clients like Dominos and Mcdonalds, you have to reach on time from Kashmir to Kanyakumari. These types of clients want daily delivery. Haldiram requires quantities of 1,00,000 cartons every day. It is, therefore, necessary to have tie-ups with print companies across India.
 
Clusters - a shot in a print firm’s arm
Presently there are cluster projects in Karnal (Haryana); Kannur (Kerala); Sivakasi (Tamil Nadu); Krishnagiri (Tamil Nadu); as well as the CFCs in Mysore (Karnataka) and Pilakhua (Uttar Pradesh). 
 
Kamal Chopra of AIFMP, who is promoting cluster development projects of the MSMS, says, the cluster programme is picking up momentum. “The Indian industry is being developed at micro/small scale. Due to the limitation of resources, it is becoming difficult to survive in the era of global competitiveness,” he says. “Clustering of units also enables providers of services to them, including banks and credit agencies, to provide their services more economically, thus reducing costs and improving the availability of services for these enterprises.”
 
Chopra however, believes that clusters should become bigger and join hands internationally. “We have to produce unitedly. Only one thing is required and that is trust. Earlier trust use to look at how to get the money and to build the money.”
 
PrintWeek India view
There is no doubt that creating a partnership is a major if not the first step towards success. Whether a community initiative or a cluster, the mission has to be passionately pursued. If that is done, there will be no dearth of genuine partners and customers will follow suit.
 
(The 100 minutes discussion was part of the AIFMP GC meet in Chennai for which Ramu Ramanathan of PrintWeek India was invited by Dev Nair, Anand Limaye and AMSG Ashokan, members of AIFMP.)