Print Summit panel indicates there is a great deal to look forward to in 2014

I've been meeting printers from Vasai and Vashi to Daman and Silvassa, and some of the top CEOs and they have been speaking of "the bloodpath in the market" and how this bloodpath has caused a great deal of ruin among print firms in Chennai and even in Mumbai.

Pundits have been predicting the death of print for decades. And yet, almost everywhere, they continue to thrive. As Narendra Paruchuri of Pragati Offset said, "When dad started the press, the next meal was important. When I joined the press, we had a turnover of three lakhs." This was in 1978. Today, Pragati is more than just "a decent name in the neighbourhood."

Gung ho about print
The 72-minute session was very gung ho about print. More than that, it was a good insight on: "Why certain print firms thrive." Is it because they stopped fence-sitting?

Pragati has been at the heart of the Indian print miracle. Today, the firm offers lamination, spot UV, online coating, UV printing, all types and textures of screen printed UVs, printing on non-absorbent surfaces, cast and cure, micro-embossing, hexachrome printing, MIPP and seven-colour extended gamut printing.

As Paruchuri made an interesting point when he said, "I think in regular jobs, bottomlines are shrinking."

He added, "So innovations and new technologies will increase bottomlines to a better percentage. That is the reason, innovations are a must." 

C J Jassawala of Thomson Press with units in Faridabad and Delhi NCR, has a similar line of thinking. When he joined, four years ago, what was India's most known printing press (other than the ertswhile  Tata Press); his vision was to make Thomson Press an “ever flourishing company”, and the “world’s most reliable printer”.

Jassawala started a journey with an operational strategy called “Theory of Constraints”. This process enabled Thomson shorten its turn-around time for jobs, and deliver on its promise. Jassawala said, "On time in Full (OTIF) is the measure of our performance. Three years ago we started with an OTIF of 37%, today we are at 90%. Our goal this year is to consistently average 95% OTIF."

He added, "As long as printers keep updating themselves with relevant technology, ride the wave of market trends, remain focused on customer delight, and keep their break-even at 70%, they will remain above the rest of the pack."

How to be a tier-one print company?
Print surveys in India, including the one PrintWeek India conducted, calculate that over the past decade, firms like Pragati and Thomson make up about 80% of the largest 100+ companies by revenue in India; and their revenues grow on average by a healthy double digit growth a year.

In India, the tier-one print firms constitute 90% of the top 100+ companies (these exclude newspaper houses and government presses for currencies). The moot question, which a majority of the 550 print delegates in the NCPA wanted to know, was how can small- and medium- scaled print firms who are not in the tier-one segment, survive and succeed in today's world.

It is in this scenario that avant garde firms like Mail Order Solutions (MOS) or Vistaprint are showing how one can survive in spite of a difficult business climate. One thing is, they have advantages that more streamlined firms lack.

MOS can cross-pollinate ideas across different businesses: their direct mail print approach incorporates expertise from both traditional print and data integration. They can also cross-subsidise risky ventures like wines. Dharti Desai of MOS could rely on its direct mail business as it took a punt on spreading the good taste among wine connoisseurs; now some of her wine partners who have very high valuations are customers of the MOS business.

Dharti Desai of MOS spoke about the unique nature of direct mail printing and their recent investments, she said, "Our mantra is 'on time, every time', and we have trained our team and ingrained the MOS' motto in them. Our investments have taken a toll on our bottomline, fortunately for us; the business has been coming in to help us recoup most of that investment."

Diversity in print
One discernible trend that emerged from the panel discussion is, that print firms do not have one person or family as the dominant owner. Thomson Press, MOS and Vistaprint have boards or management teams.

These firms vary enormously in their competence, For instance, there is Nilesh Parwani, the managing director of Vistaprint in India. He says, "For Rs 475, anybody — lawyer, doctor, or even a student — can log on to Vistaprint's site, choose a design template and place an order for printing 500 good-quality business cards."

The Paris-headquartered company, with global revenues of over $1 billion, entered India in 2011, by taking over Printbell, a company that Parwani founded in 2007.

Vistaprint has got down its technology know-how and processes to India. It has also invested in a 50,000 sq/ft printing facility in Bhiwandi. The corporate gifting space is another segment the company sees a lot of potential in. Parwani said, "Business cards are magnet products and competitive. Plus, there is tremendous scope in printing personal products like key chains, calendars, USB drives or invitations for birthday parties and weddings in a young market like India."

Nilesh Parwani of Vistaprint talked in detail about Vistaprint's business model, he said, "Our customers come to us with extremely short run jobs, and you can see an analogy between what we do and the industrial revolution of the 19th century. We had to start off by investing heavily in order to cater to our customer. Now it is imperative that our quality should be good enough to have repeat customers."

Exploring synergies

Others are “absentee landlords” like Aroon Purie of Living Media who is an "evangelical printer” (a reader of PrintWeek India). Purie has, since been, focussing on the media space where his firm is vying for top notch along with NDTV and Times Now. That said, the overall quality is going up. Thomson's decision to appoint a non-print professional like Jassawala and explore synergies between different businesses is yielding results.

Among other things, Jassawala stated, "Innovation is not only in the product, but also in a way we plan the job execution."

Jassawala drawing upon his experience at Thomson, he explained, "One should never use the past to take decisions about the future. Markets dictate the requirements of a successful business. The key is strike the right balance to include cost rationalisation without compromising with quality."

Adaptability is the key
Once upon a time, they said, only the fittest survive. Now that mantra can be modified to: Adaptability is the key. At Pragati, Paruchuri says, "We have customers who give us Rs. 50,000/- business or lower per year. Topline has nothing to do with any client. If the client is good, pays on time, and we have a reasonable margin on the job, the client and the job are worth it. We have instances where we said no to a client as the job we were doing was not to our satisfaction and also the effort was not worth the returns."
 
Today Pragati operates in three types of print space. Guided by a very Warren Buffettian management philosophy and financed by its profits, with its roots in commercial premium printing, Pragati has moved into everything, from labels to packaging to signage.

A world of scarce capital and volatile pricing is one to which printers have to adapt to.

Paruchuri who set the ball rolling for the 72-minute session said, "Goal of any business organisation is to make money. Topline-bottomline should be secondary concerns. As a business organisation one should always strive to get your efficiencies right and keep improving them."
 
Thomson's five point mantra

Jassawala highlighted the five point mantra for the Indian print industry.

One: We need to look at segment markets, customers, products to identify growing and profitable segments and grow the top line.

Two: A continuous focus on cost reduction of material costs, direct costs and fixed costs. Eliminate every cost that customer won’t pay.

Three: Developing alternate material or source of procurement for raw material and consumables.

Four: Implement focused improvement projects to improve productivity of men and machines, shorten turn-around times, reduce RM and WIP, cut waste, eliminate rejections and rework.

Five: Create a “Decisive Competitive Edge”, measured as “On-time in full delivery with required quality”. This additional value that is perceived by and critical for some customers will help us, retain them or get some premium over competitors offers.

Not everyone can be a superstar
But this does not guarantee that every print firm will become a superstar. Some print firms, especially with low margins and job work, depend heavily on their courting of customers on price, and are, thus, at constant risk from every currency change or market correction. Many still sacrifice profits for market share, and will surely one day exhaust the patience of their balance sheet. A discount is still a discount, no matter how much one sugar coats it.

As Jassawala said, "Thomson is a process driven company. Every job is estimated based on norms developed by the costing department. Sales personnel will quote as per estimation norms. There are rules for allowing discounts at different levels based on the nature of the job. Large jobs and annual contracts will obviously call for higher discounts, both in domestic and export markets. However, there is a cut-off level / a lakshman-rekha, if you may, below which, we will never bid. However, there is a cut-off level / a lakshman-rekha, if you may, below which, we will never bid. It is supposed to be like that but in case of high-end work, clients do pay a better price."

BMPA, by hosting this session, performed a valuable service to the print industry. Lots of things emerged even among the panelists as to how each of the print firm had a diversified structure, and not all diversified business groups are alike.

As Dharti Desai explained, MOS has a very different internal organisation from Pragati; and both run quite differently from Thomson. She was right to point out that management matters enormously.

One thing was clear: most of the top print firms are far better run today than they were a decade ago. There was a near-consensus among the panellists that MIS and processes, which measure hidden costs, represent profit.

As Paruchuri said, "The sole reason for doing business or the goal of business is to make money - legally. Doing business and not really having full knowledge of ROIs, RMCs and all the legal obligations of the business will take the business down. Unfortunately, these act like leeches and will drain the company. It takes a while but it will go down. The sad part is that during this time it will affect the other printers also."

He added, "I could not care less about the quantum of business if the bottomlines are not met. In our organisation, it is a must that bottom lines must be met."

 

About the Panel

Mehul Desai, chairman and founder of Mumbai-based Mail Order Solutions (MOS), along with Ramu Ramanathan, editor, PrintWeek India, chaired the panel discussion on 'How should the Indian print industry measure success? Topline or Bottomline' at the BMPA-Ricoh Print Summit 2014. The panel discussion featured Narendra Paruchuri of Pragati Offset representing traditional print firms, professional print CEO, C J Jassawala of Thomson Press. Joining them were Nilesh Parwani of Vistaprint and Dharti Desai of MOS, touted as the disruptors of the status quo.   Iqbal Kherodawala joined the panellists and posed questions in his role of the devil's advocate.