Does size matter? BMPA Vision Conclave says yes

The Indian economy is growing at an average growth of 7.5% GDP. India has already clocked a USD 3.3-trillon economy in the current year, and surveys say that the country is poised to reach USD 7-trillion by 2030.

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Future growth is inevitable, and according to Amit Shah, president, Bombay Master Printers’ Association (BMPA), the association believes that the size of your business matters.

Tejas Tanna, chairman of the Vision Conclave said for print converters to survive and grow, they need a critical size. “We should all believe that by expanding through investments, by collaborating with national and international converters, and by continuous innovations, we can contribute immensely to our national goal of reaching a USD 5-trillion economy.

Thus, VisCon 2023 saw around 40 print leaders from across the country gather together to deliberate on the exponential growth opportunities.

The second half of the second day of the conclave was devoted to the topic, Size Matters, where Mehul A Desai of Mail Order Systems engaged with the delegates on different ways of achieving growth and their implications.   

Too big to fail

Introducing the topic, Desai said that every industry has been impacted by technology, and those who have adopted technology have grown faster.

“In recent times, the industry has undergone substantial changes in terms of technological advancements, ever-changing customer preferences (higher quality at a lower price), evolving market dynamics, inevitable government policies, environment and sustainability practices, and disruptive innovations. All these have contributed to a landscape, where staying ahead of the curve is imperative,” Desai said.

He said the advantage of size is that large companies grow faster. “Large companies can adapt to the change better by leveraging aggressive marketing, strategic partnership, and exclusive contracts,” Desai said. “Large companies have greater financial resources to broaden their customer base. This also helps them invest in cutting-edge technology, capture the market faster and expand. Plus, large companies easily hire top talents to optimise efficiency with professional management. They can easily scale up their production capacity, diversify product offering, explore untapped segments, and lead market dominance.”

Desai said there are three ways of achieving size — organic growth, mergers and acquisitions and offering exclusive and niche product ranges.

Organic growth can be achieved through a firm’s own capability and resources and the successful execution of strategic steps, such as reinvesting profits, investing in R&D, scaling up production capacity, expanding operations progressively, and implementing innovative solutions.

Mergers and acquisitions allow companies to combine resources, talents and expertise for rapid growth. They can help in accelerating the use of technology, and gain a competitive advantage by diversifying product offerings.

On the other hand, exclusive and niche product ranges help companies differentiate themselves and capture market share.

“Too big to fail is a statement of fact,” Desai concluded. Giving the example of Yes Bank, which was recently saved from solvency, Desai said, large companies are highly valued and are considered to be important to the ecosystem. So, there is less chance of their failure.

Size matters, but it’s not the only thing

Ankit Tanna of Printmann Group said, “The printing industry is too fragmented. Instead of being an industry, we need to focus on being a sector where there are many more sizable players. For this transition, size matters.”

Harish Gupta of Sai Com Code agreed that size matters but, in the industry, most printers are not at a scalable level. So, the size growth is not happening. Therefore, consolidation is the way forward.

Sushant Gaur of Adeera Pack said, “In our growth journey, we had to build technical expertise so that we can acquire companies which had shut down and use their machinery.” This approach helped Adeera Pack to grow from a Rs 3.5-crore company to a Rs 250-crore company. Now, Gaur said, the company is facing a funding crunch for the next level of growth as banks and private equity firms are not ready to give loans beyond a certain amount.

Rajesh N Shah of Award Packaging said that started by his father without money, the company grew by making investments according to customer demands. The company started with pharma packaging and accordingly, each client needed to be given space within the company shopfloor. It shifted to Navi Mumbai in 1995, and once the client roster became bigger, a bigger facility opened in Silvassa.  

Shah said in the next step, the company is concentrating on industries other than pharma, including E-flute cartons. “Initially, whatever we earned we put it back in the company,” Shah said, “But as you grow beyond a certain threshold, the struggle becomes less, as you can diversify into different businesses, and once you have established yourself in the market, you don’t have to go looking for customers, customers come to you.”

Sanjay Patel of Param Packaging said, “We believe that investment is the way to grow, and we have invested in paper packaging. The per capita consumption of paper in India is still low compared to the world average, and with the plastic ban, I believe there is a real opportunity in paperboard packaging.”

Manu Choudhury of CDC Printers said that size is not the only thing that matters. What matters more is how you manage your finances. Also, the focus should be on being faster and more nimble than the larger companies. “Fast companies grow better than large companies,” he said.

Ramesh Kejriwal of Parksons Packaging agreed that though they may have more financial freedom, large companies cannot use capital more freely, as the focus is on the bottom line and ROI.

Cushrow Jassawala of Thomson Press agreed that large companies are slow to respond to immediate investment needs compared to small, privately owned organisations. He said there are limitations on large companies as the requirement goes through different departments and finance departments are more concerned about ROI than future growth prospects.

Also, to grow, one has to be at the right place at the right time, and Kejriwal said this was the case with Parksons.

“We are dependent on our customers. So, to grow, we have to look at our customers who have diversified businesses. Size matters on the diversification of the customer base,” Kejriwal said. “Again, compliance is important. So, unless you are of a particular size you cannot grow. Size helps you hire better talent as you can pay them better.”

He said if you have a bigger size and diversified portfolio, it helps your growth trajectory as you are dependent on a single set of customers. He advised against the overreliance on a single customer. “This year, our turnover was Rs 2,000-crore and no single customer has a share of more than 7%”, Kejriwal said. It means even if one of the customers pulls out, it wouldn’t affect the business.

Cushrow Jassawala of Thomson Press also said that the focus should be on customers, not on size. The size will happen with customers. “For growth, your organisation should be process-driven, rather than owner-driven. Reliability is important. You will have to offer consistent quality time after time,” he said.

Growing economy and the possibility

On the first day, Faheem Agboatwala led the conversation with the participants in an ice-breaking session, discussing the economic growth of the country and the possibilities it has opened up for the printing-converting business.

The next morning saw a session on the economy with Rajiv Batra, Naresh Khanna and Iqbal Kherodawala.