The Deputy Managing Director of Komori India shares his views about the scenario post the COVID-19.
Print can’t be immune from this deadly killer COVID 19 virus. I see that way forward for all the citizens is to break the chain from spreading further then where ever point it is.
The Total Print Business in India in all forms is INR Cr 46,507, while in Offset it is INR Cr 27,551. The estimated loss to the Print industry is expected to be Rs.3850 Cr. even if the lockdown continues for 30 days. The Offset Industry we expect may land up having a fig of approximately Rs. 2270 Cr to Rs 2800 Cr. (Calculation is based on a pro rata basis).
This will account for not only loss of business but also the cost of man-days which have gone without work. Captive Installed base and unutilized capacity which is a part of a perishable asserts like manpower time, production capacity utilization etc., which can never ever be made up.
If India is able to contain the COVID 19 with a stipulated time frame I am sure that the Graphic industry has a capacity to bounce back. As I speak to some of my friends from the industry, I have mixed reaction. From an extremely confident to fairly confident and very few are not confident on the total outcome. Well most have their own reasons based on their local commitments and other pre-defined payouts which are already defined and may hit their balance sheets just before the end of the financial year end.
As we see the pressure on the Banks and to avoid any further NPAs will also be strong on the printers’ mind, after the stern action against the defaulters for non-payments.
Seeing an Opportunity
I have always been an optimist, and do see that there is opportunity for all in the making provided we apply ourselves well enough. As Social Distancing will be the way we live from now on the Print industry too will also transform as I see COVID-19 as a game changer for all of us in the near future.
Survival of the fittest (Charles Darwin theory)
As my mentor used to say “Business has always been done with exchange of money and material, only thing that will change is way of doing Business “. One who adapts to the change and embrace it will survive and the rest will parish.
I do not think in the history of the Print Industry such an opportunity we have ever got to sit back look at our glory and mistakes made and analyze ever for a period of three weeks. I see it as a God sent opportunity in disguise to re-structure our mind set and our businesses.
As we must plan to look within us and do a quick SWOT analysis we will see forward.
- India has a great entrepreneurship’s full of energy to surge ahead of other countries.
- We have the youngest & dedicated manpower in the world
- Banks are willing to extend money for growth at reasonable rates.
- Land for the Industry is cheap in many state allotments
- Internet penetration is high
- GST has made business transaction easier for businesses to do business interstate.
- Skilled affordable manpower.
- Raw material like paper, Inks & chemicals are comparable to world prices. Etc.
- Entrepreneurs are scared to take risk in the present every changing national and international business Scenario with factors beyond their control.
- Rise of Forex USD, JPY Euro to INR is a big concern as most high productive equipment’s, raw materials are still imported in India and directly affect the final product and it lays a stress on the profitability.
- Min wage bills and local skilled manpower to get subsidy in some industrial area to is a concern as most industrial areas have to get skilled manpower from other towns making it difficult for them to avail Govt subsidy.
- Unable to add value to the finished product the printers land up having a cut through competition.
- Leaving a few most of the printers’ lac trained manpower.
- Leaving a few bigger issues for the Printers today is Standardization and lac of certifications like the ISO, TQM & Six Sigma etc.
- Most MSMEs where Press owner is the CEO to manager and Supervisor. This lacks up the specialization and ability to delegate the right work to the right person. All they key decision are taken by the owner (irrespective if he understands the final outcome or not).
- Internet Order taking, Business to be done avoiding contact keeping in mind Social Distancing.
- More and more Customers and Suppliers will choose to do business without physical contact.
- We have opportunity in every vertical of print as I see from Commercial, Semi- Commercial, Publishing, Label, Digital, Packaging, Specialty packaging, food packaging etc.
- I see that there is great potential for Packaging companies to work with international packaging Colom orates and build contracted volumes.
- Domestic collaboration of Printers combining capacities to fight with bigger players. (Gujarat has this now cultivating at the grass root level)
- Export from India are on the world buyers mind after they have put all their eggs in one basket (COVID 19 episode from China) they look for other alternatives like India, Vietnam, Sri lanka, Bangladesh etc.
- The COVID 19 if a permanent solution is not fond in weeks the economic impact may multiply and the loss may be irreparable.
- If the permanent Solution takes several months the economic fallout will be really difficult for the industry to cover.
- The Demand and Supply gap is likely to grow bigger as and can work both ways.
- either the demand gets more and there is not enough supply chain. Or
- The supply chain gets back to place but there is no money with the buyer to purchase.
- Banks get too conservative before they lend to the customers, however as the RBI and most banks will like to fund as many industries as possible it will be challenge for the Banks to fund the industry’s keeping in mind most of the balance sheets will be bleeding for cash crunch.
- Global uncertainty and frequent ups and downs in Forex, Gold, Oil & Stock Markets… directly affect the industrial cost of production.
- Frequent hire and fire in the MSME job sector too will hit the quality, productivity and creativity.
- Ability for the entrepreneur’s to take mitigated risk may reduce affecting the slowdown in new investments in the Graphic arts.
- Other competing countries like Vietnam, Sri lanka, Bangladesh gear up faster than India to recover as much business as possible from the world market.
As I conclude that this is the time to plan, plan again Plan and restructure or re innovate our businesses. Plug up the gaps. Try and be a lean mean business.
I am sure all of you know what is good for you I am no one to advice what one must do, but certainly keep your eyes open welcome the change and expect the best.
Look for opportunities, in this moment of COVID-19 Crisis and appreciate the change is there to stay with us from now on. Let’s look for solutions and share our success and failures so as we all can learn from each other.
Today is a Good Day & Tomorrow being even Brighter…