Sangam Khanna, deputy managing director, Komori, shares his thoughts on the fallout resulting from the COVID-19 lock down, and its possible opportunities.
In this time of crisis, the only medicine we are able to find yet is social distancing and by staying home. The timely action by the government to intervene the arrest of COVID-19, I am sure, will help us save lives. However, there may be fallout, if we are not fully protected and do not care about ourselves. I see the way forward for all citizens is to break the chain from spreading further, hence social distancing is important.
“Print can’t be immune from this deadly killer virus”
The lock down is likely to have its impact on the industry in terms of value. The total print business in India in all forms is Rs 46,507 crore. The total print business in India in offset is Rs 27,551 crore.
According to a market research company executive, while discussing the way forward, if the lock down continues for a period of four weeks or 30 days, the estimated loss for the print industry is expected to be Rs 3,850 core. For the offset industry, this number is expected to be between Rs 2,270 core and Rs 2,800 crore. Offset industry will be the hardest hit.
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 underutilized capacity, which is a part of perishable assets like manpower time, production capacity utilization, etc, which can never ever be made up. The loss of opportunity certainly is something India could have tried to cash in after the outbreak of the pandemic in China.
If India is able to contain COVID-19 within a stipulated time-frame, I am sure the graphic arts industry has the capacity to bounce back. In a worst-case scenario, if the citizens of India fail to align with the government, we will be heading for a disaster. It will take months to recover from the situation.
However, as I speak to some of my customers and friends from the industry, I have mixed reaction – from an extremely confident to fairly confident; few are not confident on the total outcome. 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 financial year ends.
The Government surely wants to avoid the accumulation of NPAs, hence the pressure on the banks ability to recover money from defaulters, Strict action on default might be a cause of concern for printers.
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 transform. I see COVID-19 as a game-changer for all of us in the near future.
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.
As my mentor used to say, “Business has always been done with exchange of money and material. The only thing that will change is the way of doing Business.” Those who adapt to the change and embrace will survive and the rest will parish.
Global economies are in shock from COVID-19 as Real GDP growth numbers touching bottom says KPMG report
- COVID-19 has put the world economies on a shock bigger than The Great depression. COVID-19 is a unique kind of supply shock, demand shock and a market shock.
- A hopeful ‘U’ and ‘V’ shaped recovery depends upon the timings and the magnitude of government assistance as well as the level of corporate debt and how companies and market cope with lower demand.
- The higher the debt levels the more costly and economically damaging social distancing is for an economy. Among G-7 countries India’s debt level is low.
Eyeing for the opportunity
I don’t think in the history of the printing industry we ever had such an opportunity to sit back and analyze the situation for the next three weeks. I see it as an opportunity to restructure our mindset and our businesses.
We must plan to look within us and do a quick SWOT analysis.
Strength
- India has great entrepreneurship zeal, full of energy to surge ahead of other countries
- We have the youngest and 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 and chemicals are comparable to world prices
Weakness
- Entrepreneurs are scared to take risk in the present scenario
- Rise of Forex USD, JPY Euro to INR is a big concern as most high-productive equipment, raw materials are still imported in India and it directly affects the final product
- Minimum wage bills and local skilled manpower to get subsidy in some industrial area too are a concern as most industrial areas have to get skilled manpower from other towns making it difficult for them to avail government subsidy
- Unable to add value to the finished product, the printers fail to cut through competition
- Aside from a few, most printers lack trained manpower
- The bigger issues for the printers today are standardization and lack of certifications like ISO, TQM and Six Sigma, etc
- Most MSMEs have press owners as the CEO. This results in lack of specialization and ability to delegate the right work to the right person. All they key decision are taken by the owner (irrespective of whether he understands the final outcome or not)
Opportunities
- 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.
- Domestic collaboration of printers combining capacities to fight with bigger players
- Export from India is on the mind of world buyers. After they put all their eggs in one basket (COVID-19 episode in China), they will look for other alternative destinations like India, Vietnam, Sri lanka, Bangladesh, etc.
Threats
- If a permanent solution for COVID-19 is not found 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 recover from
- The demand and supply gap is likely to grow bigger
- 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 as most balance sheets will be bleeding for cash crunch
- Global uncertainty and frequent ups and downs in Forex, gold, oil and stock markets will directly affect the industrial cost of production
- Frequent hire and fire in the MSME job sector too will hit the quality, productivity and creativity