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"We push for leadership in each silo,” says Gautham Pai of Manipal Technologies

23 May 2012

Gautham Pai talks to Ramu Ramanathan about how a $5 million family-run printing business in 1998 has transformed to a $500 million well-diversified print services and business solutions organisation

gauthampai Gautham Pai controls and runs businesses in printing, publishing, exports and related domains. The firm has achieved an impressive compounded annual growth of 31% between 2009-11

Ramu Ramanathan (RR): You are a print technologist. It is rumoured you were hands-on and have run the KBA press for test trials. At what stage did you decide to take one step back and transform into a master strategist?
Gautham Pai (GP): I did run the KBA press when it was installed and I enjoyed doing so. Every time we venture into a new business or adopt a new technology, I like to get completely involved. But that is more to learn than to run things by myself. When I joined and started leading the print business in 2005, my focus was to find the right people and to develop them. Fortunately, I found them internally and I ensured that they get adequate exposure. I do not need to be hands-on since the people who are running our various businesses are experts and specialists in their respective areas.

RR: The thing that is impressive about the five print factories I’ve seen over the past two days, is your 4,000 strong team led by solid leaders. The operation is professionally run. There is a complete absence of owners. Is this difficult?
GP: The way an organisation is managed depends a lot on the aspiration of the leader. For instance, if I had a passion for hospitality business, I could have put up a hotel and run it successfully. If my aspiration was limited to just that, it is fine. But if I had aspired to set up a chain of 100 hotels, would it be possible for me to manage it all by myself? It depends on the level of aspiration and where you want the organisation to go. It is better to have a promoter heading a strong empowered management team than having a mediocre management team where the promoter is compelled to be hands on. There can be multiple structures within, but the organisation is primarily headed only by the aspiration levels of its leaders. The challenge is to continuously induct fresh talent and provide them with the freedom and the opportunity to grow into future leaders.

RR: Each of the multiple structures, as you call it, has been a given target and are developing. In terms of turnover what does this mean?
GP: For the print business this year it is Rs 500-cr and we intend to reach Rs 600-cr. The plan is to reach Rs 2,000-cr in the next five years. It will include products and service solutions.

RR: So you are on course to achieve the Rs 600-cr target by March 2013?
GP: Sure. We are on the right course.

RR: There are three business which you run Mr Pai. In the home fragrance industry you have entered into an alliance with a US-based firm.
GP: We have multiple businesses aggregated under three companies. Manipal Technologies (MTL) is today the country’s largest integrated print solutions provider. Manipal Media Network is a dominant regional player in the publishing and entertainment industry, and Primacy-MVP Group which is the largest producer and exporter of premium designer aromatic candles having the largest distribution network in US home fragrance market.

RR: Your strength is the book segment. What is your focus?
GP: Our larger focus is on domestic market which is stable and offers ample growth opportunities as compared with other markets. Exports are targeted only to fill up capacities.

RR: You are doing work for the government state educational board like the Karnataka State Education ...
GP: Educational book publishing industry offers a huge opportunity in terms of size. We serve the requirements of the Karnataka State Board in full capacity. We have also done some work for the Maharashtra Board. But to serve other state boards there are many complexities to overcome. With over hundred local printers in every state, securing the desired magnitude of business is challenging. Would we want to? Yes. And we are trying to find ways to compete in such highly unregulated markets.

RR: In the Aadhaar project you’ve produced Aadhar–12 crore cards in three months. Your view on this project.
GP: The Aadhaar project demands superior IT capabilities since there is a lot of variable data in multiple languages. It also calls for tremendous degree of IT innovation at the process level to ensure that the output is error-free. The logistics of dispatch and tracking is intricate as well. Our in-house R&D did a commendable job in modifying the machines to integrate them with automation to be able to scale up the volumes. We committed to the Aadhaar team that we’ll deliver per-day volumes – and have been very successful at it.

RR: The National Rural Development project is another wonderful print job with personalised photographs ....
GP: That is a very prestigious project of the Andhra Pradesh government. The candidate’s photographs has been incorporated to reduce fraudulent practices. There are many such high-profile projects these days wherein capabilities in IT, fulfillment etc which are well beyond core printing come into play.

RR: That is a domain expertise you have achieved. How do you pitch to the government?
GP: Governments have turned a lot more progressive and on many occasions they articulate their needs and invite us to recommend solutions. The government engaging in elaborate discussions and consultations to arrive at a solution is a welcome trend. For instance, on the Aadhaar project, different formats were planned and they transitioned from black and white printing to a card.

RR: Are you involved in these meetings or the SBU head from Manipal leads these discussions?
GP: The customer interface is managed by the product managers. The SBU heads get involved and only if required the CEO steps in.

RR: In the publishing unit, you have run out of the 425,000 sq/ft space. How are you going to address this issue?
GP:  We are optimising space at our existing facilities. Further automation and tighter processes will ensure and liberate more space. There is also scope to expand our current infrastructure to some extent. Beyond that we are working new facilities elsewhere.

RR: My two concerns were: There are a lot of different cut-offs in the plant and therefore that many more signatures. Secondly, a lot of work is lying around. This creates a bottleneck. Are these the issues being addressed?
GP: Yes, we plan to increase the binding capacity so that the flow is faster.

RR: In the book segment, you produce 10% hard case while the remaining is soft case. What’s the binding plan?
GP: In both hard cover and soft cover segments, most of the businesses have been for long runs through long-term contracts. This is largely because we have been good at nurturing long-term relationships. We have not addressed the small quantity segment so far.

RR: When you say long-term, do you mean in terms of quantity or your association with the customers?
GP: Both. The relationships have been long typically with customers who give us long runs. We are good at it though we produce short runs and at times print digitally as well. Short runs have not been our priority though. In fact over the past four years, we have shrunk our customer-base to almost half but grown the volumes.

RR: At a recent book fair, we met someone from Wiley & Sons, who was stating numbers for scientific and academic journals. What are the key publishing trends?
GP: The global publishing industry is very different from what it is in India. Globally there are tremendous pressures on margins and that’s the reason they are looking at India and China. Printers in India are becoming increasingly sensitive about the total cost of the product rather than the printing cost to enable customers to match the price points of the end product at the market. In order to stay competitive, Printers are offering end-to-end solutions to their customers. Today, the customers are also looking for a lot of electronic publishing.

RR: With all these paradigms of super-specialisation; what should a book printer be good at?
GP: Honestly, my belief is whatever you do you must be good at it. You need not be a print company to do so. Sometimes, we think of a sequence in a straight path. We perceive the world as a straight road. It need not necessarily be that way. For instance, I am a book printer and view my business definition as the distributor of content, in any form. But the point is, you may be a specialised market leader for creating or distributing  e-books like Amazon or Flipkart, with absolutely no connection with printed book and for a publisher, unless the platform is better than or at par with other electronic platforms. To sum it, you can win if you have something better than your competition in that space.

RR: Big book print orders from Europe go to the super print firms in China. How can India atrract such orders?
GP: Right now I don’t think India has the infrastructure that can fulfill such orders. That can happen only if a group of big printers come together and set-up a mammoth facility or a group of factories are jointly deployed. Even though India exports, we are not as competitive as China. That’s one reason Manipal’s focus has not been exports.

RR: There are an increasing number of JVs in the print industry. The trend seems to be: either equity or technology flow. Do you see a trend, where we go to the international market? You have operations in Dubai. What is your view?
GP: The international market is huge but the growth is not as high as in India. So would an Indian company acquire a firm in Europe or America? The valuations can be attractive and can give you size. But at least in traditional print, it’s not a good idea. Can we buy them? Sure we can. Cause we can buy them for cheap? Some we can get it almost free but what will you do with such a firm in a dying market, a market which is losing so much money. Because the international export market is matured, people who have to outsource in any case outsource to India. It is not like you buy a company and shift it to India. So, I do not see print moving to the international market. In any other field, we will have more Indian companies venturing into the international markets. For the print industry, the story will be turned around. For example, what we are seeing with Interlabels, there will be more foreign companies acquiring Indian companies because there is growth in India and they are not witnessing growth in their markets. It is a good opportunity for Indian print promoters to encash and reduce the pressures on the margins. By the way, Africa is like India - a growth market.

RR: Your packaging unit is growing. When I visited Manipal the last time, that space had a corrugation plant. How do you see the growth of the packaging unit?
GP: I think that is a good area of growth from the industry perspective. Both industries are thriving. But exactly how much we will grow and in which format is something we are working on and should have the plan readied in the next three to five months. It appears like multi-locational medium-sized units will work best but the exact details and logistics are being worked upon.

RR: When you say medium-sized, will that be about Rs 70-80 crore plant each?
GP: I don’t think so. I think it would end up being Rs 40-45 crore for each plant with five-to six such plants.

RR: That's 3,000 tonnes being converted each month?
GP: Absolutely.

RR Why multi-locational?
GP: The cost and the time to reach the local customers will be reduced considerably and we can be more competitive. Particularly with the public infrastructure in India improving only gradually, logistics remains a challenge which can be overcome. Some of our larger customers have multi-location production facilities and we need to have that proximity.

RR: I have been to your labels unit in Chennai. What is the status between Universal and you.
GP: UPSL is a subsidiary of MTL. We acquired majority shares in UPSL three years ago and the labels jobs in India are fulfilled through that company. In Africa, the labels are through a unique subsidiary. The idea was to acquire an existing unit instead of building from scratch.

RR: This includes the label and BPO unit?
GP: That’s right. The labels business in India integrates with the Commercial Printing Division of MTL and is managed by the SBU head Shashi Ranjan. UPSL has another BPO division for packaging.

RR: This was when they used to cater to Gilchrist?
GP: Yes. The same operation but it has expanded.

RR: Are you looking at narrow web, flexo and labels and folding cartons separately or a total packaging consolidated?
GP: Internally they are two separate entities from the leadership and product standpoint. From the sales perspective, it is combined. Our teams might go together and sell the carton and the label to the same customer if there is a requirement.

RR: Will you be setting up another label unit in North India?
GP: Yes. But that would be combined with the folding carton.

RR: I was impressed with the Manipal Cards Technologies (MCT) project. It is way ahead of its times. If you can state the thought process behind the MCT plant?
GP: Our aspiration to remain the most comprehensive print solutions company leads us to be present in every form of printing. With secure transactions gradually moving from paper to plastic and embedded electronics, MCT happened as a natural extension of our security printing business. We set up MCT - the largest facility for card manufacturing as a JV three years ago with minority stakes so that we don’t have to go through the learning curve. Within a year we were able to get all the required certifications. We leveraged relationships and our team lead by Rakesh Shet did a fantastic job that within a year we secured 65% of the market-share. To cater to the electronic payments, we even developed a centre in Gurgaon.

RR: With MCT, you have JV partners; one is CSP and the other is Thomas Greg & Sons. How much of it is strategic to skip the learning curve process …
GP: Fundamentally, each partnership brings in certain value at the table. But we need to think about this from a time-line perspective. Initially, each partner believes he has got something to the table. But if you look at the partnership three-five years ahead, you need to check whether there is a equitable contribution of all partners. Else it does not work. The reason most partnerships fail is because one partner feels the other is not contributing but is only taking away the money. The underlying understanding with partners of each of our JVs is that we shall maintain complete trust and transparency and depict the future of the partnership by having a specific goals for each partner. In this case we needed the learning curve to be short. Therefore the best option was to find like-minded partners with whom we have previous working relations. All of them provided with start-up help in training and it worked.

RR: The announcement about the RuPay card is a great project. It’s impact on MCT Cards?
GP: RuPay is good because the cost of transaction will come down. It is an alternative to Visa and Mastercards like the Union Pay card in China. MCT has begun work on RuPay cards already. It is going to be big and the common interest is to reduce the reliance on the Master and the Visa cards. And so, the banks will shift to RuPay. The number of cards usage in the country is increasing significantly because banks want to reduce cost of transactions and increase in the number of ATMs. The Indian market is increasing by 25% for the debit card segment. This holds huge growth potential for us.

RR: The innovations that you are involved in is mind-boggling. Be it: the holograms, the innovation on a folding machine from Pratham. What is note-worthy is, the solutions are economic alternatives to expensive technology. How much of this is a part of the Manipal ethos?
GP: We believe that a culture that inspires Innovation and out of the box thinking is one of the key factors to success. Our environment therefore allows for a lot of experimentation and mistakes. Sudhish Rao, who is our vice president and heads the R&D team has 20-25 engineers for R&D. The entire engineering and maintenance has backed the innovation for modification of machines. We have created competence in software, chemical engineering, electronics and more..

RR: On the one hand you have the heavy-duty hardware where the card and envelope technology merge. Plus frugal innovations in thermal paper.
GP: It started as a cost-saving initiative. We do not do everything ourselves.  When we could not find proper supply and the cost was high that we could not compete; that’s when we realised that the basic cost was a fraction, we had to do it. And then one competence leads to another. 

RR: What is the nature of work in Africa or Dubai?
GP: Africa is a big market. There we do labels and packaging in terms of flower sleeve, gravure, flexible packaging. In Dubai we have a brand of our advertising business which is a Rs 100-cr firm.

RR: Which segments do you see substantial growth in?
GP: In our five year plan, we expect to grow almost equally across businesses. Certain parts are perceived as high-growth businesses like packaging. There is definitely growth in packaging and everybody is gung-ho about it because Indian retail needs packaging. But the point is, the margins are very thin compared to other opportunities. Because you are a printer and want to do something in printing, you want to enter packaging. Every commercial printer is getting into packaging because he feels that books may disappear. While there is a lot of growth, I don’t know how happy people are going to be after investing money in it. I think one needs to be very careful about how he will win the business rather than just putting in capacities.

RR: What do you benchmark against when you talk of world-class manufacturing operations?
GP: We essentially benchmark against ourselves. We strive to get more and more competent at par with international standards in terms of output, data management etc. We try to constantly improve across all fronts.

RR: You are dealing in book space and sourcing from paper firms. But we have simple issues like the paper not coming in a pallete or the cost…
GP: It is a huge challenge. It is not only the schedule but also with regard to the quality of the paper delivered. It becomes very difficult for us to meet our agreements with the customers and in India that is a very big problem. It is even graver when it comes to exports. Sadly, for the paper supplier it is more like a commodity and adverse feedback from us does not matter much.

RR: When we met during the Print Summit conference in Mumbai you spoke about business from a three horizon framework. What is it?
GP: For instance, we are working on enhancing our competence in software, chemical engineering and electronics. Visibility is not very clear about the amount of revenue that it will fetch but we believe those are big opportunities for the future. The other thing is immediate businesses which can be converted into large business in the next 24 months. And finally today’s business where we try to maximize the profit.

RR: Phillip Kotler talks about it.
GP: Kotler had developed a strategy management tool which enables you to manage the performance of your company including the strategies and not just the profits. What typically happens is, under the quarterly-profit pressure people start focusing on just financial performance. But it is an indicator of what has happened. It is not reflecting what is going to happen. Hence, the Balanced Score Card was developed by Kaplan and Norton. It has four perspectives: financial, customer, internal, and learning and development. In learning and development, you select the right people and train them, they set up the internal processes, those processes deliver results to your customers and those results determine your financial performance. It is all linked.

RR: That is what you are doing with your balance sheet?
GP: Yes, we monitor all the sections through the BSC right from what the operator does, right up to the balance sheet.

RR: Where does wastage find a place?
GP: It comes under the BSC. In the internal process section there is a parameter to determine the process efficiency. This process efficiency looks into wastage, average machine speed, average down-time, which will drill down to someone who is responsible for it and business heads present it every month. Looking at the BSC is like looking into a mirror. Each of the business unit has a separate BSC which they present in a group. It is completely transparent and all the people down the line are involved in the process.

RR: The process efficiency is there, what you are producing is very good but what about brand Manipal. Do you think that requires a bit of work?
GP: Honestly, we haven’t done any work on the brand itself, which we need to do. What we are has largely come from the reputation of the family and the customer loyalty.

RR: I think many more people should visit Manipal and see all your units. Not just the print capabilities but also the larger eco system that you are a part of. It’s an eye-opener.
GP: Thank you.

 


 

Printweek India Print company of year 2009
Manipal Technologies (earlier Manipal Press) bagged the PrintWeek India awards along with two quality awards in the inaugural year of the awards. In 2011, MCT, Manipal won the Gold Certificate of Merit in the The Economic Times India Manufacturing Excellence Awards 2011 conducted in partnership with Frost & Sullivan.

Manipal Press which rechristened itself as Manipal Technologies in 2011 has added a raft of products, services and solutions that are extensions of the print business and several that are beyond the print business. 

“Our corporate renaming is to ensure that our continued business growth is aligned to meet emerging & evolving needs of our customers across the globe and balanced with profit to create lasting impressions for the development of society,” says Gautham Pai, managing director of Manipal Technologies.

The firm is serving 35 banks in India and banks in Sri Lanka, Bangladesh and Nepal, also Europe, Middle East and Africa. Pai says, “We see growth in debit card volume in India as PSBs have large base of customers for whom cards need to be issued.”

The firm has the following certifications: ISO 9001:2008, ISMS 27001:2005 certified, NIC Certified for SCOSTA. Manipal bagged the IMEA (India Manufacturing Excellence Awards)-Gold award in 2011.

 

MCT unit: Plant has been certified by Visa, MasterCard and for RuPay (by NPCI)

 


Manipal Technologies partners with Quad/Graphics


This article was published on 23 May 2012 and received 244 views

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