Third-generation advocate of change

Rahul Kumar and Supreeth Sudhakaran understand from Himanshu Gupta, how S Chand produces more than 7,000 products which are printed at multiple sites and distributed through 27 branches all over India

13 Dec 2012 | By Rahul Kumar & Supreeth Sudhakaran

PWI: What are the advantages of being one of the oldest publishing houses in the country?
Himanshu Gupta: Being the third generation of the family, we have been in this industry for more than 70 years old, there is an earned goodwill of the company. We have had over 7,000 products in last 70 years; have a good distribution network, 27 branches and printing facilities. 

PWI: What are the challenges you have faced?
Gupta:  There are threats and hurdles in the market such as discounting, competition, piracy and challenges like banking scenarios, challenge of credit where the banks have raised the amount of credit. Plus there are challenges such as credits to customers, which has gone up in the last few years. At the same time we feel that there are several opportunities in the market, and we feel, we should be the first to grab them. 
PWI: S Chand has 24 branches across the country ...
Gupta: Yes, we try to cover all the CBSE and ICSE schools, plus we cover the prominent institutions pertaining to higher academics, management, engineering etc. Our distribution network comprises of over 4000 distributors and dealers, who are given discounts and incentives for their services. 
PWI: S Chand has modified and modernised itself in the last few years, and you spearheaded this project. What was the structure earlier – and how did it evolve?
Gupta: S Chand has been changing itself with time. However, the biggest modernisation was done six years ago (2006) when we decided to make the company more professional. Hence, we brought in talented human resource from the market. Today, we have CEOs, CFOs, vice presidents, and a blend of new and old personnel, spearheading different departments. In addition, we ensured that the veteran employees undergo professional training to match the young workforce. Veterans play an important role as they bring their experience, knowledge and contacts. And this industry requires one to have a good network with the education institutions. ... I feel every organisation should implement such efforts every 8-10 years. This gives an edge to the organisation. 
PWI: When you were at the Publicon 2011 conference organised by FICCI, you and your expert panel opined that copyrights has always been a backburner-issue in India. Can you elaborate?
Gupta: In India, copyrights have always been an issue with the publishers and we have tried various means to combat it. Unfortunately, the legal procedures in the state is tad slow, it takes a lifetime to fight any battle. S Chand has set up an anti-piracy cell which has three-four members, including a lawyer. If we come across a piracy complaint, the anti-piracy cell members along with the help of local police and our local branch, raid those places. We have done raids in Tamil Nadu, Bihar, Uttar Pradesh, Maharashtra etc, and we have found a large number of books were being pirated. On an average, we do two-three raids a month. Recently, during a raid in Bihar, we found 5,000 books worth Rs 20-30 lakh being pirated. 
PWI: Copyrights is an issue that most of the publishers are aware of, but reprographic rights is hardly even discussed. How has it affected your business?
Gupta: It doesn’t affect us much since we are textbook publishers. These are educational and curriculum-based books, which are printed according to the syllabus set by the government. Reprography adversely affects those who are into specialist books and fiction books business. 
PWI: Do you plan to get into publishing books for state boards? 
Gupta: Our sales people are already meeting the state boards executives. We are eyeing the state boards from K-8 standards as we feel the syllabus coincides with CBSE. Today, schools which are affiliated with state boards feel that the quality of education imparted through their institutions should be at par with the CBSE level. Therefore, they prefer to use books of national level authors and publishers. According to our research there are over 55,000 English-medium state board affiliated schools in India, and they have a huge potential. We have not even covered 10% of this market. In the next four years, we plan to tap into this market. 
PWI: How big is the educational book market in India?
Gupta: The education publishing market in India is worth Rs 7,000-crore. The CBSE and ICSE market would be about Rs 1500-crore. This excludes, government supported publishing market.
PWI: Currently, you have two production units. Are there plans to set up more?
Gupta: We produce almost 14 million books every year and this quantity is increasing by 15% every year in terms of production. We have a unit in Ramnagar, Delhi and one in Rudrapur, which is a tax-free zone.  We plan to expand that unit as well. 
PWI: What would be pressroom setup for this new plant?
Gupta: We plan to install two sheetfed and one web press.  
PWI: We heard that you were planning for a digital unit, what happened to that?
Gupta: The Ramnagar plant is a sheetfed unit while Rudrapur is web-offset. We were planning to set up a digital unit as well but for now it has been put on hold. 
PWI: What about an exclusive printing unit for exports?
Gupta: We don’t want to get into commercial printing by setting up exclusive units for exports. That doesn’t interest us. We utilise our printing units for our books. 
PWI: How big is the book export market in India?
Gupta: According to my estimate, the Indian book export market should be close to Rs 400-500 crore. Our export to total production ratio is 5%. The export market in India for publishing is growing. At the moment, it is  still small. Nevertheless, commercial print is gaining traction. Developed countries don’t prefer to buy books published in India. But African and UAE countries are our markets. India is a tough market to enter currently if you are a publisher. 
PWI: Books in India are the cheapest in the world. Your view?
Gupta: We produce a book at $2 while the same would be priced at $20 if they were produced in UK or USA. However, even at the low prices at which the books are available in India, several students are not able to afford them. The model works in India only because of the volumes. 
PWI: Does this have its set of pros and cons?
Gupta: Yes, at least we have the right volumes. If the books would be priced high, the publisher would surely mint more money. In the interest of the masses it is important to control the prices of books. This doesn’t affect the quality of content, may be the packaging. For instance, a publisher might not be able to produce hardcover or hardbound books or he might use a lesser quality of paper etc. In India we have an advantage that the labour for reproduction of books is cheaper compared to European countries. In India, people have a feeling that if a book is better packaged, it can be priced higher. In contrast, in Europe, it is the content that sets the price of the book. People prefer to spend on junk food than cultivate their reading habits. The psyche needs to change, and we believe it will. 
PWI: Do you think there is a favouritism attached to international writers in Indian education book industry?
Gupta: In English language, some schools still feel that the book should be written by an English author. But that does not mean the books are good. What is more important is the content. It is important that the writer understands and explains the concept in such a way that children in India understand it easily. Several of the publishers ensure that their international titles when brought to India are co-authored by eminent Indian authors. 
PWI: Everstone bought a minority stake in S Chand for Rs. 200-cr. How do you plan to invest the Everstone funds?
Gupta: We have maintained that India is a strong market for educational book publishing. A majority of the funds has been used to acquire the Indian publishing firm –Vikas and their school division; Madhuban. The rest of the funds will be used in our publishing and digital business process. 
PWI: With a pressure on bottomlines owing to high competition, are mergers and acquisitions emerging as a pragmatic way to diversify?
Gupta: Even though, Europe and America are familiar with this, acquisition and mergers are relatively new for the Indian publishing industry. However, acquisitions are not new for us. Blackie and Sons; the British company known for producing dictionaries, ELT Books and Upper India Publishing House, Lucknow were acquired by my grandfather. One of the divisions of A H Wheeler was also acquired by my father. BPI; a company that specialises in production of books for children; majority stake was acquired by us two years ago. The Vikas acquisition is the largest in the Indian publishing industry. 
PWI: What about the JV with Houghton Mifflin Harcourt?
Gupta: That was done three years ago as we wanted to enter the digital market. The main thing is, the input costs have started creating pressure on publishers. In the future, the only way to survive would be to concentrate on the niche markets or be a big player. Instead of stating that M&A are the only way ahead for the industry to diversify, I would say that the trend is to look at M&A as a viable growth option. In fact, in the next three-four years or so, we plan to acquire two or three more companies. 
PWI: How have acquisitions shaped your business strategies?
Gupta: By acquiring Vikas, S Chand has forayed into distance learning. Vikas is in to college books while, Madhuban is their school and childrens’ book division. The idea behind acquiring Madhuban was to strengthen our grip in school education and distance learning content development.
For S Chand Group, which also includes Vikas and BPI, we have set a target of Rs 350-cr in 2013. Our target is to achieve the top spot in the Indian educational book industry. In the long-term, that is, the next five years, we are moving towards being the biggest player in Asia. 
PWI: Will you venture into foreign soil? 
Gupta: The share of our exports division is 5% as compared to our domestic book sales. In the next five years, we will formulate strategies to take our export contribution to 10% to 15% of the total business. Apart from that, we plan to diversify into the medical, trade, laws and tax segments. These have been untapped areas. 
PWI: Your comment about the e-book generation of India? 
Gupta: For e-books to engulf India is still a far-fetched thought. We are confident about the future of printed books in India. Although, S Chand is also into the digital content market, traditional publishing will remain our staple. Affordability and maintenance are still big concerns in the growth of the tablets and eBook readers’ market in India. Conventional books will always rule the market. 
PWI: How so?
Gupta: For instance, newspapers in Europe and Americas have been facing stagnancy in their circulation figures but in India, the scenario is different. Take last five year’s IRS data and you will find growth in the circulation figures. My point is, we have been habituated – and are comfortable with printed books. In addition, all over the world, the cheapest newspapers and books are produced in India. Here, you can get an educational book for Rs 150 but in USA it will burn a hole in your pocket. Therefore, the growth of eBooks in those markets justifies the cost factors. Having said that, the leisure reading market will undergo a change with the new devices. 
PWI: But the government feels otherwise, as it has been promoting the Indian tablet Aakash for schools and educational institutions.
Gupta: It is too early to suggest how successful Project Aakash would be. We feel that we need not feel threatened by the tablet and eBook evolution. Nevertheless, we are content providers, so if the form of books change, we are up for that challenge as well. 
PWI: Would you not be interested in exploring the eBook market?
Gupta: Traditional books will rule the market for another 10-15 years. However, I do not say that the trend would never change. Being a publisher, we have to operate in all segments because you can never predict the future no matter what crystal ball you may possess. Therefore, if we find the eBooks market is mature, we might tie-up with a tablet manufacturer.
PWI: Currently you convert 9,000 tonnes of paper every year. What are the major tweaks in your book production arsenal? 
Gupta: Our production capacity has grown four times in the last the five years. We plan to expand our Rudrapur unit very soon. In 2013, we plan to install three-four machines in four-to eight-colour printing presses at our Rudrapur facility. We are also planning to install one or two web offset presses. 
PWI: A Padamshree in 1969, the Knowledge Pillar of India Honour Award, Dadabhai Naoroji Millenium Award, Book Sellers Best Publishers and Federation of Indian Publishers Award. What next?
Gupta: I am honoured by these awards. Our latest achievement is the FPBI honoured me as the best youngest publisher. 
PWI: Currently, the printing jobs for Vikas and Madhuban are being outsourced ... 
Gupta: Yes. But we will try to do the maximum share of this in-house.  Vikas prints 11 million books per annum, S Chand produces 14 million books and BPI produces three million. Altogether, we produce 28 million books. Next year, we plan to increase our total production volume by 15%, taking the total book production at our units to 32 million books.

S Chand Factfile
Eight KBA press - which includes five four-colour presses, two two-colour presses and a six colour press; two two-colour TPH Orient web press with online bindery equipment; kit from Muller Martini, three  Welbound six-clamps, four three-knife trimmers from Perfecta; auto-trimmers with auto loader and unloader, pile turner.  Plus a Wohlenberg with a speed of 5000 per hour, 24 gathering station, 12-clamp station, three-knife trimmer and stacker, all online. In pre-press, we have outsourced the work to a vendor who utilises, Highwaters CTP and conventional systems.