Expert views of a master printer: Pratap Kamat of Uma Offset

While some Mumbai printers might be ruing the current economic climate, for others the turbulent financial conditions spell opportunities. With more and more corporates slashing their operational budgets, the print buying department is often the first one to go. In a freewheeling conversation with Anand Limaye and Ramu Ramanathan, Pratap Kamat of Uma Offset says print firms require a new mindset to cope with the changes in the marketplace.

11 Aug 2010 | By Ramu Ramanathan

Ramu Ramanathan (RR): According to you, how is print in Mumbai faring?
Pratap Kamat (PK): All of us are facing problems, now. I'm told printers in North India are doing good. That's what Vimal Surana of Indo Polygraph told me. In the north, they are going great guns. Gopsons is shifting to Sivakasi, which is a very big and bold decision. Whether it is the right decision, we will know soon.

RR: Is the overall scenario grim for commercial printers?
PK: For us, it has worsened for the last two years. 2007-08 was the best year of my career. In 2007-08, we used to do a lot of work for mutual funds and commercial printing for tour operators. But now clients have become cost-conscious. They prefer to opt for the lowest without considering anything. You may be their printer for the last 30 years, but that doesn't count.

RR: Why?
PK: Someone may have given them a quotation of Rs 5.10, while ours may be Rs 6. They will ask us, "Can you reduce your price to Rs 5?" In fact, many a times they may not get in touch with us for the proper figure also. If you aren't the lowest, you are gone.

This trend started from April 1, 2008, when the markets crashed ...
There are global reasons as well as the pulls and push of the local market. I'm not an economist, but the overall economy started to dodder. As a result of this, we started feeling the heat in the market. The value of commercial printing decreased.

RR: In what way?
PK: There was increased competition because the number of print forms increased. Many firms installed new high-end automated machines which meant there was increased capacity. There was a perceptible shift among the breed of print buyers. Earlier these were print professionals who empathised with the technicalities of the process. Now it is marketing executives from business schools who choose products on the basis of price and it's brand effectiveness.

Anand Limaye (AL): Pratap, but you have a 30 year old business. Has the two year slack been so severe to affect everything you've earned in the last 30 years?
PK: I started Uma Printers in 1978 with a letterpress unit. Then I switched to offset in 1979. We expanded, slowly. I bought many galas in A-Z Industrial Estate and then I started in Shah & Nahar Industrial Estate. From Shah & Nahar we shifted the activity to a bigger place in Sewri, because we bought these big format sheetfed machines, which were not possible to install in Shah & Nahar.

AL: You started print activities in Navi Mumbai in 1999.
PK: We have been operating for more than 10 years in Navi Mumbai. So you can say we are established.

AL: You made decision to add coldset capacity to existing sheetfed?
PK: We reached a saturation point with our sheetfed unit. We needed to do something extra. We examined the annual report and educational book printing market. It seemed lucrative. For this I needed space for my machines and stocks. That's how we set up additional capacity at Navi Mumbai. Plus it helped us build our assets. Today, we have a capacity to deliver approx. 50000 books consisting of 200 pages with perfect binding per day. Our sheetfed capacity can take care of art paper forms if any.

AL: The arrogance of the client has become a typical problem.
PK: The overall business for commercial printers in Mumbai has dropped substantially. There are reasons for this. Agencies which formed the core of our business in the eighties and nineties, no longer do so. Key pharma companies have shifted their base out of Mumbai. Today, cities like Vadodra, Pune and Indore can match Mumbai printers in quality, price and service. It is no longer easy to develop newer customers or segments. And I don't see a chance of print revival in Mumbai unless we draft a fresh strategy.

AL: The future looks tough ...
PK: Yes, because the client will give the job to the lowest quotation. If I'm not the lowest, the client won't give it to me. But the irony is, I'm already quoting my lowest.

AL: What you're saying is, in the last 10-20 years, there has been no increase in cost ...
PK: Yes, whenever we have negotiations with labour union for increment, I tell them one simple thing: 'You visit my unit, look at any file and show me a single labour job produced in the last 20 years where I've increased the rates. I'll show you ten jobs where I've reduced the rates. This is the hrash reality.

AL: Yes, from 1989 to 2010, printers have been charging the same rate.
PK: The rate structure was fantastic in 1989. But wow can it be a good rate even after 21 years? It cannot be. All the prices have shot up. Paper, inks, plates. Labour cost has gone up at least five times, if not 10 times. Electricity has gone up and so have daily requirements. I didn't have a mobile 21 years ago and today 10 people in the company have a mobile. Life has changed. 21 years ago, offices weren't air-conditioned. But today you won't find a single office that does not have an AC.

AL: This is the kind of scenario we saw in processing houses ...
PK: Perhaps it works in a processing house. They had fantastic margins in those days. Today, their rates have also come down and because of CTP the business has vanished. Many of them have switched over to printing, adding to the competition.

AL: Were those printers surviving because of the huge margins? Today after 21 years, it is the same margin as far as labour is concerned. So how are we surviving?
PK: In the 80s, from 1986 to 1988, we had three Dominant four-colour machines. Brand new. The total price was Rs 20 lakh per machine. After seven years, I sold the Dominants for a premium price. Then we opted for second-hand Heidelberg machines. Sparingly used, sturdy machines. Because we had realised that Dominant was not the answer if you want them to run for 15-20 years. But today, that appreciation has gone. Machines have no re-sale value.

RR: Under such circumstance, how do you navigate your ship?
PK: Today real estate prices have appreciated. I've built up assets. And this has proved to be a big bonus. It enables me to absorb the ups-and-down of print.

AL: Could you elaborate on your financial control?
PK: I do the entire purchase of paper. I am the person who decides at what rate we should take up a job, because that is the most important decision. I do that for every single job. We have an estimator who works out the quotation. If the customer asks for a discount, then I go through the costing. I know areas where we can cut down costs. Even the estimator or sales people may not know. You cannot share this information with customers. Otherwise right from the beginning, they will insist that the job should be produced at rock bottom price. But will we survive, at this rock bottom rates?

AL: But what is your payment model?
PK: For me the comfort level is, I should be able to settle suppliers' bills on time. I feel, suppliers needs should be looked after. He should not suffer because of me. Then there are the banks. You cannot delay workers salary. Government dues can't be delayed, if you do, they will recover the amount with interest and penalties.

RR: Who is doing this cost cutting?
PK: I have a theory. There is a set of printers with CTP units and automated high-end sheetfed machines. Their percentage of wastage has reduced, plus make-readies are faster. They have devised a new formula for a four colour job. The processing costs have been eliminated. Some of the pressures can be felt from this segment, especially for short-runs.

RR: Is this situation applicable in your Navi Mumbai unit as well?
PK: In Navi Mumbai, I survive on labour jobs. We have good capacity. We run our machines for 24 hours for 10 months. Again, the key is produce jobs at a better rate.

RR: Are you running the three units as separate entities?
PK: We operate under five different names. We started in A-Z Industrial Estate. At that time, the perception was a print unit which exceeds x number of employees and horsepower utilisation will have to shift to "C" zone.

RR: Mr Kamat, 15 years ago, we had an interview. I don't know if you remember, but at the end of it, I shut the recorder and you said, "All of this is ok, Ramu, but ultimately I should sell all my machines and galas and sit at Willington Gymkhana every day."
PK: I remember but I have not been able to do it yet.

RR: Is that good or bad?
PK: It's a good thing I didn't close down. But then, I kept working and adding assets. Today, my major asset is the premises. I invested in premises than in machines, and it has appreciated. It gives you financial confidence.

AL: The property rates in March 1, 2008 were approx. Rs 12,000 per sq/ft. It has now gone up to Rs 20,000. Despite property rates having gone up, business has plummeted. Within six months, the rates have gone up because of corporate offices shifting to industrial estates.
PK: There was an ad for office property in Govandi, so I called them up. He wanted Rs 9 crore for a super built up area of 6000 sq/ft. So I'll end up paying more than what I'll get for A to Z's carpet area. The society is not even formed and he said one has to pay Rs 125,000 monthly as maintenance dues. That comes to Rs 25 per sq/ft maintenance cost. In A to Z, it is Rs 2 per sq/ft.

RR: This begs the question, is it feasible for printing to be retained in Mumbai? Again, this was something we had discussed 15 years ago. At that time, the debate had begun.
PK: Out of 10 printers, seven have returned to Mumbai. Why? Because they did not have the scale to start in Navi Mumbai. I think, a print firm having one gala and one four-colour cannot think of going to Navi Mumbai. You will not get 1000 sq ft unit in Navi Mumbai. The smallest area is 6,000 sq/ft. Today, you need Rs 2 or 2.5 crore to buy 6,000 sq/ft of space. Then you need to have minimum scale of production.You cannot go with one second-hand four-colour machine to Navi Mumbai and set up a sizable capacity to woo export oriented publishers and printers for labour jobs. You also need to have good binding capacity.

RR: How did you start in 1998?
PK: I needed a big place at a cheaper rate. That's how I scouted for a place in Navi Mumbai. I procured a place which is 2 kilometres from the station. I started construction. I used to play golf with a friend who has a factory in Navi Mumbai. I asked him what should be the height of this unit. He said keep the height to 18 feet. Then you can get Rs 5 to Rs 6 of godown rent if the press doesn't profit.

RR: Today, is this adequate?
PK: Today, we are using every inch of it. In fact we're short of space. We're using 40,000 sq ft. Web related jobs are seasonal. We're doing an annual report for a blue chip company this year, so every inch is utilised during the annual report season because I am converting 350 tons of paper in 20 days.

RR: How many annual reports do you produce in a day?
PK: We have two perfect binding Welbound machines; and a capacity to produce 50,000 copies per day. From the fourth day we start delivering 50,000 copies everyday. One of our client says that for the first time in seven years, a printer has kept his promise and delivered the job on time. This is possible mainly because we don't accept the job if we are not confident of delivering it on time.

RR: You are not eyeing book work during the slack period of August to March? Educational books, for instance...
PK: We did educational books for Chetana and Jeevandeep in the past. We cannot do text books because our cut-off size is 560 mm. You need 578 mm for textbooks.

RR: Your entire workforce comprises of a 200 strong team. What is the break up in Parel, Sewri, Navi Mumbai?
PK: In Sewri we have about 80-85 people and the same applies for Navi Mumbai. And then the rest of them are supervisory staff and administration. Supervisors are of course stationed there and so is the web department. The administration is managed from A-Z Industrial Estate.

RR: Initially, you had a tie up with Supressa for plates.
PK: Yes. This was a 25 year relationship. We shifted to Sewri while they shifted to Sun Mill Compound. They diversified into printing and we encouraged a bureau to start processing for us. Now that person has closed down and we have bought his processing equipment. We do positives plus plates. Our CTP is outsourced.

RR: Why?
PK: Majority of our clients provide the positives. Some of them supply processed CTP plates for printing. We are also producing excellent quality with our own equipments. Moreover, since we are spread out at 3 locations, it's difficult to transport processed CTP Plates. However if client insist on CTP we get it done.

RR: Your pool of customers must have consolidated over the years. Would you say that Uma has a total of 100 customers, for instance?
PK: It will be about 40-50 across all three units. We don't have a large customer base but we have adequate volume. It is because we print for top book publishers who give us labour jobs.

RR: What about agencies?
PK: We also used to deal with all the agencies, but now the agencies are gone. There is no business from advertising agencies. Till 1993, 75% of my business was with advertising agencies. Today, it is a big zero after 17 years. Still we have survived and grown. We have developed some clients, like mutual funds, banks, other direct clients.

RR: I want to understand the dynamics. Suppose there is a printer, who wants to understand the pros and cons of doing business in Mumbai, because you have the experience. What is the advantage of doing business in Mumbai as opposed to doing business in Navi Mumbai?
PK: Depends on the scale of business.

RR: Meaning?
PK: Whether he has his own place or wants to buy place, what sort of clientele he caters to and what sort of set up he would need. Like I said, if you want one good machine with a CTP and two galas, and if you can invest Rs 4-5 crore because you see the scope, there is nothing wrong with that. Two galas plus machine will come to more than that. Today 2,000 sq ft is worth Rs 4-5 crore in Mumbai. Add the machine cost and it will go to Rs 8-9 crore.

RR: The numbers don't add up.
PK: Precisely. You waste all your energy and endure mental pressure. At the end it should be financially beneficial!

RR: So a minimum space in Navi Mumbai would be 10,000 sq ft with a workforce of 50-75?
PK: Again, that depends on what sort of machinery you opt for. We have 10,000 sq ft in Sewri and we're very comfortable. That's because we have an office in Lower Parel, otherwise 10,000 sq ft wouldn't be enough.

RR: There was a time when A-Z and Shah & Nahar would be considered as premium property by printers from all over the country. Today is the gala system viable? Having one unit on one floor?
PK: No it's not. I think one has to shift. There are big two emerging centres - Vasai and Thane. The next will be Palghar, perhaps. People have started thinking big in terms of volume and started making a shift. People are buying in Bhiwandi. However, that project will still take four years to come up. How many of them will actually start a print company, we don't know.

RR: Has the Mumbai printer lost out to printers elsewhere?
PK: That will happen. Technology is a great leveller. It has progressed so much, that printing is no longer a personal skill. If you have good equipment and can get good CTP plates, the gap will narrow.

RR: I have met printers in B-tier towns who have learnt to do business better - and print better.
PK: Printers in Pune can produce whatever Mumbai can produce, or even Kolhapur. If there are 10 quality printers in Mumbai, there will be at least two in Kolhapur, who can offer the same quality. So, quality is not an issue. And customers know this.

RR: So, where do you see the future of print in the next 5-10 years? Where do you see Uma?
PK: I'm 60 and my sons are not in the business. One is settled in the US and working in Stanford University. The other son is not interested in print and does sound recording. He hasn't taken an interest in this. I don't know what the future of my company is. It is difficult, unless you get into packaging or into textbooks. Flexo has a huge scope now. Even for heatset web there is limited scope. There is Rajhans in Bengaluru with a fleet of heatset presses who is producing more than fifty magazine in a month. People like Times of India have their own in-house press. To feed continuously is very difficult. It has become highly seasonal. Those may be the print models, Mumbai printers should examine.

RR: And what happens to A-Z Industrial Estate? I maintain that it is one of the best run industrial estates in India.
PK: There won't be many printers left in A-Z. Today galas are sold to corporate offices. Now it is for gold ornaments or diamond-wallahs or business houses who are doing well. For every ten gala, eight will be purchased by corporate offices.

RR: The gala system looks like it's going to fade out. Even in Shah & Nahar, I saw printing machines not running. They were idle.
PK: It has become seasonal and nobody is happy. Everyone, I think, was happier two years ago.

AL: We print a journal for one of our clients. In 1993, we gave them a rate of Rs 100 per thousand. Even today, the rate is the same.
PK: It is a good rate. But my point is, everyone is scared to ask for an increase. Sometimes we print jobs at a loss. For example, there's the issue of ink consumption. If it is semi-solid, we have to pay from our pocket. Inks are expensive. You can't fight with the client saying this has more ink, this has more solid... It is sad - and you end up wondering why you took up the job. Very few people are making money in printing, in the real sense of the term. Printers aren't aware of what they are in for in the future. The question to ask ourselves is: whether in five years the print network will be the same or will it improve ... It's like riding a tiger. It may be a tough ride, but you cannot get down.

Other Q&A sessions with:

Ashok Nerker of Unique Photo Offset

Ashwani Bharadwaj of Micro Inks

Pranav Parikh of TechNova

Sanat Shah of Manugraph

K C Sanjeev of Welbound Worldwide