Hemal Mehta: This is just a phase, what is necessary will always get printed, hike in price or not
As per a representation by a printer body, there’s a 25% hike in the cost of input materials. Since January 2018, the cost of US dollar has risen to Rs 68.
In conversation with Hemal Mehta, director, Satyam Scan. we find out what print desires under the rising dollar
23 Jun 2018 | By Noel D'Cunha
You represent a business which is dependent on crude oil volatility and the currency price fluctuation. Will the dynamics be altered in the short-term?
As we all know, printing industry is working on wafer thin margins and a hike of more than 20% in 70-80% of input raw materials play a major role in change of costing. When it comes to rate contracts, even for a quarter, a cost hike is difficult to pass on instantly. But for other jobs, we have to add up the hike and eventually it becomes expensive for the end user.
Do you think your company (and the industry) absorb this price increase?
As I said above, no one in the market can simply keep on absorbing hikes and it has to be levied on to customers in a palatable way. This is a very challenging situation for our industry, and we have to develop new strategies depending on the customer to customer. For example, one juggad is: speed up the customer’s payment cycle.
Will this 25% industry-wide raw material inflation temper your company’s outlook for this year? What is the percentage you are looking at?
Inflation does make an impact on printing turnovers. As it gets expensive, customers tend to be very frugal while placing orders. But this is just a phase, what is necessary will always get printed, hike in price or not.
From an export point of view, a strong dollar will boost turnover. Your comments?
A strong dollar always attracts more exports, but increase in cost of imported raw materials brings us to the same level or makes it even costlier for us to compete in emerging markets like the Middle East. So in the end it does not matter a lot.
When the top-level delegation met the GoI representatives, they were asked what is the revenue the print and packaging industry contributes to the Exchequer? Can you hazard a guess?
Printing and packaging is one of the biggest industries in India. It is very premature for me to gauge the exact quantum or potential of the same. So, if you take a turnover of Rs 2-lakh-crore as India’s print turnover, GST from the first-tier print companies / manufacturers at 12 would generate around Rs 24,000 to Rs 30,000 crores. Add income-tax on profits from various stages, says around Rs 10,000- to Rs 15,000-crore (I have calculated 15% as taxable income on which 30% tax is paid). So, the final contribution from the print-packaging industry to the Exchequer is around Rs 35,000- to Rs 40,000-crore.