The ink experiment

ABPC Printing Inks
Raghava Raju, managing director

The year 2013 saw a sluggish growth across the economy. We fell short of our expectations with the marginal profit rate being around 2%.  

When there is a major impact on profitability we have only two ways to protect our interest; one is to purchase good raw material at a very competitive price and two, innovate new products for achieving high quality at a low price.

At ABPC, we invest in R&D for our range of products. Today, an SMEs unique selling point is its product portfolio, which should address the niche markets and be available at a competitive price. This is where an efficient R&D setup becomes of utmost importance.
Given the changing face of technology, one has to develop a suitable product in an already cluttered market scenario. We have introduced new products for the digital UV, water-based and narrow web segments. On an average our production capacity is 150 tonnes per month.

Most of the multinationals have their base in India and co-exist with the SMEs. Furthermore, one sees the trends of mergers and acquisitions and JVs picking up across the various industries, including the print industry. However, within the ink segment, there are few opportunities for mergers and acquisitions as most of the leading global players have their presence in India. In the course of time, one can even expect some of the larger players in the Indian market space to disappear.
While comparing the performance of the MNCs to the SMEs, the industry has to understand that both these organisations, in their own capacities, have a role to play in the industry.

However, I would like to add that the industry, as a whole is very fragmented and lacks unison. There is little coordination among the Indian manufacturing enterprises, which can be attributed to the lack of trust and team work. There are registered associations formed for bringing all the players under one roof and tackling these issues but the results are far from expectations.

In the present situation, barely any manufacturer is able to live up to the expectations of the customer in terms of quality, consistency, standardisation and service. The quality is nowhere close to the international standards. Plus  standardised production is rarely practised. The onus, thus, shifts on the printers to add value and deliver to meet the customer’s expectations irrespective of its effect on the profit margins.

Today’s market demands, have shifted from low-cost inferior-quality inks to high quality competitive-price inks. With the emphasis on sustainability across all industries, our customers, too, demand green inks and greener technology. As a rule, our products do not have any solvents or lead metal items, thus qualifying us under the green category.

An entrepreneur, who intends to be a part of this industry, should have a strong hold across the four verticals of business; technology know-how and the capacity to continually update technology, marketing, finance and effective management. These are the mantras for a successful and profitable business operation.

Compared to the developed countries, the Indian printing ink industry is set to grow by 2020. Packaging ink will contribute to this growth.

 

Kwality Chemical industries
Rahul Birla, managing director

Our core policy has been to observe the market conditions and respond appropriately. No growth cycle can be permanently vertical. Hence, waiting for accommodating market conditions is also part of the KCIPL policy. Manufacturing printing inks is capital intensive.

Following the slowdown, we had to adjust our delivery deadlines and fine-tune the balance of our inventory and supply to a large extent. However, during this turnaround period, we received amazing support from our customers whom we are grateful to. Also, some of our suppliers, came forward to help us voluntarily.

For us everything pivots around customer satisfaction. This has always been our goal and we drive ourselves to reach this by adhering to consistent quality standards. Our products go through rigorous qualitative analysis and nothing leaves our premises till we are assured about the results of these tests.

We have observed that the lack of unity amongst the MSME community towards a long term common goal is equally apparent. As of now, they prefer creating their own stop gap solutions to their problems rather than coming together and strategising to fill the gap. The MSME community will have to empower itself first to deduce a solution to this problem.

Research and the wish to innovate can take the industry a long way. Globally R&D is not only a tool for a value addition and acquiring a technological edge but is also a must-have business process to cope with probable, uncertain, forthcoming market situations. We believe in staying one step ahead of the market conditions and therefore a major component of our company resources is devoted towards R&D.

We and our customers are cognizant of the effects of our processes on the environment. Even when our customers didn’t demand environment friendly products, we had already customised our manufacturing processes to adhere to eco-friendly norms as much as possible.

Citing an example, we introduced a simple, cost effective, rainwater harvesting system on a test basis at one of our manufacturing facilities and we found the results quite gratifying. We are under the process of introducing the same system at all our locations. We are investigating solar energy resources to understand how we can incorporate them. On a personal front, we have also planted substantial trees.

The Indian print firms require a coherent print programme that has the ability to predict forthcoming market trends and is flexible enough to accommodate the uncertain market conditions. The Indians have an advantage where they instinctively understand the Indian market in a far better way than the multinationals ever will.

A point that should be taken into account here is the Indian potential that has attracted the MNCs into setting up their shops here. Everybody else is tapping into the Indian potential except the Indians themselves. We shouldn’t dismiss the ever increasing MNC presence either. But we we certainly need to pull up our socks and have a proper strategy focusing on our core advantages instead of being complacent about it.

 

Nice Printing Inks
Johnson Therattil, managing director

India has huge internal consumption of print inks. This  potential has to be tapped advantageously. Only a few companies are able to take the risk since generating finance is difficult.  
One thought is reserving the manufacture of certain types of inks with the small scale players. This way multinationals or big-sized companies need not enter this segment.

To safeguard his business, a manufacturer tends to stick to a regular product line and retain his clientele. The era of taking risks is over. Today, for most manufacturers, it’s a question of survival.  
India boasts of having the world’s 10th largest economy.  2013 saw the Indian rupee touch an abysmal low as compared to the dollar, the lowest in several years. The global meltdown has taken its toll in India and the printing ink industry is no exception to this phenomenon. Above all, India has lost considerable market share to China.

Poor business regulations, tardy procedures to obtain government approvals and concessions for export, need to be reviewed. It must be remembered that the printing ink industry is highly labour intensive and price sensitive. Labour reforms are a must for growth. A tariff regulatory body could be established and printing ink manufacturers could approach this body for seeking exemptions/concessions.

Growth and investment are two sides of the same coin. One can  say that the growth has stalled because the investment has stalled and vice versa. We feel that adequate quality control through R&D can help the industry to introduce newer products. However, the government support is essential to encourage the SMEs to undertake research activities. We feel, the government should allow 100% setback or write-off, if a company provides an audited and certified expenditure on R&D.

There is an immediate need to introduce eco-friendly products. An answer to this can be the creation of a working group which can take up the cause of the industry and training and education through seminars, workshops and exhibitions.

It is necessary to manufacture quality products with lower possible cost to survive in the present market conditions. Every customer wants quality products at a competitive price. Thus, every organisation should ensure that good quality raw material is purchased at a minimum cost thus leaving some profit margins for them. The customers are unwilling to bear the increase in cost of raw material, however legitimate it be.

We are engaged in full-scale manufacturing activities to cater to our own customers with our indigenous know-how. Our organisation believes that excellent quality printing inks backed with self-confidence, self-esteem and belief in the workplace can go a long way in our business. With improved team work and people management, good work ethics, and belief in the company’s missions and values, we are in a position to compete with multinational companies.

As an industry, the way ahead is, consolidation. We believe that if small printing ink manufacturing companies join hands with a few of the smaller players to purchase their raw materials through cluster system, all of us would be in a position to compete with multinationals, and bring down the selling prices. The end result would be – we would able to remain in the market and give a stiff competition to the MNCs.

 

Organic Coatings

R K Shah, vice chairman and managing director

Around 15 years ago there were no international companies in the printing ink segment except for DIC. But today, there are many international companies which have entered into this business. They  are selling inks at costs lower than their RMC. Which is why, very few financial institutions are interested in financing this sector. This translates into the slow death of the industry, especially of the small and medium scale industry.

The print ink manufacturers can create a working group which will help bring the various issues and concerns of the industry on a consolidated platform and ensure that issues are tackled. Another area where the association can play a role is in encouraging the SMEs. It is very difficult for the small and medium scale industry to set up a R&D centre. I would suggest the association to set up a R&D centre in a centrally located area. Alternatively one can tie up with the existing independent R&D centres and help them in increasing their value addition to their customers.  

Going by the numbers, the size of India’s contribution to the global printing ink production is negligible. A unified approach will enable the SME industry to survive the competition of the large MNCs. It has always been difficult to maintain a healthy profit margin since the manufacturing of printing inks us a capital intensive segment. More so, the chances of getting additional funds for operations from the industry are very bleak. This policy paralysis has been prevalent over two decades now.

Increased subsidiaries by the government will help the SMEs and the industry, at large, to keep abreast with the technological advancements and be at par with the international standards and range of product offering.

Today, adhering to the customers’ demand and need to produce sustainable products, my company has started manufacturing environment friendly inks. However, the printers demand these inks at a cheaper rate, which is difficult for us, given the high cost of raw materials.

The conditions of business operations are less favourable than in the past but there is better scope for introducing innovations in your product offering to stay ahead of the game. The opportunities for the Indian printing ink manufacturing industry are galore but it’s a unified approach of the manufacturers, the association and the government that will prove beneficial to the growth of the segment.

To go by the signs in the industry, there is tremendous growth opportunity in the packaging ink production segment. In spite of the sluggish performance last year, this segment has been growing. We experienced a 15% growth in our operations and are optimistic about the growth of the industry in the years to come.

 

Print Dynamic
Akil Contractor, managing director

Policy paralysis has had a deleterious effect but has affected the larger players across the broad industry spectrum – assuredly,  the net effect is challenging economic times and a overall diminishing enthusiasm and excitement which is what has percolated down to small players like us, but we did put up a brave face nevertheless.

In the speciality inks segment, we are hopeful of going upward in terms of volumes and value, banking on our product profile. Our response to rising material costs has always been to innovate and create niche products where we are not immediately affected by competition and to drop all products where we do not have our minimum return. This flexibility is a luxury which we may or may not enjoy in times to come.

We know that there is going to be competition from the MNCs, and there are going to be mergers and acquisitions in the industry. But, I believe, when you are small and up against such players it is critical that you acquire the technical expertise  to create niche products, develop a loyal customer base, desist from  desperation, avoid price wars and work with innovations and non-standard products model. Mergers and acquisitions are inevitable and actually a good thing for the industry players in the long run. However it is not a favourable consequence for the user due to the risk of development of a strong monopoly.

Nonetheless, our research in the production and development of inks is something we are truly proud of. Thanks to our unparalleled output we have been acknowledged by the Limca Book of Records and by the Screen Printing Technical Foundation, USA and our research in security inks make us one of the few companies in the world to offer this wide a range of security inks. Our inks for the garment printing are comparable to the best anywhere in the world.

Low cost and high price is the Utopian dream but  a wider product base and research-based activity to support product creation is a must to ensure business which supports returns on a continual basis.

The cascading price line in the ink industry in several segments is the expected fallout of very large ink manufacturers climbing over each other to serve a limited market. Low product prices are welcome but if companies are subsidising their adventurous penetration in any market segment, it is merely a reflection of cut-throat competition.

Today, the levels of awareness about green technologies has been on the increase. At Print Dynamic we have a complete range of inks which conform to the new and emerging standards of eco-compliance. However, one has to understand that this is a continual process and though extremely expensive to adopt, in the long run will be invaluable to our planet earth.

Like every other industry the future of printing ink manufacturing in India for now to 2020 will, from the macro standpoint, depend on the government at the centre. However the large players are expected to have the distinct advantage of growth prospects due to their well established strategies.

New entrants to the print industry, whether as a printer or an ink maker, will  surely decide on the basis of project reports and pre-assessments which should confirm viability based on product and service strength and economics of return based on investment.

 

Setco Chemicals
Tapan Solanki, director

An analysis reveals that over two-thirds of the regulations applying to manufacturing enterprises are generated and administered in the Indian states. Moreover, as World Bank studies show the impediments to business are often in the ways in which laws and rules are administered rather than the content of the laws. For the ink industry there is an association AIPIMA, which tackles the issues regarding regulations and policies.

We are, however, of the opinion that instead of struggling for modifying existing laws, we will have to look for available opportunities to achieve our goals. To sustain our business objective we always try to better our business process. Consolidation of business units; from being multi located to a single location, introducing a credit control system to monitor overdue payments and bad debts and introducing inventory control at stores and production planning to monitor raw material consumption, are some of the improvements that we made in our operations along the journey.

The increase in raw material prices has accounted for a 65% of the input cost rise for the printing ink manufacturers. Moreover, long credit, bad debts, interest cost, energy cost, etc., all added up to lower profitability. But our goal has always been to support the printers by way of development of new specialised products and engaging in cost control and process development so that upgraded products and savings can be passed on to them.

Our R&D centres, which house the latest instruments are manned by qualified and experienced personnels, who continuously thrive to develop new products, processes, cost reduction and much more. Furthermore, our backward integration with the resins unit results in the R&D efforts to begin from the manufacturing cycle.

In India, there is always a debate about printing inks being termed as a “commodity” or a “specialised product”. While some inks, to an extent, can be called “commodity”, most of the inks shall continue to be “specialty” as parameters of successfully running an ink are many and variable.   The pricing, however, is a major factor in our business. But there are plenty of different areas where one can comfortably position profit earning products. And honestly speaking, no ink can be sold lower than RMC plus the manufacturing cost plus the packing cost, of which the customers are quite aware.

The Indian printing ink industry, estimated to be $450 million, today, is dominated by MNCs from Japan / Europe with their subsidiaries in India. The competition, however, has helped the Indian manufacturer to upgrade the quality of their products. With the technology available, the local products are in no way inferior to those supplied by MNCs. The only way forward is to offer a varied range of products at a competitive price. This way, the small and the big companies will continue to sustain with their own business model.

A new entrant in the industry should bring in an innovative product as there has not been any major innovation in the printing ink industry as yet. In future, the demand will be up for “Green inks” and this is what the young aspirants and entrepreneurs will have at their hands to innovate solutions for.  Also trending are the demands for flexible packaging, UV and PU inks.