Ramu Ramanathan: Unflinchingly brutal price hikes; no respite for the print industry

As the March issue Cover Story indicates, “The vaccine rollout is one of the reasons that a number of print businesses state they are hopeful the economic recovery will gather steam during 2021.” Coping with the economic impact of Covid-19 remains the most important business concern and was selected by 60% of respondents. There is also a growing concern over the continuity of business from major customers, selected by 40% of respondents, and competitors pricing below cost, selected by 54%.

Swadesh Sharma, president of The Indore Master Printers Association concurs, “Most of us have regular orders from our clients, and they are dependent on us for their packaging needs. Now, if we can’t supply then their dispatch will fail – and we will lose our long-term contracts and future orders.”

This sentiment is echoed across the country. But the past two months have experienced a halt on that recovery path. The main reason is the price hike. Kamal Chopra, president of AIFMP says, “Printers are facing loss of business due to the unprecedented hike in the prices of raw materials such as paper, plates and ink.”

He adds, “The printing industry is facing a crisis as prices of raw materials have shot up by 30-35%, threatening to make the business unviable. In addition to the increase in paper prices, input costs such as manpower, laminating film, freight and other overheads have also witnessed a huge increase of 60-70%.” Iqbal Kherodawala, president of BMPA concurs, “These frequent and colossal hikes in raw material prices have struck the industry at an inopportune time.

The industry was struggling and sentiment was low. I do hope print buyers are sensitive to the tough situation that commercial printers face.” Meanwhile, there is a trickle of good news. Book print is recovering. Publishing pundits are hopeful that the restarting of academic institutes and government spending on education will boost the sector.

Also, we have been picking up newspaper data about a tweak in the ad model to subscription base. And so, many newspapers in India have increased cover prices by Rs 1.5 to Rs 2.5 (on average); as a result the impact of the same on circulation numbers has been limited.

A quick back-of-the-envelope calculation with the DB Corp circulation numbers indicates that this increase of Rs 1.5 on the cover price of a Dainik Bhaskar newspaper would mean an additional Rs 200-crore revenue. This is a 10% increase on the top-line and bottom-line. A media expert says, “The newspaper industry in India will bounce back.

What the market analysts don’t understand is most media houses have deep pockets. They can tide over a crisis.” Meanwhile, the macro indicators look good. Circulation numbers are back to 85% except for English. Trends indicate that the numbers will settle down between 85-90% next year; but moving forward it will shrink every year by 2-3%.

Direct mail is proving resilient during the pandemic, with brands and more exploiting its unique cut-through. Mehul Desai of Mail Order Solutions concurs, “In this pandemic where physical contact was frowned upon and social distancing was the norm, direct mail has proved to be a saviour for many marketers.

It has allowed marketers to communicate with their target audience. Not only that, physical direct mail has helped NGOs, publishers and others retain and acquire new customers with unique and personalised direct mail packs. This has given much-needed business to those printing presses that specialise in this kind of work.”

As our spotlight of Metro (Surat and Junagadh), Hitech Print Systems (Hyderabad and Vijayawada) and Arihant Enterprise (Vasai) indicate; a greater focus on print integration as well as a print rethink, provide a glimmer of hope.