Printing Industry in India
Content
PRINTING INDUSTRY IN INDIA
A DISSERTATION SUBMITTED IN
PARTIAL FULFILLMENT OF THE DEGREE OF
Master of Philosophy
by
N. KRISHNASWAMY
Enrollment Number: X4MEC22001
Research Guide
Dr. C. K. RENUKARYA, MA, Ph. D
DEPARTMENT OF ECONOMICS
UNIVERSITY OF MADRAS
Chennai – 600 05
OCTOBER 2006
-I-
Dedicated to Smt. N. VANAJA, my
Mother, Shri.
K.
NARAYANAN,
my
Father, who made a printer out of me,
Smt. N. ANANTHIE, my Sister, Shri. N.
JEI RAM, my Brother, Miss K. MEDHA
VANAJA, my Daughter and Smt. K.
JAYASHREE, my Wife.
- II -
CERTIFICATION FROM THE SUPERVISOR
I certify that the dissertation entitled ‘PRINTING INDUSTRY IN
INDIA’ submitted for the degree of Master of Philosophy by Mr.
N. Krishnaswamy is the record of research work carried out by
him during the period from January 21, 2006 to September 09,
2006 under my guidance and supervision and that this work has
not formed the basis for the award of any degree, diploma,
associateship, fellowship or other titles in this University or any
other University or Institution of higher learning.
Place:
Mysore
Date:
September 09, 2006
Dr. C. K. Renukarya, Ph. D.,
Professor of Economics, Director,
Pooja Bhagavat Memorial
Mahajana Post Graduate Centre,
K. R. S. Road, Mysore – 570 016
- III -
DECLARATION
I declare that the Dissertation entitled ‘PRINTING INDUSTRY IN
INDIA’ submitted by me for the degree of Master of Philosophy
is the record of research work carried out by me during the period
from January 21, 2006 to September 09, 2006 under my
guidance of Dr. C. K. Reukarya, Ph.D, Professor of Economics,
Director, Pooja Bhagavat Memorial Mahajana
Post
Graduate
Centre, K. R. S. Road, Mysore – 570 016 and has not formed the
basis for the award of any degree, diploma, associateship,
fellowship or other titles in this University or any other University
or Institution of higher learning.
Place:
Mysore
Date:
September 09, 2006
N. Krishnaswamy,
Enrolment Number: X4MEC 22001,
Department of Economics,
Institute of Distance Education,
University of Madras,
Chennai – 600 005
- IV -
ACKNOWLEDGMENT
I take this opportunity to express my deep sense of
gratitude to my teacher and guide Dr. C. K. Reukarya, Ph.D,
Professor of Economics, Director, Pooja Bhagavat Memorial
Mahajana Post Graduate Centre, K. R. S. Road, Mysore – 570
016 for accepting me as his research student, his scholarly
guidance and immense encouragement throughout the tenure of
the preparation of this dissertation.
I am thankful to Dr. R. Rajkumar, Reader, Department of
Economics, Institute of Distance Education, University of Madras,
Chennai – 600 005 for extending all the possible help in bringing
out this dissertation.
I acknowledge thankfully the cooperation received from
the teaching and non-teaching staff of Institute of Distance
Education, University of Madras, Chennai during the course of
this study.
I express my sincere thanks to the All India Federation of
Master
Printers
and
Madras
Printers
and
Lithographers
Association and their office bearers and the administrative staff
for helping me with the needful information and data.
I am thankful to all the fraternity, well-wishers and
friends from the Printing Industry for giving the required
information for this dissertation.
I am overwhelmed with sincere feelings of indebtedness to
all the members of my family particularly my Amma who has
demanded excellence in whatever I do from my birth, my Appa
-V-
who decided that his son should be a printer on my birth and
who has given me the confidence and to do whatever I decide to
do with involvement and my wife Jayashree who acted as my
support, proof reader, found happiness in what I do and giving
everlasting motivation and daughter Medha for providing the all
the more important inspiration to this project.
N. Krishnaswamy
- VI -
CONTENTS
List of Tables
List of Maps
Chapter
Title
Page No.
I
INTRODUCTION
1- 20
II
REVIEW OF LITERATURE
21 – 26
III
METHODOLOGY
27 - 32
IV
RESULTS
33 – 69
V
SUMMARY AND CONCLUSION
70 – 79
BIBLIOGRAPHY
80 - 83
- VII -
TABLES
Table
Title
Page
No.
1.1
No.
Growth of Commodity Production since
Independence
1.2
Average Annual Growth Rate of Production
1.3
Annual Growth Rate of Industrial Production
in Major Sectors of Industry
1.5
Major Manufactured Export Products
1.6
Distribution of operating surplus in different
manufacturing segments
1.7
Share of operating surplus in total output of
different
segments
in
the
manufacturing
sector: An Asian comparison (%)
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
NIC 2004 5 Digit Industry Classification,
Division 22
NIC 2004, 5 Digit Paper Industry Classification
NIC 2004 5 Digit Printing Ink and Printing
Chemical Industry Classification
NIC 2004 5 Digit Printing and Allied Machine
Manufacturing Industry Classification
Index of industrial production
Production of Paper and Board Industries
1950-51 to 2004-05
Production of Paper and Board Industries
1950-51 to 2004-05
Principal Characteristics by Industry Group for
Publishing, Printing and Related Activities
Estimate of some important characteristics by
3 digit of NIC'98 for the year 2003-2004
Comparison of All India Industries and NIC 22
- VIII -
Table
Title
No.
4.10
4.11
4.12
4.13
4.14
4.15
Page
No.
Comparison of Performance of NIC 22 with
GDP and Manufacturing Industry
Profitability in the Printing Industries Is
Declining
Return on Fixed Capital for the Industry is
Declining
Current Ration for the Industry is Declining
Interest Cover for the Industry is Fluctuating
and Declining
Change in value chain / Business Model
- IX -
-X-
CHAPTER – 1
INTRODUCTION
-1-
CHAPTER – 1
INTRODUCTION
Industrialisation has a major role to play in the economic
development of the underdeveloped countries. The industrial
sector which possesses a relatively high marginal propensity to
save
and
invest
contributes
significantly
to
the
eventual
achievement of a self sustaining economy with continued high
levels of investment and rapid rate of increase in income and
industrial employment. Besides, the development of mechanical
knowledge,
attitudes
and
skills
of
industrial
work,
with
experience of industrial management and with other attributes of
a modern society which in turn, are beneficial to the growth of
productivity in agriculture, trade, distribution and other related
sectors of economy. Industrialisation is thus inseparable from
substantial, sustained economic development because it is both a
consequence
of
higher
incomes
and
a
means
of
higher
productivity.
Industrial development depends upon the rate of capital
formation. Supply of capital goods can be augmented either
through imports or through domestic production. Increase in the
imports of capital goods depends upon the rate of growth of
exports. The export–promoting industries, import substituting
industries and domestic capital goods industries are not mutually
exclusive.
-1-
The Indian industrial structure reflected a lop-sided sizepattern prior to independence and early sixties. The peculiarity of
the industrial pattern of India was the high concentration of
employment either in small factories and household enterprises,
i.e., the lowest size-group or that there is a high concentration of
employment in large factories, i.e., the highest size group. The
medium size factories are not developed in India. Another feature
of the Indian industry was the prevalence of low capital intensity.
It is the result of two factors – first, the general level of wages in
India is low and second, the small size of the home market in view
of the low per capita income and the limited use of mass
production.
India made tremendous progress in industrial sector since
1960s. The Table 1.1 indicates the growth of industrial output in
selected commodities. India has attained self-sufficiency in almost
all consumer goods. Growth of capital goods production has been
impressive
Table 1.1: Growth of Commodity Production since Independence
Commodity
Unit
Cloth
1970-71
2000-01
Million metres 4215
7602
19718
Fertilisers (N)
‘000 tonnes
830
11025
Cement
Million tonnes 2.7
14.3
99.5
Finished Steel
Million tonnes 1.0
4.6
29.3
Electricity
Billion kwh
5.1
55.8
499.4
Aluminium
‘000 tonnes
4.0
168.8
620.4
‘000 tonnes
116
755
3090
8.6
41.2
152.0
Paper and Paper
board
1950-51
Commercial
Thousand
vehicles
numbers
Source: Economic Survey, 2001-02
-2-
9
An impressive industrial capacity has been achieved in all
major
and
minor
industries.
The
infrastructure
including
Research and Development capability, consultancy and design
engineering services, project management services and innovative
capacity to improve and adapt technologies have indeed shown an
impressive record of progress.
Industrial growth has not been uniform since 1951. After a
steady growth of about 8 percent during the initial period between
1951 to 1965 there was a fluctuating trend during 1966 to 1985
averaging about 4 to 5.5 percent. The growth had picked up to an
average of 8 percent per annum since 1985.
Table 1.2 Average Annual Growth Rate of Production
1974-79
1980-85
1985-90
1993-94
to
2000-01
V Plan
VI Plan
VII Plan
Basic industries
8.4
8.3
7.4
5.8
Capital goods
5.7
7.1
15.7
7.5
Intermediate goods
4.3
6.2
5.5
8.5
Consumer goods
5.5
6.5
6.6
7.4
Durables
6.8
15.2
12.1
12.4
Non-durables
5.4
5.3
5.4
6.1
Source: Government of India, Ministry of Industry, Handbook of
Industrial Statistics (1987 and RBI Handbook of Statistics on
Indian Economy, 2001
The process of industrialization has not been able to make a
dent on the problem of unemployment. The high intensity of
public sector investment generated a very small amount of
-3-
employment. Factory employment absorbed only 2 percent of the
labour force.
A
significant
feature
of
the
Indian
economy
since
Independence is the rapid growth of the small industry sector.
This sector has been given a special role for creating additional
employment with low capital. The number of registered small –
scale units is 34.42 lakh in 2001-02 employing 19.2 million with
an output of Rs. 6,39,024 crores. The value of exports stands at
Rs. 69,797 crores in 2000-01, which is 39 percent of total
exports.
1.2 Industrial Sector in India
Industry and services have acted as the twin engines propelling
overall growth of the economy. In the six years between 2000-01
and 2005-06, on average, increased its share in GDP from 49.8
per cent to 54.1 per cent. Industrial sector had an accelerated
growth of industrial GDP at factor cost at constant 1999-2000
prices, from 7.0 per cent in 2002-03 to 7.6 per cent and 8.6 per
cent in the next two years. In the current year, industrial growth
is driven by robust performances from manufacturing and
Services. The Table 1.3 shows the annual growth rate of
industrial production in the major sectors of Industry
-4-
Table 1.3 Annual Growth Rate of Industrial Production in
Major Sectors of Industry (Based on the Index of Industrial
Production) Base: 1993-94 = 100
(percent)
Period
Mining
& Manufact-
Quarrying
Electricity
Overall
uring
10.47
79.36
10.17
100.00
1995-96
9.7
14.1
8.1
13.0
1996-97
-1.9
7.3
4.0
6.1
1997-98
6.9
6.7
6.6
6.7
1998-99
-0.8
4.4
6.5
4.1
1999-00
1.0
7.1
7.3
6.7
2000-01
2.8
5.3
4.0
5.0
2001-02
1.2
2.9
3.1
2.7
2002-03
5.8
6.0
3.2
5.7
2003-04
5.2
7.4
5.1
7.0
2004-05
4.4
9.2
5.2
8.4
2005-06#
0.4
8.9
4.8
7.8
Weights
Source: Economic Survey 2005-2006, website:
http:/indiabudget.nic.in
1.3 Manufacturing Sector in India
Manufacturing sector with a weight of 79.36 in industry has
always outgrown the industrial growth. In contrast to the sharp
fluctuations in agriculture, industry and services have continued
to expand steadily. The manufacturing process is defined as any
process for (i) making, altering, repairing, finishing, packing,
oiling, washing, cleaning, breaking up, demolishing or otherwise
treating or adapting any article or substance with a view to its
use, sale, transport, delivery or disposal; (ii) pumping oil, water,
sewage or any substance; (iii) generating, transforming or
-5-
transmitting power; (iv) composing types for printing, printing by
letterpress, lithography, photogravure or other similar process or
book binding; (v) constructing, reconstructing, repairing, refitting,
finishing or breaking up of ships or vessels; (vi) preserving or
storing any article in cold storage. Indian manufacturing sector is
classified into two categories by National Accounts Statistics as
Registered manufacturing and Unregistered manufacturing on
the basis of the number of workers and usage of power. In 200203 there were 1.28 lakh registered production units employing
78.9 lakh workers. The total output of the manufacturing sector
was Rs 10,87,865 crore and the gross value added Rs 2,15,006
crore.
1.4 Role of Manufacturing in International Trade
After witnessing an impressive growth since 2002-03, export
growth continued to maintain momentum during the year 200405. According to provisional data available for April-January
2004-05, exports stood at Rs.274313 crore as against Rs.
2,22,864 crore in the corresponding period of last year, recording
a growth of 23.1% in rupee terms. Imports also witnessed a
robust growth of 32.1%, having increased to Rs. 3,76,815 crore
from Rs. 2,85,327 crore during April-January 2004-05. Many
sectors of the manufacturing have been able to make major forays
into the global markets over the last two decades. Though the rate
of growth has not been impressive, there has been a significant
acceleration in the trends in the more recent years. But their
share in world trade is about 1 to 7 percent only.
1.5 Role of Manufacturing in Economic Planning
Importance of manufacturing industry in the national economy is
indicated by many facts. For example manufacturing is the main
-6-
producer and provider of all types of consumer durable and
nondurable goods. While agriculture and other major industries
provide for the basic sustenance of the nation and its people it is
the manufacturing industry which gives the value added products
for the consumer to enhance the quality of life and addition of
wealth. Only a sharp increase in the manufacturing sector
workforce would take the pressure off the agriculture sector and
increase income levels. Agriculture, supporting 60% of the
working population, contributes only 22% of its gross domestic
product. This mismatch between distribution of workforce and
value added in agriculture is one of the main reasons for the large
number of poor, and this trend is expected to further widen in the
coming decades.
Only
a
large
shift
of
workforce
from
agriculture
to
manufacturing will help improve rural incomes and reduce
poverty levels. If India is to achieve an overall growth of 8% per
annum, it is essential that both manufacturing and services grow
at more than 11% even when agriculture growth picks up to close
to 4%. A comparison with other major Asian countries show that
the size of the value added in the Indian manufacturing sector ($
66 billion in 2000) was less than one fifth of the Chinese
manufacturing sector ($ 373 billion) and even less than half of the
Korean manufacturing sector ($ 144 billion). Share of the
manufacturing sector in India’s GDP has remained stable at
around 17% while in China the manufacturing sector accounted
for around 35% of the GDP and in the case of Korea it was 31%
1.6 Performance Trends in Manufacturing
Manufacturing sector growth in India has fallen sharply in the
last seven years as compared to the first seven years after the
-7-
reforms. Manufacturing sector growth slumped from 7.4% in the
first seven years of reforms (1990-91 to 1996-97) to just 4.7%
over the last seven years (1997-98 to 2003-04). Manufacturing
sector growth in the last seven years was lower than the 5.1%
growth clocked by industry or the 5.7% growth of GDP during the
period.
Indian
Manufacturing Sector faces the
following
cost
disability factors such as (i) cascading effect of indirect taxes on
selling prices of commodities, (ii) higher cost of utilities like
power, railway transport, water, (iii) higher cost of finance and (iv)
high transactions costs.
A detailed investigation of 15 major manufacturing sectors
in India shows that the share of operating surplus in the total
value of output averaged 15% in India – much lower compared to
22.6% in Malaysia, 29.4% in Indonesia and 30.6% in Korea
resulting in low operating surplus. The average the share of input
materials and utilities in total output value was as high as 81.3%
in India as against 75.5% in China, 68.7% in Malaysia and only
58.5% in Korea. Estimates show that the average share of labor
costs in manufacturing across 15 major industries was 6.9% in
India as compared to 8.7% in Malaysia, 10.7% in Korea and 5.5%
in Indonesia. The Table: 1.4 draws a comparison between the
GDP, Industry and the Manufacturing sector
-8-
Table 1.4: Sharp slowdown in manufacturing sector growth in
percentage terms
First seven
Last seven
Overall period
years (1990- 91 years (1997-
(1990-91 to
to
98 to
2003-04)
1996-97)
2003-04)
Manufacturing 7.4
4.7
6.0
Industry
6.5
5.1
5.8
GDP
7.8
5.7
5.7
Source: Annual Report 2004-05, Reserve Bank of India
There are 48 major manufactured products whose share in
the global markets has improved significantly between 1980 and
2000. The share of these 48 products in India’s total merchandize
exports has gone up from 40.3% in 1980, to 50.9% in 1990 and
further to 57.4% in 2000. The share of these 48 manufactured
products in the global market currently ranges between 1% to
13%. On the average their un-weighted share of the global export
market is just 2.8%. The list of the major 48 products is given in
the table below.
Table 1.5: Major Manufactured Export Products
Serial
Major manufactured export products
1
Pearl, precious, semi-precious stones
2
Textile articles
3
Floor coverings, etc
4
Under garments non-knit
5
Developed cinema film
6
Textile yarn
7
Cotton fabrics, woven
8
Synthetic dye, natural indigo, lakes
-9-
9
Women's outwear non-knit
10
Gold, silver ware, jewellery
11
Other organic chemicals
12
Lime, cement and building products
13
Iron, steel castings unworked
14
Headgear, non-textile clothing
15
Other fixed vegetable oils
16
Pesticides, disinfectants
17
Base metal household equip
18
Travel goods, handbags, etc
19
Under garments knitted
20
Textile clothing accessories
21
Woven man-made fib fabric
22
Lace, ribbon, tulle, etc
23
Pig iron, etc
24
Iron, steel wire, excluding wire rod
25
Outer garments knit non-elastic
26
Processed animal and vegetable oil, etc
27
Hydrocarbons, derivatives
28
Alcohols, phenols, etc
29
Carboxylic acids, etc
30
Organo-inorganic compounds, etc
31
Inorganic chemical element, oxides, etc
32
Other inorganic chemicals
33
Explosives, pyrotechnic products
34
Products of condensation, etc
35
Starch, insulin, gluten, etc
36
Rubber articles
37
Glassware
- 10 -
38
Iron, steel primary forms
39
Iron, steel shapes, etc
40
Iron, steel universal, plate, sheet
41
Iron, steel tubes, pipes, etc
42
Aluminium
43
Tin
44
Structures and parts
45
Wire products, non-electric
46
Electro-medical, x-ray equipments
47
Office supplies
48
Musical instruments and parts
Source: Manufacturing Sector in India: Competitiveness and
Other Issues, Federation of Indian Chamber of Commerce &
Industry, January 2005
1.7 Operating Surplus in the Indian Manufacturing Sector
A detailed investigation of 15 major manufacturing sectors in
India shows that the share of operating surplus in the total value
of output average 15% in India as compared to 22.6% in
Malaysia, 29.4% in Indonesia and 30.6% in Korea. The Table 1.6
shows the operating surplus in different countries.
Table 1.6: Distribution of operating surplus in different
manufacturing segments
Number of manufacturing industries
India
0
Indonesia Malaysia
13
9
Korea
14
Operating Surplus of 1020%
10
2
5
1
Operating Surplus of
Less than 10%
5
0
1
0
Operating Surplus of
above 20%
Source: Manufacturing Sector in India: Competitiveness and
Other Issues, Federation of Indian Chamber of Commerce &
Industry, January 2005
- 11 -
1.7.1
Operating Surplus of above 20%
In the case of India there was not even one single industry where
the share of operating surplus in total output value was above
20%. In contrast 9 industrial segments in Malaysia where the
operating surplus was higher than 20% and 14 manufacturing
segments each in Korea and Indonesia.
1.7.2
Operating Surplus of 10-20%
Number of manufacturing industries with an operating surplus
ranging between 10-20% of the output value numbered 10 in
India, 5 in Malaysia and one each in Korea and Indonesia.
1.7.3
Operating Surplus of less than 10%
The number of manufacturing industries with operating surplus
of less than 10% of output value numbered 5 in India, one in
Malaysia and zero in Korea and Indonesia.
Table 1.7: Share of operating surplus in total output of
different segments in the manufacturing sector: An Asian
comparison (%)
India
Indonesia
Malaysia
Korea
Iron & steel
17.2
29.9
13.2
28.1
Glass
16.0
41.4
38.4
38.4
Rubber products
14.5
12.2
24
33.1
Electrical machinery
14.1
24.2
17.7
Non Electrical
13.2
30.9
19.8
27.2
Industrial chemicals
12.7
33
28.7
32.1
Plastic products
12.7
25.3
25.5
30.1
Non ferrous metals
11.5
29.0
18.9
19.4
39.1
machinery
- 12 -
Printing & publishing
11.0
33.2
35.9
41.8
Transport equipment
10.9
51.3
21.0
30.1
Leather products
9.8
23.0
16.9
22.4
Metal products
9.4
28.3
20.6
31.4
Wood products
8.9
27.8
21.3
27.9
Food products
7.4
24.3
9.8
29.9
Textiles
7.4
26.6
27.6
28.5
Average
11.8
29.4
22.6
30.6
Source: Manufacturing Sector in India: Competitiveness and
Other Issues, Federation of Indian Chamber of Commerce &
Industry, January 2005
1.8 Printing Industry
Time magazine, in listing the 100 most influential events of the
second millennium, chose the printing of the Gutenberg Bible as
the most significant, because in creating the beginning of print as
we know it today, this event changed for all time our access to
knowledge and our ability to record and share information. The
printing industries today produce the most visible, most common
and most effective means of communication seen in our daily
lives.
1It
is India’s Twelfth largest manufacturing industry
employer and a major contributor to the Indian economy.
However, India’s printing industries are at the cross roads.
The pace of technological change in the industry is nothing short
of phenomenal. Long gone are the images of plastic sleeved
printers stooped over typesetting cases. The industries in India
have moved from the traditional ‘ink on paper’ industry to
embrace an ever-increasing range of technologies and fields of
expertise.
And yet as printing industry it has not always had a clear
vision
for
its
future.
It
does
- 13 -
not
always
recognize
the
sophistication and size of the industry and the major role it plays
in people’s lives and in the economy.
third
largest
manufacturing
2
Printing industries are the
industry
worldwide,
and
the
twentieth largest in India in terms of gross output. The industries
undertake a wide range of activities including: the manufacture of
paper stationery, commercial and job printing, the provision of
services to industry, publishing and printing of newspapers,
books magazines and periodicals, and the manufacture and
publishing of audio, video and data media. In India, the printing
and related industries (excluding pulp and paper manufacturing)
comprise
of
some
3,007
printing
factories
and
1,06,993
unregistered printing presses.. These printing factories (greater
than 200 employees) employ 1,12,974 people. The overwhelming
majority of firms are small and medium enterprises employing
some 4,93,007 people.
The industry plays an important role in regional India.
Approximately 35% of graphic arts establishments are located
outside capital cities. There is also a significant presence of small
printers in the district and taluk levels. The long term economic
performance of printing industries is a cause for concern.
Diagram 1 illustrates the industry’s on-going slow slide in
profitability and return on assets. The future does hold lucrative
new business opportunities for Indian Printing. It is no surprise
that new high value opportunities will arise more and more in
what is termed in the market space as e-commerce and the
internet.
Traditional
market
place,
ink-on-paper
business
opportunities will still be available, of course. The challenge for
printers lies in developing innovative business strategies that
- 14 -
cleverly exploit complementarity between market place and
market space business.
1.9 The
21st
century
—
Navigating
Complexity
and
Flexibility
India’s printing industry faces a number of challenges as the new
millennium dawned. Rapid technological change will continue for
the foreseeable future. The processes of industrial convergence
will accelerate creating both opportunities and threats. Printing,
information and telecommunications industries will play key roles
in the new and emerging knowledge-based economy. The future
for Indian printing industry will be exciting, complex and
uncertain. To borrow a nautical analogy, in this situation the
industry must ready itself to navigate through uncharted waters.
This Dissertation – Printing Industry in India - aims to capture
this idea of ‘navigating’ through the uncertainties that the new
millennium is bringing.
Navigating the Future
Complexity
Flexibility
Clear
Business
Appropriate use
of Technology
Drivers of
Sustainable
Growth
- 15 -
Creative and
Skilled People
1.10
A Brief History of Print
Plato spoke against the idea of writing in the 5th century BC. He
believed that being able to write things down, write words on
paper or parchment would ruin our natural capacity for memory.
From the 7th to 15th centuries ‘printing’ was largely in the form
of religious manuscripts, entirely constructed by hand. Then in
1452 the printing press was invented by Gutenberg, bringing
together the technologies of paper, oil-based ink and the winepress to print books using movable type.
The concept of ‘print’ was revolutionised in the late 1990s
when it came to mean anything that you can print on paper, a
computer screen or to any other media. This included words,
graphics, images, icons, holograms, AVIs, MPEGs, MP3s - the list
was endless. Combining this with digital presses and digital
workflows, the printing industry had an enormous opportunity to
capitalise on the next revolution - but it missed the virtual boat.
The IT and communications industries stole the lead even though
most of their employees were not educated in graphic design or
layout, let alone being able to effectively communicate with
images and words. But the printing industry survived on the
crumbs thrown to them by their bigger IT cousins - whenever
someone needed a better web page design or the occasional bulk
printing for a marketing strategy, they managed to find a cheap
printer who could do the job.
Two segments of the market survived and even prospered at
times: the print factories and the customised market printers.
The print factories operated by filling the bulk orders for clients
- 16 -
who needed to distribute paper-based products: advertising
circulars, mail order catalogues and targeted brochures. The
customised market printers catered to a small clientele who
required specialist printing of books, documents, cards and very
small runs of other printed products. As it is known, this type of
printing can be easily done at work or at home, but sometimes
when that extra professional appearance to the printed products
are desired; that expert touch that current technology just can’t
quite produce.
1.11
Importance of the Study
What the industry has been, and what it is now, will not be what
it is in the next five to ten years. The industry has the will to
survive and thrive but it must transform itself in very radical
ways if it is to enjoy meaningful and sustainable growth in the
foreseeable future. In moving from the Industrial Age into the new
Age of Information, a vibrant and robust printing industry is
fundamental for the emerging knowledge based economies. In this
new world, in addition to traditional ‘ink on paper’ printing,
significant opportunities for products and services are opening up
as a result of the increasing shift towards electronic and
information based activity. The Indian printing industry has
recognised that it is operating in a turbulent environment
characterized by rapid changes in technology. It has to initiate a
process to assist the industry and its individual companies to
operate in what is becoming an increasingly more complex set of
pathways.
Bearing in mind this highly dynamic environment, the
dissertation does not aim to chart a single or narrow range of
directions for the industry in a way that may have been possible
- 17 -
in less turbulent and slower changing times; it does not aim to
set out a prescriptive path for firms to take. Rather, its purpose is
to identify signposts that help the industry to focus on what it
needs to do today to be well prepared for an uncertain tomorrow.
The paper articulates a number of possible scenarios in which the
industry and firms may well find themselves in the future. For
these reasons the theme of ‘navigating’ has been adopted by those
developing this paper to present broad strategic guidelines for the
industry.
Businesses
will
increasingly
need
to
‘navigate’
opportunities and threats often through ‘uncharted waters’. To
navigate successfully through the important impacts of future
changes will require business leaders and managers to consider
what their core competencies are, customers’ values and needs
and how to create and deliver value.
All the evidence points to prospects for growth. The real
issue for the industry, centres generally around the nature and
scope of future growth and more specifically being close to its
customers, understanding their needs and leveraging their
growth.
The springboard for future growth lies in the industry’s
current capabilities and how these may be developed to create
new capabilities to capitalise on the emerging opportunities. The
industry has talked about ‘survival’. This suggests a victim
mentality - this is a choice. But there are other choices:
1. Choose to creatively shape the future;
2. Choose to participate in the future;
3. Choose to fall victim to the future.
- 18 -
1.12
Specific Objectives of the Study
The purpose of this paper is to:
1. Define/map the printing industry in India;
2. Describe/profile the industry in detail domestically and in
broad terms internationally; and
3. Identify
key
business
environment
signposts/trends
covering the period 1950 to 2010.
1.13
Presentation of the Study
The entire study has been presented in five chapters. In the
Chapter – I the nature, importance of specific objectives and
limitations of the study have been indicated.
Chapter – II deals with the review of the relevant research
studies connected with the objectives.
Chapter – III outlines the main features of the study area,
the method followed, nature and source of relevant data collected
and analytical tools employed in the study.
Chapter – IV is devoted to the analysis of data through a
variety of tables and discussions into which relevant details have
been compressed and summarized under appropriate heads
presented in the tables.
Chapter – V deals with the discussion of the results of the
study. It provides a brief summary of the whole study and also
suggests the policy implications from the findings of the study.V
1.14
Limitations of the Study
As the rationale for the paper is business strategy directions, the
analysis of the data is more focussed on general directional
changes
that
will
impact
- 19 -
on
the
sustainability
and
competitiveness
of
the
industry.
The
directional
changes
identified in the data can be reality tested against the knowledge
and insight industry practitioners have on the state and
dynamics of their industry. Therefore, while not compromising
accuracy in any way, precision in data analysis is not considered
to be paramount in these circumstances. Rather, the objective is
to facilitate the adoption of thoughtful industry wide and firm
based business strategy, ensuring the appropriate adoption and
uses of technology and most importantly, the development of
competencies and skills within the industry at levels of firm
structure and size.
- 20 -
CHAPTER – II
REVIEW OF LITERATURE
-1-
CHAPTER – II
REVIEW OF LITERATURE
In this chapter an attempt is made to present the literature
pertaining to the research work relate to the present study. Since,
not much work has been one on the printing industry in India,
the study is undertaken, Studies conducted on the printing and
allied industries in general and Indian printing industry in
particular have been reviewed under the following sections.
2.1
Printing industry in Indian manufacturing
2.2
Industry economics
2.3
Customer, technology and future
2.1 Printing industry in Indian manufacturing
Indian printing industry has formed part of the study on
manufacturing industry since 1951. However it is considered in
combination with paper, paper products and printing as the
group
had
been
classified.
In
this
classification
paper
manufacturing industry formed the core and paper products
manufacturing and printing industry took the shape of associate
industry. This classification is used to collect data with regard to
production and utilization of paper for forming part of the
manufacturing industry statistics. Not much of an organized
study had taken place or books are published on printing
industry. However, government had constituted committees
- 21 -
towards setting up of text book presses, which had prepared
reports for that purpose.
The industry groupings in the form of associations of
clusters had been in existence since about half a century in
different parts of India. These associations had conducted
workshops, meetings and other endeavours like exhibitions,
conferences etc., towards protecting the sustenance of the
industry.
However
all
these
had
focused
mainly
on
the
technological component of the industry. The economic and
business components were restricted towards making occasional
representations to government on taxes and duties. Also printers
had most of the time focused themselves as traders who quote,
wait for the response and execute, rather than viewing themselves
as industrialists. This also has to do with the fact that printing is
considered mainly as need based process for reproduction by any
available means than an industrial effort.
However, newspaper industry a segment of the printing
industry has always been ahead in organizing itself for their
protection and benefits. Still, there had not been an organized
study done in this area. Since the printing industry is divided into
various segments catering to a principal industries or as in house
printing units specializing in an obscure product almost no
systematic study has so for not been initiated for the industry as
whole. However, certain states where printing industry has its
major clusters in India had conducted studies focusing on solving
a particular problem or studied this industry as an associate of
other major industry.
- 22 -
There are books on printing industry in India, focusing
mainly on historical aspects of the industry and its development
or not so many books on printing as technology. It is a matter for
concern that only a few numbers of texts on printing technology
catering to the lower end of the trade are available.
The printing Industry was classified alongwith Paper and
paper
products
industry
in
1962
Standard
Industrial
Classification, with a revision in 1968. In 1970 it was made into a
three digit classification printing still clubbed with paper
industry. The National Industrial Classification 1987 grouped
Publishing,
Printing
and
Related
activities.
The
1998
classification made printing as a separate entity in the Industrial
Classification. This had further been classified in 2004 fully
covering all the old and new printing and related activities.
As for the reasons explained above studies on printing
industry as an economic activity is not available. Also the first
scientific study on this industry had been done in 1985 by Hira
Kant Jha, under the title ‘Empirical study of printing presses in
Patna, Bihar’, as dissertation for his Ph. D. in Patna University,
1985). There was another study in Punjab focusing on the
employment and wages of the printing press employees of
Amritsar in 1955. However none of the above known studies had
approached the printing industry economics as a whole or as its
major component parts, so as to use for reference or review. Also
the author could not come across any other scientific study on
this subject topic.
2.2 Industry economics
Australian Printing Industry Report, 1998 , has studied the
printing
Industry
of
Australia
- 23 -
in
1998
and
published
a
comprehensive report covering all areas of the industry from raw
material, business processes to future prospects and foreign
competition. It also had outlined the industry specific initiatives
by the government.
Encyclopedia of American Industry, Standard & Poor’s
NetAdvantage (2002), gives a crisp outlook of the American
Publishing industry in the form of overview.
Naresh Khanna (2002) in his article in India Printer and
Publisher writes about the globalization of printing technology.
The Occupational Outlook Handbook 2002-03, published by
the Graphic Communications Council, USA, explains in detail the
employment and different occupations available in the industry.
Ramu Ramanathan’s, (2003) article titled ‘An Overview of
the Small Offset sector’, published in the Indian Printer &
Publisher has provided details on the small offset sector of the
printing industry in India.
The United States Census Bureau’s Economic Census Series
Reports 2002 gives statistical analysis of different segments of it
printing industry.
A Unique Printing Industry Resource Printing Industries
Association of Australia, 2005 details the Australia’s fourth
largest manufacturing industry employer and a major contributor
to the its economy - its printing industry – its current status. It
also outlines an ambitious plan for its future sustenance, growth
and globalisation.
An Overview of the Printing and Publishing Industry in the
US, Including Future Predictions to 2009, (2005) explains in
- 24 -
detail the state of printing industry in United States in all its
details. It also makes forecast of its future to ensure its
dominance in creative printing and leader of print production
innovation.
Colin Thompson (2006) in his article titled The Chinese
Printing Industry explains about the dynamics of the emerging
Chinese Printing Industry and its effect on the global printing
industry.
The KBA Report (2006), published by Koening & Baur AG,
(2006) Germany and Polygraph International Quarterly, Germany
have detailed their current status of technology and operational
outputs.
In addition reports generated by Indian Pulp and Paper
Technical
Association,
National
Association
of
Printers
&
Lithographers, USA, North American Graphic Arts Suppliers
Association,
Paperboard
Industries of America,
Packaging
Council,
USA,
Printing
Screen printing & Graphic Imaging
Association International, USA, Technical Association of the
Graphic Arts, USA, The All India Printing Ink Manufacturers
Association, Waterless Printing Association, USA,
on different
topics on the printing industry economics and technology and
forecast for the future sourced as published literature and made
available online in the world wide web have been reviewed in
preparing this dissertation.
2.3 Customer, Technology and Future
Birkenshaw, John, (1992) in his lecture published in Ink &
Print, 1993 issue talks about the Future trends in printing, which
explain in detail the convergence of information technology,
- 25 -
knowledge management and printing industry in providing
customer a new composite service.
Printing for Profit 2000 published by the British Printing
Industries Federation in 1990s had outlined the future prospects
for the industry in United Kingdom.
Colin Thompson (2006) in his articles titled Graphical
Challenges for the Printing Industry outlines what the future has
in store for the printing industry in United Kingdom by taking the
world view.
Colin Thompson (2006) in his three part article titled
Challenges for the Printing Industry makes an in depth study of
the future of the printing industry and makes his forecasts.
- 26 -
CHAPTER – III
METHODOLOGY
-1-
CHAPTER – III
MEHODOLOGY
This chapter deals with the description of study area, the nature
and the sources of data collected, the various tools and
techniques employed in analysing data. These are presented
under the following heads.
3.1
Description of the study area
3.2
Nature and sources of data
3.3
Analytical tools and techniques employed
3.4
Definition of terms and concepts used.
3.1 Description of the Study Area
The printing industry forms part of the manufacturing industry
which is one of the major industrial sectors of the economy.
Indian printing industry is in the throws of an imminent change
which is flushed with opportunities of the known and challenges
of the unknown. These are the cumulative results of technology,
growing population, increasing literacy, opening up of the
economy, liberalisation, advent of the communication enabled
information technology based services and above all the overall
growth of the economy in particular the middle class population.
Indian GDP is growing at 7.5 to 8 % over the last two years
after a lull in the preceding three years. India’s index of industrial
production has risen from 7.9 in 1950-51 to 204.8 in 2004-05.
- 27 -
During the same period the population has grown from 359
million to 1090 million and the literacy rate from 18.33% to
65.38%. The paper, paper products and printing industry with a
weight of 26.52 has grown from 108.3 in 1981-81 to 230.7 in
2004-05 (Base: 1980-81 =100).
The earliest printing presses in India were located along the
west coast line of the peninsula namely Goa, Cochin, Pudikoil,
Vypicottah and Ambadalakkad. Also Tranquebor, Madras, Fort
William, Calcutta and Serampore, along the East Coast in the
east coast had the first of the printing presses in India. All these
happened between 1579 AD to 1795 AD. In 1817, Bombay had its
first printing press. Subsequently it led the phase of the vigorous
growth of early Indian printing. Since then printing industry has
gone through several phases in technology, constitution and
functioning. It organises itself in clusters for development all
through the country, functioning basically as a supporting service
industry.
3.2 Nature and sources of data
The secondary data needed for the study has been obtained from
the Cental Statitical Organisation, Government of India’s Annual
Survey of Industry and Reserve Bank of India’s Annual report and
Government of India’s Economic Survey.
The
secondary
data
also
has
been
sourced
from
innumerable industry published articles. The author also has
used his two decade long experience in the industry alongwith the
inputs from the experts of the industry received through
interaction.
- 28 -
3.3 Analytical Tools and Techniques Employed
3.3.1
Ratio Analysis for the Printing Industries
The definitions for these ratios are generally taken from Analysing
Company Accounts by Martin Roth, Wright Books, 1995, and
Financial Accounting by Carnegie, Jones, Norris, Wigg, and
Williams, McGraw-Hill, 1999.
Caveats on the Use of Ratios
Financial ratios are indicators only. They do not present a
complete picture of the business or industry. Other important
factors may be determinant on performance and not captured by
financial ratios. A ratio is a comparison of two figures, a
numerator and a denominator. At times it may be difficult to
determine whether, in comparing ratios, the differences are due to
the numerator or the denominator or both. Comparison between
companies can be difficult due to the adoption of different
valuation methods. Ratios are interconnected and should not be
treated in isolation.
3.3.2
Net Profit Margin and Profit Margin
The Profit Margin ratio is an indicator for corporate efficiency.
More explicitly it reflects the return on sales from the operations
of the organisation. The ratio is given by:
Profit Margin (%) = (EBIT/ Sales) x 100.
EBIT = Earnings Before Interest and Tax
3.3.3
Return on Assets
This ratio is also known as return on investment. It measures the
ability to generate profits from assets and is defined as operating
profit before tax as a percentage of the total book value of assets.
(ABS 8225.0) The ratio is given by:
Return on assets (%) = (EBIT/ Assets) x 100
- 29 -
3.3.4
Financial Stability
Financial Stability ratios focus on assessing the amount of risk
for an entity. They fall into two categories:
1.
Measures of short term liquidity:
Current Ratio
2.
Measures of financial structure and long term solvency:
Debt to Equity Ratio
Interest Cover
3.3.4.1
Current Ratio
Can the industry pay its bills? - Keeping liquidity as low as
possible while ensuring that short term obligations are met. That
is the number of times current assets cover current liabilities, i.e.
the value of current assets divided by the value of current
liabilities. This liquidity measure indicates ability to meet
immediate
financial
obligations
from
current
assets.
The
convention usually adopted is that there should be a two to one
difference between current assets and current liabilities.
The current ratio is given by:
Current ratio = Current assets/Current liabilities
"A strong cash flow, with a high stock turnover rate and
speedy collection of debts, may mean that a company can operate
safely with a current ratio nearer to one or lower. …. a company’s
working capital - surplus of current assets over current liabilitiesshould be sufficient to pay bills and give credit as necessary."
It may be useful to consider the proportion of cash
represented in current assets - cash to liabilities ratio. Have to
watch that the enterprise is not over-burdened with debt. Profits
will not mean much if it is. But debt is also a path for growth
- 30 -
especially if interest rates are low and the economy is growing. If
industry is competing in a stable predictable environment then
liquidity can be low.
3.3.4.2
Debt to equity ratio
This measures debt exposure and generally the higher the ratio,
the more likely it is that there may be difficult to pay debts;
especially if interest rates rise. There is no ‘safe’ figure though the
practice seems to be that if the ratio does not exceed 100%, there
should be no difficulty. Too much equity can mean that
management is not taking advantage of the leverage associated
with long term debt. Outside financing will become more
expensive as the debt to equity ratio increases. Therefore the
degree of leverage has to be considered in light of profitability and
industry volatility.
The ratio is given by:
Debt to Equity ratio = Total Debt/ Equity*
* Shareholder’s or Owner’s Equity depending upon whether the
company is public or private
3.3.4.3
Interest Cover
The ratio reflects the relationship between interest payments and
profits to show if there is a good margin of profit to ensure against
downturn or sharp interest rate rises. That is the number of times
over that business can meet their interest expenses from their
earnings before interest, i.e., the value of earnings before interest
and tax divided by the value of interest expenses (ABS 8225.0).
The ratio is given by:
Interest Cover = EBIT/ Net interest payments
The rule of thumb is that enterprises should be able to cover
interest payments at least three times.
- 31 -
3.3.4.4
Macro Economic Indicators for the Indian Economy
Information on predictions of the main macroeconomic indicators
into the next decade is given below. They are from the latest
report published by one of the major economic modeling houses,
Econtech. All the figures for 1998-99 are historical, and
subsequent figures are forecasts.
Essentially,
in
the
general
medium
to
longer
term
macroeconomic environment in which the Printing Industries will
be operating, GDP is predicted to be growing at a rate of about
2.5-3%. The analysis suggests that if the economy generally is
growing then the printing industries will also be growing. It also
suggests that for profitability to increase there will need to be a
shift downstream in the services offered by printers. They will
need to manage their cost structures better particularly the
capacity utilisation.
- 32 -
CHAPTER – IV
RESULTS
-1-
CHAPTER – IV
RESULTS
In consistence with the objectives of the study the necessary
data collected from different sources were and interpreted. The
results of such analysis are presented in this chapter under the
following Heads.
4.1
Defining the Industry
4.2
Data Sources and Analytical Precision
4.3
Printing Industry in India
4.4
Key External Drivers
4.5
Industry Parameters for Growth
4.6
Future Operating Environment
4.7
Choices for Future
4.1 Defining the Industry
For the purposes of this study, which is to signpost trends
in the industry using available Central Statistical Organisation
(CSO) data, the core of the industry is defined according to the
Five Digit - National Informatic Centre 2004 classification and
presented according to the Three Digit National Informatic Centre
1998 classifiction of India. It includes the Total Printing,
Publishing and Recorded Media (NIC 22 series), the Total Paper
and Paper Product Manufacturing (NIC21series), Total Printing
and Writing Inks and Photographic Films (NIC 24 series) and
- 33 -
Total
Printing,
Paper
making
Manufacture (NIC 29 series).
and
Packaging
Machinery
The paper focuses mainly on
Printing Industry and information
from the other related
industries are used for defining the industry in focus.
Table 4.1: NIC 2004 5 Digit Industry Classification, Division 22
Group Class Sub
Description
Class
221
Publishing [This group includes publishing
whether or not connected with printing.
Publishing involves financial, technical,
artistic, legal and marketing activities,
among others but not predominantly]
2211
22110 Publishing of books, brochures, musical
books and other publications.
2212
Publishing of newspapers, journals and
periodicals [includes periodicals of
technical or general contents, trade
journals, comics etc.]
22121 Publishing of newspapers.
22122 Publishing of periodicals and journals
2213
22130 Publishing of recorded media [includes
publishing of records and other recorded
audio media, publishing of sheet music etc]
2219
22190 Other publishing [includes publishing of
photos and postcards, greeting cards, timetables, forms, posters or other printed
matters.]
222
Printing and service activities related to
printing
- 34 -
2221
Printing [Includes printing of newspapers,
magazines, periodicals, journals and other
material for others on a fee or contract
basis]
22211 Printing but not publishing of newspapers
22212 Printing but not publishing of periodicals,
books, journals, directories, atlases, maps
and sheet music, schedules and pamphlets
22213 Printing of bank notes, currency notes
22219 Printing and allied activities like screen
printing other then textile, n.e.c.
2222
Service activities related to printing
22221 Engraving, etching and block making etc.
22222 Book binding on account of others
22229 Other service activities relating to printing
n.e.c
223
2230
22300 Reproduction of recorded media [This class
includes reproduction of records, audio,
video and computer tapes from master
copies, reproduction of floppy, hard or
compact disks, reproduction of noncustomised software and film duplicating]
- 35 -
Table 4.2: NIC 2004 5 Digit Paper Industry Classification
21011
Pulp, manufacturing
21012
Manufacture of paper
21012
Manufacturing of writing paper
21012
Printing paper, manufacturing
21013
Paper, newsprint, manufacturing
21014
Packaging paper, manufacturing
21017
Manufacturing of computer stationery
21019
Manufacturing of composite paper
21019
Paper board n.e.c., manufacturing
21021
Paper bags, manufacturing
21024
Paper board (corrugated), manufacturing
21091
Paper cones, manufacturing
21091
Paper loops, manufacturing
21092
Paper cups, manufacturing
21092
Paper plates, manufacturing
21092
Paper saucers, manufacturing
21094
Pulp dolls, manufacturing
21095 Manufacture of papier mache articles
21098
Manufacturing of stationery items
Table 4.3: NIC 2004 5 Digit Printing Ink and Printing
Chemical Industry Classification
24223
Printing inks, manufacturing
24294
Manufacturing of photographic films
24294
Manufacturing of photographic plates
24299
Manufacturing of writing or drawing ink
- 36 -
Table 4.4: NIC 2004 5 Digit Printing and Allied Machine
Manufacturing Industry Classification
29195
29195
29293
Manufacturing of packing and wrapping
machinery
Packing and wrapping machinery, manufacturing
29293
Manufacturing of machinery for paper board
industry
Manufacturing of machinery for paper industry
29293
Manufacturing of machinery for pulp industry
29294
Manufacture of printing machinery
29294
Manufacturing of composing machines
29294
Manufacturing of machines for photo-type setting
29294
29294
Manufacturing of machines for production of
plates
Screen presses, manufacturing
29294
Screen printers, manufacturing
29294
Type-founding machinery, manufacturing
29294
Type-setting machinery, manufacturing
This definition of the industry does not include upstream
activities such as logging, ink manufacture, plastic bag and film
manufacture, nor does it include printing activity classified under
NIC 2004 codes for in-house printing such as advertising
services, and commercial art and display services. In this paper,
the definition of the industry used to describe what the industry
has been and is now, is that of traditional boundaries based on
product and process.
An alternative approach to defining the industry which
arguably recognises contemporary shifts and changes is the
following: "An industry is made up of all those firms that in the
mind of the customer, at a specific moment in time, compete for
- 37 -
satisfying the customer’s need in return for some of the
customer’s funds." The use of this definition particularly in the
context of industry decision making will help to avoid surprises in
the form of competition coming from outside the traditional
printing industry.
It should be remembered therefore that the industry as
defined in this study represents an underestimate of the total
printing activity in the economy. However, in terms of the number
of firms, employment and turnover in the sector, the Printing,
Publishing and Recorded Media group is by far the larger
contributor to activity in the industry.
4.2 Data Sources and Analytical Precision
The data sources used to construct this industry profile are not
exhaustive and include Annual Survey of Industries, 2002-03,
Volume-I and Annual Survey of Industries, 2003-04, Volume-I, by
Central Statistical Organisation; National Accounts Statistics,
Chapter 1, Development of National Accounts Statistics, NAS –
Sources & Methods 1989; Manufacturing Sector in India:
Competitiveness
and
Other
Issues,
Federation
of
Indian
Chambers of Commerce & Industry, January 2005; Economic
Census, 1998, All India Report, Government of India , Ministry of
Statistics & Programme Implementation, Central Statistical
Organisation, New Delhi; Economic Survey 2005-2006, website:
http:/indiabudget.nic.in
website:
and Trends In India’s Foreign Trade,
http://commerce.nic.in/annual2004-05/englishhtml/content.htm.
These data are not readily comparable due to their inherent
difference in their period of coverage.
They have been used as indicative source of trends of the
printing industries by rapid technological change and turbulent
- 38 -
economic conditions at home and abroad. The general directions
that emerge from the analysis will form the springboard for
setting out a strategy for navigating through possible futures for
the industry over the next 5-10 years in rapidly changing national
and international environments.
4.3 Printing Industry in India
Table 4.5: Index of industrial production
Year
General
Index
% Year
on
Year
Paper,
paper
products
& printing
% Year
on
Year
Base Year
1981-82
109.3
-
108.3
- 1980-81
1990-91
212.6
94.5
198.0
1994-95
108.4
-
108.6
-
1995-96
122.3
12.8
125.5
15.6
1996-97
130.8
7.0
136.9
9.1
1997-98
139.5
6.7
146.4
6.9
1998-99
145.2
4.1
169.8
1999-00
154.9
6.7
180.5
6.3 =100)
2000-01
162.6
5.0
164.0
9.1
2001-02
167.0
2.7
169.0
3.0
2003-03
176.6
5.7
180.5
6.8
2003-04
189.0
7.0
208.7
15.6
82.8 =100)
16.0 1993-94
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
- 39 -
Printing and Publishing industry stands at eighth position
for the period between 1980-81 to 1990-91 at 198.0 whereas the
General Index stands at 212.6 and percentage of change from the
base is 82.8 and 94.5 respectively. The Indian printing industry
has outperformed the general manufacturing industry index all
through the nineties. This performance in the nineties though
fluctuating is due to several factors, one of which is easy access
to cheap international raw materials due to liberalization. The
growth during the previous decade has fluctuated from 3.0 to
16.0 and except for 1999-00, where the year on year index was
less than the General Index; it was growing at 22% more than the
General index. The industry has grown exceptionally well during
1998 -99 and 2003-04 at more than double than the General
Index at by 290% and 193% respectively. The growth has come
down to 3% due to General industry slowdown in 2001-02.
Performance for the year 2000-01 which has seen a negative
growth rate of -21 % in volume for the paper and paper board
industry.
Table 4.6: Production of Paper and Board Industries 1950-51
to 2004-05
1950- 1960- 1970- 198051
61
71
81
199091
200001
Industry
Unit
Paper &
paper
board
'000
116.0 349.0 755.0 1,149.0 2,088.0 3,090.0
tons
Year on
Year %
201
116
52
82
43
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
- 40 -
Table 4.7: Production of Paper and Board Industries 1950-51
to 2004-05
Industry
Unit
199192
199293
199394
199495
199596
199697
199798
Paper &
'000
paper board tons
2,122.0 2,533.0 2,734.0 2,554.0 2,710.0 2,769.0 2,922.0
Year on Year
%
2
19
8
-7
6
2
5
Unit
199899
199900
200001
200102
200203
200304
200405*
Paper &
'000
paper board tons
3,114
3,459
3,090
3,176.0 3,412
3,684.0 3,848
Year on Year
%
6
10
-12
3
7
Industry
7
4
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation; Economic Survey 2005-2006, * Provisional, Website:
http:/indiabudget.nic.in/annual 2004-05/englishhtml
The paper and paper board industry which provides about
80% of the substrate for printing industry as raw material for
printing and conversion. It has grown at an average speed of 99%
a decade from 1950-51 to 2000-01. However the year on year
growth rate has averaged at 4% between 1995-96 to 2004-05 in
volume
- 41 -
Table 4.8: Principal Characterstics by Industry Group for
Publishing, Printing and Related Activities
(Value figures in Rs. Lakh, Others in Number)
PUBLISHING, PRINTING AND RELATED ACTIVITIES
2002-03
22
Factories
%
22
All
%
127957 2.38
3007
129074 2.33
Fixed Capital
Productive
Capital
383132 44475938 0.86
402260
47333140 0.85
574753 54488048 1.05
573092
59256189 0.97
Invested Capital
489965 63747308 0.77
531049
67959786 0.78
Workers
Total Persons
Engaged
3046
All
2003-04
76954
6161493 1.25
70634
6086908 1.16
120592
7935948 1.52
112974
7870081 1.44
Wages to Workers
Total
Emoluments
45130
2968905 1.52
44291
3047777 1.45
114255
5515801 2.07
115299
5833675 1.98
Total input
740894 91618549 0.81
Gross Output
106544
Depreciation
50094
Net Value Added
752581 103962329 0.72
4203558 2.53 1104433 128740055 0.86
4203558 1.19
50975
4482349 1.14
274459 17234002 1.59
300878
20295377 1.48
Rent Paid
10769
379355 2.84
10332
416084 2.48
Interest Paid
28054
3835182 0.73
30591
3397229 0.90
Rank
18
18
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
The industry comprises of about 3,007 factories, which is
2.33 % of the total number of factories in India in 2003-04. It
employs 70,634 workers or 1.16 % of total workforce. It engages
1,12,974 people, which is 1.44% of the total persons engaged in
- 42 -
industrial activities. With Rs. 4,02,260 lakhs of invested capital
this industry accounts 0.85% of the total capital invested. This
industry pays 1.98 of the total emoluments paid by the industry.
While it accounts for 0.76% of the total industrial inputs, it
accounts for the 0.86% of total industrial output giving a higher
value addition. Its Net Value Addition is 3,00,878 which is 1.48%
of the total Net Value Addition ranking 18 in a list of 26
industries.
Table 4.9: Estimate of some important characteristics by 3
digit of NIC'98 for the year 2003-2004 Comparison of All
India Industries and NIC 22
(Value figures in Rs. Lakh, Others in Number)
2003-4
Characteristics
22
All
Number Of Factories
2393
129074
156475
Working Capital
2002-3
22
All
1.85
2428
127957
1.90
47333140
0.33
156704
44475938
0.35
64773
11923049
0.54
79307
10012110
0.79
Invested Capital
211113
67959786
0.31
206780
63747308
0.32
Outstanding Loans
106589
28977564
0.37
96259
26339233
0.37
Number of Workers
44535
6086908
0.73
52075
6161493
0.85
Total Persons Engaged
59809
7870081
0.76
69513
7935948
0.88
Wages to Workers
20728
3047777
0.68
23521
2968905
0.79
Total Emolumnets
36276
5833675
0.62
43838
5515801
0.79
5689
1411759
0.40
7100
1318412
0.54
19383
9198216
0.21
13260
6657582
0.20
Fixed Capital
Prov. Fund and Other
Welfare
Fuels Consumed
- 43 -
Percent
Percent
Materials Consumed
202224
77501526
0.26
234037
70077245
0.33
Total Inputs
289932
103962329
0.28
321179
91618549
0.35
Products & By-products
285247
113574250
0.25
316890
100128587
0.32
Value of Output
393661
128740055
0.31
437649
113056111
0.39
Depreciation
20131
4482349
0.45
20665
4203558
0.49
Net Value Added
83598
20295377
0.41
95805
17234004
0.56
2458
416084
0.59
3564
379356
0.94
14443
3397229
0.43
12430
3835182
0.32
Rent Received
984
106548
0.92
954
83324
1.14
Interest Received
576
260947
0.22
1128
260313
0.43
Net Income
66696
16482065
0.40
79810
13019466
0.61
Net Fixed Capital
Formation
18550
1271031
1.46
17330
541866
3.20
Gross Fixed Capital
Formation
38681
5753380
0.67
37995
4745424
0.80
(a) Materials,Fuels etc.
5260
1318920
0.40
6954
1087077
0.64
(b) Semi-Finished Goods
1041
130864
0.80
492
229669
0.21
(c) Finished Goods
777
215599
0.36
2494
335468
0.74
(d) Total
7078
1665383
0.43
9940
1652214
0.60
Gross Capital Formation
45759
7418762
0.62
47935
6397638
0.75
Profits
24732
9236632
0.27
28872
6185254
0.47
Rent Paid
Interest Paid
Addition in Stock of
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
- 44 -
The industry has grown about 80% during the last decade,
with its overall contribution to the Indian industry in the form of
Net Value Added is about half percent.
India’s printing and related industries are predominantly
small to medium sized firms with average number of employees of
around
ten
per
establishment.
These
small
and
medium
establishments are not reflected in this Annual Survey of
Industries’ data.
4.3.1
Products and Services
The industry undertakes a wide range of activities including:
1. The manufacture of paper stationery;
2. Commercial and job printing;
3. The provision of services to the industry;
4. Publishing and printing of newspapers, books, magazines and
periodicals and
5. The manufacture of publishing audio, video and data media.
The industry traditionally was a provider of printed material,
however in recent times a new range of services are provided as
well. These include those listed below. The shift towards services
emphasises
the
dramatic
shift
of
opportunities
towards
downstream servicing.
4.3.1.1
Print
industry
services
currently
provided
to
customers:
In addition to the traditional forms of printing, significant
opportunities are opening up as a result of the shift from the
marketplace to the marketspace. The marketplace refers to the
physical world of resources that customers can see, feel and
touch. The marketspace is the electronic and information based
- 45 -
world offering different types of information and communication
that satisfy different types of customer needs. The provision of
information types rather than products to meet customers’
information needs has become possible with the capability to
‘unbundle’ information from its physical carrier. Only those types
of information that the customer wants, for example news,
entertainment, reference, educational, promotional, need be
provided.
The
need
for
constant
innovation
and
responses
to
fundamental changes being driven by new carriers of information
such as the internet and the emerging internet television will
require the printing industries to rethink many fundamentals in
their industry if they are to capture a share of the new
opportunities. Some of it products and functions are
Newspaper and magazines printing
Quick print
Commercial print
Direct mail
Forms
Stationery
Packaging
Services to publishers
Book printing
Security printers
Point of sale
Pre-press Digital printers
Data management
Services Bureaus
Post press and fulfilment
Label and tag
Finishing
Large format plotters
Display/ Point of Presentation
4.3.2
Broad Industry Demographics and Performance
This section examines in the following broad terms:
1. The contribution of the printing industry to the economy;
2. The geographic distribution and regional significance;
- 46 -
3. The domestic and international trade; and
4. Industry performance indicators.
4.3.2.1
Sources of Data and Limitations
Annual Survey of Industries data sources are used. The data
provided do not cover unregistered, smaller and non-mechanized
units. Nevertheless, taken as a whole, the information is sufficient
to provide indicators of trends significant to the industry. The
trends identified in this section were tested and verified.
4.3.2.2
Domestic Industry Activity
An estimate of industry activity has been imputed from Annual
Survey of Industries data. Economic activity in the print,
publishing and recorded media industries continues to increase.
This may be attributed to the growth of service industries that are
typically large consumers of printed material. It is clear the
printing industries have benefited from the expansion that has
occurred in the services industries, which generally are larger
consumers of print than the manufacturing industries.
Table 4.10: Comparison of Performance of NIC 22 with GDP
and Manufacturing Industry
Year
GDP
Manufacturing
Rs.
Year
Rs. In
Year
Crore
on
lakhs
on
Year
Year
%
%
NIC 22
Rs. In Year on AS %
lakhs
Year % of GDP
1999-00 1792292
6.10 89793835 14.57 239584
2000-01 1870387
4.36 92690185
3.23 228041
-4.82 0.1219
2001-02 1978055
6.00 96245663
3.84 216821
-4.92 0.1096
2002-03 2052586
4.00 113056111 17.47 274459
26.58 0.1337
- 47 -
0.1337
2003-04 2226041
8.00 128740055 13.87 300878
9.63 0.1352
Source: Annual Survey of Industries, Reserve Bank of India
Annual Report 2004-05
In rupee terms turnover for NIC 22 increased by around
9.63% during 2003-04. All manufacturing industry turnover
during the same period has increased by 13.87%. The level of
industry sales is not in line with that of Indian manufacturing
industry. However, in terms of percentage of GDP, NIC 22 has
remained constant over the past five years. This is in line with
what is happening to manufacturing generally, as the growth in
services takes an increasing share of GDP.
4.3.2.3 Industry Value Addition
Value added is defined as turnover, plus closing inventories less
opening inventories less intermediate input expenses. The data
shows that value addition in the industry is declining. Over the
past decade the industry had faced with circumstances where it
has chosen to provide more products at ever increasing speed.
Under these conditions the industry has not been generating
sufficient value. This trend is expected to slow and reverse as
industry moves to provide higher value solutions to customers.
4.3.2.4 Geographical Distribution and Regional Significance
For NIC 22, the large medium print factories of governments and
private
are
located
in
state
capitals
and
registered
and
unregistered private and commercial establishments are located
as clusters in Mumbai, Sivakasi, Chennai, Kolakata, New Delhi,
Hyderabad
and
Noida.
However
many
unregistered
establishments exist in district and taluk levels catering to
different segments of markets at varying degrees. However, the
data on these establishments are almost nil or obscurant.
- 48 -
Sivakasi, Mumbai, Chennai, Kolakata and New Delhi and
are above the national average number of printing establishment.
Sivakasi a major center for printing in India accounts for 60% of
India’s total offset Printing Solutions with about 10 large
printing units, 200 medium scale printing units and 390 small
scale printing units with a total turnover of 1,200 crores
employing about 2,50,000 people directly and indirectly. The
number of presses are growing year by year; more than 130 have
reached 50 years of service in Printing and Publishing. This
development of cluster is normally associated with other client
industry, for example with Safety Match and Fireworks producers
as in the case of Sivakasi. Since printing is a supporting industry
it takes root and grows alongwith other major industries fulfilling
their needs.
These statistics demonstrate the importance of this industry
for regional India. The printing industry follows the location
patterns of other industries. There are opportunities for the
printing industry to transform itself into a significant contributor
to regional India by growing the scope of its activities regionally in
activities that are not distance dependent.
4.3.2.5
Trade Trends
The analysis shows that the Indian printing industry is, to a large
measure,
a
domestically
based
industry.
The
industry’s
contribution to exports is negligible and it does not find a worthy
place in trade statistics though it imports more than 80% of the
machinery requirements. The overall industry trend is - imports
significantly exceed exports. The deficit is made up of a
component from each of the NIC 22 sectors, although there are
some trade surpluses in particular areas such as corrugated
- 49 -
paperboard container manufacturing and printing. Developing
markets is an area for industry focus and could leverage the
earnings from the successes of the emerging and increasing
export activity. Whether or not the Indian printing industry
remains domestically focused or develops an export orientation,
the industry will be affected increasingly by global forces. Of
principal concern to the industry’s future are:
1. The impact of globalisation
2. The rapid pace of technological change
3. The changing cultural trends
4. The growing importance of environmental concerns both as
social and biophysical concerns.
4.3.2.6
Ratio
Profitability
analysis
is
a
commonly
accepted
technique
for
characterising financial performance. In the Annual Survey of
Industries published data for the India industries profitability of
industries are given. Profitability is an essential indicator of a
successful business or successful industry.
4.3.2.6.1 Profit Margin
The financial performance of the industry, particularly the
industry profitability is a cause for concern and warrants
consideration here. The Profit Margin represents the return on
sales
from
an
industry’s
operation
before
tax
and
interest/gearing.
TABLE 4.11: Profitability in the Printing Industries Is
Declining
Year
1998-99
Manufacturing Year on NIC 22
Year on
Year %
Year %
4730623
-13.13
58427
- 50 -
1999-00
4733475
0.06
107206
83.49
2000-01
3569880
-24.58
65408
-38.99
2001-02
3488385
-2.28
41634
-36.35
2002-03
6185254
77.31
28872
-30.65
2003-04
9236632
49.33
24732
-14.34
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
NIC 22’s Profit has been declining markedly over the six-year
period. Total Manufacturing has also experienced a decline in
Profit Margin over the six-year period in a diminishing way. The
Profit for Total Industry also has been fluctuating. Issues that
may be a cause of decline and hence related to corporate failure
and corporate recovery include: poor management; inadequate
financial control; competitive pressure; high cost structure; not
identifying
and
responding
to
changes
in
the
business
environment; changing market demand; adverse movement in
commodity prices; and lack of marketing effort. NIC 22’s Profit
Margin has fallen beneath that of Total Industry and Total
Manufacturing. The data suggest that the NIC 22 is competing on
price
and volume
and less so
on
services and product
differentiation. NIC 22’s Profit Margin trend bears out the
proposition that the industry needs to give more attention to the
development of strategies for high value differentiated products
and services and close attention to return on assets employed.
4.3.2.6.2 Return on Assets
This ratio is also known as return on investment. It measures the
amount of profits generated per rupee worth of capital.
- 51 -
Table 4.12: Return on Fixed Capital for the Industry is
Declining
(Value in Rs. Lakhs.)
Year
ManufacTuring
Fixed
Capital
Profits
Return
on Fixed
Capital%
NIC 22
Fixed
Capital
Profits
Return
on Fixed
Capital%
1998-99
39115145 4730623 12.09
384802 58427
1999-00
40186473 4733475 11.78
376859 107206 28.45
2000-01
39960422 3569880 8.93
363506 65408
17.99
2001-02
43196013 3488385 8.08
340358
12.23
2002-03
44475938 6185254 13.91
156704 28872
18.42
2003-04
47333140 9236632 19.51
156475 24732
15.81
41634
15.18
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
Share of the manufacturing sector in India’s GDP has been
fluctuating between 8% to 19% from 1998-99 to 2003-04. NIC 22
ratio is showing a significant decline. However it has not fallen
below that of Total Manufacturing. The data show that profits are
decreasing and expenditure on assets is increasing. This is cause
for concern as no industry can maintain such a decline in
profitability on a long-term basis. Earnings before interest and
tax are decreasing, sales are increasing, and total assets are
increasing rapidly. Together this means that companies under
NIC 22 are making less profit, getting smaller returns from their
asset base, and are slowly becoming less able to meet their
interest payments. In the case where investment strategies are
sound, return on assets and profit margin should be trending up.
However, the analysis presented here indicates they are not. The
future industry strategy must assist firms in decisions about
where to invest for future growth. Investment issues to be
addressed include:
- 52 -
1. Is investment in capital equipment sufficient to guarantee
growth?
2. How is the industry handling investment in intellectual
property, customer share growth etc?
Calculation of the relevant ratios for the printing industry in
India shows that it is generating too few sales for the asset base it
sustains. While sales are increasing, the cost of production is also
increasing, leaving the earnings before interest and tax relatively
unchanged. Financial figures that enable the calculation of
additional ratios should be sought to enable improved business
planning. These ratios may include accounts receivable turnover,
accounts payable turnover, and cash flow to sales.
4.3.2.6.3 Current Ratio
The liquidity measure indicates the ability to meet immediate
financial obligations from assets.
TABLE 4.13: Current Ratio for the Industry is Declining
Year
(Value in Rs. Lakhs.)
NIC 22
Current Ratio
Current
Liability
185768
0.87
1998-99
NIC 22
Current
Assets
160913
1999-00
390860
162738
2.40
2000-01
71582
76170
0.94
2001-02
45510
71741
0.63
2002-03
90375
86889
1.04
2003-04
71851
77136
0.93
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
The current ratio for the industry does not present a healthy
picture. Optimal current ratio should be a two to one difference
- 53 -
between current assets and current liabilities. The current ratio
considered for the period of study is less than half of the optimum
required. This is not only inadequate but it clearly states the
inability of the printing industry to meet the current liabilities.
4.3.2.6.4 Interest Cover
This ratio tells the relationship between interest payments and
profits to show if there is a good margin of profit to ensure against
downturn or sharp interest rate rises..
TABLE 4.14: Current Ratio for the Industry is Declining
Year
NIC 22
Profit
(Value in Rs. Lakhs.)
NIC 22
Interest Cover
Net Interest
Payments
24620
2.37
1998-99
5847
1999-00
107206
28650
3.74
2000-01
65408
13718
4.77
2001-02
41634
13678
3.04
2002-03
28872
12430
2.32
2003-04
24372
14443
1.69
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
All through the years in the interest cover of the printing
industry in India is arranging from inadequate to grossly
inadequate in a highly fluctuating manner. In normal conditions
the industry is expected to cover interest payments atleast three
times. The trend as seen from the table is telling a highly varying
and unpredictable business scenario, which is not healthy.
4.3.3
Current Operating Environment
4.3.3.1
Capacity Utilisation
- 54 -
Indian printers perceive themselves as traditionally strong
adopters of new technological innovations, and they pride
themselves on being at the forefront in the acquisition of
technology. However, this same strong tradition and culture may
be contributing to an over-investment in equipment and underutilisation of capacity. The reported industry average of 46.4
hours translates into an effective capacity utilisation rate of
41.4%. The average weekly chargeable machine hours are 46.4
hours. The average is derived from average chargeable machine
hours for small companies of 35.4 hours, medium companies
45.9 hours, and large companies 67.6 hours.
4.3.3.2
Technology Analysis
Since the 1950s, the printing industry has undergone a series of
rapid technological changes that radically altered and rationalised
printing production processes. For many years hot metal typeset
formed the basis of the printing process. Computer typeset was
introduced into the industry in the 1970s, taking over from hot
metal typeset by the 1980s. In the late 1990s technology rapidly
shifted to what has become known as computer to plate printing
or digital printing.
The growth in automation in the printing industries
accelerated further during the late 90s. A new paradigm is now
emerging. Customers are demanding high quality high value
added products. In addition each paradigm shift in technology
has been accompanied by what is known as disintermediation,
the process by which there is substantial reduction in the
number of stages of production.
- 55 -
4.3.3.3
What next?
The increasing imperative for businesses to manage knowledge
for competitiveness will provide an opportunity for printers to
assist
the
knowledge
management
process
by
positioning
themselves as enablers of ‘knowledgement’ where they advise
customers on effective and efficient approaches to meet needs for
presenting, organising and deriving value from creative content,
information and data. The future business operating environment
will be driven by three key external drivers – technological
change, globalisation, and further culture change especially in
consumer preferences.
4.3.3.4
Government Policy
Higher tariffs on import of machines and important raw materials
are a major detrimental factor for the growth of the industry.
Government has allowed Foreign Direct Investment in newspaper
industry without controlling stake. ‘Inspector Raj’ is prevailing
and the announcing of new initiatives for self-regulatory checks
and self-certification measures by entrepreneurs are happening
slowly. A new bill for encouraging Contract labor in all areas even
while protecting the social security payments and minimum
wages is being introduced. Small scale sector opening up is
delayed. Indirect taxes on manufactured goods are high when
compared to international benchmarks.
4.4 Key External Drivers
4.4.1 Change in Value Chain/Business Model
The printing industries will become an ever-increasing part of the
information industries and an enabler of the knowledge-based
economies.
Traditional
boundaries
that
existed
between
industries have now become markedly blurred. This phenomenon
- 56 -
has become known as ‘convergence’ or more specifically ‘digital
convergence’.
As
a
result
of
the
emergence
of
new
technologies,
continuous change has occurred with companies merging, reorganising, and re-focusing. A high level of awareness of
production costs has also resulted in higher demand for output at
lower costs, which is normal in industries reaching maturity.
Hence the need to shift to new generation products and services
based on staying close to and understanding the changing needs
of the industries’ customers.
Sheet fed and web presses have dramatically increased
speed of production and automatic make-ready systems have cut
times to those not thought possible even 10 years ago. The advent
of desk-top publishing has opened new horizons and expanded
rapidly from the traditional prepress companies to printers
reclaiming
pre-press
and
new
styles
of
operations.
New
production approaches in digital cameras, computer to plate,
digital proof and digital print are now industry standards. Data
communication from site to site, and continent to continent is
now well established.
4.4.2
Trends in Technology Niches
4.4.2.1
Print-on-Demand
One of the most significant new niches to emerge as a result of
technological innovation is Print-on-Demand (POD). Personalised
and variable printing is an emerging market niche fuelled by the
digital colour printing revolution. With these technologies,
printers are now able
to
offer customers high
levels of
personalisation. They will be driven by what has become known
- 57 -
as ‘push/pull’ models of publishing. ‘Push’ publishing is driven
by
customer
profile
and
preference
information
held
on
databases. ‘Pull’ publishing operates on the basis of customers
requesting
products
personalized
sent
according
to
to
them
or
customer’s
products
that
are
preferences
or
requirements.
4.4.2.2
Quick Printing (QP)
QP is primarily a business-to-business service to small and
medium firms. It capitalises on the trend to towards electronically
generated projects by customers who then seek print services.
4.4.2.3
Sheetfed Lithography
Technological
innovation
will
also
see
many
significant
developments in lithography in the coming years. Commentators
believe lithography will lose out ground to digital printing in the
short-run colour market over the next five years; particularly
where customers desire variable printing. Nonetheless, the view
seems to be that lithography will remain as the most economically
significant image transfer process into the 21st century.
4.4.2.4
Web Offset
Web offset is seeing many of the sheetfed and newsprint features
being adapted to it. The main thrust is to one-stop-shop or totally
closed loop systems. These printing systems will, in future, follow
the trend away from requiring fewer skilled press operators to
higher electronic systems management and maintenance.
4.4.2.5
Flexographic Printing
There is considerable scope for technological innovation in
flexographic printing over the next five years or so. The main
- 58 -
issues
are
concerned
with
achieving
consistency
and
predictability of print on any substrate.
4.4.2.6
Gravure
In Gravure, the trend continues to be towards bigger, better,
faster web widths of nearly four metres are now available and
press speeds of 3000 lfpm are imminent. Handling issues
however, are areas where further improvement may be possible in
the next few years.
4.4.2.7
Newspaper Printing
Technology is moving towards keyless inking, single fluid inking
and shaftless super high speed presses.
4.4.3
Trends in Market Segments
The effect of the various combinations for individual firms is
shown either as one of, or a combination of the following:
1. Efficiency
gains
sought
through
new
equipment
and
improved processes. ‘Do what you do know better- more
efficiently, in the marketplace.
2. Market expansion, through developing new markets, in the
market space, where trends in consumer demand show
opportunities for high value growth.
For example, the applications of holography technology are
currently expanding opportunities in the security print market. In
the short run however, applications of holography are not likely to
generate production efficiency gains, as economies of scale will
not yet be established. In contrast, newspaper printers are seeing
gains in efficiency from utilising offset web printers in existing
- 59 -
markets. In the case of digital print, new technology is being
applied to expand a market opportunity, while also increasing
production efficiency in those markets.
Opportunities for growth exist where print products and
technologies can be combined to meet emerging or growing
consumer needs. The trend has been toward consumer demand
for the more knowledge-intensive products.
4.4.4
Products and Technology
The major technological trend impacting on printing industries is
the move towards digitalisation. The technological issues of the
future for printers to manage will be the move towards:
1. Moving information - data transmission (infrastructure,
high-rate
data
transmission,
greater
bandwidth),
file
transfer, web based access for customers and their data;
2. Content creation, dissemination and integration methods
including the unbundling/versioning of information;
3. Digital content management and its implications; and
4. Digital printing.
The Table below illustrates the change from a sequential value
chain model to a circular, networked value chain that will be the
basis for future value creating activities.
- 60 -
Table 4.15: Change in value chain / Business Model
FROM
INFORMATION
PROVIDER
CONTENT
PACKAGING
PRODUCTION
PHYSICAL
DISTRIBUTION
MARKET PLACE
TO
CREATING PROJECT
DATABASE
LEVERAGING
SOURCING
CONTENT PACKAGING
ELECTRONIC
PRODUCTION
DISTRIBUTION
INTERFACE
PHYSICAL
DISTRIBUTION
MARKET SPACE
MARKET PLACE
Source: (Roos G, Intellectual Capital Services, May 2000)
Two issues warrant close attention regarding printing
technology. First, the immediate future of digital electronics
seems assured. However there will be a limit to this particular
technology and new technologies will emerge.
The second issue relates to lifting profitability. Should the
Indian printing industry continue to be driven by the latest
developments in technology or does a more customer focussed
approach to business planning need to be adopted throughout
the industry which better reflects the role of technology within the
context of adding value to a customer?
4.4.4
Globalisation
Followed by advances in information technology and other
scientific advances, globalisation is now a commonly used term,
which attempts to describe the level of interdependence and interconnectedness that exists in international commerce. In this new
environment it is not uncommon for large multi-national
- 61 -
enterprises to have located various branches of the business or
businesses in countries deemed most economically advantageous.
As
economies
of
scale
become
less
crucial
for
firms’
competitiveness, there are more opportunities for Small and
Medium Enterprises to exploit new technologies and develop new
products and market niches.
The
strength
of
printing
industries
has
traditionally
depended on the strength of national economies. When economies
are doing well, it has been observed that the printing industries
also do well. India is no exception to this rule. The fact is that the
Indian industry operates in a global economy. If the Indian
economy is growing, then so too, we might expect, is the Indian
printing industry. The fact that the industry is to a large extent
domestically based does not insulate it from the cycles of the
global economy.
Traditionally, the main competitive strategies chosen by
operators have focused on cost competition and investment in the
latest press. Plans focusing on customer based competitive
strategies for the industry involve:
1. Identifying growing customers who need what can be offered
by these strategically based operators and then devising
ways to better meet these needs than anyone else; and
2. Developing very close value adding relationships with
customers.
This
approach
helps
strategically
based
operators to identify when a slow-down is coming thus
giving them time to effect contingency plans.
- 62 -
For
the
Indian
Printing
Industry
global
commerce
poses
challenges in the short term and also offers opportunities in both
the short and the long term. The challenges are:
1. Increased competition from other industries e.g. IT
2. Greater mobility of customers through e-trading
3. Need to keep abreast of emerging global developments
4. Increasing risk of erosion of cost base
5. Customers moving work offshore.
However, the opportunities are also substantial and include:
1. Emergence
of
knowledge
based
economies
providing
opportunities for higher value printing activities
2. Access
to
potentially
huge
global
markets
through
increasing uptake of internet based business
3. Much more scope to develop and exploit niche markets
4. Focus on increasing literacy levels in developing countries
5. Emergence of loyal customer bases through the provision of
total business solutions.
One of the most significant opportunities for printers in the
future is the increasing need for firms to manage knowledge.
Printers have skills and competencies in manipulating, presenting
and organising information that will complement the development
and growth of knowledge management in the new knowledge
based economy. Even if the industry chooses to remain a
domestic player, it will be forced to respond to international
influences simply because its customers’ expectations will be
influenced
by
products
and
services
obtainable
in
the
international market.
The global market will inevitably become more competitive,
and the Indian printing industries will need to develop and
- 63 -
maintain their international competitiveness or risk being left
behind.
4.4.5
Cultural Change and Trends in Society
Cultural changes are likely to impact on the printing industry
through changes in consumer preferences, the ongoing changes
and developments in the printing industry and general trends in
society. The main trends in society affecting the printing
industries will be the
1. Increasing thirst for knowledge and information;
2. Rising demand for targeted information due to many and
varied interests competing for time, and
3. Concern for the environment and corporate responsibility.
4.4.5.1
Consumers
Consumers are becoming increasingly discriminating - people
around the world have high, and increasing, levels of access to
information, services and products. Products are now being
tailored to the specific needs of individual consumers, blurring
the boundary between ‘products’ and ‘services’, as relationships
between buyer and seller become more important as a basis for
competitiveness. The promised emergence of the ‘electronic
superhighway’, the new media, is expected to have a strong
impact
on
how
consumers
purchase,
receive
and
store
information. The current media trends in India indicate that
newspaper reading is steady and usage strong, magazine reading
is lifting for the electronic media.
As one example of the new media, electronic books have
emerged as a contender to traditional printed books. E-books
currently on the market can be downloaded from the Internet into
- 64 -
a computerised reader about the size of a normal book page,
storing around ten books of data.
By and large, they will provide more opportunities than
threats to traditional printers, in two ways:
1. Proliferation of new products and services means increased
demand for marketing information, much of which will be
printed matter; and
2. New communications networks and packaged media present
opportunities to produce and deliver information in nonprint ways.
Knowledge about cultural differences may also be used to
establish
new
markets
and
help
industry
become
more
competitive overseas through:
1. Different ways of perceiving, and different cultural norms,
creating specific cultural preferences which may apply to
printed material (eg, in terms of colour, form, texture and
spatial layout); and
2. Cultural knowledge as a key factor for success in conducting
business overseas.
4.4.5.2
The Printing Industry
A recent survey of printers and pre-press trade shops in the
United States indicated that 70% plan to expand product and
service offerings during the next three years. Printers and prepress trade shops are diversifying beyond film and ink-on-paper because of customer demand and increasing competition from
within the industry. The services they typically plan to add during
the next three years are:
- 65 -
1. Facilities management - having some product and customer
interface at the customer’s site;
2. Photo CD capture - the capture, storage and distribution of
images in the photo CD format;
3. Digital printing - printing by a direct digital press;
4. Database management - management and storage of digital
data to create an additional revenue stream;
5. Web page design; and
6. CD authoring.
4.4.6
Environmental Issues
Commentators within the printing industries have said that the
industry has come a long way in its understanding of, and
commitment to, environmental issues. This includes supplying
recycled products, and ensuring compliance with environmental
standards
through
cleaner technologies
and
environmental
management systems. It is likely that the range and level of
environmental requirements will continue to grow, and ongoing
industry commitment will be instrumental in meeting these
challenges. Key environmental issues for the printing industries
include:
1. Recycling and waste management
2. Chemicals inputs and releases
3. Energy use
4. Consumer expectations
5. Compliance with imposed regulations
6. Self-regulation.
- 66 -
4.4.6.1
Major Cultural Changes and Trends
1. The new electronic media will have an increasing impact on
consumers, but it should provide significant opportunities
for printers.
2. Printers will continue to be strong adopters of the latest
technology with new technology based products and services
being offered due to perceptions of customer changing
needs. The critical question is whether this actually is an
appropriate response to customers’ needs or whether it is
the way printers tend to solve articulated or unarticulated
consumer needs, in which case there may be other or
equally good or better ways which are less capital intensive
and offer better utilisation of existing equipment.
3. Consumers will increasingly focus on the social and
environmental responsibilities in assessing the industry’s
worth.
4. Environmental regulations will continue to increase.
4.5 Industry Parameters for Growth
1. Currently the printing industries’ growth is closely linked to
the general economic activity but is forming a diminishing
component of GDP.
2. The industry is experiencing declining profitability.
3. Capacity utilisation is low.
4. Continued investment in capital equipment appears to be
exacerbating the low capacity utilisation.
5. Imports significantly exceed exports in several sectors of the
industry.
- 67 -
4.6 Future Operating Environment
1. The general domestic macroeconomic environment in which
the printing industries will operate is predicted to have a
steady GDP growth rate of about 8 to 10%.
2. The global market will inevitably become more competitive,
requiring the Indian printing industries to develop and
maintain
international
competitiveness,
regardless
of
whether they operate domestically or internationally.
3. Technological change will continue at a rapid pace.
4. The new electronic media will have an increasing impact on
consumers and should expand opportunities for printers.
5. Printers will be required to respond to environmental
concerns
either
through
self-regulation
or
continuing
external regulation.
4.7 Choices for Future
In this highly dynamic world the industry faces three choices
regarding its future:
1. Stagnate and die, or
2. Maintain and survive, or
3. Grow and sustain.
The premise on which this paper rests is that it is the
responsibility of all those committed to the future of the Indian
printing industry to choose to grow and sustain. In order to grow
and sustain growth on a long-term basis, careful analysis of
intermediate and long-term market opportunities is essential.
When examining the basic dynamics of future growth strategies
for the industry, it is learnt that the product life cycle dictates
that the market for current products and services will decline
over time. Along with this the Indian domestic market will only
- 68 -
give a steady growth. Therefore the objective to grow can only be
met by strategies focusing on combinations of ‘revolutionary’ and
‘evolutionary’
business
development
options.
By
going
international the printing industry will have access to a larger
market, helping them sustain and grow individually and en
masse.
- 69 -
CHAPTER – V
CONCLUSION AND SUMMARY
-1-
CHAPTER – V
CONCLUSION AND SUMMARY
This chapter presents a brief summary of present study,
concluding observation and policy implication with regard to
printing industry of India.
5.1.1
Chapter One
This chapter gives a brief explanation about the importance of
industry in a developing economy with its contribution to
economy. Industry provides employment to about 35 percent of
the workforce in the country. It accounts for nearly 54.1 percent
of the Gross Domestic Product. Index of Industrial production has
gone up from 7.9 in 1950-51 to 204.78 in 2004-05. During the
same period manufacturing industry index has reached 214.6.
Composing types for printing, printing by letterpress,
lithography, photogravure or other similar process or book
binding form part of manufacturing industries and it is the 18th
largest industry in that category. It is made up of both registered
and unregistered establishments of different scales and spread
across the whole of India.
This belongs to the industry group NIC 22 comprising
publishing, printing and related activities. It has employed 70,634
workers in 3,007 factories in the organized sector engaging
1,12,974 persons and pays Rs. 44,291 lakhs as wages in 200304. With a fixed capital worth Rs. 4,02,260 lakhs with an invested
- 70 -
capital of Rs. 5,31,049 lakhs and Rs. 7,52,581 lakhs has made
avalue addition of Rs. 3,00,878 lakhs in 2003-04.
5.1.2
Chapter Two
The second chapter a gives a brief review of earlier study done
about the printing industry. The review of literature of previous
studies has been discussed under the following heads.
5.1
Printing Industry in general
5.2
Printing Industry in India
5.3
Future of printing industry
5.1.3
Chapter Three
In this chapter methodological details regarding the present study
have been briefly explained. These include description of the field
of study, nature and scope of data sourced and the various tools
and techniques employed in analyzing the data have been briefly
presented.
5.2 Findings of the Study
1. Indian printing industries are experiencing a slow slide in
profitability and a decline in return on assets.
2. The challenge in the new millennium is to innovate, revitalize
profitability and sustain industry-wide long term growth.
3. Reliance on the way business has been done in the industry
upto now is no guarantee of survival let alone sustainable growth.
4. New approaches are needed for new development and the
customer is vital in the in this process.
5. Customers see printers as only providing ink-on-paper
products.
- 71 -
6. Customers want to see more total business solution offerings
from Indian printers.
The study provides the following suggestions in pin pointing
projects
and
industries
to
initiatives
achieve
that
long
will
term
position
Indian
sustainable
printing
growth.
The
suggestions underscore that profitable business development will
depend on strategies that creatively integrate:
1. Clever business strategy based on sound knowledge and
in-depth
understanding
of
the
existing
and potential
customer needs.
2. Appropriate use of print technology and most importantly,
3.
Patient
investment
by
firms
in
the
professional
development of people.
5.3 Conclusion
Success of printing industry in India is more likely to follow if the
conditions given below are met.
1. The firm in the industry has a clear idea of why it is in
business.
2. The firm has a clear understanding of how it fits in the broader
scheme of things, viz., the economy, the industry, etc. It
continuously monitors and reassesses the implication of change
that will inevitably occur in its operating environment.
3. The firm knows exactly who it is competing with.
4. The firm understands where value is or can be created within
the firm. The study has shown that so often, areas that can create
value in printing firms are either undervalued or not valued at all.
- 72 -
5. The firm has an understanding and has in place, appropriate
systems and methods of financial analysis and planning.
6. The firm is able to identify and manage to best effect, all
resources within the firm that add or create value. Here value
creating resources include” human capital, organizational capital,
relationship capital (formal and informal networks).
7. The firm is able to articulate strategies which favourably
position it with respect to the competition.
8. Firms should sell total business solutions like print plus,
integrated printing, facilities and data management services and
image management services.
9. Industry and its firms should find and /or develop successful
demonstrations of value chain and supply chain management
practices, as well as other linkages, within the industry.
5.3.1
Strengths
Imaging capabilities
Uptake of new technologies by traditional printers
Expertise in the application of technology
Uptake of new technologies in a more developed form
Value of knowledge and expertise in documents and imaging
Technology convergence
Market size can facilitate closer relationship between
customer and supplier
Breadth, spread and proliferation - in every electorate
Efficiency of small companies
Flexibility of a large number of companies
Ability to source new opportunities by younger players
‘Modern’ image in design and desktop
- 73 -
Ability to handle ‘content’
Ability to facilitate entire production process - asset &
facilities management
5.3.2
Opportunities
Imaging
Benefits for commercial printing
General reduction in tariffs (cheaper raw materials)
Domestic regulations, which protects local products
Opportunities for import replacement (books, packaging)
Government purchasing policies - developing the industry
Intellectual property - closer links to customer, content
creators
Potential benefits from taxation reviews
Venture capital if taxation system changes
Potential opportunities with R & D incentive schemes
Technology now at the disposal of non-traditional printers
Customer education
New opportunities for business growth - market space,
customisation
Technology convergence
Copyright – document management, records, knowledge
Recycling - if cost of technology makes it competitive
Waste disposal - new markets with disposal technologies
Environmental regulations if can be exploited to advantage
Market size can facilitate closer relationship between
customer and supplier
Quality of the product that can be produced in Australia
Commitment by industry regarding training
Intellectual Asset management - ie, records, documents
- 74 -
5.3.3
Weaknesses
Trade based image of industry
Uptake of new technologies leading to over-investment in
‘heavy machineries’
Potential insolvency of companies who over-invest
Cost of new technologies
Inability to maximise R & D opportunities
Training
structure
inability
to
keep
up
with
new
technologies
Lack of trained workforce and trainees
Inability to capitalise on value of knowledge and expertise
People displacement - inability to capitalise on people who
move on
Recycling - expense of technology, lack of markets due to
cost
Waste disposal – by-product of the technology
Management skills - lack of formal trained personnel
Quality issues at times
Labour market reform still required
Career paths and industry recognition
Commitment by industry regarding training
Dominance of industry by small players (employee numbers,
size of companies)
Antagonism to new technology by older players
Inability to think ‘long term’
Lack
of
business
planning
and
vision
in
areas
of
competitiveness
Don't market the industry / firm as total process producers
5.3.4
Threats
Perception of being trade based
- 75 -
Tax costs for books, mags, newspapers
Tariff costs for some areas of industry
Entry of multinationals who must comply with company
policy
Aggressive offshore competition wanting to export into India
Current system - depreciation, capital gains tax
Cost of new technologies
Need for rapidly developing training structures
Technology now at the disposal of non-traditional printers
Customer expectations and rapid turnover
Technology convergence – Information technology as a major
threat
Waste disposal - public image, regulations, competitiveness
Career paths and industry recognition
Encouragement of other industries to take on opportunities
because of lack of vision
5.4 Suggestions
A.
It is recommended that the printing industry undertake a
study to identify opportunities for in regional clusters in India
and to identify ways in which they can contribute more to
regional Australia. This study needs to include the development of
scenarios for dissemination to the industry.
B.
To promote further internationalisation of the printing
industries, it is recommended that the industry
1. Undertake studies on the potential for Indian industry to
reverse the trade deficit in printed products and disseminate the
findings to industry and government. In particular:
1. The factors that have led to successful exporting activity
in some sectors of the industry with a view to developing an
- 76 -
exporting
culture
in
those
sectors
where
export
opportunities may not have been fully exploited.
2. The approaches other Indian industries have taken or are
taking to lift their international competitiveness. These
industries could include the information technology software
Industry (track record for export growth) and readymade
garments industry (small and medium emerging exporters).
3. The approaches other national printing industries and
selected overseas firms have taken to lift their export
performance in those countries whose printing industries
have a significant impact on the global printing industry and
those countries whose industries have similarities (and
notable differences) with the Australian industry.
C.
It is suggested that the industry collect and collate
industry-wide statistical information on a quarterly basis:
1. Investigate the current sources and levels of value-adding
in the industry;
2. Produce and disseminate annual reports on industry
performance;
3. Develop key operational benchmarks to assist firm based
planning and adjustments. This may involve:
(i) Surveying the industry for relevant data and
information; or
(ii) Developing and validating parameters for the
industry and its sectors.
D.
In order to address low capacity utilisation in the industry
it is suggested that the industry assess the nature and extent of
low capacity utilization
- 77 -
1. Develop an accurate measure of capacity utilisation.
2. Assess whether there is a sub-optimal or misallocation of
capital investment in the industry viz the opportunity cost of
current levels of investment in technology.
E.
In order for the Printing Industries to have the capability to
respond to emerging issues and trends impacting on them in a
timely and effective manner, it is imperative that comprehensive
and accurate information and intelligence is available for strategy
building and decision-making. It is recommended that industry:
1. Develop a service to the industry to gather, interpret and
disseminate information and knowledge on emerging issues
and trends, both domestic and international, which may
impact on the industry in the medium and long term.
2. Conduct annual or bi-annual review of possible scenarios
for
industry’s
future
growth
and
development,
and
disseminate to industry.
F.
Assist firms in the industry to increase their Research and
Development and innovation and encourage the development of
new technologies and business management. Undertake a study
of Research and Development and innovation issues for the
industry, including approaches to encourage firms to increase
their
innovative
activities
through
networking,
cooperative
research centres, centres of excellence, training centres and
business management schools.
5.5 Scope for Further Study
As a natural
consequence to this study and follow up on the
conclusion and suggestions, further studies on the scope of
technology, customers and future innovations in the printing
- 78 -
industry in India to evolve a suitable strategy with appropriate
competencies and technologies are proposed..
The printing industry is driven by technology and customer
needs, both are changing at a rapid pace due to the evolution of
newer
technologies
and
media.
This
provides
newer
and
increasing opportunities for the industry. Increased competition
from other industries such as information technology provides
greater mobility to customers, E-trading, emerging global technoeconomic and political developments pose a great challenge to the
printing industry. Hence this study has identified scope for
further studies in the following areas.
1. Development of clusters of printing industry in India.
2. Issues of trade deficit in printed product.
3. Identifying
and
developing
global
markets
for
the
industry.
4. Foreign direct investment in printing industry.
5. Addressing issues of value addition in the emerging future
by improving the competency.
6. Development
industry
of
operational
standards
and
to
benchmarks
address
for
low
setting
capacity
utilization.
7. Collection and collation of industry wide statistical
information and intelligence with a view to forecast trends
and build scenarios to identify the opportunities and focal
areas.
- 79 -
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-1-
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North American Graphic Arts Suppliers Association, 1604 New
Hampshire Ave. NW Washington, D.C. 20009-2660, Phone:
(202) 328-8441, Fax: (202) 328-8513, www.nagasa.org
Paperboard Packaging Council, 201 N. Union St., Suite 220
Alexandria, VA 22314, Phone: (703) 836-3300, Fax: (703)
836-3290, Visit us in www.ppc.net.org
Printing Industries of America, 100 Daingerfield Rd. Alexandria,
VA 22314, Phone: (703) 519-8100, Fax: (703) 548-3227,
www.gain.net
Rad Tech, 6935 Wisconsin Ave., Suite 207 Chevy Chase, MD
20815, Phone: (240) 497-1242, Fax: (240) 209-2337, E-mail:
[email protected], www.radtech.org
Research & Engineering Council of Graphic Arts Industries, P.O.
Box 1086 White Stone, VA 22578-1086, Phone: (804) 4369922, Fax: (804) 436-9911
Screenprinting & Graphic Imaging Association International,
10015 Main St. Fairfax, VA 22031-3489, Phone: (703) 385- 82 -
1335,
Fax:
(703)
273-0456,
E-mail:
[email protected],
www.sgia.org
Society of the Plastics Industry, 1801 K St. NW, Suite 600,
Washington D.C. 20006, Phone: (202) 974-5200, Fax: (202)
296-7005, www.socplas.org
Technical Association of the Graphic Arts, 68 Lomb Memorial Dr.
Rochester, NY 14623-5604, Phone: (585) 475-7470, Fax:
(585) 475-2550, Visit us in www.taga.org
The All India Plastics Manufacturers' Association.
The All India Printing Ink Manufacturers Association.
Waterless Printing Association, P.O. Box 59800 Chicago, IL
60659, Phone: (773) 743-5677 or (800) 850-0660 (U.S. and
Canada), Fax: (773) 743-5756, www.waterless.org
- 83 -
A DISSERTATION SUBMITTED IN
PARTIAL FULFILLMENT OF THE DEGREE OF
Master of Philosophy
by
N. KRISHNASWAMY
Enrollment Number: X4MEC22001
Research Guide
Dr. C. K. RENUKARYA, MA, Ph. D
DEPARTMENT OF ECONOMICS
UNIVERSITY OF MADRAS
Chennai – 600 05
OCTOBER 2006
-I-
Dedicated to Smt. N. VANAJA, my
Mother, Shri.
K.
NARAYANAN,
my
Father, who made a printer out of me,
Smt. N. ANANTHIE, my Sister, Shri. N.
JEI RAM, my Brother, Miss K. MEDHA
VANAJA, my Daughter and Smt. K.
JAYASHREE, my Wife.
- II -
CERTIFICATION FROM THE SUPERVISOR
I certify that the dissertation entitled ‘PRINTING INDUSTRY IN
INDIA’ submitted for the degree of Master of Philosophy by Mr.
N. Krishnaswamy is the record of research work carried out by
him during the period from January 21, 2006 to September 09,
2006 under my guidance and supervision and that this work has
not formed the basis for the award of any degree, diploma,
associateship, fellowship or other titles in this University or any
other University or Institution of higher learning.
Place:
Mysore
Date:
September 09, 2006
Dr. C. K. Renukarya, Ph. D.,
Professor of Economics, Director,
Pooja Bhagavat Memorial
Mahajana Post Graduate Centre,
K. R. S. Road, Mysore – 570 016
- III -
DECLARATION
I declare that the Dissertation entitled ‘PRINTING INDUSTRY IN
INDIA’ submitted by me for the degree of Master of Philosophy
is the record of research work carried out by me during the period
from January 21, 2006 to September 09, 2006 under my
guidance of Dr. C. K. Reukarya, Ph.D, Professor of Economics,
Director, Pooja Bhagavat Memorial Mahajana
Post
Graduate
Centre, K. R. S. Road, Mysore – 570 016 and has not formed the
basis for the award of any degree, diploma, associateship,
fellowship or other titles in this University or any other University
or Institution of higher learning.
Place:
Mysore
Date:
September 09, 2006
N. Krishnaswamy,
Enrolment Number: X4MEC 22001,
Department of Economics,
Institute of Distance Education,
University of Madras,
Chennai – 600 005
- IV -
ACKNOWLEDGMENT
I take this opportunity to express my deep sense of
gratitude to my teacher and guide Dr. C. K. Reukarya, Ph.D,
Professor of Economics, Director, Pooja Bhagavat Memorial
Mahajana Post Graduate Centre, K. R. S. Road, Mysore – 570
016 for accepting me as his research student, his scholarly
guidance and immense encouragement throughout the tenure of
the preparation of this dissertation.
I am thankful to Dr. R. Rajkumar, Reader, Department of
Economics, Institute of Distance Education, University of Madras,
Chennai – 600 005 for extending all the possible help in bringing
out this dissertation.
I acknowledge thankfully the cooperation received from
the teaching and non-teaching staff of Institute of Distance
Education, University of Madras, Chennai during the course of
this study.
I express my sincere thanks to the All India Federation of
Master
Printers
and
Madras
Printers
and
Lithographers
Association and their office bearers and the administrative staff
for helping me with the needful information and data.
I am thankful to all the fraternity, well-wishers and
friends from the Printing Industry for giving the required
information for this dissertation.
I am overwhelmed with sincere feelings of indebtedness to
all the members of my family particularly my Amma who has
demanded excellence in whatever I do from my birth, my Appa
-V-
who decided that his son should be a printer on my birth and
who has given me the confidence and to do whatever I decide to
do with involvement and my wife Jayashree who acted as my
support, proof reader, found happiness in what I do and giving
everlasting motivation and daughter Medha for providing the all
the more important inspiration to this project.
N. Krishnaswamy
- VI -
CONTENTS
List of Tables
List of Maps
Chapter
Title
Page No.
I
INTRODUCTION
1- 20
II
REVIEW OF LITERATURE
21 – 26
III
METHODOLOGY
27 - 32
IV
RESULTS
33 – 69
V
SUMMARY AND CONCLUSION
70 – 79
BIBLIOGRAPHY
80 - 83
- VII -
TABLES
Table
Title
Page
No.
1.1
No.
Growth of Commodity Production since
Independence
1.2
Average Annual Growth Rate of Production
1.3
Annual Growth Rate of Industrial Production
in Major Sectors of Industry
1.5
Major Manufactured Export Products
1.6
Distribution of operating surplus in different
manufacturing segments
1.7
Share of operating surplus in total output of
different
segments
in
the
manufacturing
sector: An Asian comparison (%)
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
NIC 2004 5 Digit Industry Classification,
Division 22
NIC 2004, 5 Digit Paper Industry Classification
NIC 2004 5 Digit Printing Ink and Printing
Chemical Industry Classification
NIC 2004 5 Digit Printing and Allied Machine
Manufacturing Industry Classification
Index of industrial production
Production of Paper and Board Industries
1950-51 to 2004-05
Production of Paper and Board Industries
1950-51 to 2004-05
Principal Characteristics by Industry Group for
Publishing, Printing and Related Activities
Estimate of some important characteristics by
3 digit of NIC'98 for the year 2003-2004
Comparison of All India Industries and NIC 22
- VIII -
Table
Title
No.
4.10
4.11
4.12
4.13
4.14
4.15
Page
No.
Comparison of Performance of NIC 22 with
GDP and Manufacturing Industry
Profitability in the Printing Industries Is
Declining
Return on Fixed Capital for the Industry is
Declining
Current Ration for the Industry is Declining
Interest Cover for the Industry is Fluctuating
and Declining
Change in value chain / Business Model
- IX -
-X-
CHAPTER – 1
INTRODUCTION
-1-
CHAPTER – 1
INTRODUCTION
Industrialisation has a major role to play in the economic
development of the underdeveloped countries. The industrial
sector which possesses a relatively high marginal propensity to
save
and
invest
contributes
significantly
to
the
eventual
achievement of a self sustaining economy with continued high
levels of investment and rapid rate of increase in income and
industrial employment. Besides, the development of mechanical
knowledge,
attitudes
and
skills
of
industrial
work,
with
experience of industrial management and with other attributes of
a modern society which in turn, are beneficial to the growth of
productivity in agriculture, trade, distribution and other related
sectors of economy. Industrialisation is thus inseparable from
substantial, sustained economic development because it is both a
consequence
of
higher
incomes
and
a
means
of
higher
productivity.
Industrial development depends upon the rate of capital
formation. Supply of capital goods can be augmented either
through imports or through domestic production. Increase in the
imports of capital goods depends upon the rate of growth of
exports. The export–promoting industries, import substituting
industries and domestic capital goods industries are not mutually
exclusive.
-1-
The Indian industrial structure reflected a lop-sided sizepattern prior to independence and early sixties. The peculiarity of
the industrial pattern of India was the high concentration of
employment either in small factories and household enterprises,
i.e., the lowest size-group or that there is a high concentration of
employment in large factories, i.e., the highest size group. The
medium size factories are not developed in India. Another feature
of the Indian industry was the prevalence of low capital intensity.
It is the result of two factors – first, the general level of wages in
India is low and second, the small size of the home market in view
of the low per capita income and the limited use of mass
production.
India made tremendous progress in industrial sector since
1960s. The Table 1.1 indicates the growth of industrial output in
selected commodities. India has attained self-sufficiency in almost
all consumer goods. Growth of capital goods production has been
impressive
Table 1.1: Growth of Commodity Production since Independence
Commodity
Unit
Cloth
1970-71
2000-01
Million metres 4215
7602
19718
Fertilisers (N)
‘000 tonnes
830
11025
Cement
Million tonnes 2.7
14.3
99.5
Finished Steel
Million tonnes 1.0
4.6
29.3
Electricity
Billion kwh
5.1
55.8
499.4
Aluminium
‘000 tonnes
4.0
168.8
620.4
‘000 tonnes
116
755
3090
8.6
41.2
152.0
Paper and Paper
board
1950-51
Commercial
Thousand
vehicles
numbers
Source: Economic Survey, 2001-02
-2-
9
An impressive industrial capacity has been achieved in all
major
and
minor
industries.
The
infrastructure
including
Research and Development capability, consultancy and design
engineering services, project management services and innovative
capacity to improve and adapt technologies have indeed shown an
impressive record of progress.
Industrial growth has not been uniform since 1951. After a
steady growth of about 8 percent during the initial period between
1951 to 1965 there was a fluctuating trend during 1966 to 1985
averaging about 4 to 5.5 percent. The growth had picked up to an
average of 8 percent per annum since 1985.
Table 1.2 Average Annual Growth Rate of Production
1974-79
1980-85
1985-90
1993-94
to
2000-01
V Plan
VI Plan
VII Plan
Basic industries
8.4
8.3
7.4
5.8
Capital goods
5.7
7.1
15.7
7.5
Intermediate goods
4.3
6.2
5.5
8.5
Consumer goods
5.5
6.5
6.6
7.4
Durables
6.8
15.2
12.1
12.4
Non-durables
5.4
5.3
5.4
6.1
Source: Government of India, Ministry of Industry, Handbook of
Industrial Statistics (1987 and RBI Handbook of Statistics on
Indian Economy, 2001
The process of industrialization has not been able to make a
dent on the problem of unemployment. The high intensity of
public sector investment generated a very small amount of
-3-
employment. Factory employment absorbed only 2 percent of the
labour force.
A
significant
feature
of
the
Indian
economy
since
Independence is the rapid growth of the small industry sector.
This sector has been given a special role for creating additional
employment with low capital. The number of registered small –
scale units is 34.42 lakh in 2001-02 employing 19.2 million with
an output of Rs. 6,39,024 crores. The value of exports stands at
Rs. 69,797 crores in 2000-01, which is 39 percent of total
exports.
1.2 Industrial Sector in India
Industry and services have acted as the twin engines propelling
overall growth of the economy. In the six years between 2000-01
and 2005-06, on average, increased its share in GDP from 49.8
per cent to 54.1 per cent. Industrial sector had an accelerated
growth of industrial GDP at factor cost at constant 1999-2000
prices, from 7.0 per cent in 2002-03 to 7.6 per cent and 8.6 per
cent in the next two years. In the current year, industrial growth
is driven by robust performances from manufacturing and
Services. The Table 1.3 shows the annual growth rate of
industrial production in the major sectors of Industry
-4-
Table 1.3 Annual Growth Rate of Industrial Production in
Major Sectors of Industry (Based on the Index of Industrial
Production) Base: 1993-94 = 100
(percent)
Period
Mining
& Manufact-
Quarrying
Electricity
Overall
uring
10.47
79.36
10.17
100.00
1995-96
9.7
14.1
8.1
13.0
1996-97
-1.9
7.3
4.0
6.1
1997-98
6.9
6.7
6.6
6.7
1998-99
-0.8
4.4
6.5
4.1
1999-00
1.0
7.1
7.3
6.7
2000-01
2.8
5.3
4.0
5.0
2001-02
1.2
2.9
3.1
2.7
2002-03
5.8
6.0
3.2
5.7
2003-04
5.2
7.4
5.1
7.0
2004-05
4.4
9.2
5.2
8.4
2005-06#
0.4
8.9
4.8
7.8
Weights
Source: Economic Survey 2005-2006, website:
http:/indiabudget.nic.in
1.3 Manufacturing Sector in India
Manufacturing sector with a weight of 79.36 in industry has
always outgrown the industrial growth. In contrast to the sharp
fluctuations in agriculture, industry and services have continued
to expand steadily. The manufacturing process is defined as any
process for (i) making, altering, repairing, finishing, packing,
oiling, washing, cleaning, breaking up, demolishing or otherwise
treating or adapting any article or substance with a view to its
use, sale, transport, delivery or disposal; (ii) pumping oil, water,
sewage or any substance; (iii) generating, transforming or
-5-
transmitting power; (iv) composing types for printing, printing by
letterpress, lithography, photogravure or other similar process or
book binding; (v) constructing, reconstructing, repairing, refitting,
finishing or breaking up of ships or vessels; (vi) preserving or
storing any article in cold storage. Indian manufacturing sector is
classified into two categories by National Accounts Statistics as
Registered manufacturing and Unregistered manufacturing on
the basis of the number of workers and usage of power. In 200203 there were 1.28 lakh registered production units employing
78.9 lakh workers. The total output of the manufacturing sector
was Rs 10,87,865 crore and the gross value added Rs 2,15,006
crore.
1.4 Role of Manufacturing in International Trade
After witnessing an impressive growth since 2002-03, export
growth continued to maintain momentum during the year 200405. According to provisional data available for April-January
2004-05, exports stood at Rs.274313 crore as against Rs.
2,22,864 crore in the corresponding period of last year, recording
a growth of 23.1% in rupee terms. Imports also witnessed a
robust growth of 32.1%, having increased to Rs. 3,76,815 crore
from Rs. 2,85,327 crore during April-January 2004-05. Many
sectors of the manufacturing have been able to make major forays
into the global markets over the last two decades. Though the rate
of growth has not been impressive, there has been a significant
acceleration in the trends in the more recent years. But their
share in world trade is about 1 to 7 percent only.
1.5 Role of Manufacturing in Economic Planning
Importance of manufacturing industry in the national economy is
indicated by many facts. For example manufacturing is the main
-6-
producer and provider of all types of consumer durable and
nondurable goods. While agriculture and other major industries
provide for the basic sustenance of the nation and its people it is
the manufacturing industry which gives the value added products
for the consumer to enhance the quality of life and addition of
wealth. Only a sharp increase in the manufacturing sector
workforce would take the pressure off the agriculture sector and
increase income levels. Agriculture, supporting 60% of the
working population, contributes only 22% of its gross domestic
product. This mismatch between distribution of workforce and
value added in agriculture is one of the main reasons for the large
number of poor, and this trend is expected to further widen in the
coming decades.
Only
a
large
shift
of
workforce
from
agriculture
to
manufacturing will help improve rural incomes and reduce
poverty levels. If India is to achieve an overall growth of 8% per
annum, it is essential that both manufacturing and services grow
at more than 11% even when agriculture growth picks up to close
to 4%. A comparison with other major Asian countries show that
the size of the value added in the Indian manufacturing sector ($
66 billion in 2000) was less than one fifth of the Chinese
manufacturing sector ($ 373 billion) and even less than half of the
Korean manufacturing sector ($ 144 billion). Share of the
manufacturing sector in India’s GDP has remained stable at
around 17% while in China the manufacturing sector accounted
for around 35% of the GDP and in the case of Korea it was 31%
1.6 Performance Trends in Manufacturing
Manufacturing sector growth in India has fallen sharply in the
last seven years as compared to the first seven years after the
-7-
reforms. Manufacturing sector growth slumped from 7.4% in the
first seven years of reforms (1990-91 to 1996-97) to just 4.7%
over the last seven years (1997-98 to 2003-04). Manufacturing
sector growth in the last seven years was lower than the 5.1%
growth clocked by industry or the 5.7% growth of GDP during the
period.
Indian
Manufacturing Sector faces the
following
cost
disability factors such as (i) cascading effect of indirect taxes on
selling prices of commodities, (ii) higher cost of utilities like
power, railway transport, water, (iii) higher cost of finance and (iv)
high transactions costs.
A detailed investigation of 15 major manufacturing sectors
in India shows that the share of operating surplus in the total
value of output averaged 15% in India – much lower compared to
22.6% in Malaysia, 29.4% in Indonesia and 30.6% in Korea
resulting in low operating surplus. The average the share of input
materials and utilities in total output value was as high as 81.3%
in India as against 75.5% in China, 68.7% in Malaysia and only
58.5% in Korea. Estimates show that the average share of labor
costs in manufacturing across 15 major industries was 6.9% in
India as compared to 8.7% in Malaysia, 10.7% in Korea and 5.5%
in Indonesia. The Table: 1.4 draws a comparison between the
GDP, Industry and the Manufacturing sector
-8-
Table 1.4: Sharp slowdown in manufacturing sector growth in
percentage terms
First seven
Last seven
Overall period
years (1990- 91 years (1997-
(1990-91 to
to
98 to
2003-04)
1996-97)
2003-04)
Manufacturing 7.4
4.7
6.0
Industry
6.5
5.1
5.8
GDP
7.8
5.7
5.7
Source: Annual Report 2004-05, Reserve Bank of India
There are 48 major manufactured products whose share in
the global markets has improved significantly between 1980 and
2000. The share of these 48 products in India’s total merchandize
exports has gone up from 40.3% in 1980, to 50.9% in 1990 and
further to 57.4% in 2000. The share of these 48 manufactured
products in the global market currently ranges between 1% to
13%. On the average their un-weighted share of the global export
market is just 2.8%. The list of the major 48 products is given in
the table below.
Table 1.5: Major Manufactured Export Products
Serial
Major manufactured export products
1
Pearl, precious, semi-precious stones
2
Textile articles
3
Floor coverings, etc
4
Under garments non-knit
5
Developed cinema film
6
Textile yarn
7
Cotton fabrics, woven
8
Synthetic dye, natural indigo, lakes
-9-
9
Women's outwear non-knit
10
Gold, silver ware, jewellery
11
Other organic chemicals
12
Lime, cement and building products
13
Iron, steel castings unworked
14
Headgear, non-textile clothing
15
Other fixed vegetable oils
16
Pesticides, disinfectants
17
Base metal household equip
18
Travel goods, handbags, etc
19
Under garments knitted
20
Textile clothing accessories
21
Woven man-made fib fabric
22
Lace, ribbon, tulle, etc
23
Pig iron, etc
24
Iron, steel wire, excluding wire rod
25
Outer garments knit non-elastic
26
Processed animal and vegetable oil, etc
27
Hydrocarbons, derivatives
28
Alcohols, phenols, etc
29
Carboxylic acids, etc
30
Organo-inorganic compounds, etc
31
Inorganic chemical element, oxides, etc
32
Other inorganic chemicals
33
Explosives, pyrotechnic products
34
Products of condensation, etc
35
Starch, insulin, gluten, etc
36
Rubber articles
37
Glassware
- 10 -
38
Iron, steel primary forms
39
Iron, steel shapes, etc
40
Iron, steel universal, plate, sheet
41
Iron, steel tubes, pipes, etc
42
Aluminium
43
Tin
44
Structures and parts
45
Wire products, non-electric
46
Electro-medical, x-ray equipments
47
Office supplies
48
Musical instruments and parts
Source: Manufacturing Sector in India: Competitiveness and
Other Issues, Federation of Indian Chamber of Commerce &
Industry, January 2005
1.7 Operating Surplus in the Indian Manufacturing Sector
A detailed investigation of 15 major manufacturing sectors in
India shows that the share of operating surplus in the total value
of output average 15% in India as compared to 22.6% in
Malaysia, 29.4% in Indonesia and 30.6% in Korea. The Table 1.6
shows the operating surplus in different countries.
Table 1.6: Distribution of operating surplus in different
manufacturing segments
Number of manufacturing industries
India
0
Indonesia Malaysia
13
9
Korea
14
Operating Surplus of 1020%
10
2
5
1
Operating Surplus of
Less than 10%
5
0
1
0
Operating Surplus of
above 20%
Source: Manufacturing Sector in India: Competitiveness and
Other Issues, Federation of Indian Chamber of Commerce &
Industry, January 2005
- 11 -
1.7.1
Operating Surplus of above 20%
In the case of India there was not even one single industry where
the share of operating surplus in total output value was above
20%. In contrast 9 industrial segments in Malaysia where the
operating surplus was higher than 20% and 14 manufacturing
segments each in Korea and Indonesia.
1.7.2
Operating Surplus of 10-20%
Number of manufacturing industries with an operating surplus
ranging between 10-20% of the output value numbered 10 in
India, 5 in Malaysia and one each in Korea and Indonesia.
1.7.3
Operating Surplus of less than 10%
The number of manufacturing industries with operating surplus
of less than 10% of output value numbered 5 in India, one in
Malaysia and zero in Korea and Indonesia.
Table 1.7: Share of operating surplus in total output of
different segments in the manufacturing sector: An Asian
comparison (%)
India
Indonesia
Malaysia
Korea
Iron & steel
17.2
29.9
13.2
28.1
Glass
16.0
41.4
38.4
38.4
Rubber products
14.5
12.2
24
33.1
Electrical machinery
14.1
24.2
17.7
Non Electrical
13.2
30.9
19.8
27.2
Industrial chemicals
12.7
33
28.7
32.1
Plastic products
12.7
25.3
25.5
30.1
Non ferrous metals
11.5
29.0
18.9
19.4
39.1
machinery
- 12 -
Printing & publishing
11.0
33.2
35.9
41.8
Transport equipment
10.9
51.3
21.0
30.1
Leather products
9.8
23.0
16.9
22.4
Metal products
9.4
28.3
20.6
31.4
Wood products
8.9
27.8
21.3
27.9
Food products
7.4
24.3
9.8
29.9
Textiles
7.4
26.6
27.6
28.5
Average
11.8
29.4
22.6
30.6
Source: Manufacturing Sector in India: Competitiveness and
Other Issues, Federation of Indian Chamber of Commerce &
Industry, January 2005
1.8 Printing Industry
Time magazine, in listing the 100 most influential events of the
second millennium, chose the printing of the Gutenberg Bible as
the most significant, because in creating the beginning of print as
we know it today, this event changed for all time our access to
knowledge and our ability to record and share information. The
printing industries today produce the most visible, most common
and most effective means of communication seen in our daily
lives.
1It
is India’s Twelfth largest manufacturing industry
employer and a major contributor to the Indian economy.
However, India’s printing industries are at the cross roads.
The pace of technological change in the industry is nothing short
of phenomenal. Long gone are the images of plastic sleeved
printers stooped over typesetting cases. The industries in India
have moved from the traditional ‘ink on paper’ industry to
embrace an ever-increasing range of technologies and fields of
expertise.
And yet as printing industry it has not always had a clear
vision
for
its
future.
It
does
- 13 -
not
always
recognize
the
sophistication and size of the industry and the major role it plays
in people’s lives and in the economy.
third
largest
manufacturing
2
Printing industries are the
industry
worldwide,
and
the
twentieth largest in India in terms of gross output. The industries
undertake a wide range of activities including: the manufacture of
paper stationery, commercial and job printing, the provision of
services to industry, publishing and printing of newspapers,
books magazines and periodicals, and the manufacture and
publishing of audio, video and data media. In India, the printing
and related industries (excluding pulp and paper manufacturing)
comprise
of
some
3,007
printing
factories
and
1,06,993
unregistered printing presses.. These printing factories (greater
than 200 employees) employ 1,12,974 people. The overwhelming
majority of firms are small and medium enterprises employing
some 4,93,007 people.
The industry plays an important role in regional India.
Approximately 35% of graphic arts establishments are located
outside capital cities. There is also a significant presence of small
printers in the district and taluk levels. The long term economic
performance of printing industries is a cause for concern.
Diagram 1 illustrates the industry’s on-going slow slide in
profitability and return on assets. The future does hold lucrative
new business opportunities for Indian Printing. It is no surprise
that new high value opportunities will arise more and more in
what is termed in the market space as e-commerce and the
internet.
Traditional
market
place,
ink-on-paper
business
opportunities will still be available, of course. The challenge for
printers lies in developing innovative business strategies that
- 14 -
cleverly exploit complementarity between market place and
market space business.
1.9 The
21st
century
—
Navigating
Complexity
and
Flexibility
India’s printing industry faces a number of challenges as the new
millennium dawned. Rapid technological change will continue for
the foreseeable future. The processes of industrial convergence
will accelerate creating both opportunities and threats. Printing,
information and telecommunications industries will play key roles
in the new and emerging knowledge-based economy. The future
for Indian printing industry will be exciting, complex and
uncertain. To borrow a nautical analogy, in this situation the
industry must ready itself to navigate through uncharted waters.
This Dissertation – Printing Industry in India - aims to capture
this idea of ‘navigating’ through the uncertainties that the new
millennium is bringing.
Navigating the Future
Complexity
Flexibility
Clear
Business
Appropriate use
of Technology
Drivers of
Sustainable
Growth
- 15 -
Creative and
Skilled People
1.10
A Brief History of Print
Plato spoke against the idea of writing in the 5th century BC. He
believed that being able to write things down, write words on
paper or parchment would ruin our natural capacity for memory.
From the 7th to 15th centuries ‘printing’ was largely in the form
of religious manuscripts, entirely constructed by hand. Then in
1452 the printing press was invented by Gutenberg, bringing
together the technologies of paper, oil-based ink and the winepress to print books using movable type.
The concept of ‘print’ was revolutionised in the late 1990s
when it came to mean anything that you can print on paper, a
computer screen or to any other media. This included words,
graphics, images, icons, holograms, AVIs, MPEGs, MP3s - the list
was endless. Combining this with digital presses and digital
workflows, the printing industry had an enormous opportunity to
capitalise on the next revolution - but it missed the virtual boat.
The IT and communications industries stole the lead even though
most of their employees were not educated in graphic design or
layout, let alone being able to effectively communicate with
images and words. But the printing industry survived on the
crumbs thrown to them by their bigger IT cousins - whenever
someone needed a better web page design or the occasional bulk
printing for a marketing strategy, they managed to find a cheap
printer who could do the job.
Two segments of the market survived and even prospered at
times: the print factories and the customised market printers.
The print factories operated by filling the bulk orders for clients
- 16 -
who needed to distribute paper-based products: advertising
circulars, mail order catalogues and targeted brochures. The
customised market printers catered to a small clientele who
required specialist printing of books, documents, cards and very
small runs of other printed products. As it is known, this type of
printing can be easily done at work or at home, but sometimes
when that extra professional appearance to the printed products
are desired; that expert touch that current technology just can’t
quite produce.
1.11
Importance of the Study
What the industry has been, and what it is now, will not be what
it is in the next five to ten years. The industry has the will to
survive and thrive but it must transform itself in very radical
ways if it is to enjoy meaningful and sustainable growth in the
foreseeable future. In moving from the Industrial Age into the new
Age of Information, a vibrant and robust printing industry is
fundamental for the emerging knowledge based economies. In this
new world, in addition to traditional ‘ink on paper’ printing,
significant opportunities for products and services are opening up
as a result of the increasing shift towards electronic and
information based activity. The Indian printing industry has
recognised that it is operating in a turbulent environment
characterized by rapid changes in technology. It has to initiate a
process to assist the industry and its individual companies to
operate in what is becoming an increasingly more complex set of
pathways.
Bearing in mind this highly dynamic environment, the
dissertation does not aim to chart a single or narrow range of
directions for the industry in a way that may have been possible
- 17 -
in less turbulent and slower changing times; it does not aim to
set out a prescriptive path for firms to take. Rather, its purpose is
to identify signposts that help the industry to focus on what it
needs to do today to be well prepared for an uncertain tomorrow.
The paper articulates a number of possible scenarios in which the
industry and firms may well find themselves in the future. For
these reasons the theme of ‘navigating’ has been adopted by those
developing this paper to present broad strategic guidelines for the
industry.
Businesses
will
increasingly
need
to
‘navigate’
opportunities and threats often through ‘uncharted waters’. To
navigate successfully through the important impacts of future
changes will require business leaders and managers to consider
what their core competencies are, customers’ values and needs
and how to create and deliver value.
All the evidence points to prospects for growth. The real
issue for the industry, centres generally around the nature and
scope of future growth and more specifically being close to its
customers, understanding their needs and leveraging their
growth.
The springboard for future growth lies in the industry’s
current capabilities and how these may be developed to create
new capabilities to capitalise on the emerging opportunities. The
industry has talked about ‘survival’. This suggests a victim
mentality - this is a choice. But there are other choices:
1. Choose to creatively shape the future;
2. Choose to participate in the future;
3. Choose to fall victim to the future.
- 18 -
1.12
Specific Objectives of the Study
The purpose of this paper is to:
1. Define/map the printing industry in India;
2. Describe/profile the industry in detail domestically and in
broad terms internationally; and
3. Identify
key
business
environment
signposts/trends
covering the period 1950 to 2010.
1.13
Presentation of the Study
The entire study has been presented in five chapters. In the
Chapter – I the nature, importance of specific objectives and
limitations of the study have been indicated.
Chapter – II deals with the review of the relevant research
studies connected with the objectives.
Chapter – III outlines the main features of the study area,
the method followed, nature and source of relevant data collected
and analytical tools employed in the study.
Chapter – IV is devoted to the analysis of data through a
variety of tables and discussions into which relevant details have
been compressed and summarized under appropriate heads
presented in the tables.
Chapter – V deals with the discussion of the results of the
study. It provides a brief summary of the whole study and also
suggests the policy implications from the findings of the study.V
1.14
Limitations of the Study
As the rationale for the paper is business strategy directions, the
analysis of the data is more focussed on general directional
changes
that
will
impact
- 19 -
on
the
sustainability
and
competitiveness
of
the
industry.
The
directional
changes
identified in the data can be reality tested against the knowledge
and insight industry practitioners have on the state and
dynamics of their industry. Therefore, while not compromising
accuracy in any way, precision in data analysis is not considered
to be paramount in these circumstances. Rather, the objective is
to facilitate the adoption of thoughtful industry wide and firm
based business strategy, ensuring the appropriate adoption and
uses of technology and most importantly, the development of
competencies and skills within the industry at levels of firm
structure and size.
- 20 -
CHAPTER – II
REVIEW OF LITERATURE
-1-
CHAPTER – II
REVIEW OF LITERATURE
In this chapter an attempt is made to present the literature
pertaining to the research work relate to the present study. Since,
not much work has been one on the printing industry in India,
the study is undertaken, Studies conducted on the printing and
allied industries in general and Indian printing industry in
particular have been reviewed under the following sections.
2.1
Printing industry in Indian manufacturing
2.2
Industry economics
2.3
Customer, technology and future
2.1 Printing industry in Indian manufacturing
Indian printing industry has formed part of the study on
manufacturing industry since 1951. However it is considered in
combination with paper, paper products and printing as the
group
had
been
classified.
In
this
classification
paper
manufacturing industry formed the core and paper products
manufacturing and printing industry took the shape of associate
industry. This classification is used to collect data with regard to
production and utilization of paper for forming part of the
manufacturing industry statistics. Not much of an organized
study had taken place or books are published on printing
industry. However, government had constituted committees
- 21 -
towards setting up of text book presses, which had prepared
reports for that purpose.
The industry groupings in the form of associations of
clusters had been in existence since about half a century in
different parts of India. These associations had conducted
workshops, meetings and other endeavours like exhibitions,
conferences etc., towards protecting the sustenance of the
industry.
However
all
these
had
focused
mainly
on
the
technological component of the industry. The economic and
business components were restricted towards making occasional
representations to government on taxes and duties. Also printers
had most of the time focused themselves as traders who quote,
wait for the response and execute, rather than viewing themselves
as industrialists. This also has to do with the fact that printing is
considered mainly as need based process for reproduction by any
available means than an industrial effort.
However, newspaper industry a segment of the printing
industry has always been ahead in organizing itself for their
protection and benefits. Still, there had not been an organized
study done in this area. Since the printing industry is divided into
various segments catering to a principal industries or as in house
printing units specializing in an obscure product almost no
systematic study has so for not been initiated for the industry as
whole. However, certain states where printing industry has its
major clusters in India had conducted studies focusing on solving
a particular problem or studied this industry as an associate of
other major industry.
- 22 -
There are books on printing industry in India, focusing
mainly on historical aspects of the industry and its development
or not so many books on printing as technology. It is a matter for
concern that only a few numbers of texts on printing technology
catering to the lower end of the trade are available.
The printing Industry was classified alongwith Paper and
paper
products
industry
in
1962
Standard
Industrial
Classification, with a revision in 1968. In 1970 it was made into a
three digit classification printing still clubbed with paper
industry. The National Industrial Classification 1987 grouped
Publishing,
Printing
and
Related
activities.
The
1998
classification made printing as a separate entity in the Industrial
Classification. This had further been classified in 2004 fully
covering all the old and new printing and related activities.
As for the reasons explained above studies on printing
industry as an economic activity is not available. Also the first
scientific study on this industry had been done in 1985 by Hira
Kant Jha, under the title ‘Empirical study of printing presses in
Patna, Bihar’, as dissertation for his Ph. D. in Patna University,
1985). There was another study in Punjab focusing on the
employment and wages of the printing press employees of
Amritsar in 1955. However none of the above known studies had
approached the printing industry economics as a whole or as its
major component parts, so as to use for reference or review. Also
the author could not come across any other scientific study on
this subject topic.
2.2 Industry economics
Australian Printing Industry Report, 1998 , has studied the
printing
Industry
of
Australia
- 23 -
in
1998
and
published
a
comprehensive report covering all areas of the industry from raw
material, business processes to future prospects and foreign
competition. It also had outlined the industry specific initiatives
by the government.
Encyclopedia of American Industry, Standard & Poor’s
NetAdvantage (2002), gives a crisp outlook of the American
Publishing industry in the form of overview.
Naresh Khanna (2002) in his article in India Printer and
Publisher writes about the globalization of printing technology.
The Occupational Outlook Handbook 2002-03, published by
the Graphic Communications Council, USA, explains in detail the
employment and different occupations available in the industry.
Ramu Ramanathan’s, (2003) article titled ‘An Overview of
the Small Offset sector’, published in the Indian Printer &
Publisher has provided details on the small offset sector of the
printing industry in India.
The United States Census Bureau’s Economic Census Series
Reports 2002 gives statistical analysis of different segments of it
printing industry.
A Unique Printing Industry Resource Printing Industries
Association of Australia, 2005 details the Australia’s fourth
largest manufacturing industry employer and a major contributor
to the its economy - its printing industry – its current status. It
also outlines an ambitious plan for its future sustenance, growth
and globalisation.
An Overview of the Printing and Publishing Industry in the
US, Including Future Predictions to 2009, (2005) explains in
- 24 -
detail the state of printing industry in United States in all its
details. It also makes forecast of its future to ensure its
dominance in creative printing and leader of print production
innovation.
Colin Thompson (2006) in his article titled The Chinese
Printing Industry explains about the dynamics of the emerging
Chinese Printing Industry and its effect on the global printing
industry.
The KBA Report (2006), published by Koening & Baur AG,
(2006) Germany and Polygraph International Quarterly, Germany
have detailed their current status of technology and operational
outputs.
In addition reports generated by Indian Pulp and Paper
Technical
Association,
National
Association
of
Printers
&
Lithographers, USA, North American Graphic Arts Suppliers
Association,
Paperboard
Industries of America,
Packaging
Council,
USA,
Printing
Screen printing & Graphic Imaging
Association International, USA, Technical Association of the
Graphic Arts, USA, The All India Printing Ink Manufacturers
Association, Waterless Printing Association, USA,
on different
topics on the printing industry economics and technology and
forecast for the future sourced as published literature and made
available online in the world wide web have been reviewed in
preparing this dissertation.
2.3 Customer, Technology and Future
Birkenshaw, John, (1992) in his lecture published in Ink &
Print, 1993 issue talks about the Future trends in printing, which
explain in detail the convergence of information technology,
- 25 -
knowledge management and printing industry in providing
customer a new composite service.
Printing for Profit 2000 published by the British Printing
Industries Federation in 1990s had outlined the future prospects
for the industry in United Kingdom.
Colin Thompson (2006) in his articles titled Graphical
Challenges for the Printing Industry outlines what the future has
in store for the printing industry in United Kingdom by taking the
world view.
Colin Thompson (2006) in his three part article titled
Challenges for the Printing Industry makes an in depth study of
the future of the printing industry and makes his forecasts.
- 26 -
CHAPTER – III
METHODOLOGY
-1-
CHAPTER – III
MEHODOLOGY
This chapter deals with the description of study area, the nature
and the sources of data collected, the various tools and
techniques employed in analysing data. These are presented
under the following heads.
3.1
Description of the study area
3.2
Nature and sources of data
3.3
Analytical tools and techniques employed
3.4
Definition of terms and concepts used.
3.1 Description of the Study Area
The printing industry forms part of the manufacturing industry
which is one of the major industrial sectors of the economy.
Indian printing industry is in the throws of an imminent change
which is flushed with opportunities of the known and challenges
of the unknown. These are the cumulative results of technology,
growing population, increasing literacy, opening up of the
economy, liberalisation, advent of the communication enabled
information technology based services and above all the overall
growth of the economy in particular the middle class population.
Indian GDP is growing at 7.5 to 8 % over the last two years
after a lull in the preceding three years. India’s index of industrial
production has risen from 7.9 in 1950-51 to 204.8 in 2004-05.
- 27 -
During the same period the population has grown from 359
million to 1090 million and the literacy rate from 18.33% to
65.38%. The paper, paper products and printing industry with a
weight of 26.52 has grown from 108.3 in 1981-81 to 230.7 in
2004-05 (Base: 1980-81 =100).
The earliest printing presses in India were located along the
west coast line of the peninsula namely Goa, Cochin, Pudikoil,
Vypicottah and Ambadalakkad. Also Tranquebor, Madras, Fort
William, Calcutta and Serampore, along the East Coast in the
east coast had the first of the printing presses in India. All these
happened between 1579 AD to 1795 AD. In 1817, Bombay had its
first printing press. Subsequently it led the phase of the vigorous
growth of early Indian printing. Since then printing industry has
gone through several phases in technology, constitution and
functioning. It organises itself in clusters for development all
through the country, functioning basically as a supporting service
industry.
3.2 Nature and sources of data
The secondary data needed for the study has been obtained from
the Cental Statitical Organisation, Government of India’s Annual
Survey of Industry and Reserve Bank of India’s Annual report and
Government of India’s Economic Survey.
The
secondary
data
also
has
been
sourced
from
innumerable industry published articles. The author also has
used his two decade long experience in the industry alongwith the
inputs from the experts of the industry received through
interaction.
- 28 -
3.3 Analytical Tools and Techniques Employed
3.3.1
Ratio Analysis for the Printing Industries
The definitions for these ratios are generally taken from Analysing
Company Accounts by Martin Roth, Wright Books, 1995, and
Financial Accounting by Carnegie, Jones, Norris, Wigg, and
Williams, McGraw-Hill, 1999.
Caveats on the Use of Ratios
Financial ratios are indicators only. They do not present a
complete picture of the business or industry. Other important
factors may be determinant on performance and not captured by
financial ratios. A ratio is a comparison of two figures, a
numerator and a denominator. At times it may be difficult to
determine whether, in comparing ratios, the differences are due to
the numerator or the denominator or both. Comparison between
companies can be difficult due to the adoption of different
valuation methods. Ratios are interconnected and should not be
treated in isolation.
3.3.2
Net Profit Margin and Profit Margin
The Profit Margin ratio is an indicator for corporate efficiency.
More explicitly it reflects the return on sales from the operations
of the organisation. The ratio is given by:
Profit Margin (%) = (EBIT/ Sales) x 100.
EBIT = Earnings Before Interest and Tax
3.3.3
Return on Assets
This ratio is also known as return on investment. It measures the
ability to generate profits from assets and is defined as operating
profit before tax as a percentage of the total book value of assets.
(ABS 8225.0) The ratio is given by:
Return on assets (%) = (EBIT/ Assets) x 100
- 29 -
3.3.4
Financial Stability
Financial Stability ratios focus on assessing the amount of risk
for an entity. They fall into two categories:
1.
Measures of short term liquidity:
Current Ratio
2.
Measures of financial structure and long term solvency:
Debt to Equity Ratio
Interest Cover
3.3.4.1
Current Ratio
Can the industry pay its bills? - Keeping liquidity as low as
possible while ensuring that short term obligations are met. That
is the number of times current assets cover current liabilities, i.e.
the value of current assets divided by the value of current
liabilities. This liquidity measure indicates ability to meet
immediate
financial
obligations
from
current
assets.
The
convention usually adopted is that there should be a two to one
difference between current assets and current liabilities.
The current ratio is given by:
Current ratio = Current assets/Current liabilities
"A strong cash flow, with a high stock turnover rate and
speedy collection of debts, may mean that a company can operate
safely with a current ratio nearer to one or lower. …. a company’s
working capital - surplus of current assets over current liabilitiesshould be sufficient to pay bills and give credit as necessary."
It may be useful to consider the proportion of cash
represented in current assets - cash to liabilities ratio. Have to
watch that the enterprise is not over-burdened with debt. Profits
will not mean much if it is. But debt is also a path for growth
- 30 -
especially if interest rates are low and the economy is growing. If
industry is competing in a stable predictable environment then
liquidity can be low.
3.3.4.2
Debt to equity ratio
This measures debt exposure and generally the higher the ratio,
the more likely it is that there may be difficult to pay debts;
especially if interest rates rise. There is no ‘safe’ figure though the
practice seems to be that if the ratio does not exceed 100%, there
should be no difficulty. Too much equity can mean that
management is not taking advantage of the leverage associated
with long term debt. Outside financing will become more
expensive as the debt to equity ratio increases. Therefore the
degree of leverage has to be considered in light of profitability and
industry volatility.
The ratio is given by:
Debt to Equity ratio = Total Debt/ Equity*
* Shareholder’s or Owner’s Equity depending upon whether the
company is public or private
3.3.4.3
Interest Cover
The ratio reflects the relationship between interest payments and
profits to show if there is a good margin of profit to ensure against
downturn or sharp interest rate rises. That is the number of times
over that business can meet their interest expenses from their
earnings before interest, i.e., the value of earnings before interest
and tax divided by the value of interest expenses (ABS 8225.0).
The ratio is given by:
Interest Cover = EBIT/ Net interest payments
The rule of thumb is that enterprises should be able to cover
interest payments at least three times.
- 31 -
3.3.4.4
Macro Economic Indicators for the Indian Economy
Information on predictions of the main macroeconomic indicators
into the next decade is given below. They are from the latest
report published by one of the major economic modeling houses,
Econtech. All the figures for 1998-99 are historical, and
subsequent figures are forecasts.
Essentially,
in
the
general
medium
to
longer
term
macroeconomic environment in which the Printing Industries will
be operating, GDP is predicted to be growing at a rate of about
2.5-3%. The analysis suggests that if the economy generally is
growing then the printing industries will also be growing. It also
suggests that for profitability to increase there will need to be a
shift downstream in the services offered by printers. They will
need to manage their cost structures better particularly the
capacity utilisation.
- 32 -
CHAPTER – IV
RESULTS
-1-
CHAPTER – IV
RESULTS
In consistence with the objectives of the study the necessary
data collected from different sources were and interpreted. The
results of such analysis are presented in this chapter under the
following Heads.
4.1
Defining the Industry
4.2
Data Sources and Analytical Precision
4.3
Printing Industry in India
4.4
Key External Drivers
4.5
Industry Parameters for Growth
4.6
Future Operating Environment
4.7
Choices for Future
4.1 Defining the Industry
For the purposes of this study, which is to signpost trends
in the industry using available Central Statistical Organisation
(CSO) data, the core of the industry is defined according to the
Five Digit - National Informatic Centre 2004 classification and
presented according to the Three Digit National Informatic Centre
1998 classifiction of India. It includes the Total Printing,
Publishing and Recorded Media (NIC 22 series), the Total Paper
and Paper Product Manufacturing (NIC21series), Total Printing
and Writing Inks and Photographic Films (NIC 24 series) and
- 33 -
Total
Printing,
Paper
making
Manufacture (NIC 29 series).
and
Packaging
Machinery
The paper focuses mainly on
Printing Industry and information
from the other related
industries are used for defining the industry in focus.
Table 4.1: NIC 2004 5 Digit Industry Classification, Division 22
Group Class Sub
Description
Class
221
Publishing [This group includes publishing
whether or not connected with printing.
Publishing involves financial, technical,
artistic, legal and marketing activities,
among others but not predominantly]
2211
22110 Publishing of books, brochures, musical
books and other publications.
2212
Publishing of newspapers, journals and
periodicals [includes periodicals of
technical or general contents, trade
journals, comics etc.]
22121 Publishing of newspapers.
22122 Publishing of periodicals and journals
2213
22130 Publishing of recorded media [includes
publishing of records and other recorded
audio media, publishing of sheet music etc]
2219
22190 Other publishing [includes publishing of
photos and postcards, greeting cards, timetables, forms, posters or other printed
matters.]
222
Printing and service activities related to
printing
- 34 -
2221
Printing [Includes printing of newspapers,
magazines, periodicals, journals and other
material for others on a fee or contract
basis]
22211 Printing but not publishing of newspapers
22212 Printing but not publishing of periodicals,
books, journals, directories, atlases, maps
and sheet music, schedules and pamphlets
22213 Printing of bank notes, currency notes
22219 Printing and allied activities like screen
printing other then textile, n.e.c.
2222
Service activities related to printing
22221 Engraving, etching and block making etc.
22222 Book binding on account of others
22229 Other service activities relating to printing
n.e.c
223
2230
22300 Reproduction of recorded media [This class
includes reproduction of records, audio,
video and computer tapes from master
copies, reproduction of floppy, hard or
compact disks, reproduction of noncustomised software and film duplicating]
- 35 -
Table 4.2: NIC 2004 5 Digit Paper Industry Classification
21011
Pulp, manufacturing
21012
Manufacture of paper
21012
Manufacturing of writing paper
21012
Printing paper, manufacturing
21013
Paper, newsprint, manufacturing
21014
Packaging paper, manufacturing
21017
Manufacturing of computer stationery
21019
Manufacturing of composite paper
21019
Paper board n.e.c., manufacturing
21021
Paper bags, manufacturing
21024
Paper board (corrugated), manufacturing
21091
Paper cones, manufacturing
21091
Paper loops, manufacturing
21092
Paper cups, manufacturing
21092
Paper plates, manufacturing
21092
Paper saucers, manufacturing
21094
Pulp dolls, manufacturing
21095 Manufacture of papier mache articles
21098
Manufacturing of stationery items
Table 4.3: NIC 2004 5 Digit Printing Ink and Printing
Chemical Industry Classification
24223
Printing inks, manufacturing
24294
Manufacturing of photographic films
24294
Manufacturing of photographic plates
24299
Manufacturing of writing or drawing ink
- 36 -
Table 4.4: NIC 2004 5 Digit Printing and Allied Machine
Manufacturing Industry Classification
29195
29195
29293
Manufacturing of packing and wrapping
machinery
Packing and wrapping machinery, manufacturing
29293
Manufacturing of machinery for paper board
industry
Manufacturing of machinery for paper industry
29293
Manufacturing of machinery for pulp industry
29294
Manufacture of printing machinery
29294
Manufacturing of composing machines
29294
Manufacturing of machines for photo-type setting
29294
29294
Manufacturing of machines for production of
plates
Screen presses, manufacturing
29294
Screen printers, manufacturing
29294
Type-founding machinery, manufacturing
29294
Type-setting machinery, manufacturing
This definition of the industry does not include upstream
activities such as logging, ink manufacture, plastic bag and film
manufacture, nor does it include printing activity classified under
NIC 2004 codes for in-house printing such as advertising
services, and commercial art and display services. In this paper,
the definition of the industry used to describe what the industry
has been and is now, is that of traditional boundaries based on
product and process.
An alternative approach to defining the industry which
arguably recognises contemporary shifts and changes is the
following: "An industry is made up of all those firms that in the
mind of the customer, at a specific moment in time, compete for
- 37 -
satisfying the customer’s need in return for some of the
customer’s funds." The use of this definition particularly in the
context of industry decision making will help to avoid surprises in
the form of competition coming from outside the traditional
printing industry.
It should be remembered therefore that the industry as
defined in this study represents an underestimate of the total
printing activity in the economy. However, in terms of the number
of firms, employment and turnover in the sector, the Printing,
Publishing and Recorded Media group is by far the larger
contributor to activity in the industry.
4.2 Data Sources and Analytical Precision
The data sources used to construct this industry profile are not
exhaustive and include Annual Survey of Industries, 2002-03,
Volume-I and Annual Survey of Industries, 2003-04, Volume-I, by
Central Statistical Organisation; National Accounts Statistics,
Chapter 1, Development of National Accounts Statistics, NAS –
Sources & Methods 1989; Manufacturing Sector in India:
Competitiveness
and
Other
Issues,
Federation
of
Indian
Chambers of Commerce & Industry, January 2005; Economic
Census, 1998, All India Report, Government of India , Ministry of
Statistics & Programme Implementation, Central Statistical
Organisation, New Delhi; Economic Survey 2005-2006, website:
http:/indiabudget.nic.in
website:
and Trends In India’s Foreign Trade,
http://commerce.nic.in/annual2004-05/englishhtml/content.htm.
These data are not readily comparable due to their inherent
difference in their period of coverage.
They have been used as indicative source of trends of the
printing industries by rapid technological change and turbulent
- 38 -
economic conditions at home and abroad. The general directions
that emerge from the analysis will form the springboard for
setting out a strategy for navigating through possible futures for
the industry over the next 5-10 years in rapidly changing national
and international environments.
4.3 Printing Industry in India
Table 4.5: Index of industrial production
Year
General
Index
% Year
on
Year
Paper,
paper
products
& printing
% Year
on
Year
Base Year
1981-82
109.3
-
108.3
- 1980-81
1990-91
212.6
94.5
198.0
1994-95
108.4
-
108.6
-
1995-96
122.3
12.8
125.5
15.6
1996-97
130.8
7.0
136.9
9.1
1997-98
139.5
6.7
146.4
6.9
1998-99
145.2
4.1
169.8
1999-00
154.9
6.7
180.5
6.3 =100)
2000-01
162.6
5.0
164.0
9.1
2001-02
167.0
2.7
169.0
3.0
2003-03
176.6
5.7
180.5
6.8
2003-04
189.0
7.0
208.7
15.6
82.8 =100)
16.0 1993-94
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
- 39 -
Printing and Publishing industry stands at eighth position
for the period between 1980-81 to 1990-91 at 198.0 whereas the
General Index stands at 212.6 and percentage of change from the
base is 82.8 and 94.5 respectively. The Indian printing industry
has outperformed the general manufacturing industry index all
through the nineties. This performance in the nineties though
fluctuating is due to several factors, one of which is easy access
to cheap international raw materials due to liberalization. The
growth during the previous decade has fluctuated from 3.0 to
16.0 and except for 1999-00, where the year on year index was
less than the General Index; it was growing at 22% more than the
General index. The industry has grown exceptionally well during
1998 -99 and 2003-04 at more than double than the General
Index at by 290% and 193% respectively. The growth has come
down to 3% due to General industry slowdown in 2001-02.
Performance for the year 2000-01 which has seen a negative
growth rate of -21 % in volume for the paper and paper board
industry.
Table 4.6: Production of Paper and Board Industries 1950-51
to 2004-05
1950- 1960- 1970- 198051
61
71
81
199091
200001
Industry
Unit
Paper &
paper
board
'000
116.0 349.0 755.0 1,149.0 2,088.0 3,090.0
tons
Year on
Year %
201
116
52
82
43
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
- 40 -
Table 4.7: Production of Paper and Board Industries 1950-51
to 2004-05
Industry
Unit
199192
199293
199394
199495
199596
199697
199798
Paper &
'000
paper board tons
2,122.0 2,533.0 2,734.0 2,554.0 2,710.0 2,769.0 2,922.0
Year on Year
%
2
19
8
-7
6
2
5
Unit
199899
199900
200001
200102
200203
200304
200405*
Paper &
'000
paper board tons
3,114
3,459
3,090
3,176.0 3,412
3,684.0 3,848
Year on Year
%
6
10
-12
3
7
Industry
7
4
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation; Economic Survey 2005-2006, * Provisional, Website:
http:/indiabudget.nic.in/annual 2004-05/englishhtml
The paper and paper board industry which provides about
80% of the substrate for printing industry as raw material for
printing and conversion. It has grown at an average speed of 99%
a decade from 1950-51 to 2000-01. However the year on year
growth rate has averaged at 4% between 1995-96 to 2004-05 in
volume
- 41 -
Table 4.8: Principal Characterstics by Industry Group for
Publishing, Printing and Related Activities
(Value figures in Rs. Lakh, Others in Number)
PUBLISHING, PRINTING AND RELATED ACTIVITIES
2002-03
22
Factories
%
22
All
%
127957 2.38
3007
129074 2.33
Fixed Capital
Productive
Capital
383132 44475938 0.86
402260
47333140 0.85
574753 54488048 1.05
573092
59256189 0.97
Invested Capital
489965 63747308 0.77
531049
67959786 0.78
Workers
Total Persons
Engaged
3046
All
2003-04
76954
6161493 1.25
70634
6086908 1.16
120592
7935948 1.52
112974
7870081 1.44
Wages to Workers
Total
Emoluments
45130
2968905 1.52
44291
3047777 1.45
114255
5515801 2.07
115299
5833675 1.98
Total input
740894 91618549 0.81
Gross Output
106544
Depreciation
50094
Net Value Added
752581 103962329 0.72
4203558 2.53 1104433 128740055 0.86
4203558 1.19
50975
4482349 1.14
274459 17234002 1.59
300878
20295377 1.48
Rent Paid
10769
379355 2.84
10332
416084 2.48
Interest Paid
28054
3835182 0.73
30591
3397229 0.90
Rank
18
18
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
The industry comprises of about 3,007 factories, which is
2.33 % of the total number of factories in India in 2003-04. It
employs 70,634 workers or 1.16 % of total workforce. It engages
1,12,974 people, which is 1.44% of the total persons engaged in
- 42 -
industrial activities. With Rs. 4,02,260 lakhs of invested capital
this industry accounts 0.85% of the total capital invested. This
industry pays 1.98 of the total emoluments paid by the industry.
While it accounts for 0.76% of the total industrial inputs, it
accounts for the 0.86% of total industrial output giving a higher
value addition. Its Net Value Addition is 3,00,878 which is 1.48%
of the total Net Value Addition ranking 18 in a list of 26
industries.
Table 4.9: Estimate of some important characteristics by 3
digit of NIC'98 for the year 2003-2004 Comparison of All
India Industries and NIC 22
(Value figures in Rs. Lakh, Others in Number)
2003-4
Characteristics
22
All
Number Of Factories
2393
129074
156475
Working Capital
2002-3
22
All
1.85
2428
127957
1.90
47333140
0.33
156704
44475938
0.35
64773
11923049
0.54
79307
10012110
0.79
Invested Capital
211113
67959786
0.31
206780
63747308
0.32
Outstanding Loans
106589
28977564
0.37
96259
26339233
0.37
Number of Workers
44535
6086908
0.73
52075
6161493
0.85
Total Persons Engaged
59809
7870081
0.76
69513
7935948
0.88
Wages to Workers
20728
3047777
0.68
23521
2968905
0.79
Total Emolumnets
36276
5833675
0.62
43838
5515801
0.79
5689
1411759
0.40
7100
1318412
0.54
19383
9198216
0.21
13260
6657582
0.20
Fixed Capital
Prov. Fund and Other
Welfare
Fuels Consumed
- 43 -
Percent
Percent
Materials Consumed
202224
77501526
0.26
234037
70077245
0.33
Total Inputs
289932
103962329
0.28
321179
91618549
0.35
Products & By-products
285247
113574250
0.25
316890
100128587
0.32
Value of Output
393661
128740055
0.31
437649
113056111
0.39
Depreciation
20131
4482349
0.45
20665
4203558
0.49
Net Value Added
83598
20295377
0.41
95805
17234004
0.56
2458
416084
0.59
3564
379356
0.94
14443
3397229
0.43
12430
3835182
0.32
Rent Received
984
106548
0.92
954
83324
1.14
Interest Received
576
260947
0.22
1128
260313
0.43
Net Income
66696
16482065
0.40
79810
13019466
0.61
Net Fixed Capital
Formation
18550
1271031
1.46
17330
541866
3.20
Gross Fixed Capital
Formation
38681
5753380
0.67
37995
4745424
0.80
(a) Materials,Fuels etc.
5260
1318920
0.40
6954
1087077
0.64
(b) Semi-Finished Goods
1041
130864
0.80
492
229669
0.21
(c) Finished Goods
777
215599
0.36
2494
335468
0.74
(d) Total
7078
1665383
0.43
9940
1652214
0.60
Gross Capital Formation
45759
7418762
0.62
47935
6397638
0.75
Profits
24732
9236632
0.27
28872
6185254
0.47
Rent Paid
Interest Paid
Addition in Stock of
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
- 44 -
The industry has grown about 80% during the last decade,
with its overall contribution to the Indian industry in the form of
Net Value Added is about half percent.
India’s printing and related industries are predominantly
small to medium sized firms with average number of employees of
around
ten
per
establishment.
These
small
and
medium
establishments are not reflected in this Annual Survey of
Industries’ data.
4.3.1
Products and Services
The industry undertakes a wide range of activities including:
1. The manufacture of paper stationery;
2. Commercial and job printing;
3. The provision of services to the industry;
4. Publishing and printing of newspapers, books, magazines and
periodicals and
5. The manufacture of publishing audio, video and data media.
The industry traditionally was a provider of printed material,
however in recent times a new range of services are provided as
well. These include those listed below. The shift towards services
emphasises
the
dramatic
shift
of
opportunities
towards
downstream servicing.
4.3.1.1
industry
services
currently
provided
to
customers:
In addition to the traditional forms of printing, significant
opportunities are opening up as a result of the shift from the
marketplace to the marketspace. The marketplace refers to the
physical world of resources that customers can see, feel and
touch. The marketspace is the electronic and information based
- 45 -
world offering different types of information and communication
that satisfy different types of customer needs. The provision of
information types rather than products to meet customers’
information needs has become possible with the capability to
‘unbundle’ information from its physical carrier. Only those types
of information that the customer wants, for example news,
entertainment, reference, educational, promotional, need be
provided.
The
need
for
constant
innovation
and
responses
to
fundamental changes being driven by new carriers of information
such as the internet and the emerging internet television will
require the printing industries to rethink many fundamentals in
their industry if they are to capture a share of the new
opportunities. Some of it products and functions are
Newspaper and magazines printing
Quick print
Commercial print
Direct mail
Forms
Stationery
Packaging
Services to publishers
Book printing
Security printers
Point of sale
Pre-press Digital printers
Data management
Services Bureaus
Post press and fulfilment
Label and tag
Finishing
Large format plotters
Display/ Point of Presentation
4.3.2
Broad Industry Demographics and Performance
This section examines in the following broad terms:
1. The contribution of the printing industry to the economy;
2. The geographic distribution and regional significance;
- 46 -
3. The domestic and international trade; and
4. Industry performance indicators.
4.3.2.1
Sources of Data and Limitations
Annual Survey of Industries data sources are used. The data
provided do not cover unregistered, smaller and non-mechanized
units. Nevertheless, taken as a whole, the information is sufficient
to provide indicators of trends significant to the industry. The
trends identified in this section were tested and verified.
4.3.2.2
Domestic Industry Activity
An estimate of industry activity has been imputed from Annual
Survey of Industries data. Economic activity in the print,
publishing and recorded media industries continues to increase.
This may be attributed to the growth of service industries that are
typically large consumers of printed material. It is clear the
printing industries have benefited from the expansion that has
occurred in the services industries, which generally are larger
consumers of print than the manufacturing industries.
Table 4.10: Comparison of Performance of NIC 22 with GDP
and Manufacturing Industry
Year
GDP
Manufacturing
Rs.
Year
Rs. In
Year
Crore
on
lakhs
on
Year
Year
%
%
NIC 22
Rs. In Year on AS %
lakhs
Year % of GDP
1999-00 1792292
6.10 89793835 14.57 239584
2000-01 1870387
4.36 92690185
3.23 228041
-4.82 0.1219
2001-02 1978055
6.00 96245663
3.84 216821
-4.92 0.1096
2002-03 2052586
4.00 113056111 17.47 274459
26.58 0.1337
- 47 -
0.1337
2003-04 2226041
8.00 128740055 13.87 300878
9.63 0.1352
Source: Annual Survey of Industries, Reserve Bank of India
Annual Report 2004-05
In rupee terms turnover for NIC 22 increased by around
9.63% during 2003-04. All manufacturing industry turnover
during the same period has increased by 13.87%. The level of
industry sales is not in line with that of Indian manufacturing
industry. However, in terms of percentage of GDP, NIC 22 has
remained constant over the past five years. This is in line with
what is happening to manufacturing generally, as the growth in
services takes an increasing share of GDP.
4.3.2.3 Industry Value Addition
Value added is defined as turnover, plus closing inventories less
opening inventories less intermediate input expenses. The data
shows that value addition in the industry is declining. Over the
past decade the industry had faced with circumstances where it
has chosen to provide more products at ever increasing speed.
Under these conditions the industry has not been generating
sufficient value. This trend is expected to slow and reverse as
industry moves to provide higher value solutions to customers.
4.3.2.4 Geographical Distribution and Regional Significance
For NIC 22, the large medium print factories of governments and
private
are
located
in
state
capitals
and
registered
and
unregistered private and commercial establishments are located
as clusters in Mumbai, Sivakasi, Chennai, Kolakata, New Delhi,
Hyderabad
and
Noida.
However
many
unregistered
establishments exist in district and taluk levels catering to
different segments of markets at varying degrees. However, the
data on these establishments are almost nil or obscurant.
- 48 -
Sivakasi, Mumbai, Chennai, Kolakata and New Delhi and
are above the national average number of printing establishment.
Sivakasi a major center for printing in India accounts for 60% of
India’s total offset Printing Solutions with about 10 large
printing units, 200 medium scale printing units and 390 small
scale printing units with a total turnover of 1,200 crores
employing about 2,50,000 people directly and indirectly. The
number of presses are growing year by year; more than 130 have
reached 50 years of service in Printing and Publishing. This
development of cluster is normally associated with other client
industry, for example with Safety Match and Fireworks producers
as in the case of Sivakasi. Since printing is a supporting industry
it takes root and grows alongwith other major industries fulfilling
their needs.
These statistics demonstrate the importance of this industry
for regional India. The printing industry follows the location
patterns of other industries. There are opportunities for the
printing industry to transform itself into a significant contributor
to regional India by growing the scope of its activities regionally in
activities that are not distance dependent.
4.3.2.5
Trade Trends
The analysis shows that the Indian printing industry is, to a large
measure,
a
domestically
based
industry.
The
industry’s
contribution to exports is negligible and it does not find a worthy
place in trade statistics though it imports more than 80% of the
machinery requirements. The overall industry trend is - imports
significantly exceed exports. The deficit is made up of a
component from each of the NIC 22 sectors, although there are
some trade surpluses in particular areas such as corrugated
- 49 -
paperboard container manufacturing and printing. Developing
markets is an area for industry focus and could leverage the
earnings from the successes of the emerging and increasing
export activity. Whether or not the Indian printing industry
remains domestically focused or develops an export orientation,
the industry will be affected increasingly by global forces. Of
principal concern to the industry’s future are:
1. The impact of globalisation
2. The rapid pace of technological change
3. The changing cultural trends
4. The growing importance of environmental concerns both as
social and biophysical concerns.
4.3.2.6
Ratio
Profitability
analysis
is
a
commonly
accepted
technique
for
characterising financial performance. In the Annual Survey of
Industries published data for the India industries profitability of
industries are given. Profitability is an essential indicator of a
successful business or successful industry.
4.3.2.6.1 Profit Margin
The financial performance of the industry, particularly the
industry profitability is a cause for concern and warrants
consideration here. The Profit Margin represents the return on
sales
from
an
industry’s
operation
before
tax
and
interest/gearing.
TABLE 4.11: Profitability in the Printing Industries Is
Declining
Year
1998-99
Manufacturing Year on NIC 22
Year on
Year %
Year %
4730623
-13.13
58427
- 50 -
1999-00
4733475
0.06
107206
83.49
2000-01
3569880
-24.58
65408
-38.99
2001-02
3488385
-2.28
41634
-36.35
2002-03
6185254
77.31
28872
-30.65
2003-04
9236632
49.33
24732
-14.34
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
NIC 22’s Profit has been declining markedly over the six-year
period. Total Manufacturing has also experienced a decline in
Profit Margin over the six-year period in a diminishing way. The
Profit for Total Industry also has been fluctuating. Issues that
may be a cause of decline and hence related to corporate failure
and corporate recovery include: poor management; inadequate
financial control; competitive pressure; high cost structure; not
identifying
and
responding
to
changes
in
the
business
environment; changing market demand; adverse movement in
commodity prices; and lack of marketing effort. NIC 22’s Profit
Margin has fallen beneath that of Total Industry and Total
Manufacturing. The data suggest that the NIC 22 is competing on
price
and volume
and less so
on
services and product
differentiation. NIC 22’s Profit Margin trend bears out the
proposition that the industry needs to give more attention to the
development of strategies for high value differentiated products
and services and close attention to return on assets employed.
4.3.2.6.2 Return on Assets
This ratio is also known as return on investment. It measures the
amount of profits generated per rupee worth of capital.
- 51 -
Table 4.12: Return on Fixed Capital for the Industry is
Declining
(Value in Rs. Lakhs.)
Year
ManufacTuring
Fixed
Capital
Profits
Return
on Fixed
Capital%
NIC 22
Fixed
Capital
Profits
Return
on Fixed
Capital%
1998-99
39115145 4730623 12.09
384802 58427
1999-00
40186473 4733475 11.78
376859 107206 28.45
2000-01
39960422 3569880 8.93
363506 65408
17.99
2001-02
43196013 3488385 8.08
340358
12.23
2002-03
44475938 6185254 13.91
156704 28872
18.42
2003-04
47333140 9236632 19.51
156475 24732
15.81
41634
15.18
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
Share of the manufacturing sector in India’s GDP has been
fluctuating between 8% to 19% from 1998-99 to 2003-04. NIC 22
ratio is showing a significant decline. However it has not fallen
below that of Total Manufacturing. The data show that profits are
decreasing and expenditure on assets is increasing. This is cause
for concern as no industry can maintain such a decline in
profitability on a long-term basis. Earnings before interest and
tax are decreasing, sales are increasing, and total assets are
increasing rapidly. Together this means that companies under
NIC 22 are making less profit, getting smaller returns from their
asset base, and are slowly becoming less able to meet their
interest payments. In the case where investment strategies are
sound, return on assets and profit margin should be trending up.
However, the analysis presented here indicates they are not. The
future industry strategy must assist firms in decisions about
where to invest for future growth. Investment issues to be
addressed include:
- 52 -
1. Is investment in capital equipment sufficient to guarantee
growth?
2. How is the industry handling investment in intellectual
property, customer share growth etc?
Calculation of the relevant ratios for the printing industry in
India shows that it is generating too few sales for the asset base it
sustains. While sales are increasing, the cost of production is also
increasing, leaving the earnings before interest and tax relatively
unchanged. Financial figures that enable the calculation of
additional ratios should be sought to enable improved business
planning. These ratios may include accounts receivable turnover,
accounts payable turnover, and cash flow to sales.
4.3.2.6.3 Current Ratio
The liquidity measure indicates the ability to meet immediate
financial obligations from assets.
TABLE 4.13: Current Ratio for the Industry is Declining
Year
(Value in Rs. Lakhs.)
NIC 22
Current Ratio
Current
Liability
185768
0.87
1998-99
NIC 22
Current
Assets
160913
1999-00
390860
162738
2.40
2000-01
71582
76170
0.94
2001-02
45510
71741
0.63
2002-03
90375
86889
1.04
2003-04
71851
77136
0.93
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
The current ratio for the industry does not present a healthy
picture. Optimal current ratio should be a two to one difference
- 53 -
between current assets and current liabilities. The current ratio
considered for the period of study is less than half of the optimum
required. This is not only inadequate but it clearly states the
inability of the printing industry to meet the current liabilities.
4.3.2.6.4 Interest Cover
This ratio tells the relationship between interest payments and
profits to show if there is a good margin of profit to ensure against
downturn or sharp interest rate rises..
TABLE 4.14: Current Ratio for the Industry is Declining
Year
NIC 22
Profit
(Value in Rs. Lakhs.)
NIC 22
Interest Cover
Net Interest
Payments
24620
2.37
1998-99
5847
1999-00
107206
28650
3.74
2000-01
65408
13718
4.77
2001-02
41634
13678
3.04
2002-03
28872
12430
2.32
2003-04
24372
14443
1.69
Source: Annual Survey of Industries 2003-04, Central Statistical
Organisation
All through the years in the interest cover of the printing
industry in India is arranging from inadequate to grossly
inadequate in a highly fluctuating manner. In normal conditions
the industry is expected to cover interest payments atleast three
times. The trend as seen from the table is telling a highly varying
and unpredictable business scenario, which is not healthy.
4.3.3
Current Operating Environment
4.3.3.1
Capacity Utilisation
- 54 -
Indian printers perceive themselves as traditionally strong
adopters of new technological innovations, and they pride
themselves on being at the forefront in the acquisition of
technology. However, this same strong tradition and culture may
be contributing to an over-investment in equipment and underutilisation of capacity. The reported industry average of 46.4
hours translates into an effective capacity utilisation rate of
41.4%. The average weekly chargeable machine hours are 46.4
hours. The average is derived from average chargeable machine
hours for small companies of 35.4 hours, medium companies
45.9 hours, and large companies 67.6 hours.
4.3.3.2
Technology Analysis
Since the 1950s, the printing industry has undergone a series of
rapid technological changes that radically altered and rationalised
printing production processes. For many years hot metal typeset
formed the basis of the printing process. Computer typeset was
introduced into the industry in the 1970s, taking over from hot
metal typeset by the 1980s. In the late 1990s technology rapidly
shifted to what has become known as computer to plate printing
or digital printing.
The growth in automation in the printing industries
accelerated further during the late 90s. A new paradigm is now
emerging. Customers are demanding high quality high value
added products. In addition each paradigm shift in technology
has been accompanied by what is known as disintermediation,
the process by which there is substantial reduction in the
number of stages of production.
- 55 -
4.3.3.3
What next?
The increasing imperative for businesses to manage knowledge
for competitiveness will provide an opportunity for printers to
assist
the
knowledge
management
process
by
positioning
themselves as enablers of ‘knowledgement’ where they advise
customers on effective and efficient approaches to meet needs for
presenting, organising and deriving value from creative content,
information and data. The future business operating environment
will be driven by three key external drivers – technological
change, globalisation, and further culture change especially in
consumer preferences.
4.3.3.4
Government Policy
Higher tariffs on import of machines and important raw materials
are a major detrimental factor for the growth of the industry.
Government has allowed Foreign Direct Investment in newspaper
industry without controlling stake. ‘Inspector Raj’ is prevailing
and the announcing of new initiatives for self-regulatory checks
and self-certification measures by entrepreneurs are happening
slowly. A new bill for encouraging Contract labor in all areas even
while protecting the social security payments and minimum
wages is being introduced. Small scale sector opening up is
delayed. Indirect taxes on manufactured goods are high when
compared to international benchmarks.
4.4 Key External Drivers
4.4.1 Change in Value Chain/Business Model
The printing industries will become an ever-increasing part of the
information industries and an enabler of the knowledge-based
economies.
Traditional
boundaries
that
existed
between
industries have now become markedly blurred. This phenomenon
- 56 -
has become known as ‘convergence’ or more specifically ‘digital
convergence’.
As
a
result
of
the
emergence
of
new
technologies,
continuous change has occurred with companies merging, reorganising, and re-focusing. A high level of awareness of
production costs has also resulted in higher demand for output at
lower costs, which is normal in industries reaching maturity.
Hence the need to shift to new generation products and services
based on staying close to and understanding the changing needs
of the industries’ customers.
Sheet fed and web presses have dramatically increased
speed of production and automatic make-ready systems have cut
times to those not thought possible even 10 years ago. The advent
of desk-top publishing has opened new horizons and expanded
rapidly from the traditional prepress companies to printers
reclaiming
pre-press
and
new
styles
of
operations.
New
production approaches in digital cameras, computer to plate,
digital proof and digital print are now industry standards. Data
communication from site to site, and continent to continent is
now well established.
4.4.2
Trends in Technology Niches
4.4.2.1
Print-on-Demand
One of the most significant new niches to emerge as a result of
technological innovation is Print-on-Demand (POD). Personalised
and variable printing is an emerging market niche fuelled by the
digital colour printing revolution. With these technologies,
printers are now able
to
offer customers high
levels of
personalisation. They will be driven by what has become known
- 57 -
as ‘push/pull’ models of publishing. ‘Push’ publishing is driven
by
customer
profile
and
preference
information
held
on
databases. ‘Pull’ publishing operates on the basis of customers
requesting
products
personalized
sent
according
to
to
them
or
customer’s
products
that
are
preferences
or
requirements.
4.4.2.2
Quick Printing (QP)
QP is primarily a business-to-business service to small and
medium firms. It capitalises on the trend to towards electronically
generated projects by customers who then seek print services.
4.4.2.3
Sheetfed Lithography
Technological
innovation
will
also
see
many
significant
developments in lithography in the coming years. Commentators
believe lithography will lose out ground to digital printing in the
short-run colour market over the next five years; particularly
where customers desire variable printing. Nonetheless, the view
seems to be that lithography will remain as the most economically
significant image transfer process into the 21st century.
4.4.2.4
Web Offset
Web offset is seeing many of the sheetfed and newsprint features
being adapted to it. The main thrust is to one-stop-shop or totally
closed loop systems. These printing systems will, in future, follow
the trend away from requiring fewer skilled press operators to
higher electronic systems management and maintenance.
4.4.2.5
Flexographic Printing
There is considerable scope for technological innovation in
flexographic printing over the next five years or so. The main
- 58 -
issues
are
concerned
with
achieving
consistency
and
predictability of print on any substrate.
4.4.2.6
Gravure
In Gravure, the trend continues to be towards bigger, better,
faster web widths of nearly four metres are now available and
press speeds of 3000 lfpm are imminent. Handling issues
however, are areas where further improvement may be possible in
the next few years.
4.4.2.7
Newspaper Printing
Technology is moving towards keyless inking, single fluid inking
and shaftless super high speed presses.
4.4.3
Trends in Market Segments
The effect of the various combinations for individual firms is
shown either as one of, or a combination of the following:
1. Efficiency
gains
sought
through
new
equipment
and
improved processes. ‘Do what you do know better- more
efficiently, in the marketplace.
2. Market expansion, through developing new markets, in the
market space, where trends in consumer demand show
opportunities for high value growth.
For example, the applications of holography technology are
currently expanding opportunities in the security print market. In
the short run however, applications of holography are not likely to
generate production efficiency gains, as economies of scale will
not yet be established. In contrast, newspaper printers are seeing
gains in efficiency from utilising offset web printers in existing
- 59 -
markets. In the case of digital print, new technology is being
applied to expand a market opportunity, while also increasing
production efficiency in those markets.
Opportunities for growth exist where print products and
technologies can be combined to meet emerging or growing
consumer needs. The trend has been toward consumer demand
for the more knowledge-intensive products.
4.4.4
Products and Technology
The major technological trend impacting on printing industries is
the move towards digitalisation. The technological issues of the
future for printers to manage will be the move towards:
1. Moving information - data transmission (infrastructure,
high-rate
data
transmission,
greater
bandwidth),
file
transfer, web based access for customers and their data;
2. Content creation, dissemination and integration methods
including the unbundling/versioning of information;
3. Digital content management and its implications; and
4. Digital printing.
The Table below illustrates the change from a sequential value
chain model to a circular, networked value chain that will be the
basis for future value creating activities.
- 60 -
Table 4.15: Change in value chain / Business Model
FROM
INFORMATION
PROVIDER
CONTENT
PACKAGING
PRODUCTION
PHYSICAL
DISTRIBUTION
MARKET PLACE
TO
CREATING PROJECT
DATABASE
LEVERAGING
SOURCING
CONTENT PACKAGING
ELECTRONIC
PRODUCTION
DISTRIBUTION
INTERFACE
PHYSICAL
DISTRIBUTION
MARKET SPACE
MARKET PLACE
Source: (Roos G, Intellectual Capital Services, May 2000)
Two issues warrant close attention regarding printing
technology. First, the immediate future of digital electronics
seems assured. However there will be a limit to this particular
technology and new technologies will emerge.
The second issue relates to lifting profitability. Should the
Indian printing industry continue to be driven by the latest
developments in technology or does a more customer focussed
approach to business planning need to be adopted throughout
the industry which better reflects the role of technology within the
context of adding value to a customer?
4.4.4
Globalisation
Followed by advances in information technology and other
scientific advances, globalisation is now a commonly used term,
which attempts to describe the level of interdependence and interconnectedness that exists in international commerce. In this new
environment it is not uncommon for large multi-national
- 61 -
enterprises to have located various branches of the business or
businesses in countries deemed most economically advantageous.
As
economies
of
scale
become
less
crucial
for
firms’
competitiveness, there are more opportunities for Small and
Medium Enterprises to exploit new technologies and develop new
products and market niches.
The
strength
of
printing
industries
has
traditionally
depended on the strength of national economies. When economies
are doing well, it has been observed that the printing industries
also do well. India is no exception to this rule. The fact is that the
Indian industry operates in a global economy. If the Indian
economy is growing, then so too, we might expect, is the Indian
printing industry. The fact that the industry is to a large extent
domestically based does not insulate it from the cycles of the
global economy.
Traditionally, the main competitive strategies chosen by
operators have focused on cost competition and investment in the
latest press. Plans focusing on customer based competitive
strategies for the industry involve:
1. Identifying growing customers who need what can be offered
by these strategically based operators and then devising
ways to better meet these needs than anyone else; and
2. Developing very close value adding relationships with
customers.
This
approach
helps
strategically
based
operators to identify when a slow-down is coming thus
giving them time to effect contingency plans.
- 62 -
For
the
Indian
Printing
Industry
global
commerce
poses
challenges in the short term and also offers opportunities in both
the short and the long term. The challenges are:
1. Increased competition from other industries e.g. IT
2. Greater mobility of customers through e-trading
3. Need to keep abreast of emerging global developments
4. Increasing risk of erosion of cost base
5. Customers moving work offshore.
However, the opportunities are also substantial and include:
1. Emergence
of
knowledge
based
economies
providing
opportunities for higher value printing activities
2. Access
to
potentially
huge
global
markets
through
increasing uptake of internet based business
3. Much more scope to develop and exploit niche markets
4. Focus on increasing literacy levels in developing countries
5. Emergence of loyal customer bases through the provision of
total business solutions.
One of the most significant opportunities for printers in the
future is the increasing need for firms to manage knowledge.
Printers have skills and competencies in manipulating, presenting
and organising information that will complement the development
and growth of knowledge management in the new knowledge
based economy. Even if the industry chooses to remain a
domestic player, it will be forced to respond to international
influences simply because its customers’ expectations will be
influenced
by
products
and
services
obtainable
in
the
international market.
The global market will inevitably become more competitive,
and the Indian printing industries will need to develop and
- 63 -
maintain their international competitiveness or risk being left
behind.
4.4.5
Cultural Change and Trends in Society
Cultural changes are likely to impact on the printing industry
through changes in consumer preferences, the ongoing changes
and developments in the printing industry and general trends in
society. The main trends in society affecting the printing
industries will be the
1. Increasing thirst for knowledge and information;
2. Rising demand for targeted information due to many and
varied interests competing for time, and
3. Concern for the environment and corporate responsibility.
4.4.5.1
Consumers
Consumers are becoming increasingly discriminating - people
around the world have high, and increasing, levels of access to
information, services and products. Products are now being
tailored to the specific needs of individual consumers, blurring
the boundary between ‘products’ and ‘services’, as relationships
between buyer and seller become more important as a basis for
competitiveness. The promised emergence of the ‘electronic
superhighway’, the new media, is expected to have a strong
impact
on
how
consumers
purchase,
receive
and
store
information. The current media trends in India indicate that
newspaper reading is steady and usage strong, magazine reading
is lifting for the electronic media.
As one example of the new media, electronic books have
emerged as a contender to traditional printed books. E-books
currently on the market can be downloaded from the Internet into
- 64 -
a computerised reader about the size of a normal book page,
storing around ten books of data.
By and large, they will provide more opportunities than
threats to traditional printers, in two ways:
1. Proliferation of new products and services means increased
demand for marketing information, much of which will be
printed matter; and
2. New communications networks and packaged media present
opportunities to produce and deliver information in nonprint ways.
Knowledge about cultural differences may also be used to
establish
new
markets
and
help
industry
become
more
competitive overseas through:
1. Different ways of perceiving, and different cultural norms,
creating specific cultural preferences which may apply to
printed material (eg, in terms of colour, form, texture and
spatial layout); and
2. Cultural knowledge as a key factor for success in conducting
business overseas.
4.4.5.2
The Printing Industry
A recent survey of printers and pre-press trade shops in the
United States indicated that 70% plan to expand product and
service offerings during the next three years. Printers and prepress trade shops are diversifying beyond film and ink-on-paper because of customer demand and increasing competition from
within the industry. The services they typically plan to add during
the next three years are:
- 65 -
1. Facilities management - having some product and customer
interface at the customer’s site;
2. Photo CD capture - the capture, storage and distribution of
images in the photo CD format;
3. Digital printing - printing by a direct digital press;
4. Database management - management and storage of digital
data to create an additional revenue stream;
5. Web page design; and
6. CD authoring.
4.4.6
Environmental Issues
Commentators within the printing industries have said that the
industry has come a long way in its understanding of, and
commitment to, environmental issues. This includes supplying
recycled products, and ensuring compliance with environmental
standards
through
cleaner technologies
and
environmental
management systems. It is likely that the range and level of
environmental requirements will continue to grow, and ongoing
industry commitment will be instrumental in meeting these
challenges. Key environmental issues for the printing industries
include:
1. Recycling and waste management
2. Chemicals inputs and releases
3. Energy use
4. Consumer expectations
5. Compliance with imposed regulations
6. Self-regulation.
- 66 -
4.4.6.1
Major Cultural Changes and Trends
1. The new electronic media will have an increasing impact on
consumers, but it should provide significant opportunities
for printers.
2. Printers will continue to be strong adopters of the latest
technology with new technology based products and services
being offered due to perceptions of customer changing
needs. The critical question is whether this actually is an
appropriate response to customers’ needs or whether it is
the way printers tend to solve articulated or unarticulated
consumer needs, in which case there may be other or
equally good or better ways which are less capital intensive
and offer better utilisation of existing equipment.
3. Consumers will increasingly focus on the social and
environmental responsibilities in assessing the industry’s
worth.
4. Environmental regulations will continue to increase.
4.5 Industry Parameters for Growth
1. Currently the printing industries’ growth is closely linked to
the general economic activity but is forming a diminishing
component of GDP.
2. The industry is experiencing declining profitability.
3. Capacity utilisation is low.
4. Continued investment in capital equipment appears to be
exacerbating the low capacity utilisation.
5. Imports significantly exceed exports in several sectors of the
industry.
- 67 -
4.6 Future Operating Environment
1. The general domestic macroeconomic environment in which
the printing industries will operate is predicted to have a
steady GDP growth rate of about 8 to 10%.
2. The global market will inevitably become more competitive,
requiring the Indian printing industries to develop and
maintain
international
competitiveness,
regardless
of
whether they operate domestically or internationally.
3. Technological change will continue at a rapid pace.
4. The new electronic media will have an increasing impact on
consumers and should expand opportunities for printers.
5. Printers will be required to respond to environmental
concerns
either
through
self-regulation
or
continuing
external regulation.
4.7 Choices for Future
In this highly dynamic world the industry faces three choices
regarding its future:
1. Stagnate and die, or
2. Maintain and survive, or
3. Grow and sustain.
The premise on which this paper rests is that it is the
responsibility of all those committed to the future of the Indian
printing industry to choose to grow and sustain. In order to grow
and sustain growth on a long-term basis, careful analysis of
intermediate and long-term market opportunities is essential.
When examining the basic dynamics of future growth strategies
for the industry, it is learnt that the product life cycle dictates
that the market for current products and services will decline
over time. Along with this the Indian domestic market will only
- 68 -
give a steady growth. Therefore the objective to grow can only be
met by strategies focusing on combinations of ‘revolutionary’ and
‘evolutionary’
business
development
options.
By
going
international the printing industry will have access to a larger
market, helping them sustain and grow individually and en
masse.
- 69 -
CHAPTER – V
CONCLUSION AND SUMMARY
-1-
CHAPTER – V
CONCLUSION AND SUMMARY
This chapter presents a brief summary of present study,
concluding observation and policy implication with regard to
printing industry of India.
5.1.1
Chapter One
This chapter gives a brief explanation about the importance of
industry in a developing economy with its contribution to
economy. Industry provides employment to about 35 percent of
the workforce in the country. It accounts for nearly 54.1 percent
of the Gross Domestic Product. Index of Industrial production has
gone up from 7.9 in 1950-51 to 204.78 in 2004-05. During the
same period manufacturing industry index has reached 214.6.
Composing types for printing, printing by letterpress,
lithography, photogravure or other similar process or book
binding form part of manufacturing industries and it is the 18th
largest industry in that category. It is made up of both registered
and unregistered establishments of different scales and spread
across the whole of India.
This belongs to the industry group NIC 22 comprising
publishing, printing and related activities. It has employed 70,634
workers in 3,007 factories in the organized sector engaging
1,12,974 persons and pays Rs. 44,291 lakhs as wages in 200304. With a fixed capital worth Rs. 4,02,260 lakhs with an invested
- 70 -
capital of Rs. 5,31,049 lakhs and Rs. 7,52,581 lakhs has made
avalue addition of Rs. 3,00,878 lakhs in 2003-04.
5.1.2
Chapter Two
The second chapter a gives a brief review of earlier study done
about the printing industry. The review of literature of previous
studies has been discussed under the following heads.
5.1
Printing Industry in general
5.2
Printing Industry in India
5.3
Future of printing industry
5.1.3
Chapter Three
In this chapter methodological details regarding the present study
have been briefly explained. These include description of the field
of study, nature and scope of data sourced and the various tools
and techniques employed in analyzing the data have been briefly
presented.
5.2 Findings of the Study
1. Indian printing industries are experiencing a slow slide in
profitability and a decline in return on assets.
2. The challenge in the new millennium is to innovate, revitalize
profitability and sustain industry-wide long term growth.
3. Reliance on the way business has been done in the industry
upto now is no guarantee of survival let alone sustainable growth.
4. New approaches are needed for new development and the
customer is vital in the in this process.
5. Customers see printers as only providing ink-on-paper
products.
- 71 -
6. Customers want to see more total business solution offerings
from Indian printers.
The study provides the following suggestions in pin pointing
projects
and
industries
to
initiatives
achieve
that
long
will
term
position
Indian
sustainable
printing
growth.
The
suggestions underscore that profitable business development will
depend on strategies that creatively integrate:
1. Clever business strategy based on sound knowledge and
in-depth
understanding
of
the
existing
and potential
customer needs.
2. Appropriate use of print technology and most importantly,
3.
Patient
investment
by
firms
in
the
professional
development of people.
5.3 Conclusion
Success of printing industry in India is more likely to follow if the
conditions given below are met.
1. The firm in the industry has a clear idea of why it is in
business.
2. The firm has a clear understanding of how it fits in the broader
scheme of things, viz., the economy, the industry, etc. It
continuously monitors and reassesses the implication of change
that will inevitably occur in its operating environment.
3. The firm knows exactly who it is competing with.
4. The firm understands where value is or can be created within
the firm. The study has shown that so often, areas that can create
value in printing firms are either undervalued or not valued at all.
- 72 -
5. The firm has an understanding and has in place, appropriate
systems and methods of financial analysis and planning.
6. The firm is able to identify and manage to best effect, all
resources within the firm that add or create value. Here value
creating resources include” human capital, organizational capital,
relationship capital (formal and informal networks).
7. The firm is able to articulate strategies which favourably
position it with respect to the competition.
8. Firms should sell total business solutions like print plus,
integrated printing, facilities and data management services and
image management services.
9. Industry and its firms should find and /or develop successful
demonstrations of value chain and supply chain management
practices, as well as other linkages, within the industry.
5.3.1
Strengths
Imaging capabilities
Uptake of new technologies by traditional printers
Expertise in the application of technology
Uptake of new technologies in a more developed form
Value of knowledge and expertise in documents and imaging
Technology convergence
Market size can facilitate closer relationship between
customer and supplier
Breadth, spread and proliferation - in every electorate
Efficiency of small companies
Flexibility of a large number of companies
Ability to source new opportunities by younger players
‘Modern’ image in design and desktop
- 73 -
Ability to handle ‘content’
Ability to facilitate entire production process - asset &
facilities management
5.3.2
Opportunities
Imaging
Benefits for commercial printing
General reduction in tariffs (cheaper raw materials)
Domestic regulations, which protects local products
Opportunities for import replacement (books, packaging)
Government purchasing policies - developing the industry
Intellectual property - closer links to customer, content
creators
Potential benefits from taxation reviews
Venture capital if taxation system changes
Potential opportunities with R & D incentive schemes
Technology now at the disposal of non-traditional printers
Customer education
New opportunities for business growth - market space,
customisation
Technology convergence
Copyright – document management, records, knowledge
Recycling - if cost of technology makes it competitive
Waste disposal - new markets with disposal technologies
Environmental regulations if can be exploited to advantage
Market size can facilitate closer relationship between
customer and supplier
Quality of the product that can be produced in Australia
Commitment by industry regarding training
Intellectual Asset management - ie, records, documents
- 74 -
5.3.3
Weaknesses
Trade based image of industry
Uptake of new technologies leading to over-investment in
‘heavy machineries’
Potential insolvency of companies who over-invest
Cost of new technologies
Inability to maximise R & D opportunities
Training
structure
inability
to
keep
up
with
new
technologies
Lack of trained workforce and trainees
Inability to capitalise on value of knowledge and expertise
People displacement - inability to capitalise on people who
move on
Recycling - expense of technology, lack of markets due to
cost
Waste disposal – by-product of the technology
Management skills - lack of formal trained personnel
Quality issues at times
Labour market reform still required
Career paths and industry recognition
Commitment by industry regarding training
Dominance of industry by small players (employee numbers,
size of companies)
Antagonism to new technology by older players
Inability to think ‘long term’
Lack
of
business
planning
and
vision
in
areas
of
competitiveness
Don't market the industry / firm as total process producers
5.3.4
Threats
Perception of being trade based
- 75 -
Tax costs for books, mags, newspapers
Tariff costs for some areas of industry
Entry of multinationals who must comply with company
policy
Aggressive offshore competition wanting to export into India
Current system - depreciation, capital gains tax
Cost of new technologies
Need for rapidly developing training structures
Technology now at the disposal of non-traditional printers
Customer expectations and rapid turnover
Technology convergence – Information technology as a major
threat
Waste disposal - public image, regulations, competitiveness
Career paths and industry recognition
Encouragement of other industries to take on opportunities
because of lack of vision
5.4 Suggestions
A.
It is recommended that the printing industry undertake a
study to identify opportunities for in regional clusters in India
and to identify ways in which they can contribute more to
regional Australia. This study needs to include the development of
scenarios for dissemination to the industry.
B.
To promote further internationalisation of the printing
industries, it is recommended that the industry
1. Undertake studies on the potential for Indian industry to
reverse the trade deficit in printed products and disseminate the
findings to industry and government. In particular:
1. The factors that have led to successful exporting activity
in some sectors of the industry with a view to developing an
- 76 -
exporting
culture
in
those
sectors
where
export
opportunities may not have been fully exploited.
2. The approaches other Indian industries have taken or are
taking to lift their international competitiveness. These
industries could include the information technology software
Industry (track record for export growth) and readymade
garments industry (small and medium emerging exporters).
3. The approaches other national printing industries and
selected overseas firms have taken to lift their export
performance in those countries whose printing industries
have a significant impact on the global printing industry and
those countries whose industries have similarities (and
notable differences) with the Australian industry.
C.
It is suggested that the industry collect and collate
industry-wide statistical information on a quarterly basis:
1. Investigate the current sources and levels of value-adding
in the industry;
2. Produce and disseminate annual reports on industry
performance;
3. Develop key operational benchmarks to assist firm based
planning and adjustments. This may involve:
(i) Surveying the industry for relevant data and
information; or
(ii) Developing and validating parameters for the
industry and its sectors.
D.
In order to address low capacity utilisation in the industry
it is suggested that the industry assess the nature and extent of
low capacity utilization
- 77 -
1. Develop an accurate measure of capacity utilisation.
2. Assess whether there is a sub-optimal or misallocation of
capital investment in the industry viz the opportunity cost of
current levels of investment in technology.
E.
In order for the Printing Industries to have the capability to
respond to emerging issues and trends impacting on them in a
timely and effective manner, it is imperative that comprehensive
and accurate information and intelligence is available for strategy
building and decision-making. It is recommended that industry:
1. Develop a service to the industry to gather, interpret and
disseminate information and knowledge on emerging issues
and trends, both domestic and international, which may
impact on the industry in the medium and long term.
2. Conduct annual or bi-annual review of possible scenarios
for
industry’s
future
growth
and
development,
and
disseminate to industry.
F.
Assist firms in the industry to increase their Research and
Development and innovation and encourage the development of
new technologies and business management. Undertake a study
of Research and Development and innovation issues for the
industry, including approaches to encourage firms to increase
their
innovative
activities
through
networking,
cooperative
research centres, centres of excellence, training centres and
business management schools.
5.5 Scope for Further Study
As a natural
consequence to this study and follow up on the
conclusion and suggestions, further studies on the scope of
technology, customers and future innovations in the printing
- 78 -
industry in India to evolve a suitable strategy with appropriate
competencies and technologies are proposed..
The printing industry is driven by technology and customer
needs, both are changing at a rapid pace due to the evolution of
newer
technologies
and
media.
This
provides
newer
and
increasing opportunities for the industry. Increased competition
from other industries such as information technology provides
greater mobility to customers, E-trading, emerging global technoeconomic and political developments pose a great challenge to the
printing industry. Hence this study has identified scope for
further studies in the following areas.
1. Development of clusters of printing industry in India.
2. Issues of trade deficit in printed product.
3. Identifying
and
developing
global
markets
for
the
industry.
4. Foreign direct investment in printing industry.
5. Addressing issues of value addition in the emerging future
by improving the competency.
6. Development
industry
of
operational
standards
and
to
benchmarks
address
for
low
setting
capacity
utilization.
7. Collection and collation of industry wide statistical
information and intelligence with a view to forecast trends
and build scenarios to identify the opportunities and focal
areas.
- 79 -
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-1-
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20212-0001,
URL:
http://www.bls.gov/oco/cg/home.htm.
Association Organisations
Digital Printing & Imaging Association, 10015 Main St. Fairfax,
VA 22031, Phone: (703) 385-1339, Fax: (703) 389-1336,
www.dpia.org
Federation of Societies for Coating Technology, 492 Norristown
Rd. Blue Bell, PA 19422, Phone: (610) 940-0777, Fax: (610)
940-0292,
E-mail:
[email protected],
www.coatingstech.org
Flexible Packaging Association, 971 Corporate Blcd, Suite. 403
Lithicum, MD 21090, Phone: (410) 694-0800, Fax: (410)
694-0900, E-mail: [email protected], www.flexpack.org
Flexographic
Technical
Association,
900
Marconi
Ave.,
Ronkonkoma, NY 11779-7212, Phone: (631) 737-6020, Fax:
(631)
737-6813,
E-mail:
[email protected],
www.ffta.org
Graphic Arts Technical Foundation, 200 Deer Run Rd. Sewickley,
PA 15143-2600, Phone: (412) 741-6860, Fax: (412) 7412311, E-mail: [email protected], www.gain.net
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Gravure Association of America (GAA), 1200-A Scottsville Rd.,
Rochester, NY 14624, Phone: (585) 436-2150, Fax: (585)
436-7689, E-mail : [email protected], www.gaa.org
Indian Printing, Packaging and Allied Machinery Manufacturers
Association.
Indian Pulp and Paper Technical Association.
National Association of Printers & Lithographers, 75 West
Century Road Paramus, NJ 07652, Phone: (201) 634-9600
or (800) 642-6275, E-mail: [email protected], www.napl.org
North American Graphic Arts Suppliers Association, 1604 New
Hampshire Ave. NW Washington, D.C. 20009-2660, Phone:
(202) 328-8441, Fax: (202) 328-8513, www.nagasa.org
Paperboard Packaging Council, 201 N. Union St., Suite 220
Alexandria, VA 22314, Phone: (703) 836-3300, Fax: (703)
836-3290, Visit us in www.ppc.net.org
Printing Industries of America, 100 Daingerfield Rd. Alexandria,
VA 22314, Phone: (703) 519-8100, Fax: (703) 548-3227,
www.gain.net
Rad Tech, 6935 Wisconsin Ave., Suite 207 Chevy Chase, MD
20815, Phone: (240) 497-1242, Fax: (240) 209-2337, E-mail:
[email protected], www.radtech.org
Research & Engineering Council of Graphic Arts Industries, P.O.
Box 1086 White Stone, VA 22578-1086, Phone: (804) 4369922, Fax: (804) 436-9911
Screenprinting & Graphic Imaging Association International,
10015 Main St. Fairfax, VA 22031-3489, Phone: (703) 385- 82 -
1335,
Fax:
(703)
273-0456,
E-mail:
[email protected],
www.sgia.org
Society of the Plastics Industry, 1801 K St. NW, Suite 600,
Washington D.C. 20006, Phone: (202) 974-5200, Fax: (202)
296-7005, www.socplas.org
Technical Association of the Graphic Arts, 68 Lomb Memorial Dr.
Rochester, NY 14623-5604, Phone: (585) 475-7470, Fax:
(585) 475-2550, Visit us in www.taga.org
The All India Plastics Manufacturers' Association.
The All India Printing Ink Manufacturers Association.
Waterless Printing Association, P.O. Box 59800 Chicago, IL
60659, Phone: (773) 743-5677 or (800) 850-0660 (U.S. and
Canada), Fax: (773) 743-5756, www.waterless.org
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