As with most businesses in the country, Sakata Inx India too had its share of hurdles following what is largely termed “the demonetization effect.” With the economy recovering gradually, Sakata India is now poised to consolidate its position as a leader in the ink market of India. Indian Printer and Publisher met VK Seth, managing director of the company, who has been at the helm of affairs for over two decades, steering the company to its present position of dominance. Under his able leadership Sakata India has managed to break the sudden shock-wave caused by demonetization and is confident of making good up for the losses the company bore in 2016.
The advertising revenue is still very low for the newspapers and as a result, the pagination has been adversely affected. When an industry slows down, the first casualty is always advertisements.
The story post-demonetization
According to Seth, it is a mixed situation after demonetization. In 2016, with oil prices hitting an all-time low, customers expected a reduction in prices. Unfortunately, the market was stagnant owing to a slowdown even before demonetization. Sakata itself recorded no growth post demonetisztion. The period between November 2016 and February 2017 was a lean one for the company as there was excess capacity and every competing company was trying to target the same set of customers. The price pressure was significantly high and it cut into profit margins—a situation common across the entire ink manufacturing fraternity
However, there have been some signs of recovery since March 2017, with the consumption story slowly gaining momentum.
Newspaper and other printing and publishing businesses
Seth was confident that the newspaper segment will continue to grow despite the slowdown in economy due to demonetization in 2016. However, there are still serious concerns about how well the segment can do and the same concerns hold true for other segments of the publishing industry. The advertising revenue is still very low for the newspapers and as a result, the pagination has been adversely affected. When an industry slows down, the first casualty is always advertisements. Companies cut down on advertising as a first measure to cope up with the slowdown and this shrinks the pagination and subsequently affects ink consumption.
In the last quarter there has been some increase in ink consumption in the book publishing segment although one cannot be too sure of this becoming a trend, since it is based on just one quarter. Not too long ago in India, there were 400-450 ink manufacturers. Today, many of them have shut down as they do not have the capacity to buy raw material the way a large buyer is able to, and are not able to negotiate or even manage their inventories and working capital. Consequently, they end up losing out in the race. Scale will be crucial for businesses across India just like it is in China.
