Although India is one of the few markets where overall newspaper readership is growing, in the last couple of years the industry has been hit hard by factors beyond its control. English language newspapers have seen their readership stagnate as the younger generation has taken to the internet to access news, a trend which has become popular due to greater affordability of handheld digital devices like smartphones and tablets. The only bastion of growth has been the regional language dailies, which have witnessed circulation growth in recent years.
The majority of web offset press users produces news dailies while others are in book production. With increased color demand, both types of web offset printers are upgrading their presses with automation and thus reducing dependency on manual labour. Vijay Jadhav, plant head at Repro a leading book printer and exporter, says, “The technology has advanced and web offset presses are capable of producing more with less waste. Currently, we are replacing our existing presses with new ones and very soon we will install a web offset press.”
Nagesh Shukla, assistant general manager of production at Gujarati daily Sandesh says, “Readers in remote areas are increasing and even in this digital age, they prefer to buy a daily newspaper. Upgaradations will happen in web offset systems for at least the next 10 years.” Being inclined towards indigenously manufactured offset presses, Shukla nevertheless feels the need to stay competitive with European technology, with full automation and minimal manual intervention. Echoing a similar tone, Sachin Phulpagar, deputy general manager of prepress at the Nagpur-based Hindi and Marathi Navbharat dailies, says, “Recently, English dailies had many layoffs, so everyone’s focus has shifted to web offset presses with full automation.”
From 2016 until now, the Indian economy has faced two major disruptions—demonetization and implementation of goods and services tax (GST). Although there is no clear correlation, many experts are of the opinion that the recent episodes of retrenchment in the newspaper industry were triggered by currency demonetization. The industry was already stressed due to declining advertising revenues, and the move to suck out all the currency notes from circulation was a second whammy.
Just when the industry had begun to emerge from the aftermath of demonetization, GST came into force from 1 July 2017. Although the actual impact of the new tax system will be known only in months to come, at least initially its impact on newsprint seems to be not that severe. The GST on newsprint has gone up to 5% from the earlier 3% levy. Selling of space for ads in print and services by way of job work in relation to printing of newspapers, have both been notified with 5% GST. Circulation revenue stays at 0% taxation.
Second half of 2017 could see rise in CAPEX
In this profoundly changed atmosphere, we spoke to some of the stakeholders in the newspaper industry to understand how these developments have impacted investment decisions on hardware and capital goods. SLKulkarni Cyril Graphics (SLKCG) has been marketing, installing and providing after-sales support to GOSS International’s range of web offset machines in India and Sri Lanka. According to Surendra Kulkarni, managing director of SLKCG, the investment climate during the first half of 2017 was extremely dire. “It seems the investment in the first half of 2017 was almost nil. We have not received any enquiries in the first half. But now we are receiving some enquiries,” he says. Kulkarni agrees that regional newspapers are still growing faster than their English counterparts but despite wanting to upgrade their technology, they are hamstrung by financial constraints in the current situation.
Managing director of Newstech India, Roy Alex, another veteran of the newspaper print industry, also has a similar point of view. He says that investments in the newspaper industry are quite erratic, as noticed over the years. “Most of the projects are taken up only after July, i.e. once they have the working results for the last financial year, then they gauge their requirements in technology and CAPEX for the current year.”
Newstech India is one of the leading providers of print solutions to the newspaper industry, from prepress to press to consumables. It distributes Mitsubishi newspaper offset presses in India. Talking about the impact of GST on the newspaper industry, Alex says, “The cost for newspapers, both for CAPEX and consumables—has gone up with the new GST system. However, I think, they are braced for it; still it will take some time to settle down. We would know the real impact only at the end of Q2, i.e. in the first week of October.”
Alex further confirms the widely reported data of regional newspapers growing at a higher rate than English dailies with many of the bigger regional language newspapers looking to increase their production capacities, in terms of pagination and color—moving towards doublewide (4 x 1) presses and more high-end editorial and CMS systems geared for multimedia and multi-channel broadcast. “The English language newspapers are increasingly looking for ‘value addition’ in their products, with equipment like UV curing system for using UV Inks on the cover jacket, etc.”
Rajiv Gandotra of Technicon India, which makes mailroom automation equipment, echoes the sentiment that the second half of 2017 will be much better as compared to the first half when it comes to CAPEX in the newspaper industry. He says that a lot of regional newspapers have been inquiring about how to improve their postpress and mailroom sections. “Smaller publications are looking to increase their productivity by increasing automation in their postpress department. I expect the second half of this year to be good for us,” he states.