Sakal slows down on investment in machinery and infrastructure

Economic slowdown impacting revenue

Bhausaheb Patil, director, Sakal Media Group
Bhausaheb Patil, director, Sakal Media Group

The Pune-headquartered Marathi broadsheet daily Sakal has slowed down investment in new machinery and infrastructure due to sufficient capacity at present and the general slowdown in the industry, Bhausaheb Patil, director, Sakal Media Group said.

“In the last one year or so, we have not made any major investments in machinery or other related infrastructure; firstly, because we have enough capacity for the moment and secondly, due to sluggishness in the newspaper industry. Yes, we have made some minor investments but nothing significant,” he shared.

Sakal is the flagship brand of the Sakal Media Group. It is published in the cities of Pune, Mumbai, Kolhapur, Sangli, Nashik, Aurangabad, Nanded, Parbhani, Solapur, Nagpur, Satara, Akola and Jalgaon. It has printing plants in 12 locations and ranks among the top 10 language dailies of India and is the largest circulated Marathi newspaper.

According to Patil, the overall slowdown in the economic growth and severe slowdown in automobiles and real estate industries has impacted the advertising revenue of not only Sakal but the overall Marathi newspaper industry.

“Our circulation is growing but this growth is not translating into higher advertising revenue. The biggest reason is major economic headwinds faced by big advertisers like automobile and real estate industries. The Indian automobile industry is in the middle of a severe slowdown. The real estate industry is also going through a rough patch. Their advertising budgets have been slashed, which has in turn affected the newspaper industry,” Patil explained.

Marathi broadsheet daily, Sakal
Marathi broadsheet daily, Sakal

Duty on imported newsprint adds to the problem

For the Marathi newspaper industry, and the newspaper industry as a whole, sluggish advertising revenue is not the only cause of concern. The recent imposition of import duty on newsprint has added to the operating cost as well. In this year’s budget, the Indian government announced a 10% customs duty on newsprint. According to this provision, uncoated paper used for newspapers and lightweight coated paper for magazines will attract 10% customs duty with effect from 6 July 2019.

“The industry will definitely feel the impact of duty imposition on import newsprint. There is a direct cost escalation due to this. There is not enough availability of quality newsprint locally and newspapers have to rely on imports. In fact, a large proportion of newsprint consumed by Sakal is imported. During festival season, the proportion of imported newsprint can go up to 80% for Sakal as there are higher volumes of advertisements,” he said.

Digital growing but revenue visibility still a challenge

Sakal has been fast to adapt to the advent of the digital age and has a separate vertical to cater to that segment. There is a successful electronic paper, eSakal, as well as a mobile application. Although, eSakal has seen good growth in user base, according to Patil, a clear revenue generation model is still elusive.

“We have a very successful digital platform but generating revenue through this channel is still a challenge, not only for Sakal Media Group but for the whole Marathi newspaper industry. We are focusing on innovating the content so that the reader is willing to pay for that. Our focus is on creating hyperlocal and specialized content for which the reader is ready to pay,” he said.

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