Prepress trade to recover before signage

Perfect Chem and Technologies – a Monotech Systems' prepress equipment user

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prepress
Amit Mittal, owner of Perfect Chem in Kanpur

Kanpur-based Perfect Chem and Technologies started as a chemical supplier of fountain solutions and inks in 2011. After shutting its chemical distribution business, the company became a trade prepress supplier of offset plates and gravure cylinders. Apart from supplying offset plates, it sends over 900 engraved gravure cylinders to customers throughout the country every month.

Perfect Chem and Technologies purchased its first basysPrint CtCP offset plate imager from Monotech in 2013. Diversifying its prepress operations to gravure cylinder making, it bought two intaGlios engravers from Monotech. In 2016, Perfect Chem and Technologies expanded further and purchased a Pixeljet UV wide-format printer, also from Monotech.

basysPrint
basysPrint UV Setter installed at Perfect Chem

The owner of Perfect Chem and Technologies is Amit Kumar Mittal, a prepress designer who initially supplied prepress design work to several advertising agencies, which has helped him grow the signage business. “Signage is a small part of our overall portfolio. Although we get work regularly, we didn’t focus enough to grow that vertical over the years. We gave more importance to the plate and cylinder business. But since Kanpur is a small city, there is hardly any work and hyper-competition in the market,” says Mittal.

The debt-ridden trade prepress business model

Perfect Chem supplies engraved cylinders to customers across the country. “A packaging prepress supplier could easily earn (turnover or trade) Rs 5 crore a month in Kanpur if it could withstand the pay later and extended credit terms of the business model. Most of the packaging printers in Kanpur are well-established, prominent, and renowned players in the market. However, to tap the Rs 5 crore monthly demand in Kanpur, we need a Rs 20 crore working capital in terms of backing and machinery setup worth Rs 50 crore. Since that amount is huge for us, we decided not to supply locally.

Monotech
intaGlios gravure engraver sold by Monotech System

“We do try to tap the smaller players locally – those who face difficulty in finding a prepress supplier and operate on credit terms that are mutually agreed. We do not supply cylinders of more than Rs 30 lakhs in a month because we cannot afford debt beyond that figure. To tap the larger players in the market, we would have to expand aggressively, and with the current situation and business model in place, we cannot invest more in the business. The prepress industry is, in any case undergoing a recession for the past year. Expansion is just not viable for us right now,” explains Mittal.

Faster recovery of prepress business anticipated

For the first 45 days of the lockdown, Perfect Chem and Technologies was closed, resulting in significant losses. However, ever since it reopened on 5 May 2020, the company is getting regular prepress work. “I wouldn’t say that the situation is as good as before the lockdown, but it is not as bad either. There must be a slight 20% difference in demand. I’m sure that the situation will improve in the days to come. The prepress business is showing promising signs, and I anticipate faster growth in the segment. Signage recovery, however, looks sluggish and will remain this way till September,” Mittal adds.

Logistics is a significant challenge for Perfect Chem and Technologies since it supplies gravure cylinders to many parts of the country. It completely stopped supplying to South India since the lockdown started. “Trains are the cheapest means of transport, especially to the South, and since the trains stopped running in the lockdown, we have not been able to supply. We will resume operations in South when the Indian Railways start operating normally,” says Mittal. Currently, supplying only to areas where Gati and SafeEx operate, he says that most carriers have massively increased their rates during the lockdown.

Loans for stimulus a wrong move by the government

The government via Finance Minister Nirmala Sitaraman’s announcements has extended guarantees for bank loans to Micro, Small and Medium Enterprises (MSMEs) in a relief package meant to help revive their business. “Loans are the last thing we want to think about right now. This is not what we expected from the government. The major problem is, the advisors to the current government are bigwigs, such as the Ambanis and the Tatas.

“These larger players have hardly been affected due to the pandemic. The definition of an MSME also changed during this time. The current government has turned a blind eye to companies having Rs 25 – Rs 50 lakh (US$ 35,000 to US$ 70,000) turnover. Also, only those companies are eligible to take loans that have already taken these in the past. I have another firm that never took a loan but is now in a dire financial situation. It needs financial support to survive. But, the recent regulations do not allow the banks to extend any monetary support to that firm,” Mittal concludes.