The Print Business Outlook seminar in Mumbai

The outlook for cartons, and the experience and advice for M&A

L to R- Kirti Modi, Saket Kanoria, Sushant Gaur, Ramesh Kejriwal, and Mehul desai. Photo PSA

On Saturday, 25 March 2023, an unusually rich in content and intelligently moderated interactive print industry seminar took place in Mumbai. While it featured excellent sessions on the paper industry, and commercial print diversification such as board games, design, and artificial intelligence applications, I will, in this article, only discuss two sessions.

The first is the opening session with its comprehensive presentation by Ramkumar Sunkara of SS Consultants based out of Pune and who is the co-chairman of the research and development center of the Federation of Corrugated Box Manufacturers of India. Sunkara’s comprehensive presentation of Indian economic growth and its prospects was exceptional in terms of its realism and its lack of boastful hubris. He presented growth numbers for the Indian economy that are solid and that present immense opportunity for the packaging and especially the corrugating industry.

Moreover, he warned that the industry doesn’t seem to be ready to make the Rs 15,000 crore (US$ 1.85 billion) investment needed in the next 10 years to take advantage of the corrugation opportunity. The growth opportunity requires great improvement and expansion in recycled liner (known as kraft) paper mills. He said, “Sorry to say, the Indian paper mills will not change and are not likely to improve any time soon.” He added that the implication of virgin liner imports is an untenable solution.

Mergers and acquisitions in paper-based packaging

The merger and acquisition session comprised Kirit Modi, the managing director of the leading Indian corrugated manufacturing company, which he substantially divested to JK Paper last year; the two leading monocarton manufacturers in the country – Saket Kanoria, the managing director of TCPL, a listed company on the stock exchange; and, Ramesh Kejriwal, the chairman of Parksons Packaging, which was substantially acquired by Warburg Pincus more than two years ago.

The fourth panelist was slightly younger, Sushant Gaur, the CEO of Adheera Packaging, which produces (8 crore) 80 million paper bags monthly and exports to seven countries currently, with plans to set up a US plant in 2024. The moderator of the session was Mehul Desai, the founder and chairman of Mail Order Solutions based in Mumbai.

The session was a remarkably frank discussion that addressed the desire and need for growth in order for businesses to sustainably survive. To a large extent, it is a matter of the scale that is required for competitive growth in order to generate the cash and the management resources for continuity and structured growth beyond the personal capabilities of entrepreneurs and promoters. The advice mentioned by several panelists was to embrace good governance (clean up your books).

Kirit Modi pointed out that 95% of mergers and acquisitions fail globally. He said, “When a promoter has exhausted all the options of organic growth then the path forward could be an IPO, private equity investment, or a strategic investor. However, many promoters fail to appreciate the importance of basic financial concepts such as enterprise value, working capital, asset value, and equity value.”

Saket Kanoria emphasized that mergers can be complex and could fail. He felt that there has to be some emotional or psychological fit as in many family partnerships even brothers cannot continue doing business together. “Mergers or acquisitions have to fit your mindset,” he said. Ramesh Kejriwal M&A’s said mergers and acquisitions have to be seen as a marriage of equals. In answer to a question of whether private equity is to some extent a via media because of scale, Kejriwal agreed that to some extent it is. “Eventually, you will have to have an IPO. You cannot continue to grow as a private company,” he said.

Adheera’s CEO Sushant Gaur, whose 10-year-old company has already acquired or merged with half a dozen companies, represents an altogether new generation who are supremely confident and well-equipped to see global opportunities. They seem to lack neither access to capital nor the management skills to replicate success in a number of plants profitably. He explained his quite amazing but convincing method of operation, “At first I speak with every employee of a company that we acquire or build and I explain what is expected of them. Once the metrics of performance are set, then it’s HR’s job.” Voila!

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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