Monday, 2 April, 2012

The smooth TechNova machine and the fragmented printing industry

(This article was first posted on 3-December, 2011)

TechNova has filed an anti-dumping duty case against the import of Computer to Plate (CtP) or what are known as digital plates. This case is directed against both Chinese and Japanese manufactured CtP plates. TechNova essentially says that China is a non-market economy, its currency is undervalued and that it subsidises the plates manufactured not only by Chinese manufacturers in China but also by the three multinational manufacturers in China: Agfa, Fuji and Kodak. However among the multinational manufacturers it only accuses Fuji and Kodak of selling plates at subsidised prices in India and not Agfa which is the technology supplier to TechNova of long standing.
As far as raw material prices being subsidised, this year the Shanghai Metal Exchange prices for aluminium have been considerably higher than the London Metal Exchange rates and the purchases by multinational players such as Fuji and Agfa are not subsidised -- in that sense multinationals in China are part of a market economy. The current aluminium prices are also much higher on the Shanghai Metal Exchange than on the London Metal Exchange. (Aluminium ingot prices in August 2011 – LME US$2,400; SME US$2931 – Source respective websites)
In any case we cannot know at what price TechNova buys litho grade coil from Hindalco or anyone else. Meanwhile the application for safeguard duty on import of aluminium from China has also been withdrawn by the government order of 13 October 2011 which rules the issue as ‘infructuous.’ Thus TechNova can also import aluminium at whatever competitive rates it can find without having to pay any safeguard duty.
By and large offset printers have to their credit upgraded their technologies and taken on many of the infrastructural challenges in spite of being a fragmented collection of smaller companies. In this respect TechNova has always been extremely articulate and has been the opposite of fragmented. It has in fact been able to consolidate or acquire every other organised Indian plate manufacturer over the years – be it Lunar, ATE-Stovec, or Lastra Niraj.
However one cannot criticise TechNova for being articulate or being forceful and effective in putting its case to the government on anti-dumping duties. Nor can one criticise the printers for speaking with several voices or not speaking at all, since no one really wants to take on TechNova or to have less than good relations with what is certainly the largest and most dominant local supplier. Thus the discussion has been muted or non-existent. The AIFMP is supporting TechNova’s case while the only association to speak out against the anti-dumping duty is the Kerala Master Printers’ Association.
After implementation of anti-dumping duty, the possibility of a monopolistic player calling the shots is a clear obviousity. The argument that the competitors’ plates are being dumped and being cheaply priced is completely false as both Kodak and Fuji plates are priced higher than TechNova,” said the letter written by the Kerala Master Printers’ Association to the Directorate General of Anti Dumping and Allied Duties DGAD. The association also said that it is a common inference that the plates from Fuji and Kodak have superior print quality.
The KMPA resolution states, “We strongly object to the malicious intention of introducing anti-dumping duty by TechNova as it will spell doom to this already fragile print-fraternity and have decided to move the papers to (DGAD) and inform all concerned parties to join this campaign so that a wrong decision is not imposed on the printers of India.”
The fact is that the Indian market is a compelling market for the leading manufacturers of offset plates and the Indian printers must have access to the widest variety of technology and performance. From my point of view Indian printers who want to buy Chinese or Japanese plates should be allowed to do so without having to go through roundabout invoicing techniques to circumvent tariffs or anti-dumping duties. I do not think that the Chinese government is keen to subsidise Indian printers. I also do not think that either the Chinese government or Kodak or Fuji are out to bankrupt TechNova which has continued to dominate the high growth Indian market for offset plates. They only want a fair shot at the compelling Indian market just as the printers want a fair shot at buying whatever plates they find useful or competitive in order to excel or to remain in business. The printers want to continue to compete successfully with Chinese and global printers when and how they choose to do so.

1 comment:

Comments said...

We agree with your views that the Indian printer does not deserve to be subjected to monopolistic pressures as he already struggles with import duties on all his inputs, be it paper, ink, plates or equipment, while the end product that he manufactures (Books e.g) can be imported duty free, thus putting him at a 25% disadvantage straight away.
Needless to add, Technova already has a 25% price advantage as all imports into India have an import duty component which technova only pays (at worst) on the raw materials it imports. (Aluminum constitutes only 30-35% of the cost of the finished plate and the rest in coating costs and labour.)
It really is imperative that the Indian Printer wakes up to these facts and stands up for his rights.

Regards
Ranesh Bajaj
Director Marketing
Creed Engineers