Can we emerge from the chaos?

Govt bans plastic sachets for gutka, tobacco

With the Supreme Court taking an active position on use of plastics for packaging, the environment ministry banned the use of plastic in packaging of tobacco goods on Monday 7 February 2011. The ministry’s order, which also bans the free distribution of plastic bags by shopkeepers to their customers, is likely to most deeply affect the gutka, pan masala and other tobacco products industries that are sold in small sachets. The environment ministry’s decision came as part of new rules under the Environment Protection Act, 1986 to regulate use of plastic waste.

As usual in our country things are mixed up. In this case the tremendous occurrence and increase in mouth cancer caused by chewing gutka and pan masala and other tobacco products is being mixed up with the need to have legislation and enforcement on the use and recycling of packaging and all other forms of waste. Both the health and environment problems are huge.

The so-called solutions are also most likely band-aids for a deeper systemic problem with our polity and society. Why does it take a Supreme Court order to implement rules which were proposed by the Environment ministry in September 2009? On 2nd February 2011 the Supreme Court ordered  the government to notify the rules by the deadline it had set in December 2010. The bench headed by Justice GS Singhvi warned, “You [the government] would violate the court’s order at your peril.”

The ban does not completely ban plastic bags as some of the northern hill states have already done on their own. The new order only tries to regulate and limit their use. According to Minister of Environment and Forests Jairam Ramesh, “It is impractical and undesirable to impose a blanket ban on the use of plastic all over the country. The real challenge is to improve municipal solid waste management systems.”

Of course, this makes the much in the news minister sound very modern and sensible. The question is whether we are really going to become more sensible and modern? How are industry and particularly the plastics and packaging industry going to respond? In my view, all of us need to take concerted action, citizens, consumers and industry. We cannot leave plastic recycling or any other type of waste handling to the government alone. We should be ahead of the government. And not continuously be in a position where our lack of consensus and action requires the Supreme Court to tell our government or us, what to do.                            

 — Naresh Khanna (February 2011)

Kasturi and Sons

The issue is transformation in the face of competition and change

Excerpt from paragraph 8 of the CLB order of 20 May 2011 by Judge Lizamma Augustine.

“The far reaching consequence of the proposals is that a shareholder of the company will be perpetually debarred from holding the post of editor of The Hindu, which in my view is contrary to the tradition and practice followed by the company since its inception. Besides, it is doubtful whether the proposed advisory board which consists of members of the rival groups would be able to effectively guide the non family editor in discharging his duties. I am of the prima facie view that except ‘the wholesale removal of the family editors’, the present proposals do not take in any other aspect. The board had not addressed the aspects (retirement entry and exit norms etc), referred to in my earlier order. It also appears that the Board has given a go by to the idea of framing guidelines for succession or rather they have limited the directions of the CLB only to the extent of removing the entire family editors.”

It is not easy for us to add anything sensible to the dispute amongst the owners of the company that publishes The Hindu and Businessline daily newspapers, and the periodicals Frontline and Sportstar. Nevertheless as usual we tend to barge in where angels fear to tread. The dispute has been covered in the daily press which in India is generally loath to write about each other’s problems — most notably and in the main quite respectfully in Business Standard and The Mint. However the headlines and slugs have included, “Family Fight’, ‘Family Matters,’ ‘The Hindu battles to transform.’ Expressions such as 'beleaguered' have also been used.

We agree that the discussion, dispute and even the court cases are about change and transformation of the reputed family owned newspaper. The main issue is who will lead the transformation of the third largest circulated English daily in the country. The transformation is necessary if the The Hindu is to stand up to Bennet Coleman’s Times of India which has already made an impact with its Chennai edition and will soon add to its South India campaign with three new editions in Kerala in cooperation with Mathrubhumi. Meanwhile The Hindu continues to call itself India’s national newspaper without having editions in the major metros of Mumbai and Kolkata.

Transformation goes beyond new editions or contemporary design — it implies innovation, futurism and the building of a new publishing paradigm which turns several technology and media threats  into a cross media opportunity. The organisation has a very strong production infrastructure which  is wasted on a paper that is crying out for editorial innovation and juice. The professionalisation of the paper’s editorial, design and business functions is overdue and cannot be limited to one appointment, albeit even the first non-family member to be appointed as editor. Transformation will require many steps which have been stayed for a variety of reasons not by the court but by the dysfunction and inability of the owners to congenially map out and implement the plans for change.

It is apparent that in the Kasturi and Sons dispute, one side believes that only they can lead the transformation. This side not only wants to professionalise the paper but also wants to retain some kind of editorial control — ideological and political. Currently enjoying a majority of 7 to 5 on the board, this rival group wants to get rid of N Ravi and Malini Parthasarathy on the editorial side and is largely using the appointment of a professional editor as an excuse to deprive Ravi and Parthasarathy of the responsibilities and power that would have naturally and sequentially come to them as educated and experienced editors as well as part owners of the group’s publications.

While the Company Law Board in its order on 20 May 2011 gave relief to N Murali and restored his responsibilities as Joint Managing Director, it has postponed judgement on whether the 7 to 5 decision of the Kasturi and Sons board to throw out all the family editors including Ravi and Parthasarathy amounts to oppression and whether a special resolution calling for more than a simple majority is needed. The real issues are of editorial control and of who leads the transformation and who ultimately wields power in the process of the company’s growth as a newspaper business. Put simply, transformation may mean taking on Bennett Coleman and bringing in new investment. At this juncture, it may behoove the owners of Kasturi and Sons to remember that newspaper owners have to choose between fame, power and wealth. According to a sage editor, newspaper owners can aspire to any two of these at best, but not all three. 

                                  — Naresh Khanna (June 2011)

Three things I learnt last year

I am currently traveling in Germany for interpack and to the manroland open house in Offenbach for sheetfed offset printing. Although like most of the newspaper industry, I am extremely curious about what will happen at the board meeting of Kasturi and Sons in Chennai on 20 May, I will wait till that date to comment. Mint, among other papers, has carried detailed reports about the change an d no change at one of the oldest papers in the country.

In the meantime, let me relate what I have learnt from three young printers in the past year, although to some extent I may be repeating myself. But then when does one really have something new or useful to say to one’s readers? Ship it out if you want to make a profit The lesson that I learnt from Amit Tara last year while riding on a train from the NEC back to Birmingham was that there is no point in buying more presses unless you can fold, bind and trim the work, despatch it and bill. It’s terrible to have a pressroom clogged with stacks and pallets of printed sheets going nowhere. Tara has been working hard on his mission of acquiring and installing au tomated postpress and binding equipment at his Noida plant, and we hope to revisit him soon.

Profit without cutting corners

Nitin Shah is also a commercial printer, whose motto is working smart to profit — without cutting corners. He told this to me in his brand new environment friendly plant in one of the scenic and modern industrial estates on the edge of Pune. Nitin’s domain knowledge of paper, digital and offset printing and postpress is based on a good bit of experience, but he is marketing lead. He is able to combine digital with offset in a very canny way to provide leading brand owners a one-stop shop. For jobs with bigger sheet sizes than his own new Heidelberg PM74, he outsources the print but keeps the postpress under his total control in his own plant. He is also adept at ordering paper in appropriate sizes to avoid trim wastage.

Excellence and speed
Asked at a recent seminar in Delhi by Pranav Parikh about what she brought to the family business when she joined it, Priyata Raghavan said she ha d to fight for both excellence and speed when she came to work and provide next generation leadership at Sai Security. The lesson is that excellence and speed are simultaneous — slow work and less action do not add value or make for excellence in the production process. In this spirit, Priyata was a key decision maker in buying two label presses simultaneously for the Faridabad and Bengaluru plants. It was the same attitude and tone of voice when she confidently pronounced that the hardware from the old plants would be dismantled and reinstalled at the new factory in Faridabad in 30 days.

—  Naresh Khanna (May 2011)

Upselling print

Frankly to me, the word upselling sounded like a marketing hype. I heard this expression when IppStar did its digital printing and transpromo conference in December 2009. Cross-selling and upselling was the way that digital print companies talked about leveraging customer information to sell more to the customer or to sell new products that they could anticipate by looking at and analysing a customers' profile and behaviour.

Then came the expression of value added printing. To some extent, this sounded like marketing hype from press manufacturers such as manroland in order to sell coaters and foilers, and new techniques with their multicolour presses. However, if I look back at the leading printers, such as Pragati, what have they been doing? They have been adding value with special prepress in order to use UV coating techniques for special effects and textures that enable print to have a ‘wow’ factor.

Pragati has certainly created a differentiation within the market – it is competitive on ordinary jobs but it can upsell – the company can transform a piece of paper into an object of desire.

The interesting thing is that this does not apply to all customers and all products, but the number of both customers and products which demand the differentiation is increasing. And is far more than the number of commercial printers who are willing to invest in these technologies. By the way, the same thing will happen to digital printing when a digital press can produce textures or ‘dimensional’ print.

Look at newspapers going from black and while to colour and look at textbooks going from black and white to colour. This is also a form of upselling with the realisation that the market wants colour. The ad revenue for newspapers or the price of a textbook only doubles with 4-colour printing versus black and white. Although you need four times as much heavy metal, plates and ink but only the same amount of paper. In these two situations, survival depends on upselling colour.

If print is going to compete with television, internet, cell-phone and the iPad, colour is basic. In fact, print will also have to compete in terms of interactivity. And this is where cross selling may also happen. For instance, when we sell a banner ad on our website or in one of our two weekly newsletters, the readers can immediately click on that ad and reach the advertiser. The same click could also bring up a second pop-up selling a related product.

Print, too, can be interactive. As an example and as an experiment too, we have had a tie-up with a fascinating company called Adorai for past eight months which allows a reader of our print magazine to simply sms the article to any email address. We could use this to evaluate which article is interesting to readers for sharing with their friends.

In the future our advertisers could use a similar code in the print ads so that our readers can get an instant response from the nearest salesman for the product advertised. This infrastructure is already built by us, and it can make print more interactive. We only need to learn how to upsell. The next step will be to cross sell.

— Naresh Khanna (March 2011)

The larger Indian newspapers from the production point of view

The still fast growing newspaper industry in India is apparently unique in its behaviour. Whereas in trying to understand the entirety and variety of newspaper publishing, I recently described this behaviour as complex, many others actually see it as fairly structured and not so complex.

Ten years ago, from the production point of view, we used to think that there were only ten large newspaper groups in India and at most these would grow to about 20 with the inclusion of the major vernacular dailies in addition to the major English language publishers. We did not reckon on various factors such as several regional groups going national —­ such as the Deccan Chronicle group or the Dainik Bhaskar group. We did not think that so many new newspapers would start up and survive. And above all, although it was theoretically possible and the numbers were staring us in the face, it was difficult to grasp that the vernacular dailies would grow as fast as they have. We also underestimated the unlocking of value that is possible by throwing newspaper ownership open to public investment and to foreign direct investment.

One of the reasons that our perception of the future was a bit clouded was that we looked at growth from the production side and for us a large newspaper group meant one that needed or could afford to buy an imported 4 x 2 press for printing 70,000 copies an hour. We underestimated the vernacular publisher’s ability to leverage the digital infrastructure and to use it to capture newer cities and towns with numerous printing plants based on ever-improving and very affordable 2 x 1 presses. The fact is that 4 x 2 presses are very expensive to buy, install and operate for newspapers that need to print only 150,000 copies from a single centre and that too with many edition changes.

Fortunately for Indian newspapers the 4 x 1 presses (four broadsheet pages across and one around) were developed and have been much cheaper to buy and to operate. Apart from a smaller capital investment, they require less space and for our high number of localised edition change, since only one plate needs to be changed instead two, are economical in operation. Colour and the expansion of colour pages also become a natural and more tractable proposition.

Five or six years ago, experts in the industry estimated the demand by Indian dailies for approximately two hundred towers in the 4 x 1 format — provided the price was right. In the past five years, eighty 4 x 1 towers from manroland, Goss, KBA, Mitsubishi and Seikan have been installed in Indian newspaper plants. And another 45 are already on order from Manugraph, manroland, Seikan and TKS for installation by 31 March 2012.

Two things have improved the prices of 4 x 1 presses for Indian publishers — Firstly, the contraction of the newspaper industry in the developed countries since the financial crisis of 2008 and the increasing preference for new digital media. The second is that Indian newspapers have inspired several manufacturers to make this new configuration machine for the first time — and provided that the price is right, they have been ready to be the first customers of these new presses. In one case, an existing manufacturer of a 4 x 1 has come up with a new idea for making this format work more economically in Indian conditions. By encouraging innovation and willingly becoming the testing and proving ground, Indian newspapers are driving the 4 x 1 press market that will benefit newspaper publishers around the world.

Looking at newspaper growth from the 4 x 1 production point of view, it now seems that number of Indian newspaper groups that will need these presses is not merely 20 but more likely 40 to 50. This growth will happen most likely in the next five years as the competitive action shifts to the vernacular dailies. Consequently the demand for 4 x 1 towers by Indian newspapers will have to be suitably revised.

                                    —  Naresh Khanna (February 2011)