Despite an increase in inquiries from both domestic and international customers, the Rs 1,500-crore printing industry in Sivakasi is unable to convert them into orders. Printing units – mostly SMEs – are facing power cuts and a slowdown in their traditional businesses of notebooks, text books, novels and labels.
Started in 1922 by a Tamil teacher, the printing industry in Sivakasi, a town located some 520 km from Chennai, today employs about 50,000 people across 600-700 units.
K Selvakumar, director, Lovely Offset Printers Pvt Ltd, one of the largest printers in Sivakasi, said that the industry is at the crossroads, because of the advent of digital technology, a decline in the magazine printing business and a slowdown in the book printing business, but the packaging industry has come to its rescue. However, the profit margin it offers, at 10 per cent, is less than the 15 per cent on the other businesses.
Selvakumar believes the industry will grow by seven to eight per cent, and that export markets also offer good opportunities. However, the challenges are many, including power cuts, fierce competition and access to finance.
Today the industry faces daily power cuts of five to eight hours. “We believe in generators — power from the grid is a bonus,” said Selvakumar. But, while the bigger companies can pay for gensets, small ones cannot afford them.
M Murali Manoj, director, Moorthy Offset Printers Private Ltd, said average capacity utilisation in small units, which have up to three machines, is only 50-60 per cent and of the three machines, one will be idle at any given point of time. The time taken to finish a job has increased to 12-14 days, compared to five to seven days earlier. Business has come down by 30-35 per cent, he added.
Along with power costs, which have gone up by 20 per cent, raw material prices have also shot up by 15 per cent and eroded margins, he said. Competitors have started expanding rapidly and now threaten to edge Sivakasi out of the modern printing industry in the domestic market.
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There is an urgent need for technology upgradation and investment in new machines, said Vashikaran Rajendrasingh, director, Bell Printers. Today, the gap between the old and the new technology is high and widening by the day.
In most of Sivakasi, the machines in use are over 20-30 years old, whereas competitors are upgrading from time to time. Bell however has invested Rs 6-7 crore and is planning to invest Rs 7 crore more in new machines.
Industry insiders are skeptical about their future prospects, and Selvakumar says that if they want to survive, they need specialised technology. Lovely Offset has printed one million calendars for the Tirumala Tirupati Devastanam on high-quality paper with specialised technology that Selvakumar claims is used by only two presses in India — his own and Thomson Press.
V Srinivasan, a local printer, said bankers are no longer willing to meet working capital requirements and loan money for buying new machines, as printing units are already defaulting and machines are idle.
While agreeing that access to finance is an issue, Selvakumar says the industry is highly capital- intensive and needs regular infusions of working capital. “While there is a dilemma about whether one should invest in the current circumstances, the fact is that anyone who does not invest now will not be able to sustain themselves in the industry,” he added.