During an online panel discussion, experts and stakeholders agreed that the signage industry needs to stand united in this time of crisis and work in tandem to emerge as winners, beating all odds.
Indian Signage Industry urgently needs an apex body, mainly for working unilaterally for a common goal besides representing its concerns to the government. This consensus was built when 1000s of industry stakeholders gathered at a single platform to discuss issues pertaining to the current situation. Two other important steps were agreed upon – shorter credits and ‘Make in India’.
The entire discussion took place over a virtual platform. In over an hour and a half long discussion with select representatives of different sectors within the signage industry, thousands of attendees shared their concerns with the experts and tried vying for ways that can lead them to a smooth transition from the stalled economy to a working one. But, for all this to happen, a proper commitment is required by industry peers to collaborate and cooperate with each other.
With the lockdown going on, Sign & POP World & Satyam Plastics thought that the time was right to bring together experts and understand the future challenges. This led to an enlightening panel discussion, where organisers, panellists, and the audience put forth their concerns. The topic chosen was kept very much in tune with what the industry was willing to ponder upon i.e. ‘Post Covid-19, Kya Hain Indian Signage Industry Ke Challenges?’
Before going into further detail, let’s know who those seven members in the panel were. It comprised top industry experts representing seven different sectors within the signage industry. Vijai Kapur, Managing Director, Pioneer Polyleathers Ltd.; M S Dadu, Chairman, Colorjet Group; Gaurav Juneja, Director, MEX Exhibitions Pvt. Ltd.; Neerav Goswamy, Director, AT Inks; Gautam Bajaj, Partner, ADS LED; Sandeep Bhutani, Director, Colourmate Digital; and Vinod Kalra, CA, VKHS & Associates Chartered Accountants.
Considering that the given names don’t need any further introduction, let’s move on to attendees representing different regions. The pie included 43% from North, 24% from West, 12% from East, 15% from South and 6% from Central India. While majority of them were from North India, all the regions were having remarkable presence among the audience, which when summed up together had enough to build a consensus so as to attract the attention of the industry as a whole.
Business Profile of the Audience
The audience equally represented almost all the segments. 38% Signage Makers & Fabricators, 24% Large Format Printing Companies & PSPs, 9% Machine & Equipment Suppliers, 11% Media & Ink Suppliers, 9% Advertising & Event Agencies, and 9% as Others. Thus there was a wholesome representation of the industry from almost all the sectors.
The representation of the industry to such a large extent was making it pretty evident as how important this event was for them from an industry perspective. Each of us were actually exploring ways to interact with the industry leaders and discuss these burning issues as to what sort of transition should the industry must take which can help the stakeholders easy transposing this difficult phase.
Immediate Impact of Covid 19
According to MS Dadu, one thing is very much clear that this has been affecting everyone – be it large or small. “We have both organised as well as unorganised sectors in our industry.
In the organised sectors, it depends on the industries where you are supplying. If it is food & agro industries, e-commerce, FMCG, etc., there would be minimal impact on business. However, if your clients belong to auto industries, white goods industries, or similar ones, then you need to look at how you want to make a good mix of your clients.”
“For unorganised sectors, the services are mostly linked to events – religious events, community events, local events, etc. where lot of signage are made or required. For now, all these events will take time to resume, so would be the businesses. Also, there are smaller businesses with personal advertising which takes place on regular basis. There, in the beginning, people may prefer to spend less but as the time would pass by, it will pick up the pace,” explained Dadu.
China plus One
According to Vijai Kapur, proposition like India replacing China as a manufacturing hub is there in everyone’s mind and we wish this to happen. “Most of the manufacturing & trading companies need an option to China. But let us, at the same time, admit that there is no option to replacing China today. So, the strategy today should be China plus One. India could try to pitch itself as the second source of supply,” he suggested.
Kapur was of the view that with the disruption all over the world, most of the trade is willing to have a second supply, which could be India. “But here, we will have to compete with countries like Indonesia, Vietnam, Malaysia, Taiwan, etc. For this, we need to put our best foot forward both from the private as well as government sectors.
Favourable Policy Structure
Kapur highlighted that we can’t continue with the current set of retroactive policies which are eventually impacting the overseas manufacturers who already have their setups in India.
“The government needs to reassure international business fraternity about stable business policies plus ease of doing business. “We will have to reassure that we have faster processes with regard to clearances. If we will be able to do this, I am sure India would attract significant numbers of manufacturing units.”
He went on elaborating it further. “For all this to happen, we need a concentrated effort both from the government & private sectors to invite interested people who are willing to pitch up in India. We are pretty sure that the speed at which the government is building the needed infrastructure, it’s a step in that direction. We only need to push our cause more forcefully and sell India hard with someone in the PMO who can very impact-fully use his experiences in highlighting these supportive facts.”
Innovation is the key
According to Gaurav Juneja people have to become innovative to pass on this challenging phase. “Especially, the signage industry has to invent new ways. I see a lot of signages related to safety, health standard, social distancing, etc. are picking up the pace and it will receive further momentum when operations will keep on resuming with a series of unlocks. All the corporates would need these precautionary measures to be highlighted in quite visible manners,” he anticipated adding that opportunities lie amidst difficulties.
Juneja very strongly believes that every sector, irrespective of the industry types, will be forced to put up such signages either in the form of big hoarding, a wall covering, a poster, in the form of a floor graphic, or a mere standee. “As I mentioned, instructions like these will not be restricted only to the entrance of a business entity, but also at various places within or outside the premises as well as public places,” he reiterated adding that for all this, PSPs need to shift their focus to admin department instead of marketing & advertising.
Gautem Bajaj put forth his opinion in the same line, but in a different way. “With restrictions that we are currently facing regarding personal meeting will be there to stay for longer than usual. This needs us to outgrow and deviate from the normal by adapting to new ways of interactions through virtual platforms. We will have to make our presentations more effective and descriptive by using more graphics to let the client understand the essence,” he said adding that the skills of presentation need to be uplifted to suit the present condition. “We need to incorporate more innovations. There’s no other way out.”
Regarding the opportunities that are expected to pick up in the market in order to promote physical distancing, Juneja gave an easy clue that it will substantially push up the requirements of floor graphics. “For instance, HDFC banks have just started using floor graphics guiding its employees as well as customers to maintain the distance. This is just an example of one brand while other brands must be asking for these services. Even the governments would come with such requirements not only to spread awareness, but also to keep reminding people for longer than usual about these facts.”
According to him, to materialise all these opportunities, the only way is to think innovatively. “There are certain sectors like food, healthcare, FMCG, etc., where there would be an upward demand curve but for other sectors, it will open when there will be a bounce back after a short gap of few months. We need to be patient and wait for the revival of the activities, and hence, market,” he suggested sharing that many PSPs have found new ways of engagement and are busy supplying printed face masks and other stuff like face shields.
Adding further weight to this fact, Neerav Goswamy also put more thrust on innovation. According to him, this is the time where survival of fittest is no more valued, but survival of the fastest is at the forefront. “We need to innovate and invent ways to help ourselves in generating revenues. We must have to break the shield and look forward to new ways of offering our products and services. This is the time for innovation.”
Kapur seemed confident regarding the availability of media. “I don’t think we will be facing any crunch as far as availability of media is concerned. We have already full house with enough reserves to feed the market. And in case the demand exceeds the supply, we can manufacture the same in our facility to meet the augmented demand. We can do this because not all our raw materials are from China, but from varied and diversified sources. And since our facility is mostly automated, we may not need more labourers to run the unit,” he assured.
Goswamy too agreed that China is truly a very important part of our signage industry as most of the raw materials, spare parts like print heads, machines, media, inks, etc. are sourced directly from there. “But we are lucky to put it this way that for our Inks, we are not at all dependent on China as for most of our raw materials, either we are managing it ourselves from within India, or sourcing it from Europe or USA. For now, I can say that we have enough reserves even of ready inks for the next few months and are ready to feed the market,” he asserted.
Indian Over Chinese
We all know that most of the Indian industries are very much dependent on Chinese stuff be it in the form of raw materials, spare parts or ready components. We can’t manufacture most of the products without the support of overseas sourcing, mainly from China owing to their competitive pricing and fair quality. Most of the stakeholders do not really want to carry this on, but there’s no option. However, Kapur very strongly suggested that time is right to learn to stop chasing China for each of our needs – be it smaller or bigger.
Dadu, elaborating it in little detail said that he also supports make in India but the time is not right to completely boycott the Chinese stuff at this moment. “We know that we can manufacture in India of the same quality that we use to import from China. We are not yet ready to stand on our own. We have the capability, capacity and quality. The only thing that we need is strong commitment towards making our country a leader. We need to move ahead with cooperation and collaboration.”
Meanwhile, Goswamy cautioned that sudden discard of Chinese or imported stuff from any other country for that matter can further push our industry back at this point in time when we are already passing through rough patches. “Since we are heavily dependent on imports for our other requirements – be it from China or from anywhere else in the world, the rapidly increasing exchange rates will add extra burden on imports. However, we can’t avoid it instantly rather the industry needs to be ready internally so as to face the challenges like these.”
PSPs Need Support
Sandeep Bhutani insisted that PSPs are in dire need of support from the industry stakeholders, especially the machine manufacturers. “The future is totally uncertain as greater challenges are there for PSPs, first in terms of manufacturing the signage and then getting it installed. The complete process needs highly engaging human interaction, which in these challenging times itself is a challenge.”
Bhutani further added that scarcity of labour may hamper the activities once the operations will start picking up the pace of resumption. “Majority of labourers have left for their hometown and their return would take longer time, which is not known. We will have to cope up with the ones that are available though at a little higher cost. But there is no other way out but to adapt to the situation.”
There was a mix of response on all the half-made orders to which the industry stakeholders feel that it depends on the cost of the project and the investment put in there by clients. “It’s not necessary that everything will be washed away. We are staying positive and hope that the projects, which have already received 75 to 80% of the investment, will need to use signage out there. But at the same time, the possibility of capping the expenses can’t be ruled out. We will have to be ready for both the situations. It also depends on which industry one is associated with,” opined Bajaj.
Bhutani however said that most of the major orders have been cancelled owing to the lockdown. “Many other brands have denied taking their orders. We do have half-finished products, which are as of now of no use. These have only added to our expenses and we need to scrutinise the things as to which all ways we can mitigate these losses.”
Vinod K Kalra suggests that at this moment, capital infusion is very important with a very fine review of the expenses as well as stocks. “Businesses need to discuss this with their respective CAs or financial advisers for that matter to clear out the clutter from the balance sheets. A thorough review of the same is a must for proper re-functioning of the units again once after the activities are resumed. Each head should be examined with minute details,” he advised.
According to him, it’s more like starting afresh. “The time is right for all of us to find out the gaps, if there is any, and find ways to fill that. All of us must look for those expenses, which are not essential and can be avoided to save on the expenditure and mitigate the anticipated loss. In the mean time, the government is devising some policies in their favour which can help them in feeding the financial crunch by providing easy accessibility of loan on a pretty favourable term to every stakeholder.”
Living with Covid19
According to Kapur, as far as living with the Covid is concerned, we have to be extra careful as this will be here for a period which is not known to anyone for now. “It’s important for all of us to strictly follow the social distancing norms wherein we will have to take all the precautions prescribed by the government. For instance, we have strict instructions for drivers to either wash hands or sanitise just after reaching the premises. Also, their movements are restricted to a certain specific area. This, we need to follow across the board.”
Kapur suggested that by now, it is proven that India stands far ahead of the world when it comes to taking care of our people by strictly following the guidelines issued by the health ministry. “If we keep on doing such basic things on regular basis, like washing hands, sanitising and using masks & wearing gloves, we will surely take up the challenge. It may add to some expenses undoubtedly but the same can be transferred to the clients who are equally dedicated to get things done in safe & secure manner.”
According to Goswamy, there has been a big dilemma about the price rise. “We have already delayed the price increase for some time and we are eagerly exploring some measures. It depends upon how the exchange rates react. Though there is a sharp decrease in the oil prices, we expect a dip in the prices of raw materials as well. If that happens, we will move ahead with no price increase. For now, we are determined to carry on the same price line till we can be able to afford.”
Dip in Revenue
Expected revenue losses in the period of six months as estimated by the industry stakeholders: 9% said it is up to 25%, 19% opined that it will be between 25 to 35%, 30% of the respondents suggested an expected loss of 35 to 45%, while those voted for above 50% loss are 30%. Rest of the respondents i.e. 12% seemed to be indecisive at this stage. On an average, the industry as a whole assessed a dip of 50% in the revenue in next six months. It’s a challenge undoubtedly, but as we know, behind every challenge there’s an opportunity.
Bhutani rightly pointed out that it’s a question of the survival not ROI. “The business for PSPs would be cut short at least by 35 to 40%. Majority of the industries are on a halt and there’s no update yet on their being operational once again. Most of these are also moving to e-commerce platforms. Big malls were our major target clients, which are yet to be fully functional. Many of the QSRs are still in dilemma whether to continue the operation or shut some of the stores.”
To which, Juneja agreed, but he gave a ray of hope as usual. “The business is definitely down for next six to eight months especially in the urban areas; however, opportunities are still there in rural India where in the absence of digital platform, e-commerce has not yet reached to an extent it has penetrated into urban areas.”
Bajaj, while responding to a question of survival, said that in this challenging time, the strongest need is to believe on ourselves. “There’s an old saying that tough time do not stay for longer, but tough people do. We have to be tougher and more efficient. We will have to take care of our finances.”
Bajaj suggested that the signage industry, which is passing through a rough financial terrain, can be back on track if customers pay back the outstanding. “We will then be in a position to rotate the money, and hence, the business curve. On the way, we may need to absorb some of the increased prices of the raw materials so that customers can feel at ease to come forward.”
Such an honest submission from Bajaj raises the point of credits, which was successfully picked up by Juneja. He went on to highlighting that in the last 25 years the biggest problem that the industry has continuously been facing is that of credit. “I won’t be wrong to mention that our industry is in the grip of credit. The industry leaders should come forward and cut short the credit period to make the business look more realistic.” Juneja received all round support for this. After listening to the word credit, all the stakeholders started feeling fresh giving an impression that the problem will be solved right there.
“We are media people and have put substantial investments not only into manufacturing but also in the trade credit. It has come to a level where I can guarantee you that if we do not correct it very quickly, the industry will die. So, the only solution is the shorter period of credit,” said Kapur pointing out that if traders can pay most of the amount in advance to their overseas partners, why can’t they do the same here with their Indian customers.
Dadu used his decades of experience to clarify the point of credit to the industry stakeholders. “Being in this industry for decades, I personally have been into China many times. I have stayed there and learned that in China, margin as well as credit, both are shorter. But what I found impressive there is the commitment of paying it back as it helps rotating the money and promote the planning for the next stage. We need to take such steps and be stricter in our approach.”
Bhutani then put a direct question to the manufacturers that what remedial steps should be there if corporates do not meet their promises of paying credits within the stipulated time. He also shared his pain that these corporates do not actually want to do business with MSMEs. The moment they found the supplier or solution provider belongs to MSMEs, they usually cancel their orders.
While MSMEs are passing through such tough phase, other stakeholders are also not very confident of their businesses in the near future. The need arose for an SOP for the industry as a whole to maintain symmetry across the board. Considering all that, another important consensus was built to have an apex body specific to signage industry. This would work as an umbrella, under which all the existing product specific associations can come and strengthen the stand.
“It is very unfortunate that we do not have any representative body while the scale of the industry is as high as Rs. 20,000 crore, comprising both organised as well as unorganised sectors. We urgently need an apex body that can take our cause forward, discuss issues pertaining to the stakeholders, and bring us the solutions,” Juneja summed up the discussion with this. Let’s wait and watch how serious is the industry to this front and how long does it take to respond to this issue.