The north Indian signage market‘s regional hotspot shows speedy recovery post demonetisation.
It was more than six months that cash available with people suddenly reduced from Rs. 17 lakh crore just before the demonetisation announcement to the lowest post-demonetisation level of Rs. 7.81 lakh crore in the second week of December, 2016. In March 2017, according to Reserve Bank of India (RBI) data, the cash availability increased to Rs. 11.74 lakh crore. It was already reported that the sudden cash crunch in the economy put all the activities at a halt for quite some time as the industry that we deal in is largely cash based. Consumer giants FMCG companies like Surf Excel and Palmolive, the performance of which largely affects our signage industry, have had a bad quarter owing to less cash circulation in the economy.
With this impression that this slump in consumption and the trickle down effect must have been felt by small businesses, we again strode in our very own signage hub in Chuna Mandi of Paharganj area in New Delhi. As we stepped in, we found a rather crowded space this time showing no sign of stagnancy but rapid pace. All the players (traders/manufacturers/suppliers) in that area were seemingly rejuvenated and extremely busy closing their orders for the day. The ground zero had a different outlook on display as none was found waiting for customers but looked progressive in their respective traits. We followed the same way as last, visited the market 4-5 times on intermittent basis, strolled inside-out the extremely populated space, tried getting hold with many but as usual could manage to catch up with only a few as we didn’t find it viable to eat out their precious business hours.
Prior to getting in to the discussion of our signage industry, let’s get a nick of what the reports, published in the recent past, has to say about how India’s surprising economic strength in the last quarter renewed the debate over how much the unprecedented demonetisation has curtailed the growth and how quickly activity will bounce back. India’s economy is still smarting over Central Government’s shock currency withdrawal in the end of the year 2016 that saw India’s vast shadow economy stall and forced millions to spend days queuing up to withdraw cash or exchange their worthless notes.
No doubt that the costs have been huge, especially for the informal sector which does the bulk of its transactions in cash. There was a sharp dip in consumption towards the end of 2016, which was highlighted by a contraction in overall auto sales in December. Industrial growth was hit and the demand for loans from companies remains at a record low. Adding to it is the uncertainty over the introduction of GST, which is officially due later this year. However, there are a few signs of revival and it is expected that the private sector investment will spearhead the recovery.
Nevertheless, economists suggest that a bumper harvest of summer crops will surely boost rural incomes. They also opined that while the immediate recovery is proving to be V-shaped, there seem a lingering impact over the next two or three quarters as the shock will fade only over time. As of now, India recorded the growth at 7.1% in the last quarter in March—the slowest pace since 2014 but still among the fastest in the world and easily beating the 6.8% median estimate as revealed in a Bloomberg survey of 30 economists. GDP growth slowed to 7.0% in October-December from a year earlier, its slowest pace since the January-March quarter of 2015.
Amidst all this and many other things that we learned from the reports published hereinafter the demonetisation, a tempting eagerness to know as how is our signage industry strolling and maintaining the repo with the on-going chemistry of the hierarchical market forces i.e. demand & supply these days, forced us to tread in to the local hub. Of those, from whom we somehow stole some precious moments, were as usual busy dealing with their clients and making them understand the changing attributes of signage owing to the introduction of various new technologies. We are thankful for their contribution in aiding to our knowledge. Here’s what they shared…
Trade is Back on Track
In general, we received an overwhelmed response from the market except for a few which didn’t witness considerable footfall to their threshold in those cash-less days. Satyam Techno’s Abhijeet Bose gave a thrilling revelation when he shares that the market knows no bounds. According to him, usually the month of April witnesses a halt as far as marketing activities are concerned, but this year it has shown tremendous fervour and remained continuously busy. “The signage business owners, irrespective of their traits, were not getting time to rest as the customers kept pouring in with huge orders. Although, the turnaround was not totally Indian but the overseas players especially Vivo, Oppo, Samsung, etc. seem fighting to capture bigger part of the chunk out of this so called economic slump in the country,” he said.
Satyam Techno deals in imported as well as indigenous quality arrays of LED modules and 3D Channel letters. Bose seem confident about a rather secure future with emerging markets potential in store for LED signage as India is yet to take on this segment seriously. Right from the flexible & rigid LED strips, video walls, LED moving signs, LED modules, LED display signs, edge-lite (e-lite) LED/poster frames and a complete range of advertisement products like scrolling displays, banner stands, canopies, tri-visions, etc., Satyam has everything of anything related to LED signs in its bouquet. “Our LED modules are made with high-technology Taiwanese chips featuring anti-static design to produce high brightness, low-power consumption, extremely minimised heat radiation and wide beam angle. With two years warranty, these modules are compatible for a range of applications including channel letters, advertisement boards, decorations, lighting and the like.”
These apart, Satyam Techno’s LED moving and multi-zone display systems offer to combine movement, light, graphics and messages to cater to the specific needs of service industry, information centres, government departments, hospitals, sports stadiums, railway stations, airports, shopping malls and retail outlets. “We do provide display boards in various languages to focus on region-specific target audience,” added Bose indicating that the lenticular signage is added recently in the portfolio.
Contrary to this, Nitin Srivastava, Managing Worker, City Advertising wasn’t happy with the response from the market. “December was very bad, January picked up a bit and February onward it is dull again,” said Srivastava adding that the reason is very much intuitive. “After demonetisation came in to effect, big corporates have become far more reluctant than simply cautious spending on advertisement, and hence, have put the promotional activities at a halt. They are looking rather indecisive about any financial outflow citing quite a few pending policies which the Centre is about to announce and impose in near future. At the same time, small business houses do not show any inclination towards promoting their brands in this era of national or rather global economic slump,” he added.
Note that since 2005, City Advertising has been engaged in manufacturing, supplying and distributing high quality, cost-effective and customised solutions catering to all kinds of signage solutions. Specialist in offering signage and advertising solution comprising services like glow sign/neon sign boards, solvent/digital printing, vinyl printing and ultra slim light boards. Of late, the company introduced a one-of-its kind range of Next Generation LED Signage (NGLS) Ultra Slim signage that includes slim sign, edge lit sign, acrylic slim sign, acrylic sandwich LED frame, LED slim sign, Aluminium frame slim sign, Aluminium clip slim sign, etc. – all at the most competitive prices.
Going forward, when we stepped in to the premises of the well-known one-stop signage solution-provider, Dinesh Plastic Works (DPW), we found it difficult to take some time out of DPW’s Proprietor, Dinesh Sharma‘s extremely busy schedule to extract the inputs for our article. Still, we sat inside his cabin, waited for around 15 mnts for him to be free from the continuously ringing cell phones. And finally, sensing that it’s almost impossible to speak to him in a relaxed atmosphere, we started pinching him in between his business calls. Not to our surprise, he maintained the cool and responded in a very subtle manner to almost every query, we put forward to him intermittently in between his talks to his customers.
Strategically located in Chuna Mandi – the north Indian signage solutions hub, DPW was established in the 90s, and has seen the market’s various phases of ups and downs. Over the years, Dinesh Plastic has become the synonym for signage solutions, the stretch of which is not limited to its domestic periphery but has got its name inscribed in the overseas markets too. Sharma told us that for DPW, demonetisation was not a big issue to deal with as most of the clients are from corporate world and don’t really like to trade in cash. “The payment usually comes in Cheque, which lets us free from the pinch of any such cash crunch that has arisen out of the demonatisation,” he shared.
DPW boasts of its quality which earns it reputation not only in India but also across the national border. With in-house printing and router cutting facilities, DPW is also known for its impressive fabrication work and total display items. “We have entered into an era where there is increasing demand for our products from overseas markets especially from neighbouring countries like Sri Lanka and Nepal where we already are catering to a few prominent clients,” asserted Sharma while speaking about the company’s cross-boarder experience with international clients. “This could be possible while we started dealing in and offering the finished products, in particular, the premier range of total display items.”
Satyam Plastics, another giant in the Chuna Mandi area of Paharganj, closely follows the market trends especially the international ones that keep changing with frequent introduction of innovative products & technologies. Mind you, talking to Rajiv Kalra also wasn’t easy that day as each time we approached; he excused us for his uninterrupted meetings with his customers. In the fourth attempt, we finally got hold of him to know how he has been fairing the phase after demonetisation. Remember, it wasn’t one among the impacted names out of demonetisation as it sailed smoothly in those cash-less days despite having a revenue ratio of 60:40 between corporate & retail.
“Initially, the demonetisation had put the market to a standstill as most of the businesses in signage market is highly cash-based. Our business too suffered to an extent of 25% to 30% during those days. But now, it is getting back on track with cash started roving in,” stated Kalra maintaining that there is a clear shift in the market towards billed payment structure, however, many traders have started dealing in cash. “It’s not surprising that with the inflow of cash, people took a U-turn towards cash deals, but it’s not 100%. Not all the trades, but half has shifted back to the cash-based transaction again,” he said adding that people feel easy in this way.
Satyam Plastics’ product portfolio is not confined to particular catalogue which remains static. “We keep changing our offerings with whatever new entering the global signage market,” said Kalra adding that the recently updated portfolio includes products such as sunboard, sunpack, eco-solvent media, speciality media, high-end vinyl, PE, etc. “Besides, we are dealing in many other notable products like GE excel polycarbonate sheet, aluminium composite panel, mesh banner, block out, floor & fleet graphics, over lamination film, etc.” A storehouse for signage materials, Satyam Plastics fetches around 70% of its total trade from flex alone, which is then followed by vinyl, inks, acrylic sheets, etc.
At the same time, with more than a decade in the market, Sawhney Signage didn’t feel the pinch of demonetisation, and hence, remained consistent in catering to the nationwide clientele with its innovative solutions in signboards & signage. “We were never under the effect of demonetisation to an extent may have been experienced by others. This is because we rely mostly on billed structure of the payment i.e. through Cheque and that makes us feel secure from the very beginning,” said Sunny Sawhney, the company’s Proprietor adding the company recently added channel letters to its offerings to expand its existing clientele by adding those looking for trendy channel lettered signage for both – indoor as well as outdoor applications.
It is important to note that the company has expanded its capabilities in the recent past by getting installed UV flatbed printers in its facility thereby enhancing the competencies so as to cater to a larger base of customers encompassing various industries. “We can now provide customised direct printing on any of the flat surfaces including blockouts, leatherette, steel, sunmica, acrylic, glass, wood, tiles, MDF, ACP, sunboard, sunpack, and UV vinyl to meet the rapidly increasing requirements of our esteemed clients,” said Sunny. Sawhney’s state-of-the-art infrastructure that includes ColorJet, Mutoh, Valuejet and Roland printers, is worth offering all kinds of signage printing solutions. It caters not only to its domestic clients but also to a few overseas customers who greatly value the quality of its products. “This is also because of the creative side of the team that keeps driving our designers to churn out fresh ideas,” asserted Sunny.
Going forward, denying any impact of demonetisation on the trade, Virendra Kumar of Motion Displays, shared that he is happy with it as the system got regulated. “Demonetisation has brought a total shift in the payment structure and I am very happy with this development. Now, we don’t have to fear the tax department as everything is on paper and we have properly maintained the book of account since then,” Kumar said adding that the temporary halt in business activities was fruitful as now the confidence level has also surged high.
Motion Display as the name suggests, is the manufacturer and supplier of scrolling poster display engine and deals in scrollers, static signboard, LED plastic ABS display, Translite and LED boxes, canopy, gazebos, roll-up stand, pop-up stand, etc. “Out of these the most selling is LED scrollers because of its advantages irrespective of the business or its domain. This is because of its degree of exposure that is far greater than any other media available. The varied businesses going for it include restaurants, shopping centers, indoor market areas, car companies and other service-oriented companies,” he elaborated.
Retail Sales is Restored
Going with DOC Sign, retail was initially impacted but now the activity is back on to the track. “As far as our business is concerned, we didn’t feel much of the impact and managed the cash-less phase quite smoothly. The trade was very much in tune, and if at all you believe, we did considerable business during that period. We are a service provider and move with the market. As and when there comes any project, we are there to supply the orders. All thanks to our state-of-the-art infrastructure, which we keep updating time to time,” said Harpreet Singh of DOC Sign adding that the company has recently installed a machine for high-quality UV printing.
The company offers a complete range of printing services that include wall paper printing, fine arts inkjet printing, canvas printing & frames, vinyl printing, frosted glass film and digital printing services on the latest technology HP Latex machine. “For world class digital printing services on various type of medias like vinyl, fabric, translite, flex, paper, etc., we guarantee image quality that delivers the highest resolution and colour saturation possible, exceeding customers’ expectations,” asserted Sandeep Sharma of DOC Sign. “We are known for high-impact POP displays, to temporary textiles, bus shelters, vehicle graphics, and more; DOC Sign makes sure to provide all these solutions at market leading prices,” he added.
“Not much has changed after the demonetisation. People now mostly prefer billed payment structure, and hence, the transaction is done in Cheques,” said Sharad Sharma of Rajeev Publicity Company (RPC). He informed that there are quite a few small businessmen who don’t have their TIN or registration numbers ready yet. “So for them, the cash transaction is still in operation even though they account for only a meager around 5% of RPC’s total trade. The truth is that they exist and we can’t say no to them,” explained Sharma.
As we know, RPC’s legacy dates back to more than three decades. It was early 80s when Mr. S P Sharma along with his brother Mr. B. K. Sharma, Proprietor, Bee Kay Signs build its foundation. Then after, RPC continued enhancing capabilities on regular basis either by diversifying or shifting focus to the latest in the trend or as the clients may ask for. This is despite the fact that the company is yet to place the trendy UV technology & fabric in its premises, as for them, the prospect for both these is still not that great.
RPC has been catering to the signage market since more than four decades and has seen evolving the market, passing through numerous stages of improvement, pushing printing industry to turn digital. It was the time that demonetisation was announced and digits stopped showing any sign of surge as the market was put to a halt for some time. “Now that the cash has started flowing back in the system, the traders are feeling at ease and sailing through smoothly,” Sharma added.
According to Dinesh Sharma of DPW, retail business accounts a handful only 5-10% of its total business. “We, at DPW, try maintaining the cash as it is now available aplenty in the market which is enough to deal with retail customers,” Sharma pointed out that the display works (finished products) have been contributing a considerable portion of DPW’s revenue over the past few years. He anticipates a lot of untapped potential in this segment for DPW. “We are happy that the cash is back in the market now and the meager that was going in cash from DPW’s counter has got its flow back and rest are already registered through bill of quantity and travel through book of accounts,” he said.
Recalling our last meeting at Satyam Techno, Bose had evinced some level of anxiety mentioning that the market was not responsive as per expectation due to demonetisation. The absence of ready cash had brought retail activities to a halt owing to its dependency on cash. Also, this resulted in the stacking of old payments which was due over clients and other retail purchasers of the signage and its components. However, the demand from corporate world continued its flow keeping the market busy meeting orders for bulk purchasers. Retail sale is almost off the scene due to non-availability of ready cash.
By-Products of Demonetisation
Highlighting further, Bose suggests, “The one important thing that demonatisation has brought us is the recovery of bad debts. Quite a few financial dues that were lingering on for months got cleared during this period bringing us a sigh of relief. Also, since our business is mainly from government departments and big corporate like BSNL, Mumbai Airport, DLF, Indian Railways, Vivo, Oppo, Gionee, Samsung, Radisson, Apollo Hospitals (Kolkata), Maharaja Agrasen Hospital (New Delhi), etc., we hardly have any visible cash transaction. So for us, there is nothing to hide.”
Srivastava noted that demonetisation has brought a lot of things as by-products. One of that is the regulation of market and revamping of the payment system where billing has become a kind of must for any product to be sold irrespective of industries. This has automatically brought in sales tax in to picture aiding further to the cost of the product for end-customers. “But this doesn’t imply at all that the future is bleak as the promotional industry is waiting a revamp with quite a few consumer giants awaiting to jump back on to the advertising bandwagon to lure customers with their new offers,” he anticipated.
Need to be GST-ready
Following the Union Cabinet’s approval to the four GST Bills—Central GST Bill, Integrated GST Bill, Union Territory GST Bill and GST (Compensation to the States) Bill, everyone in the Indian printing and signage industry is keeping fingers crossed with a hope for things to turn out positively.
As of now, none of the players seemed confident when we asked them about dealing with the much awaited GST. In general, there seems a state of confusion in the minds of many of the manufacturers/suppliers/traders present in this local hub.
Quite a few of them shared that they are not maintaining the stock of materials with this belief that there may come some added tax to make it painful in the future. Thus, trading only with what they have as order-in-hand. However, there is still lack of clarity around what the actual impact on print will be.
Goods and Services Tax (GST), which is peculiar in its structural presentation, has reached at the threshold and would supposedly, enter the national tax regime on July 01, 2017. And there is only little time left to analyse, plan, implement and prepare for the change in taxation that is going to take place.
GST will have a far reaching impact virtually on all parameters irrespective of industries. Complete awareness and proactive preparation is vital in handling this long-awaited tax reform effectively. It is important on the part of taxpayers to keep a check on their readiness for a smooth transition into GST regime, ensuring that their businesses are not hampered.
In fact, the need for preparedness is of utmost significance because of it being unique and far more complex, with a dual GST regime encompassing two tax administrative authorities, Centre and States, which would have the powers to levy tax on each transaction concurrently.
It’s pretty visible that multiple taxes in the present tax structure are badly affecting the growth of printing sector. GST will bring single-point taxation in the country and also simplify taxation system. Hopefully, things will be more efficient and manageable with the implementation of GST.
GST is expected to overcome the gaps which are present in the existing tax regime as the new tax format will eliminate cascading effect of taxes and duties. It would remove cost inefficiencies arising due to current levy of Central Sales Tax, Octroi or Local Body Taxes and physical interstate tax barriers.
Experts feel that seamless flow of input credit, under the GST regime, would benefit the printing industry which currently is facing issues of blocked working capital due to large accumulated CenVAT Credit balances. GST would also promote wider tax net as it would be beneficial to be GST compliant.
The greater impact under the GST regime would be the cost competitiveness of the printing industry, which is expected to improve with the unification of fragmented domestic market along with the reduction in cost associated with tax compliance, inventory and logistics.
Looking towards imports, GST law states that imports would be considered as supplies in the course of inter-state trade or commerce. Imports would be subject to Basic Custom Duty plus IGST (Integrated GST). Under the GST regime, full input tax credit shall be available on such IGST paid on imports.
Let’s take an example, say newspaper printing sector—it is recognised that in the present regime the sector is excluded from the burden of taxes. However, the exemption list under GST is not available in the public domain till date. Nevertheless, according to the GST Council, necessities would be taxed at zero percent.
In principle, GST will have an overall positive impact on the printing industry, which can only be assessed once the effective rate is finalised, especially for raw wood and pulp materials. Transportation, logistics cost and taxes on input materials would also affect the businesses in time to come.
“The impact of GST on the print industry is still vague. We will have to wait for the GST draft guidelines and the substantive stand of our state government in its successful implementation. The effect of the so-called game-changer will be known only after it is put to practice,” said Bose of Satyam Techno.
While most of players are sure of getting some corrective measures in the trading activities just like VAT had brought which was introduced almost a decade ago; a few showed their concern for the slab signage industry has been placed into. “It attracts 28% tax, which actually would demoralise the signage fraternity, especially the end customers, and may impact the business in time to come,” lamented Sandeep Sharma of DOC Sign.
Conclusion
Amidst all these ifs and buts, 2017 is going to be one of the best years for the Indian economy in turn would bring up brighter signs for our signage industry in terms of building a strong foundation for the years to come. We must not forget that the industry is still in shock with the sudden change in the way it traveled through to cash-less economy barring daily transactions. But receiving the kind of response, we expect the industry would soon resume the previous level of trading activities.