On
the 11th of May 2020 an embattled Indian Prime Minister Narendra
Modi, fighting a mammoth pandemic Covid-19 on one hand and facing a dwindling
economic scenario on the other, made a clarion call to the nation, calling for
his countrymen to support his vision for Atma-Nirbhar Bharat or self-Reliant
India. He mentioned the five pillars of Atmanirbhar Bharat as: Economy,
Infrastructure, System, Vibrant Demography and Demand. A natural human response
to any form of attack is to go on defense however it is dynamism and daring
spirit to prompt the nation into an offensive with long term growth perception.
It reminds one of what George Washington wrote in 1799, “That offensive operations, often times,
is the surest, if not the only (in some cases) means of defense”. In
simpler terms “offence is the best form of defense”. The five pillars of the
Prime Minister’s vision of a Self-Reliant India were also explained as.
1) Economy, which brings in
quantum jump and not incremental change
2) Infrastructure, which should
become the identity of India
3) System, based on
21st-century technology-driven arrangements
4) Vibrant Demography,
which is our source of energy for a self-reliant India and
5) Demand, whereby the
strength of our demand and supply chain should be utilized to full capacity
To
achieve the vision, a huge financial package is also being put in place to
support and encourage the people, industry and other institutions furthering
the cause. Stressing on the imperative
need for going local in mind, he stressed the “make in India” concept to
escalate inherent strength of the nation. If the instilled red tapism that has
prevailed in Indian bureaucratic system and has refused to die down over the
years, does not create hurdles in disbursement to the beneficiaries specially
the MSME sector, the large cache of technically educated English speaking
manpower in democratic India can deliver the expected results. Expressing his
reservations Chennai (South India) based A. Ramesh, owner of Sree Krishna
Labels & Solutions Pvt. Ltd. says, “Most MSMEs will be restarting
from ground zero and Govt support package has still not reached the banks and
it is in the bank’s hand to decide”. This sentiment has been expressed by
others as well. As for “going local” or “make in India” concept, as
explained by the Indian finance minister on the following day of Prime
Minister’s speech, clarifies that it does not mean that the country wishes to
be in isolation. It translates into achieving freedom of dependence from global
brands for everyday consumption of materials which our youth can provide if
their entrepreneurial capabilities are encouraged to produce. It remains to be
seen if this package is what will make the industry stand up and applaud and
move on.
The
Indian self-adhesive or pressure sensitive label industry is completing almost
50 years of existence. In the early years, the production was either manual or
simpler and evolving technologies of that time were being used sparingly across
India. It is only in the last decade that the industry has risen to global
standards in installing technically advanced label printing, decorating, and
converting presses comparable to the best in the world. Since most label
printing companies are MSMEs, they have faced a big adverse impact of lockdown
following spread of pandemic Covid-19. They are mostly family owned first
generation entrepreneurs who do not have large industrial groups backing them.
Now if they get the financial aid as communicated by the government, it will be
difficult and long before the industry bounces back. However, at this time the
support as given, is not a compensation of losses incurred by industry, Government
is only giving loans that will attract interest and add to the burden of the entrepreneurs.
It may be enhanced business for Banks but a burden on industry. From the
difficult experience gained during this lockdown, it may still make sense to
take the Prime Minister’s appeal seriously towards becoming Atmanirbhar. Surely
it does not imply going into isolation shunning everything or all technology that
is foreign. Surely it means we use the best capital equipment available across
the world to produce end products that are largely local in content. If Indian equipment
suffices the need, it should be preferred. However, the industry needs to aim
and create products in their factories that are of high standards and eliminate
the need for imported products.
Label industry around the country on
the contrary is unhappy and distressed at government’s
response and decisions to
sufferings they are facing and will be facing an even bigger challenge of reduced
demand in coming months. The author interacted with label industry constituents
in all geographical zones of India and the reaction every where was somewhat
similar. Kuldip Goel, President LMAI (Label Manufacturers Association of India)
said, “I don’t see any benefit in the package being offered. A Loan being given
and repayable in just 4 years is not the support that MSMEs need for losses
that they incurred in lockdown facing this pandemic. The instalment and interest
will be huge and add to the woes of MSMEs in a burdensome time”. Leading Label stock
manufacturer Ajay Mehta Managing Director of SMI Coated Products Pvt. Ltd. is
also apprehensive about the losses due to the lockdown, he says, “The
governments financial support package is a reflection of its policy of Atmanirbhav,
the confidence it has on the Indians to be able to take things ahead, despite
all the constraints, by providing funds to take care of the liquidity crunch
and not delve into the compensating the losses already made in these months, as well as what losses
would be incurred in the coming months.” Manoj Kochhar of Holoflex Kolkata in
the East of India feels there is no direct incentive given, the biggest hit is due
to this pause in operations. The Government should have at least made the loans
interest free and for longer tenure. It is not easy to deal with banks as they
have ways to become selective and find loopholes to refuse or reduce support.
Harish Gupta heading Sai Com Codes in Rai, district Sonepat in the Delhi NCR is
quite upset at the governments package, “We have been pushed back by two years!
The support package is an eyewash and joke on the industry” he says and adds, “Ask
anyone if he can easily get a loan from bank, they will make you cry”. He is
also worried that workers who went back home are starving and they have no
support, they now wish to return but there are no means to come back. LMAI General
Secretary Rajesh Nema of Pragati Global Indore in Central India expressed, “Lockdown
has taught us to live our life in a simpler way. Govt's package would
indeed increase liquidity in hands of entrepreneurs but the
interest burden is going to be there. The Govt should have waived off
interest for 3 months or at least reduced income tax to lessen the burden.” Sanjeev Sondhi of Zircon said, "Two things are killing; cash flow and manpower shortage. Government initiative looks a big puzzle if you can solve it, you may get something in the end". Accepting life as it comes Harish Gulati Managing Director Alpine Containers
Jammu in the northern most part of India said, “The biggest impact of lockdown
has resulted in bringing economy to its knees which is beyond any body’s
imagination and taught many new lessons out of management books. The tough time
is going to be a new normal for quite a long time.” With a divergent response Raveendran
Selvarajan Managing Director at Sel Jegat Printers Private Limited Sivakasi in
South India states, “In present circumstances Government has made a good effort
to bring about liquidity in market, If the intended support reaches the
industry, it will bring buoyancy back into markets”. Summing up Jigesh Dani of
Maharshi Labels, Ahmedabad western India says, “Justice delayed is justice
denied!” he explains that the corona virus erupted in December 2019, government
should have gone into planning to reduce stress on workers and industry, it
would then have not led to migration of workers. If you look at the financial
package of 20 Lakh Crores, the cost to Government is just 2500 Crores! Please
see the table at the end of this article. Even out this amount meant for them only
20-25% will reach the targeted MSMEs. A small single owner entrepreneur does
not have the capability to cope up with the formalities that banks ask for and
they finally get tired of pursuing and give up. By the time, the support does
eventually reach some, they will be deeper in RED. If the government is earnest
in supporting, then they should have transferred the monies straight into
accounts…this delay is denied justice.”
 |
| LMAI President Kuldip Goel |
To recover from this catastrophe there
is need to look within and find the strength as Albert Einstein said, “Adversity
introduces a man to himself.” To re-engineer your business we must adopt
an operating structure of financial discipline. The adherence depends on
profitability and cash flows. The production may appear to be profitable, but a
negative cash flow will hamper the march toward self-reliance. Printers need to
balance the inflow and outflow all the time and ensure its positive status, it
may sound difficult for MSMEs but the present situation has made us realise
that we have to be focused on quality customers and not quantity. The latter if
not taken care of, will adversely impact your own status in terms of quality as
buyers. Costing needs to be in check, for some persons this may translate into
integrating backward and forward. Some big label companies may toy with the
idea of producing labelstock to cut costs, but that would be counterproductive.
It will be prudent to stay with core competence and keep achieving excellence
in what you produce. It will also help in maintaining a focus of achieving a
quantum jump. The reduction in cost must be in terms of wastages, down time, reduced
human intervention, better inventory management and effective logistics. Label
stock is the major part of a self-adhesive label and it involves a lot of
imported papers. In an effort to localize, our Indian stock producers need to
take initiative to reduce the imported content of labelstock and consider using
alternative liners and indigenous face materials. They need to interact with
paper mills to achieve the localization of these specialty papers. Label
printers with support from Labelstock producers need to impress upon print
buyers to opt for indigenously produced label materials reducing dependence on
imported materials which are not really a necessity.
This
leads to the need for better infrastructure and equipment which is a onetime
capital investment, amortization of which is quicker as you produce in quality
and quantity without wastages but if the equipment is wanting in parameters the
impact of higher cost is ongoing for all jobs resulting in reduced
profitability. There is now need for printers to implement automation and
workflow management. Materials must move in a planned manner without hindrance
in the given floor space. Equipment with highly advanced automatic registration
control ensuring reduced wastage and setting time help in cost control. Order
receiving from customer, approval and processing for production, make ready (like ink
preparation-plates and dies), just in time raw material ordering, final
printing, converting, packing and finally logistics to dispatch all with real
time targets can all be done through software. The progress of any order can be
tracked by the customer, all departments concerned and logistics handlers who
are involved with the process. There is virtually no need for huge inventory as
materials are received just in time at allocated times and are lined up at
designated presses for converting without need of extra worker moving around on
shop floor reducing dependence on them. This may look expensive but as
mentioned these are one-time costs that get amortised quickly as you produce
more.
Systems
are which make life easier for the management in label companies. May it be
HRD, time management, sales/marketing, customer care, production, order
tracking both inward and outward, etc. should all have pre-set systems implemented
through proper software that can be accessed by whoever it pertains to with it
being limited to his or her area of responsibility or concern. Successful will
be those companies that are driven by systems and not by persons. This will
surely leave enough time to innovate, create, network and much more to be a
part of a vibrant demography.
As
the economy of the country if and when it improves and there is more disposable
money in hands of consumers, the demand will rise. Demand that has nosedived
due to lockdown has impacted economy heavily and created a difficult situation
for the label industry which has a direct link to sale of consumer products
that need labels and packaging. The present boost promised by the Prime
Minister is expected to bring the consumer back to the shopping arenas uplifting
demand. Currently Label printers need to deliver well, quality of a label and
its ability to motivate an end customer to lift it off the shelf gives a fillip
to demand. It is a difficult unprecedented happening that has occurred in our
lifetime and we wonder how long it will last? It is now duty of all concerned
to contribute their might in bringing back normalcy, there is of course the big
condition of receiving governments promised support in time with ease and not loaded
with conditions.
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