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STUDY ON POTENTIAL OF

INDIAN PRINTING & CONVERTING SECTOR WITH RESPECT TO ITALIAN COMPANIES

PENETRATION FOR MARKET SHARE

PREPARED FOR :

Italian Trade Commission115, Maker Chambers

11th Floor, Nariman Point MUMBAI – 400 021 (INDIA)

PREPARED BY :

MITCON CONSULTANCY SERVICES LTD.1st Floor, Kubera Chambers, Shivajinagar

PUNE – 411 005

AUGUST, 2008

TABLE OF CONTENTS

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CHAPTER - 01 Introduction

CHAPTER - 0 2 Printing & Converting Machinery

CHAPTER - 03 Printing & Converting Machinery Industry in India

CHAPTER - 04 Market Potential in India

CHAPTER-05 Survey Findings

CHAPTER-06 SWOT Analysis

CHAPTER -07 Building your Presence in India

CHAPTER-08 Conclusion & Recommendation

CHAPTER - 1INTRODUCTION

1.1 BACKGROUND OF THE ASSIGNMENT

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The Italian Trade Commission (ITC) has appointed MITCON

Consultancy Services Limited, Pune to study the potential of Indian

printing & converting sector with respect to Italian Cos.’ Penetration for

market share.

The Client wants to have an assessment of the current scenario of the

Indian printing & converting machinery industry and also wants to know

the scope for the Italian business to enter into the Indian Market.

1.2 ABOUT MITCON CONSULTANCY SERVICES LTD. MITCON, an ISO 9001 company, established in 1982, is a Technical

Consultancy Organisation which is a joint venture of leading financial

institutes ICICI, IDBI, IFCI; major State Corporations like SICOM,

MSFC, MIDC and nationalised banks in India.

MITCON to its credit has successfully completed more than 1000

assignments on Market Surveys, Techno-Economic Feasibility

Reports, Detailed Project Reports, Appraisals, Foreign Collaborations,

Evaluation Studies, Socio-Economic Studies etc. for Government of

Maharashtra, Government of India, Private Corporate & SMEs.

.

1.3 OBJECTIVES OF THE STUDY The objective of the study is to study the potential of Indian printing &

converting sector with respect to Italian Cos.’ Penetration for market

share.

1.4 SCOPE OF THE STUDY

The scope and coverage of the Survey includes following:

To study current status of the Indian companies, foreign wholly owned

Indian Companies producing printing & converting machinery

To study current status of the Indian printing & converting industry,

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To find out the areas where the Italian companies producing Printing &

Converting Machinery could enhance their presence in broad/sub

categories/products in the Indian user industry,

Statistical data which would enable the Italian companies understand

the;

o Actual production of printing & converting machinery in India

(Quantity Nos. & Euro)

o Actual imports of printing & converting machinery in India

(Quantity Nos. & Euro)

Future projections (next 3 to 5 years) of where the Indian printing &

converting industry could be in terms of technology used.

Listing major agents with their names and principals for printing

machinery (imported/local- Indian) as applicable.

The mode of entry and way of establishing presence in India for the

Italian Printing Machinery manufacturers to be facilitated depending on

Research data. It could be by way of

Through Agent

Branch Office

Joint Venture

100% Owned Indian company (Indicating transfer pricing norms in

detail)

Manufacturing machines under licensing

A & M’s (Acquiring Procedure)

Information regarding the following:

o Fiscal Benefits under EOU Policy / Exports

o Capital Equip producing capacity in India

o Indian companies looking for collaborations / Joint Ventures

(based on Research)

To study Price structure of Machines (Local / Foreign)

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Procuring practices generally followed by Indian Private/Government

companies.

1.5 RESEARCH METHODOLOGYBoth the Desk Research and Field survey (using structured

questionnaire) methods are used to obtain the information from the

respondents.

Desk Research Through Desk Research, we have collected the data from our Internal

Database, the Published Literature, News items, and Company

Reports, Publications (National / International), Information available

with respective Industry Associations etc.

Field Survey MITCON has interviewed the various Indian Machine Manufacturers,

Distributors / Dealers ,End Users of Machinery ( Printing Units ) &

Associations from Printing & Converting Sector with structured

Questionnaires & Check Lists covering the scope of the study using in-

depth face-to-face Interview method.

The Geographical locations covered under study were Mumbai, Delhi,

Chennai, Bangalore, Kolkata, Hyderabad & Pune.

Data Analysis The data collected from Field Survey and Desk Research has been

analyzed to draw meaningful conclusions.

* * * * * * * * * *

CHAPTER - 2PRINTING & CONVERTING MACHINERY

2.1 PRINTING MACHINERYPrinting is a process for reproducing text and image, typically with ink

on paper using a printing press. It is often carried out as a large-scale

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industrial process, and is an essential part of publishing and

transaction printing.

Modern printing technology:

Across the world, over 45 trillion pages (2005 figure) are printed

annually.

[Source: http://h20325.www2.hp.com/blogs/scaglia/archive/2007/08/30/4314.html]

In 2006 there were approximately 30,700 printing companies in the

United States, accounting for US$112 billion, according to the 2006

U.S. Industry & Market Outlook by Barnes Reports. Print jobs that

move through the Internet made up 12.5% of the total U.S. Printing

market last year, according to research firm InfoTrend/CAP Ventures.

Common Techniques of printing include:

Relief print (letter press), mainly used for the printing of

catalogues

Offset printing is the mostly used Technique today. Books and

newspapers are printed today using the technique of offset

lithography.

Rotogravure mainly used for magazines and packaging

Screen printing for T-shirts to floor tiles

Pad printing for applying a flat image on a curved substrate

Inkjet used typically to print a small number of Books or

Packaging, and also to print a variety of materials from high

quality papers simulate offset printing, to floor Tiles; Inkjet is also

used to apply mailing addresses to direct mail pieces.

Flexography used for packaging, labels, newspapers

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Laser printing mainly used in offices and for transactional

printing (bills, bank documents). Laser printing is commonly

used by direct mail companies to create variable data letters or

coupons, for example.

2.2 CONVERTING MACHINERYConverting Machinery is used in the process of value-added converting

of paper, paperboard and plastic film in the primary converting

industries of flexible packaging, unprinted rolls or sheets, labels,

cartons and printed electronics.

* * * * * * * * * *

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CHAPTER 3PRINTING & CONVERTING MACHINERY

INDUSTRY IN INDIA

3.1 PRINTING & CONVERTING MACHINERY INDUSTRY IN INDIA - CURRENT SCENARIO

3.1.1 Views of All India Federation of Master Printers (AIFMP)

The All India Federation of Master Printers (AIFMP) is an apex body,

recognized by the Government of India, established in the year 1953.

AIFMP draws its strength from 52 regional associations spread all over

the country; which are affiliated to the AIFMP.

Status of the Indian Print Industry :

More than 160,000 Printing Presses in active operation in India.

Employment: 1.6 million work force.

Education Infrastructure: 18 Printing Engineering Colleges,

Several diploma schools and many print training institutions.

Educated People: Over 2000 Printing Graduates every year.

Indian Printing Industry has been considered as one of the

largest industries, with the growth of 12.5%.

Projected Growth of Indian Printing and Packaging Industry

combined for 2007-08 is 14%.

Projected Growth of Indian Label Printing Industry for 2007-08 is

18%.

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3.1.2 Views of National Printing Equipment Association (NPES)

NPES - The Association for Suppliers of Printing, Publishing and

Converting Technologies, is a trade association of over 400 companies

which manufacture and distribute equipment, systems, software,

supplies used in printing, publishing and converting.

The Association was founded as the National Printing Equipment

Association in 1933. The 26 charter members included manufacturers

of printing presses, bindery equipment, typesetting machinery and

specialty equipment.

Today NPES represents Manufacturers, Importers and Distributors of

equipment, supplies, systems and software used in every printing,

publishing and converting process from design to distribution. Virtually

all industry products and processes are represented by the member

companies, which range in size from under US$1 million in annual

sales revenue to more than US$1 billion.

Indian Printing Industry Scenario:

Print industry growth outpaces GDP growth since 1989.

Printing and Packaging Industry compound annual growth over

14%.

More than 150,000 printing presses in operation in India.

Capital investment of over US$2 billion.

Employs directly / indirectly over 1.5 million people.

Indian Packaging Industry Scenario:

The Indian Packaging Industry worth US$2 billion.

Indian packaging output grew by around 18% in 2003.

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Today, most basic raw materials required for packaging Industry

i.e. Paper, Board, Plastic, Glass, Metal etc. are easily available.

Growth rate varies -5% in some sectors to 20% in sectors like

Flexible Packaging (Developed Countries average: 3%)

Over 40% of Export by Small / Medium Sector where Packaging

Industry has major presence.

3.1.3 Views of Indian Printing, Packaging and Allied Machinery Manufacturers' Association (IPAMA )

IPAMA, founded in 1991, the acronym for Indian Printing, Packaging

and Allied Machinery Manufacturers' Association is an independent

organization serving the needs of the printing, packaging and allied

industries in a rapidly changing marketplace.

As a registered apex body under the Societies Registration Act, IPAMA

is dedicated to disseminating information on the state of the

Technology, Market perspectives and various developments taking

place around the world, relevant to the Indian printing packaging and

allied industries through its bimonthly journal "IPAMA BULLETIN".

Status of the Indian Packaging Industry:

The Indian packaging industry is growing at 14%-15% annually.

This growth rate is expected to double in the next two years.

The turnover of the packaging industry is estimated at Indian

National Rupees (INR) 150 Billion (equivalent to Euros 2.2

Billion).

The Indian fascination for rigid packaging remains intact. It is

estimated that more than 80% of the total packaging in India

constitutes rigid packaging, which is the oldest and the most

conventional form of packaging. The remaining 20% comprises

flexible packaging.

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Rigid packaging constitutes glass bottles, metal cans, aerosol

cans, battery cell cans, aluminum collapsible tubes, injection

moulded plastic containers made of PVC, PET, HDOPE, barrels

made from HOPE, paperboards, and corrugated boxes.

With the expanding middle class and rising income levels, the

patterns of consumption are bound to change substantially and

the demand for quality and convenience-based products will

increase.

3.1.4 Views of Indo-Italian Chamber of Commerce and Industry

According to a report 'Overview of the Engineering Sector in India',

April 2007 published by the Indo-Italian Chamber of Commerce and

Industry, Mumbai, printing machinery industry in India is growing and

yet is dependent on imports.

Here are some points highlighted in the said report:

Printing Machinery (for print media)

India has more than 130,000 printing presses by the end of

2005.

Though demand for printing machinery in India for FY06 is

around €157.9mn (US$249 Million or INR 10140 Million, i.e.

approx. Rs. 1015 Crores), production of printing machinery for

that duration is valued at €51.78mn (US$81.65 Million or INR

3325 Million, i.e. approx. Rs. 332 Crores).

The requirement met through imports is in the order of about

€92.47mn (US$145.80 Million or INR 5938 Million, i.e. approx.

Rs. 594 Crores).

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The sector that is driving the demand for printing machines is

the Indian newspaper industry with a turnover of €1.37 billion

(INR 88 Billion, i.e. approx. Rs. 88,000 Million) in 2004, which is

growing at a CAGR of 6.9% during 2000-04. This industry has

attracted capital investment of €1.70mn (INR 109 Million, i.e.

approx. Rs. 11 Crores) in two years by the end of 2004.

The Indian media industry is undergoing a modernization

process in order to gain from these growth opportunities. In this

process they have realized the need for technically advanced

printing machinery to achieve success in the tough competition.

Since the machinery manufactured in India is not meeting their

requirements many newspaper/media companies are importing

them from Europe and Japan.

The Indian printing machine manufacturers are not equipped

with the latest technology hence large demand is catered

through imports.

Recently the print media has been allowed for 100% foreign

direct investment and as a result the foreign print media

companies are attracted towards India. This may further

increase the growth in the demand for printing machines.

3.2 PRINTING & CONVERTING MACHINERY INDUSTRY IN INDIA – PRODUCTION AND IMPORTS

3.2.1 Production

According to the AIFMP, the Indian printing machinery market was

valued at US$ 402.4 million in 2006. This is forecasted to grow from

US$ 465.30 million in 2007 to reach US$ 992.30 million in 2012, at a

compounded annual growth rate (CAGR) of 16.4% for 2007-12.

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3.2.2 Imports

Actual Imports of Printing & Converting Machinery in India (Quantity &

Value)

Import of Printing Machinery in India

Printing Machinery Imports are rising.

Values in US $ Million

Commodity HS Code

2001-02

2002-03

2003-04

2004-05

2005-06 2006-07

Offset Printing Machinery – Reel Fed

844311 12.81 9.08 4.60 12.41 72.38 59.72

Offset Printing Machinery – Sheet Fed

844312 1.01 0.62 3.31 12.14 5.65 3.91

Flexographic Printing Machinery

844330 0.42 1.02 4.32 4.68 3.81 22.60

Gravure Printing Machinery

844340 4.44 2.94 3.69 7.63 2.80 12.01

Other Offset Printing Machinery

844319 21.92 19.93 22.64 51.72 45.11 90.64

Total Imports 40.60 33.59 38.56 88.58 129.75 188.88Source: Ministry of Commerce, Government of India, (Export Import Databank)

As % of total Printing Machinery Imports

Commodity HS Code

2001-02

2002-03

2003-04

2004-05

2005-06 2006-07

Offset Printing Machinery – Reel Fed

844311 32% 27% 12% 14% 56% 32%

Offset Printing Machinery – Sheet Fed

844312 2% 2% 9% 14% 4% 2%

Flexographic Printing Machinery

844330 1% 3% 11% 5% 3% 12%

Gravure Printing Machinery

844340 11% 9% 10% 9% 2% 6%

Other Offset Printing Machinery

844319 54% 59% 59% 58% 35% 48%

Total Imports 100% 100% 100% 100% 100% 100%

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Import of Printing Machinery in India – Major Countries from where India had imported

Commodity: 844311 - OFFSET PRINTING MACHINERY REEL FED


Country 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07Total Commodity

12.81 9.08 4.60 12.41 72.38 59.72

China P RP --- --- --- -- 1.16 2.70France 2.94 3.94 0.27 4.16 17.56 21.28Germany 9.52 4.49 0.1 6.99 51.09 15.13Japan --- 0.14 3.23 0.09 0.23 14.90Australia --- --- --- --- --- 1.17UK --- --- 0.01 0.27 --- 1.57USA 0.29 --- 0.11 0.25 1.66 1.12Italy --- --- 0.01 --- --- 0.45Spain --- 0.45 --- 0.49 0.67 ---

Offset Printing Machinery - Reel Feed, import figures shows a fluctuating

trend.

In 2006-2007, Offset Printing Machinery - Reel Feed, imports are contributing

to about 32% of the total printing machinery imports.

India imports mainly from France, Germany and Japan. In fact, France has

been consistent in the last 6 years and challenged the dominance of

Germany. Japan had also grown significantly.

China is emerging as new competitor.

Italy has very little presence in this category (OFFSET PRINTING MACHINERY REEL FED) when Indian Printing Machinery Imports are considered.


Commodity: 844312 - OFFSET PRINTING MACHINERY SHEET FEDValues in US $ Million

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1.01 0.62 3.31 12.14 5.65 3.91

Germany 0.47 0.29 2.47 4.40 1.13 2.21Japan 0.12 0.16 0.81 7.46 4.44 1.06

Offset Printing Machinery – Sheet Feed, import figures shows a fluctuating

trend, albeit a decreasing one in last two years.

In 2006-2007, Offset Printing Machinery – Sheet Feed, imports are

contributing to only 2% of the total printing machinery imports.

India imports mainly from Germany and Japan. In fact both the countries have

been consistent in the last 6 years.

Italy has no presence in this category (OFFSET PRINTING MACHINERY SHEET FED) when Indian Printing Machinery Imports are considered.


Commodity: 844330 – FLEXOGRAPHIC PRINTING MACHINERY



0.42 1.02 4.32 4.68 3.81 22.6

Brazil --- --- --- 0.04 0.91 0.12China P RP --- --- --- --- 0.75 4.28Germany --- --- 3.46 0.83 0.02 4.43Japan --- --- --- --- --- 1.12Singapore --- --- --- --- 0.09 4.68USA --- 0.39 0.35 0.82 0.40 0.47Italy 0.19 0.37 --- --- 0.01 2.58Netherlands --- --- --- --- --- 1.56UK 0.08 --- 0.24 0.69 0.40 1.14Spain --- --- --- 0.62 ---Switzerland 0.15 0.13 0.25 1.69 0.48 0.43Flexographic Printing Machinery, import figures shows a growth trend. Rather

it had shown an explosive growth in the year 2006-2007.

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In 2006-2007, Flexographic Printing Machinery, imports are contributing to

about 12% of the total printing machinery imports.

India imports mainly from Germany, USA, UK, Italy and Switzerland.

Switzerland is loosing its share to other emerging competitors.

Singapore and China are emerging competitors. Others to watch include

Japan, Netherlands.

Italy has been supplier to India in this category (FLEXOGRAPHIC PRINTING MACHINERY).

Italy has lesser presence in this category (FLEXOGRAPHIC PRINTING MACHINERY) when Indian Printing Machinery Imports are considered.


Commodity: 844340 – GRAVURE PRINTING MACHINERY



4.44 2.94 3.69 7.63 2.80 12.01

China P RP --- --- --- 0.48 0.14Germany 0.09 0.11 0.04 0.61 0.54 0.94Korea RP 1.49 0.01 --- 0.01 2.19USA --- 0.69 0.17 0.20 0.37Italy 3.84 1.21 2.02 5.99 1.46 6.03Israel --- --- --- --- --- 1.54UK --- --- 0.16 0.12 0.03 0.13Japan --- --- 0.55 0.02 0.01 0.30Gravure Printing Machinery, import figures shows a growth trend except

2005-06. Rather it had shown an explosive growth in the year 2006-2007.

In 2006-2007, Gravure Printing Machinery, imports are contributing to about

6% of the total printing machinery imports.

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India imports mainly from Italy, Germany, and Korea RP.

Emerging countries to watch include Israel.

Italy has been the predominant supplier to India in this category (GRAVURE PRINTING MACHINERY). Italy has very strong presence and contributes more than 50% of the total supplies.

Recently, this dominance of Italy has been challenged by the competitors. Last consecutive two years had seen a decreasing trend in Italy’s contribution in total exports – the matter of concern!!!


Commodity: 844319 – OTHER OFFSET PRINTING MACHINERY



21.92 19.93 22.64 51.72 45.11 90.64

China P RP 0.45 --- 0.36 0.03 0.38 2.29Germany 9.93 10.08 11.02 28.52 24.02 47.21France 0.06 1.87 0.23 0.16 0.07 6.50Italy 0.93 1.79 0.15 0.28 0.01 1.48Czech Republic

0.53 0.33 0.59 1.37 1.39 0.82

UK 1.64 0.80 0.86 0.51 1.01 1.98Japan 5.27 2.41 7.21 12.54 12.18 20.45Taiwan 0.55 0.40 1.10 1.06USA 0.98 1.52 0.72 2.50 1.61 3.83Australia 0.36 0.24 0.09 0.50 1.08 0.73Spain 0.62 --- --- 2.24 0.07 0.12Other Offset Printing Machinery, import figures shows a growth trend except

2005-06.

In 2006-2007, Other Offset Printing Machinery, imports are contributing to

about 48% of the total printing machinery imports. (This might be the second

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hand or used machinery imported in the country). A lot of suppliers indicate

very competitive market.

India imports mainly from Germany, Japan, Czech Republic, USA, UK, and

France. Germany and Japan dominates the second hand import markets.

Interestingly, France has shown significant increase in 2006-07.

Emerging countries to watch include China.

Italy has been supplier to India in this category (OTHER OFFSET PRINTING MACHINERY). Italy has very little presence in this category.

3.3 PRINTING & CONVERTING MACHINERY INDUSTRY IN INDIA - PROJECTIONS

3.3.1 Views of AIFMP

According to AIFMP, Indian Printing Industry has been considered as

one of the largest industries, with the growth of 12.5%. The projected

growth rate of Indian Printing and Packaging Industry combined for

2007-08 is estimated at 14%.

According to the AIFMP, the Indian printing machinery market was valued at US$ 402.4 million in 2006. This is forecasted to grow from US$ 465.30 million in 2007 to reach US$ 992.30 million in 2012, at a compound annual growth rate (CAGR) of 16.4% for 2007-12.

The Indian printing market has consistently outpaced GDP growth over

the past 15 years. Printing has now reached international standard in

end uses such as newspapers, books, catalogues, packaging products

and other publications such as coffee-table books.

The Indian printing market was valued at US$ 12.6 billion in 2006. This

is forecasted to grow from US$ 14.12 million in 2007 to reach US$ 25.1

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billion in 2012, at a compound annual growth rate (CAGR) of 12.2% for

2007-12.

Including printing equipment, ink, and the consumables, the entire print

sector in India was valued at US$ 13.5 billion in 2006 and is forecast to

reach US$ 27.2 billion in 2012.

According to AIFMP, the industry (market values at present and

estimates) projections are as shown below:

India’s Print and Allied Items: Market Value, 2005–2012 (In US$ Million)

Source: The All India Federation of Master Printers (AIFMP)

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These industry projections extrapolated year-wise is as shown below :

India’s Print and Allied Items: Market Value, 2005-2012 (In US$ Million)

Year Printing Consumables

Ink Machinery Total

2005 11,580.9 112.1 343.3 358.4 12,394.72006 12,609.7 125.0 380.8 402.4 13,517.92007 14,118.7 143.0 434.1 465.3 15,161.12008 15,845.0 163.0 495.0 541.4 17,044.42009 17,782.0 185.7 564.2 630.0 19,161.92010 19,954.0 211.6 643.1 733.0 21,541.72011 22,391.0 241.2 733.2 853.0 24,218.42012 25,084.6 274.9 835.9 992.3 27,187.7

CAGR (%)

2007-2012

12.2 14 14 16.4 12.4


3.3.2 Views of NPES

According to NPES - India is the world’s fastest growing print market

with a projected 73% of change from 2006-2011. Not only is India

growing extremely fast but it’s doing so from a very large base.

India is already the 12th largest print market in the world but it will grow

to be the 8th largest printing market by 2011.

According to NPES, the industry projections are as shown below:

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Source: Newsletter from NPES - The Association for Suppliers of Printing, Publishing

and Converting Technologies

As shown, in 2006, India’s printing market was valued about US$ 12.1

billion and is forecasted to grow and reach US$ 20.9 billion by 2011, at

a compound annual growth rate (CAGR) of 11.6% during the period

2006-11.

As shown, according to the NPES, the Indian printing machinery market was valued at US$ 521 million in 2006. This is forecasted to grow and reach US$ 628 million in 2011, at a compound annual growth rate (CAGR) of 4% for 2006-11.

It seems that NPES assumes a stable trend of ‘print machinery usage’

in India. Thus the industry projections as indicated by NPES are on the

lower side as compared to the industry projections as indicated by

AIFMP.

* * * * * * * * * *

CHAPTER 4MARKET POTENTIAL IN INDIA

4.1 MARKET POTENTIAL IN INDIA

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Print Market Scenario

India represents a good market potential for printing industry and is

amongst the fastest growing print markets as per the study, recently

completed by Print Industries Market Information and Research

Organization (PRIMIR) on the Worldwide Market for Print. This study

was presented to the membership at the recent NPES Industry

Summit. Looking at individual country markets, the Table 1 overleaf

shows the top 12 markets on a dollar volume basis in 2006 and 2011.

There are really no surprises in this data, other than the fact that China

has already displaced Germany and the UK as the third largest print

market. However, by 2011, India will rise from the 12th largest market

to number eight.

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In fact India is one of the 12 fastest growing markets (see Table 2) in

Asia. In 2006, India’s printing market is about US$ 12.1 billion and is

forecasted to grow to US$ 20.9 billion by 2011.

Printing Machinery Market Scenario

As mentioned earlier in section 3.3.1, the AIFMP has indicated the

following :

According to the AIFMP estimates, the Indian printing machinery market was valued at US$ 402.4 million in 2006. This is forecasted to grow from US$ 465.30 million in 2007 to reach US$ 992.30 million in 2012, at a compound annual growth rate (CAGR) of 16.4% for 2007-12.

The breakup of the market is as shown below :

India’s Printing Machinery: Market Value, 2005-2012 (In US$ Million)

Year Total Machiner

y

Pre-Press

Press Post-Press

Others

2005 358.4 41.4 276.1 22.6 18.32006 402.4 46.4 310.2 25.5 20.32007 465.3 53.5 359.1 29.5 23.22012 992.3 108.5 777.3 61.4 45.10

CAGR (%) 2007-2012

16.4 15.2 16.7 15.8 14.2

Source: The All India Federation of Master Printers (AIFMP) and Desk Research

As mentioned in section 3.3.2, here we are seeing a stable trend of

‘print machinery usage’ in India. Out of the total print machinery, press

accounts for 77%, pre-press (12%), post-press (6%) and others (5%).

Regarding imports of Printing Machinery in India

OFFSET PRINTING MACHINERY REEL FED - Italy has very little

presence in this category.

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OFFSET PRINTING MACHINERY SHEET FED - Italy has no

presence in this category.

FLEXOGRAPHIC PRINTING MACHINERY - Italy has been supplier to

India in this category. Italy has lesser presence in this category.

GRAVURE PRINTING MACHINERY - Italy has been the predominant

supplier to India in this category. Italy has very strong presence and

contributes more than 50% of the total imports in this category to India.

Recently, this dominance of Italy has been challenged by the

competitors. Last consecutive two years had seen a decreasing trend

in Italy’s contribution in total exports – a thing to concern!!!

OTHER OFFSET PRINTING MACHINERY - Italy has been supplier to

India in this category. Italy has very little presence in this category. This

category is also termed as ‘used machinery’ or ‘second hand

machinery’.

4.2 ABOUT THE CONVERTING INDUSTRY IN INDIA

Packaging Industry is set to move up to the 20-25% Growth Band.

The Indian economy is set to grow at a fast pace in the coming years.

As the economy rides an increased industrial production and a growing

international trade, the package converters find the customers are

increasingly demanding better and innovative products. Retailing shifts from

the corner shops to the malls also means that the packaging is assigned more

responsibilities. The present per capita consumption of packaging in the

country is dramatically lower than the global averages. All the pointers

indicate that the packaging industry is set to move to a higher level of growth

between 20-25% from the present level of around 12-15%.

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The larger Indian converters have been adopting the latest technologies and

several high-end machines have been installed in the country in the past few

years. These machines are largely imported from the western countries, with

Germany and Italy accounting for almost 45% of the total packaging

machinery imports. However, as the need to upgrade is felt by the smaller

converters and corrugators and many commercial printers diversify into

package printing, there is an increasing focus on machines made in Taiwan,

Korea and also China.

Meantime, the Indian machinery manufacturers have also geared up and are

today making machines that are lapped up by the growing industry in India.

Some of these machinery manufacturers are also making inroads in the

export markets and are moving beyond the traditional Asian neighbours and

the countries in the Gulf to South Africa, East Europe and even South

America.

For years, the Indian corrugated box industry has been characterised by low

technology and has been reserved for the small scale sector. With the

booming white goods industry, the use of the corrugated box as a primary

package is increasing. At the same time, the market dynamics is witnessing

the increased customer demand for an improved secondary package. The

Indian corrugator is responding to the emerging demands and to the need to

upgrade and innovate.

World over, Flexography has become the pre-dominant medium for package

printing. The use of flexo has also been growing in India. Several

sophisticated CI flexo presses have been installed in the past few months.

The booming label industry is riding a narrow web flexo invasion as folding

carton manufacturers also take a look at this technology. The Indian

corrugators have been increasingly adopting flexo printing with water-based

inks. The coming years should see a larger share of printing going to flexo in

the converting and corrugating industries.

Source:

http://www.indiaconvertingshow.com/industry.htm

26

As per the AIFMP presentation, it is seen that the ‘packaging’ is the largest

end use sector and is growing.


4.3 PRINT MARKET – BY END USE

India’s Print Market value by end use, 2005-12 (US $ Million)

End Use Segment

2005 2006 2007 2012 CAGR (%) 2007-2012

Magazines and

Periodicals

296 312 339 509 8.5

Sales and mail-

order Catalogues

56.5 62.2 70.4 130.9 13.2

Packaging 2850 3138 3552 6682 13.5

Labels 420 472 547 1149 16.0

27

Others 951 1029 1144 1947 11.2

Note: The end use segments shown above are using ‘Gravure Printing’. Source: The All India Federation of Master Printers (AIFMP)

The consumer packaging, labels and magazines are the sectors driving the ‘gravure

printing’ market growth in India.

In US $ Million 2005 2006 2007 2012

Total Printing 11580.9 12609.7 14118.7 25084.6

Packaging 2850.3 3138 3552.8 6682

Packaging as %

of Total Printing 24.6% 24.9% 25.2% 26.6%


4.4 UP COMING TECHNOLOGIES IN INDIAN PRINTING INDUSTRY4.4.1 Flexographic Printing

Flexography (also called surface printing), often abbreviated to flexo, is

a method of printing most commonly used for packaging (labels, tape,

bags, boxes, banners, etc.).

A flexographic print is made by creating a positive mirrored master of

the required image as a 3D relief in a rubber or polymer material. A

measured amount of ink is deposited upon the surface of the printing

plate (or printing cylinder) using an engraved anilox roll whose texture

holds a specific amount of ink. The print surface then rotates,

contacting the print material which transfers the ink.

The flexible printing plate used in the final ink printing stage is light

sensitive. A positive is placed over the plate, and is displayed to ultra-

violet light. The plate is then 'washed' on a rotating drum in a tank of

Toluene solvent, which removes the layer of material that received the

ultra-violet light.

28

Originally flexographic printing was basic in quality. Labels requiring

high quality have generally been printed using the offset process until

recently. In the last few years great advances have been made to the

quality of flexographic printing presses.

The greatest advances in flexographic printing have been in the area of

photopolymer printing plates, including improvements to the plate

material and the method of plate creation, usually photographic

exposure followed by chemical etching, though also by direct laser

engraving.

Digital direct to plate systems have dominated the industry recently

with their better resolution and the ability to print four color process (or

more) as well as offset. Some companies who make plates in house

are going to trade shops to get these high quality plates.

Laser-etched anilox rolls also play a part in the improvement of print

quality. Full color picture printing is now possible, and some of the finer

presses available today, in combination with a skilled operator, allow

quality that rivals the lithographic process. One ongoing improvement

has been the increasing ability to reproduce highlight tonal values,

thereby providing a workaround for the very high dot gain associated

with flexographic printing.

Flexo has an advantage over lithography in that it can use a wider

range of inks, water based rather than oil based inks, and is good at

printing on a variety of different materials. Flexographic inks, like those

used in gravure and unlike those used in lithography, generally have a

low viscosity. This enables faster drying and, as a result, faster

production, which results in lower costs. Printing press speeds of up to

2000 FPM (600 meters per minute) are achieveable now with modern

technology high-end printers, like Flexotecnica, a member of the

29

Cerutti Group. Flexotecnica will introduce its highly automated F12

press at Drupa 2008.

ProductsTypical products printed using flexography include brown corrugated boxes,

flexible packaging including retail and shopping bags, food and hygiene bags

and sacks, flexible plastics, self adhesive labels, and wallpaper. A number of

newspapers now eschew (or avoid) the more common offset lithography

process in favour of flexo.

The packaging sector is clearly the driving force behind the ‘flexographic printing’

market growth in India.

In US $ Million 2005 2006 2007 2012Total Printing 11580.9 12609.7 14118.7 25084.6

Packaging 2850.3 3138 3552.8 6682

Packaging as % of Total Printing 24.6% 24.9% 25.2% 26.6%


4.4.2 Gravure PrintingRotogravure (roto or gravure for short) is a type of intaglio printing

process, in that it involves engraving the image onto an image carrier.

In gravure printing, the image is engraved onto a copper cylinder

because, like offset and flexography, it uses a rotary printing press.

The vast majority of gravure presses print on reels of paper, rather than

sheets of paper. (Sheetfed gravure is a small, specialty market.) Rotary

gravure presses are the fastest and widest presses in operation,

printing everything from narrow labels to 12-feet-wide rolls of vinyl

flooring. Additional operations may be in-line with a gravure press,

such as saddle stitching facilities for magazine/brochure work. Because

gravure is capable of transferring more ink to the paper than other

printing processes, gravure is noted for its remarkable density range

(light to shadow) and hence is a process of choice for fine art and

photography reproduction, though not typically as clean an image as

that of sheet fed litho or web offset litho.

30

ProductsGravure is widely used for long-run magazine printing in excess of 1

million copies. Gravure's major quality shortcoming is that all images,

including type and "solids," are actually printed as dots, and the screen

pattern of these dots is readily visible to the naked eye. Examples of

gravure work in the United States are typically long-run magazines,

mail order catalogs, consumer packaging, and Sunday newspaper ad

inserts.

Other application area of gravure printing is in the flexible packaging

sector. A wide range of substrates such as Polyethylene,

Polypropylene, Polyester, BOPP etc. can be printed in the gravure

press.

4.5 PRINT MARKET – BY PROCESS

It is seen that the print market is dominated by Offset Processing

(Sheet-fed, Heatset and Coldest). Still other segments like

‘flexography’ and ‘gravure’ are growing.

l

India’s Print Market value by process, 2005-12 (US $ Million)

Process 2005 2006 2007 2012 CAGR (%) 2007-2012

Flexography 1180 1337 1553 3189 15.5

Gravure 763 816 895 1380 9.0


* * * * * * * * *

31

CHAPTER – 5

SURVEY FINDINGS5.1 LIST OF CONTACTS

MITCON have contacted about 100 respondents from Indian Printings

and Converting Industry with standard questionnaire using indepth face

to face interviewing method. The details are as given below :

Sr. No.

Particulars Nos.

1. Printing Machine Manufacturers 172. Printing Associations 053. Institutes 024. Dealers and Distributors 145. Printing Units 66

TOTAL… 104

General Findings

1. Majority of the users are using imported machinery mainly

manufactured in countries like Germany, Sweden, Japan, Italy, Korea

and Czechoslovakia.

2. German make machineries are more popular because of reliability and

Technological competence like precision and durability.

3. Specific brands like Cerotti (Italy), Solana (Sweden) Heidelberg

(Germany) Mitsubishi (Japan), Hakiyama (Japan), Komori (Japan),

HMT (India), Manugraph (India) are the popular brands for Gravure

and Offset respectively.

4. Average increase in production is about 10 % per annum.

5. Most of the user industries are having multicolor machines.

6. Average purchases of the machinery are made in last 10 years period .

7. Users of indigenously manufactured machinery are manage to get

satisfactory after sale service from vendor.

8. 80 % of the users from India are using medium and large size

machines.

9. Dealers & Distributors are selling machineries of multiple brands, with

various Technologies.

32

Printing Machine Manufacturers

Sr. No.

Name of the Company

Location Name of the Respondent

Designation

01 Heidelberg India Pvt. Ltd.

Chennai Mr. Ramakrishnan

Sr. Manager-sales

02 HMT (International) Limited

Bangalore Mr. H B Jagadeeshr

Dy. General Manager

03 .Mitsubishi ( Proteck Machinery Pvt. Ltd)

Chennai Mr. Om Prakash. H. R.

General Manager

04 Marsons Print-Graf Machines Pvt.Ltd.

Mumbai Mr.Swapan Chakrabartty

General Manager

05 Pragati Polyprint Mumbai Mr.Lunkaran Jangid

Director

06 Sheth Printograph Pvt. Ltd.

Noida Mr. Sheth Managing Director

07 NBG Printographic Machinery Co. Pvt. Ltd.

New Delhi Mr. Navin Goel Executive Director

08 J Mahabeer & Company Pvt. Ltd.

New Delhi Mr. V K Gupta Manager-Sales

09 The Printers House (P) Ltd.

New Delhi Mr. Rohit Bhatia Asst. Manager-Sales

10 Autoprint Machinery Manufacturers Pvt Ltd.

Pune Mr. Mandar Shetty

Branch Incharge

11 Kinnari Printing Technologies Private Limited

Mumbai Mr. Nilay Savla Director -Marketing

12 U V Graphic Technologies Pvt. Ltd.

New Delhi Mr. Abhay Dutta Executive Director

13 Alpha Omega Machines

Bangalore Mr. I Stanley George

Managing Director

14 Covertech Equipment Pvt. Ltd.

New Delhi Mr. Avinash Mansukhani

Asst. Manager

15 Safepack Industries Ltd.

Pune Mr.Rajendra Tapadia

President

16 Faroni Enterprises Chennai Mr.A.H.D.Farooq Director 17. Gurunanak Machinery

Works Delhi Mr. Manjit Singh Proprietor

Findings:

33

1. Majority of the Indian Machine Manufacturers are producing Offset Machines.

2. The presence of Flexographic & Gravure Machine Manufacturers from India is competitively very less.

Feedback from Printing Machine Manufacturers :

Source : MITCON Field Survey


34



Printing Associations

Sr. No.

Name of the Association Location

01 All India Federation Of Master Printers New Delhi02 Indian Printing Packaging and Allied Machinery

Manufacturers’ Association (IPAMA)Noida

03 The Bombay Master Printers` Association Mumbai

35

04 Karnataka State Printers Association Bangalore05 The Madras Printers` & Lithographers` Association Chennai

Institutes

Sr. No.

Name of the Institute Location

01 Indian Institute of Packaging Mumbai

02 Maharashtra Institute of Printing Technology Pune

36

Dealers & Distributors

Sr. No.

Name of the Company Location Name of the Respondent

01 Deluxe Printing Machinery Co. Mumbai Mr. R S Khurana02 Print Service Enterprises Pune Mr. V George kutty03 Haploos Printing House New Delhi Mr. R R Pandey04 Vandana Photo Copiers New Delhi Mr. V K Chadha05 Sindhu Machinery House Delhi Mr. Ashok06 Hi-Tech Engineers New Delhi Mr. Vinesh Jain07 Ambica Machineries Bangalore Mr. Suresh Gupta08 J R Graphics Bangalore Mr. J Satishkumar09 Panchamukhi Enterprises Bangalore Mr. Manjunath10 Graphic India Marketing &

ServicesChennai Mr. J J Furtado

11 Safire Lithographers Chennai Mr. A Gunasekaran

12 Standard Machinery Sales Company

Chennai Mr. M S Nagarajan

13 Canaan Press Private Limited Chennai Mr. Jaba mani14. Chemo Graphic International Mumbai Mr. Mahesh Bhuta

Findings:1. Indian Dealers & Distributors are ready to promote Italian printing Machines in

India provided the machine manufacturers shall make proper & prompt arrangements for after sales service as well as easy & economical availability of the spare parts.

2. According to them Manufacturers shall be open to offer various combination like bye-back, cross-up gradation etc.

3. The incentive /commission structure varies from 05 % to 15%

4. Most of the agents are not offering credit facility to their Buyers.

37

Feedback from Dealers and Distributors



38



39



40



41


42

Packaging & Converting UnitsSr.No.

Name of the Unit Location Name of the Respondent

Designation

01 Orient Press Limited Mumbai Mr. Manish Jain Vice PresidentSales & Marketing

02 Dhruvi Flex Packaging Pvt. Ltd.

Pune Mr. R B Soundalgekar

Director

03 Smart Tech (Precise Labels & Packaging Ltd)

Pune Mr. Uttam Nagne General Manager

04 Vaishnevi Pakaging And Printerr

Ranjangaon, Dist. Pune

Mr. Bharatt Nahar Director

05 Pack Shield (Associated Capsules Pvt. Ltd.)

Shirwal, Dist Satara

Mr. G S Pathak Manager-Purchase

06 Cargill Foods India Ltd. Kurkumbh, Dist. Pune

Mr. Bhimanappa Manthale

Manager- Process

07 Bilcare Limited Rajgurunagar,Dist.Pune

Mr. Sameer Apte Manager-Printing

08 Kibhuki Roto Hadapsar, Pune

Mr. Bhushan Garge Partner

09 Manikchand Packaging Shirur ,Dist. Pune

Mr. Prakashji Dhariwal

Director

10 Suvidha Flex Packaging Pimpri, Pune Mr. S K Agarwal Director11 Positive Packaging

IndustriesKhopoli, Dist.Raigad

Mr. G. Srinivasan Sr. Manager

12 Rite-Print-Pak Mumbai Mr. Sopan Taware Foreman-Printing13 Innova Printing &

Packaging Co.Bangalore Mr. Satish Manager

14 Global Printing & Packaging Co. Pvt. Ltd.

Bangalore Mr. Amarnath B. K. Executive Director

15 Nandan Phototype Nandan Print & Pack

Kolkatta Mr. Ranendra Nandan Datta

Director

16. Printex India Kolkatta Mr. E. Kabir Managing Director 17. Speed Print Kolkatta Mr. Kingshuk Dutia Managing Director 18. Graphic Enterprises Kolkatta Mr. Pritish Shroff Partner19 Olympic Cards Ltd. Chennai Mr. Iqbal General Manager20. Vaishnavi Rototek Bangalore Mr. Banumathi T.L. Partner 21. Pushpa roto Printers Bangalore Mr. Deepak B. Jain Proprietor22. Anu Polymers Bangalore Mr. Rajendra Proprietor 23. Uniqlobe Packaging Pvt.

Ltd. Mumbai Mr. Rajan Tadani Managing Director

24. Sundram Plastic Chennai Mr. S.S. Murali Director 25. Venus Plastics Chennai Mr. Balasubra

maniyam Proprietor

26. Jaya Plastics Chennai Mr. B.G. Lakshmipathy

Director

27. Uneedus Kolkatta Mr. Ajay Bhadwar Proprietor

Findings:

43

1. Overall Indian Industry is aware that Italians are the world leaders as

far as Gravure & Flexographic Technologies are concerned.

2. Many of the packaging Industries are having their expansion /

upgradation plans in next 2 to 5 years.

3. Existing Users of the Italian printing & Converting machinery are

seems to be ‘brand-loyal’ and willing to go only for the Italian

machinery in case of Expansion & up-gradation.

4. . Italian manufacturers will be welcome in Indian marker provided they

offer Technological support & after sales services to their costumers.

5. Italian companies may offer ‘hand-holding’ support for running jobs to

their Buyers initially after installing their machinery.

6. Inclination towards purchase / install multiple small size machines to

replace one large size machine.

7. End user segment is more interested to have ‘Turn Key solution’ instead of having ‘stand-alone’ machine.

The machinery required for entire manufacturing chain including

various functions like sizing Raw material processing, printing,

gumming, lacquering, lamination, coating, cutting, gathering and

finishing etc. may be provided by single manufacturer.

8. Italian Machine manufacturers may face major compilation from

German Machine manufacturers in Indian market.

44

Publishing HousesSr.No.

Name of the Unit Location Name of the Respondent

Designation

01 Thomson Press (I) Ltd. Navi Mumbai

Mr. Pratyush Basak

General Manager-Works

02 Janatha Printing & Publishing Co. Pvt. Ltd.

Chennai Ms. Vijaya Kumar

Managing Director

03 Blue Bird (India) Limited Pune Mr. Rajesh Desai

General Manager

04 Canara Traders & Printers Private Limited

Chennai Mr. Mahesh V. Shanbhag

Executive Director

05 Oriental Watchman Publishing House

Pune Mr. Ravi Sighamoney

Treasurer

06 Rajhans Enterprises Bangalore Mr. A. Balachandra

Proprietor

07 Chola Printec Chennai Mr. L. Senthivel ProprietorFindings:

1. The users are more concerned about the after sale service, issues since presently presence of Italian manufacturers in Indian market is very less.

2. The Publishing Houses are more cost conscious while purchasing their machinery.

3. Confidence building about the Italian machine manufacturer companies is required.

4. Italian manufactures are required to set an ‘example’ or ‘role model’ through handful of successful end-users in India.

45

News Paper Sector

Sr.No.

Name of the Company


Designation

01 The Hindu Chennai Mr. P. James Rajakumar

Dy. General Manager -Printing

02 Sakaal Pune Mr. Santosh Kulkarni

Asst. Manager

03 Lokmat Pune Mr. Bajirao S. Dhavale

Production Manager

04 Express Publications (Madurai) Ltd.

Bangalore Mr. T. P. Sasidharan

Production Manager

05 Daily Thanthi Chennai Mr. S. Pandian Executive-Materials

06 Dinamani/ Kannada Prabha

Bangalore Mr. T.P. Shashidaran

Production Manager

Findings:

1. Majority of the Indian News Paper Printing Presses are publishing their

News Paper in Regional language hence the circulation is less as

compare to the circulation of the New Paper printer Internationally.

2. Overall trend is to have a few common pages for all the editions and

majority of the pages are part of ‘local edition’ even within region/ city/

circulation area.

3. As a result of that CTP is becoming more popular among the news

paper printers.

4. The Printing Presses operating on the National Basis (Publishing

News paper in English ) are having huge circulation but presently they

are not much keen to shift from Web Offset (or at the most

Flexography) to Gravur.

46

Stationery Sector

Sr.No.

Name of the Company


Designation

01 Anupam Stationery Ltd.

Vasai , Dist.Thane

Mr. Vijay Desai

General Manager

02 Sudarshan Art Printing Press

Mumbai Mr. Anand Bagwe

Partner

Findings:1. Majority of the stationery manufacturers are upgrading their machines

frequently.

2. Italians may welcome since presently there is no comparison available.

Commercial Print Houses

Sr.No.

Name of the Company Address Name of the Respondent

Designation

01 Good Impressions Mumbai Mr. Jairaj Shetty

Proprietor

02 Finalcopy (India) Private Limited

Mumbai Mr. Venkat Director

03 Lotus Printers Pvt. Ltd. Bangalore Mr. M. D. Patil Director04 Shakti Printing Press New Delhi Mr. Umesh

SharmaDirector

05 Digital Graphics India Pvt. Ltd.

New Delhi Mr. J. D. Batra Manager- Production

06 Indra Offset Printers Pvt. Ltd.

New Delhi Mr. Abhishek Gupta

Director

07 S M Print Chennai Mr. V K Babu Proprietor

08 The Sobana Offset Printers

Bangalore Mr. Madhukaran

Manager

09 Batra Press New Delhi Mr. Manminder Singh Batra

Proprietor

10 Vijay Mudran Mumbai Mr. Madhav Kanitkar

Proprietor

11 Veer Offset Mumbai Mr. V Mani Manager12 Vijay Process Mumbai Mr. Sachin

NayakIncharge

13 Print Process Mumbai Mr. Singare Gowda

Proprietor

14 Uthamaguru Offset Chennai Mr. PNV Moorthy

Proprietor

15 Ravi Graphics Offset Printers

Bangalore Mr. V R Natu Proprietor

47

16 Bharat Lithographing Co. (P) Ltd.

Kolkatta Mr. Surendra B. Dhote

Managing Director

17 Lasergraph Advertising Kolkatta Mr.Asif Nadeem

Proprietor

18 Nutan Printers New Delhi Mr. Ashok Aggarwal

Director

19 Jolly Printers Chennai Mr. C.Pandian Proprietor20 Sankalp Arts Pune Mr. Pravin

ZambareProprietor

21. Vijayalakshmi Printers Chennai Mr. R. Ramesh Proprietor 22. Nisarga Offset Printers Bangalore Mr. M.

ShivakanthProprietor

23. Sri Bhavahara Ganapathi Bangalore Mr. Sainath Proprietor24. The Basanti Press Kolkatta Mr. R.K.

BhowmicProprietor

Findings:

1. Major concern is service and spares.

2. German Machine Manufacturers have established very good Brand

Image in Indian market especially in the Offset machine sector.

3. Italians will be having tough compilation by the companies like

Heidelberg & Manugraph in Large & Medium Sectors End user

segment and by Indian Manufacturers like Swift in Small Scale Sector

end use segment.

48

Feedback from Printing Units



49



50



51

CHAPTER 6

SWOT ANALYSISPrinting & Converting Machinery Industry in India

6.1 Strengths

Established industry in India having strong base – about

150,000 to 160,000 printing presses in operation.

A growing industry - Printing and packing industry has CAGR of

about 14%.

6.2 Weaknesses


with the latest Technology.

The printing machinery industry is still dependent on Imported

know-how and import of critical components with different

models in existence without a proper technical back-up by way

of research, development and standardization.

The domestic industry lacks development of new techniques in

the absence of domestic research and development activities in

printing machinery manufacture.

The domestic industry imports used machinery form other

developed countries and then uses it. The industry is not used to

procuring of brand new machinery (may be due to cost

constraints).

The domestic industry has not built-up sufficient strength in R&D

for original design and development.

Majority of the Indian printing presses do not have maintenance

facilities of their own due to economic consideration. As such,

52

after-sales service, even after warranty period, is necessary but

lacking.

6.3 Opportunities

Booming Indian economy.

Government initiatives opening the sector to foreign investment.

Indian has high literacy levels and has seen increase in literate

population in the recent past.

India has a large newspaper reader base. Print media reach is

India has increased to 222 million people.

Vast potential to grow market still larger. There are around 369

million literate peoples in India still not tapped by any publication.

The Indian media industry is undergoing a modernization process in

order to gain from these growth opportunities. In this process they

have realized the need for technically advanced printing machinery

to achieve success in the tough competition.

Recently the print media has been allowed for 100% foreign direct

investment and as a result the foreign print media companies are

attracted towards India. This may further increase the growth in the

demand for printing machines.

6.4 Threats


with the latest technology hence large demand is catered

through imports.

A trend of Increasing imports. Imports of printing machinery

have been increasing from US$ 41 million in 2001-02 to US$

188 million in 2006-2007.

53

Trend towards implementing used machinery in the current

projects or ongoing projects. It is seen that during the past 6

years imports of second hand machinery has increased

considerably.

Since the machinery manufactured in India is not meeting the

requirements of many newspaper / media companies, they are

importing them from Europe and Japan.

CHAPTER 7

BUILDING YOUR PRESENCE IN INDIA

7.1 Entry Strategies For Foreign Investors

A foreign company planning to set up business operations in India has

the following options-

AS AN INDIAN COMPANYA foreign company can commence operations in India by incorporating a

company under the Companies Act 1956 through

i) Joint Ventures

ii) Wholly Owned Subsidiaries

Foreign equity in such Indian companies can be up to 100% depending on the

requirements of the investor, subject to equity caps in respect of the area of

activities under the Foreign Direct Investment (FDI) policy. For details refer to

http://www.dipp.nic.in

Incorporation of Company For registration and incorporation, an application

has to be filed with Registrar of Companies (ROC). Once a company has

been duly registered and incorporated as an Indian company, it is subject to

Indian laws and regulations as applicable to other domestic Indian companies.

For details please visit the website of Department of Company Affairs under

http://www.dipp.nic.in/

54

Ministry of Finance at http://dca.nic.in

AS A FOREIGN COMPANYi) Liaison Office/Representative Office

ii) Project Office

iii) Branch Office

Such offices can undertake any permitted activities. Companies have to

register themselves with Registrar of Companies (ROC) within 30 days of

setting up a place of business in India.

Liaison Office/Representative OfficeLiaison office acts as a channel of communication between the principal place

of business or head office and entities in India. Liaison office can not

undertake any commercial activity directly or indirectly and can not, therefore,

earn any income in India.

Its role is limited to collecting information about possible market opportunities

and providing information about the company and its products to prospective

Indian customers. It can promote export/import from/to India and also facilitate

Technical / Financial collaboration between the parent company and

companies in India. Approval for establishing a liaison office in India is

granted by Reserve Bank of India (RBI).

Project OfficeForeign Companies planning to execute specific projects in India can set up

temporary project/site offices in India. RBI has now granted general

permission to foreign entities to establish Project Offices subject to specified

conditions. Such offices can not undertake or carry on any activity other than

the activity relating and incidental to execution of the project. Project Offices

may remit outside India the surplus of the project on its completion, general

permission for which has been granted by the RBI.

55

Branch OfficeForeign companies engaged in manufacturing and trading activities abroad

are allowed to set up Branch Offices in India for the following purposes:

i) Export/Import of goods

ii) Rendering professional or consultancy services

iii) Carrying out research work, in which the parent company is engaged.

iv) Promoting technical or financial collaborations between Indian

companies and parent or overseas group company.

v) Representing the parent company in India and acting as buying/selling

agents in India.

vi) Rendering services in Information Technology and development of

software in India.

vii) Rendering technical support to the products supplied by the parent/

group companies.

viii) Foreign airline/shipping company.

A branch office is not allowed to carry out manufacturing activities on its own

but is permitted to subcontract these to an Indian manufacturer. Branch

Offices established with the approval of RBI, may remit outside India profit of

the branch, net of applicable Indian taxes and subject to RBI guidelines

Permission for setting up branch offices is granted by the Reserve Bank of

India (RBI).

Branch Office on “Stand Alone Basis” Such Branch Offices would be isolated

and restricted to the Special Economic zone (SEZ) alone and no business

activity/transaction will be allowed outside the SEZs in India, which include

branches/subsidiaries of its parent office in India.

No approval shall be necessary from RBI for a company to establish a

branch/unit in SEZs to undertake manufacturing and service activities subject

to specified conditions.

Application for setting up Liaison Office/ Project Office/ Branch Office may be

submitted in form FNC 1 available at RBI website at www.rbi.org.in

56

Source: Ministry of Commerce, Govt of India.

7.2 Company FormationSTART

Obtaining approval for the proposed name of the Company from the ROC

Drawing up the Memorandum of Association

Drawing up the Articles of Association

Getting the appropriate persons to subscribe to the Memorandum (a minimum

of 7

for a public company and 2 for a private company)

Payment of Registration Fee to the ROC

Receipt of Certificate of Incorporation

Obtain a certificate of commencement of business from the ROC

in case of a public company

END

Source: Ministry of Commerce, Govt of India

7.3 Steps to Get a Company Incorporated

1. Select in order of preference, a few suitable names, not less than

four, indicative of the main objects of the company.

2. Ensure that the name does not resemble the name of any other

company already registered and also does not violate the

57

provisions of Emblems and names (prevention of improper use)

Act, 1950.

3. Apply to the concerned ROC to ascertain the availability of name in

Form-1 A of General Rules and Forms along with a fee of

Rs.500/-. If proposed name is not available apply for a fresh name

on the same application.

4. Arrange for the drafting of the Memorandum and Articles of

Association by the solicitors, vetting of the same by ROC and

printing of the same.

5. Arrange for stamping of the Memorandum and Articles with the

appropriate stamp duty.

6. Get the Memorandum and Articles signed by atleast two

subscribers in his own hand, his father’s name, occupation,

address and the number of shares subscribed for and witnessed

by atleast one person.

7. Ensure that the Memorandum and Article is dated on a date after

the date of stamping.

8. Get the following forms duly filled up and signed:-

i) Declaration of compliance – Form-1

ii) Notice of situation of registered office of the company – Form-18.

iii) Particulars of Director, Manager or Secretary – Form-32.

1. Pre sent the following documents to ROC with filing fee and

registration fee:-

i) The stamped and signed copies of Memorandum and Articles of

Association (3 copies).

ii) Form-1, 18 & 32 in duplicate.

iii) Any agreement referred to in the M&A.

iv) Any agreement proposed to be entered into with any individual for

appointment as Managing or whole time Director.

v) Name availability letter issued by ROC. Power of Attorney from the

subscribers in favour of any person for making corrections on their

behalf in the documents and papers filed for registration.

58

1. Pay the Registration and Filing Fee by Demand Draft/Banker’s Cheque

if it exceeds Rs.1000/-.

2. Obtain Certificate of Incorporation from ROC.

Additional Steps to be taken for formation of a Public Limited Company

3. Consent of Directors to act as such in Form No.29.

4. Arrange for payment of application and allotment money by Directors

on shares taken or agreed to be taken.

5. File the statement in lieu of prospectus with ROC in schedule-iv of the

Companies Act.

6. File a declaration in Form-20 duly signed by one of the Director.

7. Obtain the Certificate of Commencement of Business.

8. As per Citizens Charter name availability will be disposed of in 3

working days.

Forms mentioned above can be downloaded from:

http://dca.nic.in/downloads_2003.htm


7.4 Approval/Clearances Required For New Projects

Approvals/Clearances Required

Department to be Approached andConsulted

Incorporation of Company Registrar of Companies

Registration/IEM/Industrial

license

DIC for SSI/SIA for large and medium

industries

Allotment of land State DI/SIDC/Infrastructure Corporation

/SSIDC

Permission for land use

(in case industry is located

outside an industrial area)

a. State DI

b. Dept. of Town and Country

Planning

c. Local authority/district collector

NOC and consent under

Water and Air

State Pollution Control Board

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Pollution Control Acts

Approval of construction

activity and building plan

a. Town and country planning

b. Municipal and local authorities

c. Chief Inspector of Factories

d. Pollution Control Board

e. Electricity Board

Sanction of Power State Electricity Board

Use and storage of

explosives

Chief Controller of Explosives

Boiler Inspection Certificate Chief Inspector of Boilers

Finance i) SFC/SIDC for term loans

ii) For loans higher than Rs.

15 Million, all India financial

institutions like IDBI, ICICI,

IFCI etc.

Registration under States

Sales Tax Act, and

Central and State Excise Act

i. Sales Tax Department

ii. Central and State Excise

Depts.

Extraction of Minerals State Director of Mines and Geology

ISI Certificate Regional Office of the Bureau of

Indian Standards (BIS)

Quality Marking Certificate Quality Marking Center of the State

Government

Weights and Measures Inspector of Weights and Measures

Code Number for Export and

Import

Regional Office of Director General of

Foreign Trade.

SIDC : State Industrial Development Corporation

SSI : Small Scale Industries

SIA : Secretariat of Industrial Assistance

SSIDC : Small Scale Industrial Development Corporation

SFC : State Financial Corporation

DIC : District Industry Center (exists in particular State)

GOI : Government of India

60

IDBI : Industrial Development Bank of India

ICICI : Industrial Credit and Investment Corporation of India

IFCI : Industrial Finance Corporation of India


7.5 Important Government Websites:Department of Industrial Policy & Promotion http://dipp.nic.in/

Department of Commerce http://commerce.nic.in

Directorate General of Foreign Trade http://dgft.delhi.nic.in

Ministry of Environment of Forests http://envfor.nic.in

Ministry of Small Scale Industries http://ssi.nic.in

Reserve Bank of India http://www.rbi.gov.in

Ministry of Finance http://www.finmin.nic.i

Department of Company Affairs http://www.nic.in/dca

7.6 Investment Related PoliciesFOREIGN DIRECT INVESTMENT (FDI) POLICY

FDI under automatic route is now allowed in all sectors, including the

services sector, except a few sectors where the existing and notified

sectoral policy does not permit FDI beyond a ceiling.

Automatic Route No prior approval is required for FDI under the

Automatic Route. Only information to the RBI within 30days of inward

remittances or issue of shares to Non Residents is required. RBI has

prescribed a new form, Form FC-GPR (instead of earlier FC-RBI) for

reporting shares issued to the Foreign Investors by an Indian company.

61

For details please contact:

Chief General Manager,

Reserve Bank of India,

Foreign Investment and Technology Transfer Division,

Exchange Control Department,

Shaheed Bhagat Singh Road,

Mumbai – 400001.

Tel.:+ 91-22-2266 1603

Fax + 91-22-2266 5330

TAXATION IN INDIAIndia is moving towards reforming its tax policies and systems so as to

facilitate globalization of economic activities. The corporate tax rate for foreign

companies is 40%. The net tax rate is far lower than this on account of

various deductions and exemptions available under the tax laws. Tax holidays

are available in Special Economic Zones set up to make industry globally

competitive. Infrastructure Sector Projects enjoy special tax

treatment/holidays. A user friendly tax administration is being introduced with

round the clock electronic filing of customs documents from 31.3.04. For

details regarding taxes in India, please contact Ministry of Finance,

Government of India, North Block, New Delhi – 110001 through their website

http://finmin.nic.in/topics/taxation/index.html

INVESTMENT FACILITATIONSecretariat for Industrial Assistance (SIA) in Department of Industrial Policy

and Promotion, Government of India provides a single window service for

entrepreneurial assistance, Investor facilitation and monitoring implementation

of the projects.

Secretariat for Industrial Assistance (SIA)

Department of Industrial Policy and Promotion

Ministry of Commerce & Industry

Udyog Bhavan, New Delhi-110 011

Email: [email protected]

62

Tel.: +91-11-23011983

Fax : +91-11-23011034


* * * * * * * * * *

63

CHAPTER 8

CONCLUSION & RECOMMENDATION

8.1 CONCLUSION

Overall Indian manufacturers are not yet wholly equipped with

latest technology, hence large demand for foreign machines.

Packaging and converting is an emerging sector in India.

Presently, offset technology is popular in India, hence, there is a

good scope for introducing technologies like flexography and

gravure by up gradation of existing printing units.

Presently, after sales service , spare parts availability/assurance

in long run & their cost and warranty period are the crucial

points while selecting the machinery for Indian printing units.

8.2 RECOMMENDATION

ACIMGA has already started their office in Mumbai. The Italian

Companies like OMET, Cerrutti etc. have entered in Indian market.

The other Italian manufacturing companies may take advantage of this

situation and concentrate on Indian printing machine market.

Considering present import duty structure (@28.63%) for Printing

Machines & their parts to be imported in India , it may be advisable for

Italian Machinery manufacturers to initially set up their Offices in India ,

increase local market presence on long continuation basis; market their

Machineries ,undertake Installation/Commissioning ,make available

spare parts easily at reasonable costs; train & develop sufficient Indian

manpower for Techno-commercial-management purpose.

As a long term vision , India could be thought of as a manufacturing

base to serve the emerging Asian market as well as beyond to start

64

with Technology Tie ups by select enterprises of suitable scales

manufacturing different categories of end use Printing machines.

The Italian companies are welcome to utilize the professional hand

holding services of MITCON Consultancy Services Ltd., Pune, India for

establishing their operations in India…Best Wishes!!!

* * * * * * * * *

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