Due to impact of Coronavirus outbreak, there is lower spending by investors as well as end-users, India’s Imaging Industry is bound to suffer a big downturn in the FY 2020-21, and severely in the first half.
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The disease has come under control in China, South Korea, Taiwan and Japan from where most of the imaging products are imported, but now the imports come with 10-15% higher prices, and no credit. As the number of Covid-19 cases in India surges, the IT industry has sought easing of regulatory restrictions for a month to enable Work from Home (WFH) for the many sectors, but work-from-home may not apply or help much in case of Imaging Industry.
In most of South Asian countries, the COVID-19 is in the begging stages and expected rise exponentially unless it is methodically controlled. The Indian government is taking drastic measures to control the spread of the virus, through locking down cities and districts, blocking all the transportation services, imposing curfews, etc.
As the Coronavirus outbreak continues spread, now is the time for the technology industries to consider response actions to help mitigate the risks and prepare for how well to deal with the fallout from the Coronavirus. An effective plan should include establishing an interdisciplinary crisis response team to identify, assess, and manage the risk presented. The team should include personnel from purchasing, operations, quality, finance, human resources and legal.
In recent days, technology companies have closed stores and offices, restricted executives and workers from traveling to affected areas and warned about the potential effects on their supply chains. Manufacturers in China and Southeast Asia are key suppliers to various technology companies across the globe. A number of those manufacturers have been impacted by the Coronavirus and have delivered to customers notices of potential force majeure events as a result of the Coronavirus.
China is the world’s biggest manufacturing hub. Typically, Indian companies are present in China as branch offices, subsidiaries, joint ventures, or wholly-owned foreign enterprises, hiring more than half of their workforce locally. China is India’s second largest trading partner. The country accounted for 13.7% of India’s total imports in 2018-19 while 5.1% of India’s total exports went there, according to ministry of commerce data. zent on China. A supply crunch in smartphones, TVs and electronics will impact e-commerce sales dearly. Well, the realization dawns that the outbreak has the potential to affect trade worth #87 billion approximately as China exports around $70 billion worth of goods to India.
COVID-9 is a rude reminder of the fragility in the systems of doing business and the uncertainty. While in the short-term, this is no more than a minor speed bump, in the long-run, many companies must take cues from this episode for contingency of delivery to clients.
Impact of Coronavirus Epidemic on Indian Businesses
According to Sanjeev Mahajan (Consultant & Country Manager) (New Delhi), Prime Success Company Limited, “Yes, the outbreak of Corona virus epidemic has severely hampered the operations of China’s imaging supplies manufacturing companies. Output in most factories / companies in China has reduced or in many cases stopped due to labor unable to reach factories due to travel restrictions and/or quarantine. Production everywhere is quite low as compared to normal and hence much fewer dispatches than usual are possible from factories and this has affected shipments to our customers in India also. Now, many other manufacturers who supply to India are shipping only upon receiving advance payments. This has further restricted the shipments to India as most are unable to meet this advance cash requirement. The FOB prices of the imported compatible new build toner cartridges have been increased by most, if not by all manufacturers, by approx 8% to 10% at least usually to cover the increased input cost of raw materials and shortages. However, in most of India importers and distributors are selling at prices higher by 25% over their normal December-end selling prices to boost profitability as their supply lines are not assured, costs uncertain and they have to ensure supplies last till fresh stocks arrive. Thus the end-user or actual customer pays a little more but it is still below the corresponding OEM price …so I guess this price increase is inevitable to make this business sustainable and profits acceptable.”
Aryan Goel (President), Aryan Trade World Pvt Ltd (ATWPL),said “The outbreak of Coronavirus has affected all the businesses and industries in India, including the imaging Industry. Supplies from China have started now at a slower pace. Recently, I heard customs people are not working regularly, so even if some shipments arrive from China, we are not sure when they will reach our warehouse. Chinese suppliers have increased prices by 10-12%. And then the epidemic has also pushed up the value of dollar against rupee dollar leading to some unavoidable increase in prices.”
“Imaging industry, like every other industry, got affected by the impact of Coronavirus epidemic outbreak. We have sufficient stocks to go for 1 more month. However, the supplies from China have started arriving. Costs have gone up by nearly 10% and we have increased the prices of our supplies to our partners at the same 10%, not more. Also there is delay and disruption of payments receivable from the market in India,” said, Ajay Mehta (Managing Director), Pristine Care Products Pvt Ltd.
Ashish Sanghvi, Proprietor, Premier Computers [Mumbai], shares, “Due to the outbreak of Coronavirus epidemic, there were no suppliers for the last 2 months and now supplies have resumed partially and deliveries are slow due to lockdowns. On the other hand Chinese companies have increased prices by 10%, freight charges have gone up and dollar cost has gone up. Due to all these factors, we are compelled to increase prices of our products to our suppliers by 15-20%.”
Rajendra Seksaria (CMD), Balaji Solutions Limited (Kolkata), comments, “With the spread of Coronavirus in China, all our orders placed to Chinese companies are pending and consignments are not arriving. We finished all our stocks in India and waiting for the consignments to arrive and this has seriously affected our business which has been already been going slow due to dull market for the past few years. We are anxiously waiting for the COVID-9 crisis to end and the pressure to ease on us and on our partners.”
Gaurav Khetterpal (Director), Greenlam Office Solutions (New Delhi), said, “The Coronavirus has definitely affected the Indian imaging industry, as the supplies have stopped from China. The prices of imported products from China have gone up by 10%, but we have not increased our prices to our partners so far as we have old stocks that will keep us going for another 3 months and also we do not want to take advantage of this situation and increase prices.”
Sanjeev Chaudhury, Delco Copier (New Delhi), “Due to the Coronavirus impact, the wholesale prices have surged by 20-25% on toner cartridges and 5-10% on other items like viper blades. On IT products, the increases are by 15-20%. Currently, we have limited stocks and hope the situation will improve by May-end and prices will become normal.”
Mukesh Patel, Multi Info Media Pvt Ltd (Ahmedabad), says, “Due to Coronavirus spread, the supplies had stopped earlier, but now they have started supplies. We have already placed orders and we are expecting deliveries by the first week of May. The Chinese have increased prices by 6-12% and they are doing only cash business first-paid, first-ordered first-served basis.”
Deepesh Patel (Prop), Jet Technologies (Mumbai), comments, “About the impact of the Coronavirus epidemic, we have stocks to go for till mid-May and we are expecting fresh deliveries by the first week of May from China, so are not affected much by the Coronavirus epidemic and also we have not increased our prices because of Coronavirus issue, as many other are increasing taking advantage of the situation. We increased our prices only by 5-10% because of the drop in the value or rupee vis-à-vis dollar. We hope the situation will become normal by May-end.”
Prashant Bhansali (CEO), HCR Info Consumables Pvt Ltd (New Delhi), said, “The impact of Coronavirus has been very bad as we have finished all our stocks. The prices have gone up by 15-25% from China side and we are selling with the same percentage increase. We are expecting new consignment deliveries only by the first week of May 2020. We hope things will improve by May.”
B.B. Somani (CEO),Gloima Imaging Technologies (Pune), said, “The situation is very bad. In China manufacturing has come to a standstill in most of the plans. Only a few manufacturers are taking orders and the increased their prices by 8-10%. We have increased our prices by 20%. Our stocks are finishing fast and may last only till April-end. By the time supplies from China become normal, it will be June 2020. We are eagerly waiting to see the crisis blown over.”
Sandeep Sanghvi, MD, Itone(Mumbai), said “There has been some impact on our stock availability on products coming in from China since there has been a delay in factories reopening, but the situation seems to be improving. Also the impact of Coronavirus has led to a depreciation of the rupee vis-à-vis US dollar. Impact on our business has been limited since we work with businesses and factories worldwide, not just in China.”
Vishvesh Gilda (Partner), Intrix Infotech LLP, opines“The Coronavirus epidemic has caused a panic in the market. Partners and users are buying only a limited extent as they want to see how things will shape up. From Chinese side the prices have gone up by 10-12% and also there is drop in the value of rupee against dollar, so we have increased our prices by 10-15%. We have limited stocks and hope the situation would improve and become normal by June-end.”
Navratan Baid, Vijex Vyapaar Pvt Ltd, said, “There is panic in the market as a result of Coronavirus. We do not import much from China, but import mostly from Japan and South Korea, where our suppliers are able to send us material. So we are not affected much by the this epidemic. Next, we have stocks to run for 2 to 3 months, so we are not much worried. But the drop in the value of rupee against dollar has pushed up our prices. Overall we hope the situation will become normal by June-end.”
Abhay Kumar, Proprietor, Easyfill, comments, “The recent spread of coronavirus has pushed up the prices of imaging consumables. And situation could get worse in the coming months unless the outbreak comes under control.”
David Gibbons Business Director RT Media, comments, “In my view it will take between 1 month and 4 months for everything to reach normal. For some suppliers it will make little or no difference with just a small temporary delay. For some others it will take a little longer.,”
Tarun Gupta, Goel Imports, New Delhi, states, “The Coronavirus epidemic has definitely affected the imaging industry in India as a result of its severe impact on the manufacturing of imaging products in China. Earlier, the suppliers in China were giving credit, but now they are asking the Indian customers to pay back the dues and then pay in advance for fresh purchases. We may receive supplies, for the orders we placed in Feb 2020, only in May. Right now prices of imaging products in India have gone up by 25-30%, but if the supplies are short, the situation can worsen in the coming months.”
Rakesh Virmani, Proprietor, Rank Office Automation, opines, “For the past two months there have been no shipments from China due to the outbreak of Coronavirus pandemic. At present, only toners are made in India and other components have to come from abroad. So our business is bound to be affected. However, we have good stocks, so we are able to cushion the effects of low supplies from abroad. We hope the Coronavirus situation will improve by May-June.”
Ashish Ahlawat, A R Copier, New Delhi, expresses, “Due to Coronavirus outbreak, prices have gone up by 20% and sales are coming down, because nobody wants to make big purchases as the market trends remain uncertain. Copier consumables business is totally down and printer consumables are doing ok. On the negative side we do not know when the outbreak will subside and we start getting deliveries from China. If the situation continues, from June onwards there could be acute shortage of products. Let us hope the situation will improve.”
Ganesh S. Iyer (GM-Sales & Marketing), ITDL Imagetec Limited [New Delhi], said“Since we manufacture everything in India, the outbreak of Coronavirus epidemic has no impact on our business in terms of demand or supply. Only high the unhealthy competition from low-quality products in the market is affecting our business negatively. But if the epidemic breaks loose and goes out of control in India, it can have devastating effects on the India industries and markets, irrespective of the import situation.”
“Due to the outbreak of Coronovirus, we have increased the prices of our products by 20% for our customers in India, but sales have gone down. Copier consumables have come down drastically by printer consumables are doing OK. Let us hope the situation will improve soon,” concluded Joshi of Delhi Copier.
Looking at the Brighter Side of the Situation
The outbreak of COVID-9 has devastated the Indian industry in general and imaging industry in particular. Let us see the positives of the situation at least in the short-run. On a positive note, dollar has appreciated by almost 4-5%, which is a good sign for Indian export businesses as their margins will improve. Due to this, some western companies India could become a manufacturing-outsourcing alternative to China. For those who have overstocked products, this will be an opportunity to clear stocks. Another brighter side is imaging players have been selling with very low margins which has been pushing them below survival level. With prices increasing now they can make some decent profit. Below are some opinions which throw light on the positive side of the current crisis.
Tempted by credit supplies, some entrepreneurs have overstocked the products and on the other hands margins have been too low in the past few years making it difficult for the players to survive. In general business on credit is bad and harmful for both suppliers and partners in the long run. Some Industry players believe this is an opportunity to dispose of their stocks and at decent profit; and it is also an opportunity to get out of the old and destructive way of doing business on credit. Below are the comments of some people who look at the brighter side of the current scenario.
Tarun Gupta of Goel Imports states, “Looking at the lighter side, Chinese manufacturers stopping credit sales is also good for the Indian providers who often tempted to purchase big lots on credit and then unable to sell them in-time and then end up selling at undercut prices thus upsetting the MoP. Now, I hope, people will buy only the amounts they could comfortably sell. Some importers and distributors are selling products at 50% above earlier prices taking advantage of the panic-buying. In our case, we have increased prices by a reasonable 10%, not over-pricing, so that partners can comfortable in selling our products and we want to maintain that goodwill and trust among our partners and end users. We are also trying our best maintain a continuous supply to our partners in spite of Coronavirus affects.”
Ashish Ahlawat, A R Copier, New Delhi, expresses, “We have enough stocks and we have been suffering due to low margins but now with prices going up we could make some decent profit by increasing prices. Industry and partners have been weighed down by low margins. Now, as a positive effect of the Coronavirus outbreak, the distributors who have over-stocked products can finish the stocks and also make a decent profit as prices have gone up. Similarly, dealers and jobbers can charge a little more from the customers and make some profit.”
says, However, I do not see any link between the Coronavirus and ‘Make in India’ initiative except that people are unable to travel from the to-and-fro the affected countries indirectly affecting the process. There is nothing we can really do under the circumstances; we just have to wait till the situation improves,” concluded, Sandeep Sanghvi, MD, Itone.
How Entrepreneurs are Dealing with the Crisis
According to Aryan Goel of ATWPL, “We have a few stocks left, but have not increased prices much to our partners as we want to support them. We are currently supplying only to our old and regular partners and not accepting any new partners. Unless the epidemic comes under control in the coming few weeks, all the industries in India and the economy is going suffer severely.”
Ajay Mehta of Pristine Care Products, said, “We are optimistic that things will get normal by April-end provided the epidemic won’t go out of control in India.”
Ashish Sanghvi, Proprietor, Premier Computers [Mumbai], said, “We have stocks to run till the end our April 2020. We hope the situation will improve by May. Otherwise there is going to be severe shortages in the market.”
Mukesh Patel of Multi Info Media says, “We have stocks to go for two more months. We are supplying only to some limited regular partners so that they do not run out of products. Also we have not increased prices for them; we are supplying them at old and genuine prices.”
Sanjeev Mahajan of Prime Success Company Limited, said “Customers in India are now not buying big lots and are not making long-term commitments as the future price and supply scenario is uncertain thus further exacerbating the difficult situation. To survive and even thrive under the present circumstances, importers and distributors in India should maintain long-term supplier relationships to ensure their brand’s integrity and consistent customer experience. Importers should not increase the prices of their products unnecessarily nor shift to selling lower quality products to compete, taking advantage of the shortages situation. All we can do at present is to hope things will improve sooner than expected and by April or latest before end May 2020 the situation will be normal and supplies ease to fully meet customer demand.”
“We want to be supportive towards our partners as far as possible. If the situation continues this way then we may have to increase prices. Drop in the value of rupee vis-à-vis USD is also impacting our imports. In April we will take a call whether to increase our prices to partners or not. We hope the situation will get normal by May-end,” concluded, Gaurav Khetterpal (Director), Greenlam Office Solutions (New Delhi).
Finally
At a time when the world is looking for the cure of Covid-19, it is essential for technology companies to be able to support global efforts by ensuring adequate uptime to save of lives around the world. India’s leading global information technology, consulting and cloud services companies are reacting on war-footing to help businesses sustain and operate under pressure of Coronovirus pandemic. Companies are offering FREE MIGRATION of Desktops to Cloud so that businesses can declare work from home option for their employees and contribute to the safety of their employees. It is important for the Technology Industry to take additional steps in-time in order to mitigate their risk of suffering negative impacts from the Coronavirus. This is also an opportunity for the brand and partners to design new proactive strategies that will help them do business better in future. Many times great inventions are made during crises.
INDUSTRY VIEWS
Mr Aryan Goel (President), Aryan Trade World Pvt Ltd (ATWPL)
“Supplies from China have started at a slower pace but shipments are also getting delayed at customers further as customs departments are not working at full capacity due to lockdowns. We are just waiting for the situation to improve.”
Mr Sanjeev Mahajan (Consultant & Country Manager) (New Delhi), Prime Success Company Limited
“Importers should not increase the prices of their products too much nor shift to selling lower quality products to compete, taking advantage of the shortages situation. Partners in India should maintain long-term supplier relationships to ensure their brand’s integrity and consistent customer experience.”
Mr Sandeep Sanghvi, MD, Itone
“Impact on our business has been limited since we work with businesses and factories in several countries worldwide, not just in China. But the impact of Coronavirus has led to a depreciation of the rupee vis-à-vis US dollar this is putting pressure on us to increase prices.”
Mr. Gaurav Khetterpal (Director), Greenlam Office Solutions (New Delhi)
“Under the circumstances, we want to be supportive towards our partners so we have increased prices as little as possible. Drop in the value of rupee vis-à-vis USD is also impacting the prices of imports.”
Mr Rakesh Virmani, Proprietor, Rank Office Automation
“At present, only toners are made in India and other components have to come from abroad, so our business is bound to be affected. However, we have good stocks, so we are able to cushion the effects of low supplies from abroad. We hope the Coronavirus situation will improve by May-June.”
Mr Ashish Sanghvi, Proprietor, Premier Computers [Mumbai]
“We have stocks to run till the end our April 2020. We hope the situation will improve by May. Otherwise there is going to be severe shortages in the market.”
Mr Mukesh Patel of Multi Info Media Pvt Ltd
“Until our current stocks are finished, we are supplying only to some limited regular partners at old prices so that they do not run out of products. We hope things will improve soon.”
Mr Tarun Gupta of Goel Imports
“Now, I hope, people will buy only the amounts they could comfortably buy and sell in cash, and credit-based business will decrease. Credit business is bad for both sellers and buyers in the long-run.”
Mr. Ganesh S. Iyer (GM-Sales & Marketing), ITDL Imagetec Limited [New Delhi]
“Since we manufacture everything in India, the outbreak of Coronavirus epidemic has no impact on our business in terms of demand or supply. But if the epidemic breaks loose, it can have devastating effects on the India industries and markets.”
Mr Joshi of Delhi Copier
“Due to the outbreak of Coronovirus, we have increased the prices of our products by 20% for our customers in India, but sales have gone down. Copier consumables have come down drastically by printer consumables are doing OK. Let us hope the situation will improve soon.”
