SECTOR REPORT: PRINTING AND PUBLISHING

INTRODUCTION:
India has one of the largest newspaper markets
market with more than 100 million copies
being circulated daily, accounting for more than 20% of all dailies in the world. The
Indian print industry is also one of the most fragmented markets with over 75000
registered periodicals with different periodicities circulating in the country.
country
The printing and publishing industry forms a part of the larger Media & Entertainment
industry which also includes TV, films and other media. The Media & Entertainment
industry, which is estimated to be Rs. 73800 Cr in 2011, is expected to grow at a
CAGR of 14% to reach Rs. 1,275,00
1
Cr by 2015, according to a KPMG report. Print
media, that accounts for approximately 30%
30 i.e. Rs. 19,288 Cr of the total M&E
revenues, is expected to grow at a CAGR of 10
10% and reach Rs. 31,010 Cr in 2015.
INDIAN PRINTING AND PUBLISHING INDUSTRY:
INDUSTRY
With a total population of more than 1.2 billion and a literacy rate of more than 75%
according to the latest census, India is one of the biggest publishing markets in the
world. More importantly, given a penetration rate of less than 30%
30%, rising income
levels and increasing literacy rates, the market provides a huge growth potential.
According to FICCI-KPMG
G Indian Media & Entertainment report,
report, the industry is
expected to register a CAGR of 10% during the next 5 years starting from the year
2011 as against CAGR of 6% during the period 2007-2010.
2007
The print business has
witnessed steady growth with new editions being launched and new players entering
the field. An estimated 1900 'large' daily newspapers are published in the country over 40 per cent of them in Hindi, less than 10 per cent in English
English and the other half in
dozens of other languages and dialects. The industry has certain distinguishing trends
and also faces certain challenges which it will have to overcome to become more
mor
effective for its various stakeholders.
eholders.
The majority of the revenues of Indian publishers are derived from advertisements. The
contribution of advertising revenue to overall M&E industry pie is projected to
increase from 38% in 2007 to 42
42% in 2012. Advertising spends are expected to grow at
a CAGR of 15% to reach Rs. 54,100 Cr in the year 2015. Out of this, the print media

continues to have the largest share at 47%, accounting for nearly Rs. 12,600 Cr of the
t
total advertising spends across all media,
media which totaled Rs. 26,600 Cr in 2010. Growth
in advertisement revenue was nearly 15% last year as against growth of mere 3% in
subscription revenue. This trend is opposite to the trend noticed in electronic media
which is fast moving to the paid content model, reducing its dependence on
advertisement
tisement revenue. If we look at past 5 years from 2005 to 2010, the ratio between
advertisement revenue and circulation revenue has dramatically changed from 59:41 in
2005 to 63:37 (on higher base) in 2010. The industry also continues to battle with high
distribution
istribution cost with the distributor getting 30% or more of the cover price.
The tough industry conditions are exemplified by the fact that the cover price of the
newspaper is often about the same as the value of waste paper. Low
L
cover prices
coupled withh high distributor commissions,
commissions, are the two biggest challenges that are
affecting the profitability of the industry.
industry The Indian industry however, has shown a
much better trend than the global print industry, which is witnessing a decline in print
revenues over the past few years. In contrast to the global trends, print circulation
numbers in India continue to witness an uptrend. Furthermore, given the rising literacy
levels and no immediate threat of new media platforms, the trend is expected to sustain
over the near term.
KEY GROWTH FACTORS:
FACTORS
Favorable demographics, rising literacy levels, increasing penetration in semi-urban
semi
and
rural areas,, increasing advertisement revenues, increasing incomes, stronger
regionalization and local language newspapers catching up with English newspapers
GOOD COMPANIES:
(Price information as on 29-02
02-12)
The leaders

Current PE:
Price:

PB:

Avg. EPS PEG(Mar

Growth(3 2011):
year-%):

MCap(Cr):

DB Corp.

205.25

18.12

3.90

56.94

0.30

3,762

Jagran
Prakashan

106.70

18.87

4.03

32.26

0.60

3,375

Good
valuations
Repro India

Other
names

Current PE:
Price:
194.45

5.83

good Current PE:

Price:

Hindustan
Media
Ventures
Navneet
Publications

PB:

1.26

PB:

Avg. EPS PEG(Mar

Growth(3 2011):
year-%):
13.78

0.31

MCap(Cr):

208.75

Avg. EPS PEG(Mar MCap(Cr):

Growth(3 2011):
year-%):

142

16.16

2.42

789.17

0.02

1,042

57.25

16.14

3.28

-10.05

1,364

PORTERS FIVE FORCES ANALYSIS:

Threat of new competition: This is moderate since it takes a fairly long gestation
period to establish the brand and readership for a new player. On the other hand,
there is huge potential in relatively low penetration markets, which would face more
competition from new players.

Threat of substitutes: It is high since other media platforms including various

digital media are giving tough competition to the print industry and are increasingly
becoming the mode of preference for the younger population.

Bargaining power of customers: This is moderate and not high primarily because
the customers are already getting maximum value as compared to other markets in
the world in terms of value for money. The switching costs are not high and the
customers have a lot of options to choose from.

Bargaining power of suppliers: This is on the lower side as there are large numbers
of content providing journalists covering various news segments.

Existing competition: The Indian newspaper industry in general and Hindi

newspaper industry in particular has become intensely competitive in the last few
years. The industry also faces competition from other platforms like internet and TV.
FUTURE OUTLOOK:
With low penetrations of print media in smaller towns and semi-urban
urban areas, there are
large opportunities
pportunities for growth in the Indian publishing market. Along with increasing
incomes and rising advertisement spends with consistent support from automobiles,
FMCG, education and real estate sectors, the print media provides huge potential for
different players. Testimony of this is also the fact that the Indian per capita
advertisements spend continues to be pretty low as compared to the global per capita
advertisements spends.
However, the industry needs to reduce its over
ver dependence on advertisers for survival
as well as reduce the distribution cost. According to the FICCI Frames estimates
though, the advertisement revenues in the print media segment will show a projected
CAGR of around 13% over the next three years fro
from
m a much lower CAGR of 8%
between 2007 and 2010.
isparity in advertisement rates between English and Indian language
Also, the disparity
publications continues despite better reach and more or less similar demography of the
readers of Indian language newspapers.
newspaper This trend, though,, is expectedly to slowly
reverse over the next few years.
years Also, the industry's dependence on education sector
will continue to remain high for some years and focus on regionalization of contents
and innovation will remain the key to success in the industry.
Competition has been intensifying particularly in the Hindi newspaper segment for past
3-4 years. Going forward, regionalization
egionalization is expected to gain prominence in the years
ahead as a key growth driver. Backed by an increasing purchasing
purchasing power across rural
areas,, regional media consumption is expected to rise at a much faster pace. Combined
with revenues from regional segments, Hindi and other regional newsprint revenues
are expected to catch up with English, which has till date, enjoyed a majority share.