Noel D’cunha (ND): Congratulations. Please tell us about the new Reliance investment. It’s probably the first of its kind investment by a non-print player into the print industry. When did they get in? What are they doing?
Hitesh Jobalia (HJ): Thank you. Reliance Equity Advisors has invested Rs 110-crore against 29% stake in our company.

ND: How have things changed since you opted for the Reliance investment? I imagine it raised your profile.
HJ: The change was expected. When we were working towards the IPO, we were aware that once the issue opens, we will all get busy in working towards achieving our goals we have set forth for ourselves. Now after the Reliance investment is through, we have been experiencing a hectic schedule. This is a very exciting time for all of us at Max and we wish to make the most out of it and grow as a company.

ND: How do you plan to utilise the Reliance investment?
HJ: Our plans more or less remain the same, as they were for the IPO. We are setting up a flex manufacturing plant, a PVC rigid sheet and PP hollow sheet manufacturing plant. We will add to our presence by opening up new branches. With these developments, we would be able to serve our customers better than before. We are glad about Reliance’s infusion of funds in our company and we will ensure that we make the most out of it.

ND: How are you assessing the world economic situation? Some people are saying that the print market is fizzing out…
HJ: I very strongly believe that the print market is here to stay. Take for example newspapers. Many had predicted the death of newspapers; that it would be out of business a long time ago. Every time I get asked if we should be worried about competition from the internet or the electronic media with a plethora of news channels. A few years ago, I would say no. I say no even today because in spite of all the doom, newspapers are still printed in very high volumes. And I say no also because these newspapers are on the internet too, more and more all the time, updating their site many times during the day while enjoying huge circulations for their printed newspapers. Similarly, the signage industry of which we are a part, also will continue to grow as the closest alternative to printed outdoor advertising is digital signboard. But there are factors that very strongly work towards the growth of printed signboards and other printed outdoor advertising.

ND: The Indian printing industry has grown many folds in last three to four years. Your view?
HJ: We estimate that print in the Indian market is very promising and lucrative. On the business side of things, there are competitive pressures, and with changes in the industry, the consumables sides of the print landscape are changing. What you are going to see is more and more innovations coming in. We think that offering these value added benefits may be one of the ways to penetrate the market. In doing so, Max has become a leader in providing the signage consumables in India and has seen a growth of about 50% in the last three years.

ND: What is your mid-term outlook for the Indian print market? Will print firms continue to boast 20% plus return?
HJ: I strongly believe that the Indian printing Industry will continue to boom and as I have said, the returns of 20% and more are easily achievable by the printing firms that offer quality solutions and good customer service.

ND: Let us rewind to 1968? How did you create Max …
HJ: Max had a very humble beginning, my father, along with my uncle, started a printing press in 1968. The printing press was performing reasonably for years. By 1983, our press had a turnover of about Rs 10-lakh. I was in college at that point. Even at that young age, my parents had immense confidence in my abilities and they persuaded me to start working in the printing press. After attending to work at my father’s press for few days, I observed that our printing press was facing serious financial crunch. I did a quick root-cause analysis and realised that the issue that we faced was firstly, the availability of the printing consumables and secondly, the demand of immediate payments against the purchase of printing consumables. There was no direct way out. That’s when I thought of starting the trade of printing consumables. I was convinced and sold to the idea of trading. I floated this idea to my father and he was receptive. We got a dealership of one domestic brand. The progress we made in trading added to my confidence and we started moving in this direction.

ND: Today, Max is a ‘one-stop-shop’ for all printing?
HJ: Yes, we provide 10,000 variations of the printing consumables. Our products are especially designed keeping in mind the needs of the Indian market and with 26 branches, we are able to supply the best quality consumables to printers across India.

ND: In terms of numbers, what does this translate into?
HJ: Max has grown at a CAGR of 107.96% between 2006 and 2011 and our profit after tax went up by 278.54% during the same period.

ND: Consumables is crucial to Max’s dealings. What is the business model for this?
HJ: India is a very huge country in terms of its geography. There are printing houses are across the length and breadth of the country and not all are able to stock consumables. Hence, they depend on companies like us to supply them with the materials as and when the need arises, which is usually on a very urgent basis. This demands consistent availability of quality consumables and also a pan-India presence. Max’s distribution network of 26 branches spread across the country caters to the needs of the printing houses at any time. From a business point of view it is essential have a strong distribution network. But there are other factors too, factors like quality, readiness to supply new global technology, innovation with the products and also the customer service plays a major role in defining the business model when dealing with consumables for the Indian printing industry.

ND: Why do you think the print market is so dependent on the distributor model? Is it good from the view of the broader macro-economic point of view?
HJ: As I mentioned earlier, the market is dependent on the distributor model as the printing houses are located far and wide. The industry has technologically advanced over the years and the printers are able to provide world-class printing solutions to their customers. Due to this technological advancement, the variations of consumables in terms of sizes and quality are very wide. The printers are never sure of what type of job work would their customers need, thus making it difficult for them to stock such a vast variety of consumables. With a wide repertoire of product variations and distribution network, Max is in a position to make available consumables as and when required.

ND: But India is a large country. How do you manage the supplies?
HJ: Yes. Our branches are very strategically located and that’s not all. They are also equipped with adequate facilities for warehousing of the consumables as per the trend and demands of their respective regions. This I believe is also very good from the macro-economic point of view.

ND: About a year ago, Max decided to raise funds through initial public offer (IPO) for its expansion activities. Why the change?
HJ: Indian printing industry is very demanding and challenging, the needs do not suggest any specific trend and also demands keep changing with time. A printer might need a particular size and quality of a flex today and would ask for something completely different tomorrow. We at Max understand this and are committed to ensure that whatever the needs of our customers are, we should be able to serve them. Our customers expect us to be ready with any type of material they may need at any hour of the day, any day of the year. In an effort to live up to the expectations of our customers and to serve them better, we realised the need of setting up the flex manufacturing factory in India to supply the customers with whatever their needs are at the earliest as against getting the materials manufactured through our contract manufacturing suppliers in China and getting it shipped, which is time consuming. Thus setting up a factory in India would ensure that our customers can order any specification of consumables in terms of quality, sizes and quantity and we would be able to manufacture it in our factory and deliver the same to them at the earliest and with ease. It would also be cost effective for our customers and would give Max a competitive advantage in terms of price. Setting up of a factory is not an easy task. Manufacturing flex is one thing and manufacturing quality flex is another. We, with the help of our technology partners, would be able to serve our customers with the best and consistent quality. This is what made us realise the need of raising funds through the IPO.

ND: What are your targets?
HJ: As I said our current focus is on setting up the manufacturing plants for flex, PVC rigid sheets and PP hollow sheets. The printing industry in India is promising and we want to keep pace with the times and support and serve our customers all across the country.

ND: Are there chances that Max will go public maybe in the next two to three years?
HJ: Although nothing is finalised as yet, I won’t deny the possibility of Max going public in the future. However it will not be appropriate to comment on the timeframe as of now.

ND: Switching gears. Let’s talk about your offerings going forward. This is an incredibly secretive market and there is so much competition. There is new competition from manufacturers who have started offering print consumables as part of a package deal. Do you see that as a threat?
HJ: I know what competition you are referring to. As far as digital and signage consumables are concerned, Max is the largest supplier and with our product portfolio and our presence across India, it will be extremely difficult for any company to compete with us, moreover there is no direct competition as of now. However when we talk about the offset printing industry, we have our own set of customers and the list keeps growing. We are able to offer unmatched service and support to these customers and that’s the reason they are with us in spite of the stiff competition. Thus, if you see the overall picture, there is no threat to Max.

ND: A lot of print consumables manufacturers are having hard time right now owing to rising raw material cost, which are squeezing profits. There are reports that costs per item will be up 20% in the next half of the year and that passing them on to the consumers is an option. Will consumers tolerate higher prices?
HJ: In India, there are just few print consumables manufacturers; most of the supplies are imported, the major issue they face is not only the prices of the raw materials but also the quality. Manufacturing of the printing consumables like flex, inks etc require a comprehensive technical knowhow and this needs to be bundled with top-class service and support. Just having deep pockets will not suffice. Max along with its technology partners will be able to provide consistent quality of consumables and since the manufacturing will be done in India and the raw materials will also be sourced from within India, we will be very competitive in pricing.

Max catalogue launch in Mumbai