On Friday, November 4, we had a very informative session by Mr Narendra Paruchuri, CEO of Pragati Offset as part of the ICFAI WiseViews Leadership Conversations Series.
The full recording of the session is available at:
About Mr Narendra Paruchuri
Mr Narendra Paruchuri graduated in Chemical Engineering from the Manipal Institute of Technology in 1975. He worked in a Metal Finishing company for 2.5 years before joining Pragati Offset Pvt. Ltd., a commercial printing press started by his father Sri Paruchuri Hanumantha Rao in 1962.
Mr Narendra has been instrumental in helping Pragati embrace the latest technologies and building a professional team. Under his leadership, Pragati has become a pioneer in many facets of the printing industry. Mr Narendra has made Pragati an extension of the customers’ team, rather than just be another supplier. In the printing industry, Pragati is the winner of the highest number of awards, domestic and international.
Mr Narendra is ably supported by his brother Mahendra, and sons Harsha, Hemanth and niece Swathi. Their hard work and keenness to excel have made Pragati one of the best printers of the world and winner of the SAPPI International Printer of the Year award in 2006, 2008 & 2010. Mr Narendra’s wife, Dr. Sasikala, a gynaecologist has also been a pillar of support.
About Pragati Offset
Pragati Offset has five major verticals.
– Commercial Printing
– Cartons
– Labels
– Rigid Boxes
– Outserts
Commercial printing includes Coffee-table books, Annual reports, Catalogues, Posters, Calendars and Leaflets.
Cartons are supplied to industries such as FMCG, personal care, medical products for toothpastes, cereals , perfumes, etc.
Labels are supplied to industries like pharma.
Rigid boxes are used for Luxury packaging in industries like High-end cosmetics, Cell phones, Liquor, and chocolates.
Outserts include medical literature which must go with every bottle of medication when exported to the USA.
Note: During the Q&A, Mr Narendra explained that the diversification from printing into other businesses began with the arrival of the internet in the mid-1990s. Hard copies gave way to soft copies in some areas. Pragati toyed with the idea of entering magazines but his friends (owners of Kalajyoti Printers) were already in this business. So, Mr Narendra stayed away. That is how the idea of entering cartons, boxes and labels came. It helped that Hyderabad was a Pharma hub.
The early days
Mr Narendra’s father, Mr Hanumantha Rao was closely associated with his friend Sri Vasireddy Narayana Rao who wrote detective novels. Mr Hanumantha Rao would get them printed and sell them to make a living. This was his training ground for printing. Later, he got a job in Visalandhra newspaper. He then joined Sarathi Studios and shifted to Hyderabad in 1957.
In 1962, Sarathi Studios were closed due to the scarcity of cine film with no foreign exchange available due to the India-China war. His father was out of a job again. Luckily his mother who was a teacher in Holy Mary High School supported the family.
In 1962, Mr Hanumantha Rao decided to start his own press with Rs.4000 of his money and his friend Mr. Narayana Rao’s Rs.6000. A year later, his partner quit, making it a proprietary concern.
Initially, Pragati was a letter press unit. In 1964, his maternal uncle, Mr. Neelakanteswara Rao joined the press and became one of the pillars of the organization. The early years were a struggle, but Mr. Narendra’s mother came to the rescue and could keep the kitchen going with her job.
From the beginning, Pragati had a good name as a dependable printing press. The first major step was buying a single colour offset press in an APSFC (AP State Financial Corporation) auction for Rs.1,77,000, a very big sum those days. But Mr Hanumantha Rao was cautious and not too interested in rapid growth, as he was not sure about his children entering the business.
Mr Narendra graduated in Chemical Engineering from Manipal Engineering college in 1975. He was a good student and passed out as a university rank holder. Studying in Manipal from 1970-75 taught him many things apart from the studies and developed his personality.
Mr Narendra joined Roxy Metal Finishing company in Bangalore in 1975. The company specialized in Gold plating – watch cases and Electronic contacts. He made a mark in HMT and things were going well. When his dad showed Mr Narendra, Golden Press, which at that time was the biggest press in Hyderabad, he decided to join and strengthen the family business.
Mr. Narendra joined the press on May 1st, 1978, when the turnover was approximately Rs.3 lakhs per year. Pragati moved to its own premises in Red Hills in 1982. Those days, imports were restricted. The OGL (Open General License) policy introduced during the 1982 Delhi Asian Games, liberalized imports and enabled Pragati to leap forward. The company had felt very stifled in the license era.
When the Internet took off in the mid-1990s, there were new opportunities but there was also the threat of disruption. Pragati started a Packaging Division in 1998 to insulate itself from the impact of the internet. The decision has paid off. Today, 3/4th of the business comes from Packaging.
Slowly but steadily, the company went from strength to strength achieving several landmarks:
- First photo composing set up in South India in 1979
- First new imported Offset machine in 1980
- First 4 color press in Hyderabad set up in 1985
- First computerized 5 colour press in India set up in 1988
- Computerized MIS set up in 1992. This enabled Mr. Narendra and his brother to offer quotes to customers in real time, even as the (hugely expensive) STD call with them was going on.
- International Printer of the Year award for in 2006
- Golden Jubilee of Pragati in 2012
- Shasti Poorthi (60 years of completion) in 2022
- Registered ‘Pragati.com” in 1996
Quality
Pragati began as the best printing press in its area, then the best in the city, then in south India and finally across the country. In the early days, Mr. Narendra would go around carrying posters and samples, to show prospective clients the kind of work which Pragati could do. Many clients were in Mumbai and Hyderabad was not well known those days. By investing in technology and improving quality, Mr. Narendra differentiated his product successfully. Today, thanks to its quality, Pragati has many customers and has 11 offices all over the country.
Awards
In 2001, Pragati was the SAPPI (South African Pulp and Paper Industries) Asian Printer of the year. Pragati continued to win this award till 2012 when this competition was disbanded. Pragati’s proudest moment came in 2006 when the company won the coveted Elephant – the International Printer of the Year – in Budapest. SAPPI brought the elephant to India to award the same to Pragati as SARS prevented big functions. There are three SAPPI elephants in Asia. All have been won by Pragati.
Pragati today is the most awarded company in this country in the printing industry. But Mr. Narendra, who is extremely grounded, believes that the company cannot rest on its past laurels.
What made it all click
Mr Narendra generously acknowledged the contribution of all those who have helped Pragati become what it is today.
Parents: Once they handed over the company, they never ever asked Mr. Narendra any question. They were informed about investment plans. But this was more for information and less for permission.
Uncle Sri Neelakanteswara Rao: He worked very hard to keep the press going. He was with Pragati for 27 years.
Brother Mahendra: He has worked with complete loyalty and dedication.
Son Harsha: He has made Pragati’s prepress world class and so also the printing.
Son Hemanth: He has made his mark in the Packaging business.
Daughter Swathi: She takes care of finance, compliance and audit.
Wife Dr. Sasikala and Daughters in law Sruthi and Bhargavi: Have been pillars of support
Team Pragati: Without the dedication of its employees, Pragati would not have come this far. During the Q&A, Mr Narendra emphasized that success is possible only if we attract the right kind of people, train them well and retain them.
Learnings
It is important to use appropriate technology. We should not ape the west or the east. We should choose the technology that would best suit us.
We must master the domain. We must enter new areas in a small way. That will allow us to learn and in case of failure, walk away.
The team is the main difference between success and failure.
We should not delegate financial management to the CFO.
We should run the business in a clean and transparent way, paying taxes and following the laws of the land.
We must try to keep zero debt.
Our employees are the best consultants, best lawyers and best accountants for the company. There is no need to go outside.
We must constantly keep looking for better technologies far before others. We may have to go through the pains of a pioneer but the early bird does get the worm.
It is very important to hand over the charge to the next generation. This must be done when we still have some steam left as we can mentor them, if needed. We must also help them plan for their team as the team would be aging too.
Managing expectations: Having the right expectations will help us remain in peace.
Outreach
Mr Narendra sincerely believes that giving is far more enjoyable than taking. He has set up various CSR initiatives:
- Pragati Public Charitable Trust since 25 years
- Free clinic held once a week. (Now shut down as these areas have become rich.) There are more than 20,000 registered patients.
- Support teachers at Teach for India NGO (10 teachers every year)
Covid 2020
An unheard of, unseen, unprecedented situation dawned on Pragati in March 2020. More than 50 days were spent in lockdown. Luckily, the company was able to function with a skeleton staff to deliver packaging to the Pharma and Food companies. The team rallied behind the company by accepting cuts in remuneration for two months.
Mr Narendra was unhappy at the silence of the central government. MSMEs are the backbone of the country as they produce most of the jobs. But not much support was forthcoming from the government.
However, the pandemic was a boon in some ways. Zoom provided a good way to interact regularly with all the 11 offices. Mr Narendra also used the pandemic to improve software and marketing materials.
Mr Narendra took advantage of the pandemic and started his succession planning. He asked his sons to look at all expansions and new technologies. He participated in all discussions with them and gave them his take on the new technologies – pros and cons. But it was up to them to take it or leave it. Every Sunday morning, the family meets to deliberate on important issues. Mr Narendra listens to the next generation and only offers his views. It is up to them to take the decision.
Q&A
On entrepreneurship
It is challenging to become an entrepreneur. We need breadth of knowledge besides expertise in the chosen domain. It is also important to understand Finance. We must work hard. But success means there is a lot of money to be made. So, entrepreneurship is worth the effort and time.
On India ‘s capabilities
When it comes to technology, India is second to no one. At the same time, the country enjoys low labour costs. So, we can do many improvisations and embellishments. These are simply not possible in western countries due to their high labour costs. We are today a cheaper location than China. With many companies embracing China plus one, the outlook for the country is bright. Recently, Pragati provided packaging for Johnny Walker bottles. It was very much appreciated by the customer.
On ESG certification
Contrary to common perception, paper is a highly sustainable material. As long as paper is made from trees cut in certified forests, there is no problem. For every tree cut, two new trees are planted. Pragati also uses more sustainable soy-based inks. Wherever possible, Pragati uses green technology. Unfortunately, ESG investments cost money and many customers are reluctant to pay a premium. Mr Narendra’s personal philosophy is that operations should be sustainable. We must leave the world a better place for future generations.
On the impact of digital
Digital printing is useful for very small print runs, when time is limited and the information is variable and has to be customized. But when we must print more than 100-150 copies of the same matter, offset printing is cheaper and also of much better quality. While digital technologies have in some ways eliminated the need for hard copies, greater purchasing power means that the market for printed books continues to grow.
Digital may be growing fast but that is on a small base. Offset may be growing slowly but it is on a large base. So offset printing will continue to be important. The two forms of printing will coexist.
Pragati has strong capabilities in digital printing. For one cigarette customer, it has made 1,000,000 packs each with a different label. This remains a world record.
On the importance of healthy cash flows
Mr Narendra recalls importing an expensive equipment from Japan. Just when the shipment arrived in India, the customs duty was increased and an additional Rs 30,000 had to be paid. Mr Narendra did not have the money. Fortunately, he persuaded SBI to give a loan for the additional amount. The experience taught Mr Narendra the importance of healthy cash flows.
Today, Pragati is cash rich, pays suppliers promptly and takes advantage of all the payment discounts. Mr Narendra however added that beyond a point, cash does not have any value. It only makes the accountants and tax officials happy. Cash must be invested prudently to achieve the required growth.
On governance
Mr Narendra was an independent director on some boards and found his views were not taken seriously by these companies. So Pragati does not have any independent directors on the board. On the Pragati board, there are a couple of members who have risen through the ranks. The company is managed professionally. People are empowered to make decisions. Mr Narendra is only kept informed. A good example is Mr Ananth who manages the NOIDA plant.
On talent retention
Mr Narendra’s philosophy is to attract decent people, pay them good salaries and provide a good working environment. At the top, compensation is handsome and more in the form of variable pay. At the bottom, people are treated humanely and provided financial assistance in special situations.
On keeping pace with technology
Mr Narendra and his team regularly visit exhibitions abroad. Mr Narendra has spent days together at the famous Dusseldorf exhibition moving from one stall to another to keep pace with the recent developments. Once a promising technology is identified, a second team then visits and makes a more detailed study. Earlier, many of the equipment came from Europe. But today, China is also able to offer good quality machines at a much lower price. Mr Narendra is very much impressed by the Chinese. Like us, they employ more people. That is important because our social responsibility is to create jobs.
On vendor management
Pragati maintains excellent relations with vendors. These vendors give advance notices about price rises. But the past two years have been chaotic. More than the price, Mr Narendra has been worried about reliable supplies. Prices have almost doubled between 2020 and 2022. By the time Pragati’s customers agree to a price revision, the suppliers impose another hike. Now with container prices coming down, things may be turning the corner.
On meeting commitments to customers
Mr Narendra always keeps additional capacity so that he can meet tight deadlines without any dilution of quality. The general policy is to expand the capacity once 75% utilization is reached. Pragati never lets its clients down and tries to ensure on time delivery because clients make promises to their customers based on the promised delivery schedule.
There are too many printers today. So, competition is increasing. Some of them are unviable. If a few of them fold up, it will be good for the industry. With a turnover of about Rs 120 crores in Commercial Printing and Rs 350 Crores in Packaging (Group turnover Rs 450 Crores for 2021/22), Mr Narendra is satisfied with steady growth.
