Import Duty Cut May Propel Photographic & Allied Products

The market for these goods may look up. The industry turns out a wide variety of products that makes it difficult to assess the value of production.

It is safe to assume the industry grew by about 20 per cent in 1996-97. The figure is based on the average growth of the photography majors after allowing for fluctuations.

Yet, per capita consumption of photographic rolls in India is low at 0.04 per annum compared to 3.6 rolls in the USA and 3.4 in Japan.

The growing middle class in the country that seeks to make photography a part of its lifestyle provides a major stimulus to the industry.

 

The market for photographic goods is expanding as more and more households inch up to the middle class category. The entertainment industry too aids industry.

The rising demand for these goods has certainly helped the photography majors to do well.

In the first half of 1996-97, sales income of five select photographic & allied product companies increased by 20.4 per cent to Rs 416.4 crore (Rs 345.9 crore). Kodak India and Selvas Photographics exceeded the average growth in sales. Selvas Photographics, mainly engaged in X-ray films, reported an increase of 97 per cent in sales income.

Operating profit of the five companies rose to Rs 40 crore (Rs 31 crore), up 29.7 per cent. Gross profit increased by 26.6 per cent to Rs 33.6 crore (Rs 26.5 crore). Net profit rose by 24.3 per cent to Rs 29 crore (Rs 23 crore).

Operating profit margin of the five companies was up to 9.6 per cent (8.9 per cent), gross profit margin to 8.1 per cent (7.7 per cent) and net profit margin to 6.9 per cent (6.6 per cent). Jindal Photo Films topped the profitability margin.

The company claims it continues to enjoy an edge over its competitors mainly because of value addition to the imported semi -finished products.

Kodak India, during the nine months to December 1996, showed an annualised increase of 33.3 per cent in sales income to Rs 240.8 crore (Rs 240.9 crore). Annualised net profit of the company rose by 170 per cent to Rs 4.7 crore (Rs 2.3 crore).

Hindustan Photo Films, a public sector enterprise, has been declared sick.

ICICI has been appointed as the operating agency to examine its economic, commercial and technical viability.

Industry circles are not in agreement over the exact size of the photographic and allied products industry, since aggregation of values at all stages involves a number of numerical and methodological difficulties.

However, most agree upon Rs 1,300 crore as the size of the industry's organised sector. The industry comprises of different products like photo colour paper, colour film rolls, medical x-ray films, graphic art films, cine colour positive films, black & white paper, black & white films and cameras.

Photo colour paper (Rs 300 crore) and colour film rolls (Rs 360 crore) account for 50 per cent of the total market size.

The rest of the players include cine colour positive films with a market size of Rs 250 crore, medical x-ray films - Rs 130 crore, graphic art films - Rs120 crore, black & white paper - Rs 60 crore, cameras - Rs 60 crore and black & white films at Rs 20 crore account for the rest.

The colour roll films and colour paper have a dominant presence in the market adding to the competitive pressure.

Major players in this segment include Jindal Photo Films, Phil Corporation, Kodak India and Allied Photographics. Each company has its own brand name: Jindal Photo Films - Fuji, Phil Corporation - Konica, Kodak India - Kodak and Allied Photographics - Agfa.

Industry sources claim the colour roll films segment is dominated by Jindal Photo Films with a share of 40 per cent followed by Phil Corporation at 34 per cent, Kodak at 19 per cent and Allied Photographics constituting the rest .

In the colour paper segment too, Jindal Photo Films has a predominant presence with 45 per cent followed by Phil Corporation with 27 per cent, Kodak India with 19 per cent and Allied Photographics with 9 per cent.

X-ray films are mainly divided into two segments, medical and industrial X-ray.

According to the industry estimates, about 6 million sq mt medical X-ray and 75,000 sq mt industrial X-ray films are sold in a year. Industrial X-ray films are mainly used for radiography by consultants and engineers for the detection of leakages, etc.

The price of medical X-ray is in the range of Rs 215-220 per sq mt, whereas for industrial x-ray, it is about Rs 900 per sq mt. The market for colour films is flush with numerous brands. The market is determined by the brand prices.

Lower prices stimulate market demand and expand consumer base. However, choosy customers prefer quality rather than low price.

At present, about 46 million colour rolls are in demand every year. Of this, 65 per cent of films are consumed by professional buyers.

Generally, marriage season and occasional birthday parties spur demand for photographic materials including colour films. Slack season is from June to August.

The industry displays features of monopolistic competition with brand prices moving in a close groove.

Price cutting is quite normal at retail outlets. The maximum retail price (MRP) for Konica's VX-100 is Rs 90 and for that of Konica Peak is Rs 125.

The MRP for other products are: Kodak 100 ASA - Rs 90, Kodak Gold - Rs 107, Twin pack of Kodak Gold - Rs 180, Fuji - Rs 99, Fuji - 200 ASA - Rs 105, Fuji Super plus - Rs 91 and Agfa - Rs 85.

Of the total raw material consumption of the industry, 85-90 per cent account for imports. Colour films and finished products account for the bulk of the imports.

High import duty on camera is a big problem for the industry.

This is because, if the levy on camera is lowered substantially, the middle class can afford to buy in larger numbers. Amateurs buy cameras as a hobby, but are deterred by high prices.

Camera may boost demand for colour film and colour paper. Rising demand for camera may ensure rising demand for rolls. Demand for colour paper hinges on processing of the rolls. Kodak India and Phil Corporation produced 1.51 lakh cameras in 1995-96, the same as in the previous year. However, the company's sales income from cameras rose 31.8 per cent to Rs 27.8 crore (Rs 21 crore).

There is vast potential for the growth of this industry. With rise in the disposable income of the middle class and changing attitude, demand for photographic materials may go up.

At present, boys in the age group of 10-15 take much interest in photography.

Transformation of photography from a hobby to an integral part of one's lifestyle may ensure its future growth.

But, the industry has to ensure the prices of colour films are affordable and also processing labs network is spread far and wide.