How merger deal saved six printing firms from death

 

In 2007, a number of Kenya's leading printing firms signed a formal agreement that would see them set up a printing mall. 

The companies would jointly own the mall, and buy equipment, stock them in the entity and share their use.

This idea was birthed by a constant problem in the diminishing printing industry, where many firms could ill afford to buy expensive machines on their own, and even for those who did, the kits bought were underutilised, leading to lost productivity.

But pooling their resources allowed them to share the cost of buying expensive and modern printing machinery and assorted equipment, and it would also allow them to maximise production capacity. 

The deal was a success, and thus the seeds of top players in the sector, some of whom partook the deal, joining hands to better their market position and survival, were sown.

So when the print industry came under onslaught from various quarters in the following years, these firms companies merged into a lean, efficient, flexible and strong enough entity that would survive the turbulence now swamping the industry.

The six firms

"Actually, the earliest stage of this exchange (merger talks) was in 2007 when some of the original companies in the merger decided that instead of separately buying printing machines and operating at half their capacities, they would instead buy them together and jointly own them. This led to formation of a "printing mall" where they would share the resources and it became very successful," Amardeep Vidyarthi, chief officer for Strategy and Integration at Chrome Partners, told Smart Business in an interview at the firm's production plant in Industrial Area last week.

The six firms, Colourprint, Kul Graphics, Digital Hub, Orchid Printers and Stationers, Printfast and The Rodwell Press, 12 years after the success of that joint sharing of resources, officially started operations as Chrome Partners in October 2019 after being granted approval for their merger by the Competition Authority of Kenya. 

The firm, which now employs about 140 people, operates from an expansive, multi-million shilling state-of-the-art factory in Industrial Area, Nairobi, which was built when the firms merged.

It is from here that your favourite comic book Shujaaz is printed, alongside a wide range of merchandise such as calendars, to large-format prints like banners and signage. T-shirts are also customised here, as is the making labelling stickers, wall murals and other print items. 

Meanwhile, rapid technological advancements had also made the assets of the companies such as typewriters obsolete, and at a time the prices of printing machines were falling, it required less capital for new players to enter the market. For example, you can now type, print, photocopy, bind, laminate files at almost every corner of the street and cheaply.

"These are faced not just by these six companies, but by all other print firms in the country," Mr Vidyarthi says.

Digitisation

"As digitisation took over, we found that instead of printing posters, banners and brochures for their marketing campaigns, people are now posting advertisements on Facebook and other digital platforms. These changes hit us really hard. For example, companies would in the past allocate about 80 percent of their advertising budget in print, yet today, it's come down to only about 15 percent," he says.

"All these trends within the industry made us feel that we needed to change our approach in the market. These six legacy companies had a history of success in the business with valuable market experience. But the business models we had been using were the same as our fathers used, which made it difficult for us to compete in this new market, we had not adapted quickly enough," Mr Vidyarthi says.

A critical consideration for the merger, apart from the blanket problems facing the sector, was that each of the individual legacy firm would bring unique strengths to the partnership as they all had different market strengths before they partnered. 

It is this same criteria the firm will use should any wish to join the six in the partnership, even as the entity's CEO Ajay Patel opens the door for other players to join the venture. 

"We merged because we were like-minded, our goals were the same. We are looking to grow, we are always looking for investors but a new partner must have the same mind-set that we have, the same ideals and must add value to the venture. However, at the moment, we have no plans of bringing in another partner," Mr Patel says.

Orchids Printers and Stationers, he says, had its strength in stationery such as books, envelopes and office supplies before the merger.

Mr Patel was also Orchirds' CEO prior to becoming the joint venture's boss.

Youngest partner

Meanwhile, Digital Hub, the youngest partner in the venture, having been formed only in 2012, brought its strength in digital printing to the venture, an area most of the other partners weren't doing, while Kul Graphics brought its expertise and forte in design and printing of packaging material.

The Rodwell Press, the oldest partner in the venture, came with over 60 years of experience in packaging, labelling, and commercial and large format printing such as banners and tear drops, while Printfast did large format printing, printing for outdoor events and also did digital printing.

On the other hand, Colourprint, where Mr Vidyarthi was CEO, is the largest partner in the venture and vast experience and expertise in commercial printing such as calendars, magazines, posters, diaries among others, was its bacon.

But in a close-knit venture with a combined heritage of over 200 years, with deep family roots, traditions and values, successfully running such a firm was never going to be all hugs and kisses.

It was not easy for six CEOs of the companies to surrender their lofty titles and work under one boss, Mr Vidyarthi admits, and such issues have brought a fair share of moments of tension in the boardroom.

However, having one unified goal and a shared vision, he says, keeps everyone grounded for the success of the entity.