Canon enters new businesses to maintain topline

For major printing and imaging company Canon India, the year 2013 is undoubtedly one of the most challenging years that the company has experienced in the country. More so because the company's higher base has increased substantially. Canon India closed the last fiscal at Rs 1850 crore. However, this year looks very bleak for the company to sustain the same growth.

In an exclusive interaction with /The DQ Week/ Dr Alok Bharadwaj, executive VP, Canon India shared his strategies to drive the company's topline in the current scheme of thing. He said, "If I look at the last 5-7 years, in the worst of the time, we grew at 20% and in best of the time we grew at 50%, so for Canon's growth it meant 20-50%. But this is not the year which is not even giving us 20% growth. This year, the first 6 months were flat, so the H1 for Canon is flat over last year. We are hoping the H2 to grow better at least 15% is our expectation in H2. Overall for the year we may grow 8-10%, almost a single digit growth overall with all the difficulties."

This year, the IT industry is badly hit as the low economic growth and high inflation have done most of the damages. It has caused higher interest and cost of conducting business rise rapidly. So this year, the challenge is not only on the topline but the biggest challenge is protecting bottom line as the cost structure is based on higher base. So in case of Canon, cost structure is very high. The company has penned down strategies to control the cost. To maintain topline the areas which Canon is contemplating are within its four business groups including camera, IT peripherals, office automation copier and commercial printing. Depending on each group topline has different dynamics to it.

Bharadwaj added, "We are happy to see our B2B, which comprises professional printing products (PPP) group is growing at 15%. This year for instance if we attain 10% growth, and finally do Rs 2000 plus crore turnover, of which Rs 1000 crore will come from camera and 25% of will be IT peripherals and 20% of that is B2B which is OA and the Commercial printing."

The company wants to grow its B2B business which caters to large enterprises. Large enterprises are beginning to consolidate on their printing devices and adopting cost effective model-Managed Print Services, also commercial printing is gaining grounds as the digital book printing and transactional printing is lots of workload is shifting from offset printing to digital printing has improved a lot. Another area, which Canon is aiming at is government projects. Currently, Canon does 25% (laser and copier, scanners) in the government space and it bets high through its system integrators

Another focus for Canon is to make its sales team more productive and optimizing every element of business operation. "We are not adding more manpower, we are doing restructuring in the territories to make people more effective. The second priority is how to grow our top line. In that area we are having three ways to increase it, one is by adding new domain. We are entering into new line of businesses such as business services, medical imaging and cinematography," he informed.

Business services is one area which means things which are beyond office printing and document management. "We will be doing front-end role of digitization requirement contract by having alliance with domain expertise. We are in talks with services companies. We will announce our first contract in H2. The second area is medical imaging. We have digital medical equipments, currently one of our partner is importing from Canon Singapore. We have also appointed manager to look after this business. The third area we are entering is cinematography looking at broadcasting channels, videographers. So far we have sold 48 such specialized cameras," Bharadwaj added

The next area, which Canon is eying is increasing its market share by expanding geographically and vertically. It is entering into those verticals which are new and weak. It has also introduced large corporate preferred customers program, which would allow end customers to do more printing by introducing special attractive price consumables.

"We are not only looking at marktshare in printers, but are looking at having high marketshare in overall printing. So our thrust is to push mid and high-end printing devices and color printing. So it means low end printing devices are not our focus area. Lastly, we are growing our photo printing and becoming another revenue stream, globally we are developing machines which can take photo album printing," concluded Bharadwaj.

First Published in The DQ WEEK http://www.dqweek.com/dq-week/news/189431/canon-enters-business-maintain-topline