"We are ages ahead of others in yellow pages. No one even comes close." - Views on News from Equitymaster

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  • Nov 10, 2000 - "We are ages ahead of others in yellow pages. No one even comes close."

"We are ages ahead of others in yellow pages. No one even comes close."

Nov 10, 2000

Trained as a chartered accountant, Mr. Hoshang Billimoria started his career with Ernst & Whinney, London. After his return to India, he joined the Ernst & Whinney representative firm in India, S. B. Billimoria & Co. He became a partner in the firm in 1979 and remained a partner for nearly a decade. He took over as the Deputy Chief Executive Officer of Tata Sons in 1988. His responsibility in Tata Sons was in the area of group policy and co–ordination. In 1990, he took charge as the Managing Director of Tata Press (now Tata Infomedia). It is he who has directed the entry of the company into the information services business (yellow pages, special interest publications and data base services.) In an interview to equitymaster Mr. Billimoria commented on the international printing scenario, explained the thrust areas for Tata Infomedia and elaborated on the company’s web initiatives.

EQM: Could you throw some light on the international printing scenario and elaborate on the reasons why your partner R. R. Donnelley withdrew from Tata Donnelley?

Mr. Billimoria Printing and commercial printing in particular, is very much a commodity business and being commodity business the margins that you earn there are at best very modest. It also means that when the going is good you are a little better and when the going is bad you run the chance of being ruined. Internationally, commercial printers earn only 3% of the net sales and given the high capital cost of machinery of the printing industry, it is obviously not a very attractive industry to enter. Internationally even the big players have had problems. Donnelley itself, went through a very bad patch in 1997 and 1998. They have come out of that now but they have lost their number one position to Quebecor, which unlike Donnelley, is not a commercial printer alone. It’s into printing, it’s into publishing and it’s into media. So the international lesson is, if you are a pure commercial printer you’re in trouble. But if you are earning money in the various parts of the value chain your safe.

EQM: And could you elaborate on the reasons why your partner R. R. Donnelley withdrew from Tata Donnelley?

Mr. Billimoria We are hardly commercial printers. And they are only commercial printers. So obviously the synergy was getting less and less. We wanted to grow in value added products. And also, they wanted to re focus only on certain countries mainly on the United States and very selectively on the Internet. So it was mutually decided to part ways and it was a very amicable parting of ways. Tata Sons took over the 25.37% stake of R. R. Donnelley.

EQM: Commercial printing used to contribute over 90% of your revenues about a decade ago and now contributes around 16% of your turnover. What are the prospects of this business going forward?

Mr. Billimoria For us it will be a filler business. We have spare capacity, we’ll fill it with commercial printing. It will not be a thrust area.

EQM: You also have a contract business where you print magazines including Outlook and Cricket Talk. The problem with this business is that magazines don’t want their circulation to go beyond a certain level once ads get saturated…

Mr. Billimoria See, the problem in India is that cover prices of magazines in India are too low. Incredibly low. And because cover prices are low magazine business is heavily dependent on advertising. That’s creates a disadvantage for the publisher since he has to get more income from advertisement sales than newstand sales or from subscriptions. Infact our ‘Photography’ magazine which we publish sells at Rs 50. An equivalent magazine abroad would be at £ 3½ i.e. Rs 250. That is around five times. And we use the same paper and the costs are the same. We print on the same high quality machinery except that our machinery costs 50% more since our duties our 55% while abroad they are 5%. So the dice is loaded against the publisher in India. And that’s why he is much more dependent on advertising than he is in the UK/USA.

EQM: Do you anticipate the contract business to grow in terms of its contribution to the turnover? (It’s current contribution to the company’s turnover is around 19%)

Mr. Billimoria Oh that will grow. We are bullish that generally the magazine sector would be very alive. Even in the west while the books sector is tapering off, as people do not have six hour or eight hours of spare time to read a book, they still have an hour or two and that’s when they pick up a magazine to read. And particularly special interest magazines.

EQM: Your main business is that of yellow pages and exporters directories. You have spoken about transiting to a web based model….

Mr. Billimoria We’ve already done that. All our directories are on the web. As far as yellow pages are concerned our own site already exists tpyponline.com. We are already selling space on the site. It gets more than 40,000 hits a day, which is amazing. We are not dependent on banner advertising; to be on the tpyponline.com you have to advertise.

EQM: There are other portals such as asiansources.com or infospace.com that offer similar services to yours. Are you contemplating any alliances, which would offer entry into India via your business listings?

Mr. Billimoria Yes, we have already linked up with ISPs such as those of the Times and ICICI. And we are talking to Yahoo and Satyam. After all, no ISP is complete without having yellow pages and we are ages ahead of others in yellow pages. No one even comes close.

EQM: There is a perception that you were late in getting on to the Internet. How true is that perception?

Mr. Billimoria On the yellow pages show me one person who is making money. Most of the people who have set up sites offering yellow pages have all copied our Yellow Pages. See, first of all an Internet–only model is never going to succeed. All these guys have shoe string budgets. They run offices with three people and claim to have over 7,000 listings. Such people don’t have any sustaining power. Even in the USA, Internet advertising for the yellow pages does not even account for 5% of the total yellow pages advertising. And our brand, which is very valid in the real world has to translate much more easily on the Internet than an XYZ getting on the Internet. He’ll be OK as long as everything is free. The day he wants to charge money everyone will come to us because they know that they can trust us.

EQM: Kindly elaborate on your Special Interest Publication business and what sort of circulation numbers have you notched up so far?

Mr. Billimoria ‘Overdrive’ is by far the largest selling car and bike magazine in India. So also is ‘Better Photography’. It’s number one in South Asia. ‘Search’ and ‘AV Max’ also top their respective categories. You must also keep in mind that these are special interest publications. Their USP is a focused readership. If someone like General Motors wants to advertise the ‘Opel Corsa’ four out of ten people reading (say) India Today would be interested in the ‘Corsa’ but ten out of ten people reading ‘Overdrive’ would be interested in the Corsa. So we offer a much more focused audience. This is slowly being recognised in India because we’ve never had Special Interest Publications (SIP) in the past. And therefore the USP of SIP is not print run or circulation but is the focussing of the readership. But having said that ‘Overdrive’ runs 100,000 copies a month, ‘Better Photgraphy’ and AV Max are between 25,000 and 35,000 every month and ‘Search’ would be around 25,000.

EQM: The rationale for the change in name of the company to Tata Infomedia…

Mr. Billimoria Our thrust is to bring out information products. To make them successful, to create brands out of them and to reach those brands to our end users in the media of their choice. The Tata Press Yellow Pages is a brand, it’s a very successful brand, a very visible brand. Today its available in print, its available on CD, its available on the Internet. So ‘Infomedia’ represents that: Information products through a media of the users choice.

EQM: A word about your hobbies…

Mr. Billimoria Photography is one. Music is another and fishkeeping is the third.

EQM: Any personalities whom you admire…

Mr. Billimoria I admire Sunil Gavaskar for his poise, his maturity, his intelligence and sheer capability and I admire Amitabh Bachchan for making such a successful transition and making age sound irrelevant in Indian filmdom where it is automatically assumed that the day you cross 50, you are useless.


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