Remanufacture, not refill

Remanufacturing industry in India has huge potential for employment and wealth generation. But it needs a new approach to the sector

Remanufacturing is a hot business opportunity worldwide and the business of e-waste is the most lucrative and effective. In India, which is the second most populated country in the world, a need was identified for remanufacturing a decade and a half ago. The country is still trying to tap into the vast potential of the industry. Among various information technology products, recycled and remanufactured imaging products were receiving maximum attention worldwide when India decided to follow its peers. International players soon carved a niche and turned it into their success story. Indian players, making a slow start, are yet to come to terms with it and thus the industry is still in its infancy, according to leading Indian remanufacturers.

Keeping environmental and cost factors in mind, people started cartridge remanufacturing in a big way. Today, remanufacturing is a $35 billion industry, which constitutes nearly 30 percent of the $115 billion worth printer cartridges market spread globally. However, the Indian remanufacturing industry continues to play a marginal role and even after more than a decade of existence, it is yet to organize itself and chalk out effective strategies.

Initiated in the early 1990s by Shalimar Cartridges, the Indian cartridge remanufacturing industry trails behind. “We are yet to see a box on the shelf,” said D Mahajan, marketing head of New Delhi MP Colour Prints Ltd. The marginal role played by the Indian remanufacturing industry is primarily due to lack of organization and negative end user perceptions. According to estimates, genuine compatibles and remanufactured products account for less than 10 percent of the total inkjet cartridges and laser toners sold. “Refilled and remanufactured products constitute just 20 percent of printer consumables. Of these 8 out of 10 cartridges are being refilled,” said Gopi Verma, Director of Black Magic Toners, one of the leading domestic remanufactured cartridge makers in India. Verma claims that his own company has observed a healthy growth but the industry was yet to attain a similar pace. “Black Magic is experiencing a 30-40 percent annual growth rate, but the industry as a whole lags far behind,” said Verma, also former president of Indian Cartridge Recyclers and Remanufactures Association (ICRRA).

The nature of the Indian remanufacturing industry has been summed up by Secretary ICRRA, Deepak Jalihal: “India has predominantly been more into refilling than remanufacturing. The cost is a major deciding factor, as people are unwilling to pay 75 percent of the price of the OEM product.” ICRRA, which is trying to bring all relevant people to a single platform, is aiming to impart awareness about the advantage and necessity of remanufactured cartridges, but the association has yet to attain national importance. In a country with a population of more than one billion and a booming economy, it has attracted number of industry players, which convinced them to expand its base by incorporating more people and increasing the number of members.

Present Imperfect
While analysing the current status of the Indian remanufacturing industry, one thing is evident that its disorganised nature, which is due to the lack of proper maneuvering while formalising perfect strategies. Indian players have failed to define the most roundabout route to the customer and thus are suffering the consequences of a direct confrontation with the market leaders, the OEMs. Not a single company has produced a strategy that could have guided them towards popularising their remanufactured products in an ever-developing market. Whatever data is available is either inflated or has been developed to lure companies from other sectors. It is either the corporate that uses remanufactured cartridges or a small group which understands the nemesis of IT peripheries.

There are over 30,000 odd players in the business of refilling and remanufacturing across the country employing more than five lakh people. Out of it 70 remanufacturers and 300 refillers in the country can be called serious players with quality brands, proper manufacturing facilities and trained manpower. As per estimates, the Indian cartridge market is estimated at around Rs 1,400 crore, growing annually at 30 percent. Of the 30 percent less than 10 percent is contributed by alternative supplies like compatibles and remanufactured products. Even the presence of big players like Black Magic, Amkette and Lipi Data Systems hasn't helped much.

Now with the emergence of international players, Indian remanufacturers are optimistic about the industry. Foremost among them is Cartridge World, one of the world's largest retail chains, selling remanufactured products through 1,500 franchise outlets. The retailer has aggressive plans for India and plans to open 50 stores by the end of the current financial year and 250 stores by 2010. “Very little quality has been established as a lot of quality compromises have been made to keep the price low,” says Naveen Rakhecha, CEO, Cartridge World India. "We are here to create a niche by creating value and quality material at affordable prices. Only the price is not sustainable.” Rakhecha is optimistic about the market and says, “There is no doubt the industry is in its infancy but there is every possibility of growth. We are nowhere near saturation point. The emergence of international players will raise the bar and set better standards.” Aggressive plans for India have also been devised by Static Control Components (SCC). The company makes some 13,000 different parts including drums, ink, casings and chips for 1,200 different toners and cartridges. They have two offices in India, Delhi and Mumbai and have plans to open in more cities soon with big investments lined up for our various initiatives here. “The Indian market is very tough and under developed but with enormous potential,” said Stuart Lacey, International Sales Director, in charge of India SCC. “This market will be very important for us in the future and we are investing a lot of time, energy and money in it,” he added.

Paradigm shift
The Indian industry is still being driven by refilling. Refilling and remanufacturing together constitute less than 20 percent of printer consumables and out of 10 used cartridges 8 are being refilled. “India is a price driven market and end users are reluctant to pay 75 percent of the price OEM cartridges. Refilling, on the other hand gives a solution at 10 percent the cost that is very attractive. Compromise on quality is acceptable at those kinds of savings,” said Deepak Jalihal secretary ICRRA. “In my opinion, refilling is dominant in India and the estimates of 18 to 20 percent market share could be very wrong. Inkjets had a major market share which is now being replaced by monochrome laser. Colour is coming in but a little slowly.” In the refilling market inkjet refilling still constitutes more than 90 percent of the overall market while laser refilling is picking up. Colour laser is still in its infancy. “Inkjet refilling is ruling the market while colour laser is nowhere near it,” said Naveen Rakhecha. ICRRA, along with major remanufacturers, is planning to educate refillers about remanufacturing and to achieve this they are going to start the exhaustive process of educating refillers, remanufacturers and above all end users.