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Sep, 14 2010

Inking technology

As more and more companies are drowning in a sea of red ink, the market for recycled cartridges is hitting a high tide. The retail refilling market is populated by independent refillers, franchised operations and chain stores, each servicing both consumer

The cartridge refilling market is an emerging segment, driven by demand for a more cost-effective solution to replacing printer cartridges, by environmental concerns, and by enabling technology. As availability increases, so, too, will demand and revenue. Issues affecting this increase are primarily technology-based and include quality, ease, safety and reliability of the refilling process. Cartridge refilling has become a major service relied on by corporates. Serving these needs are various national and international cartridge refilling service providers, who are setting shops in various parts of the country.

Business potential

Estimated at Rs 1,500 crore in 2006-07, the cartridge refilling market in India has more than doubled today. As per industry estimates, total size of the printer cartridges market is over Rs 4,000 crore and it is growing at about 30 to 35 per cent year-on-year. During slowdown, when companies were trying to cut costs, refilling came as a cost-effective option. Cartridge refilling serves the increasing demand of printers and cartridges and caters to the needs of SMEs, SOHO, SMBs, government and large institutions.

Naveen Rakhecha, Chief Executive Officer, Cartridge World, India, says, “Corporate customers contribute 35 to 40 per cent to our total sales. As awareness about our service is increasing, more and more organisations are happy to use our services and save money.”

As an eco-friendly concept, cartridge refilling has also become a part of the green movement. Since the consumption of printers has gone up in all the sectors, cartridge refilling industry is bound to increase over a period of time. Cartridge World, Refeel Cartridge Engineering, AbbeeFill, Cartridge Café and Navson`s Cartridge Clinic Pvt. Ltd are some of the major players in this industry.

Flip side

The industry is very much change-driven, as technology keeps on changing fast. Accordingly, cartridge refilling service providers have to keep themselves updated to serve clients better. Talking about the challenges, Rakhecha says, “In India, there were very few or no specialised refill stores. Refilling in most cases was not done scientifically. A cartridge was treated like a container and ink like coloured water. The result, a bad product. The fact is that cartridge is the most sensitive part of the printing process and the quality of printing depends primarily on its quality and not the printer alone. Introducing organised way of refilling was a process of bringing about a change and henceforth a challenge.” The competition from local unorganised payers is a major threat to the industry.

Franchisability

Serving the demands of various institutional clients in various parts of the country becomes easy via setting franchise shops. Players like Refeel have grown entirely on the franchise model. Through franchising, a franchisor is able to provide faster services and generate more clients with the help of widespread network of franchisees from various parts of the country. A franchisee gets to be a part of serving the corporate deals.

Technical support and training plays a key role in business transferability. It is important to equip your franchisees with the right training and support, as that they can offer resolute service to clients.

Taken up as a full-time business opportunity, the cartridge refilling industry looks for prominent entrepreneurs, who have wide experience in business development or sales. Companies like Cartridge World give their franchisees an option of selling their business provided the buyer/new franchisee’s profile qualifies the norms of Cartridge World (India).

Expansion

The expansion for cartridge refilling players started with metro cities and now they are keen to penetrate in smaller towns. Rakhecha says, “Cartridge World is planning to make presence stronger in all tier I, II and III cities in India. We aim to open 250 retail stores of Cartridge World by 2012 across the Indian sub-continent.” Though the market has been in the hands of unorganised players so far, organised players are making the market mature towards which franchising is playing a major role.

BOX

Cost count

  • Investment per sq. ft; Rs 3,750 to 3,800/-
  • RoI: 40 to 45%
  • Employee cost per sq.ft: Rs 70 to 75/-
  • Working capital:Rs 2 to 5 lakh, depending upon store turnover
  • Break-even period: 3 to 5 months (operational break-even)
  • Marketing cost {percentage of sales}:3% Ad fund
  • Time period for recovery of initial capex: 24 to 30 months
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