• Opportunities

Lost in translation or lots of translation? A tweak in structure can alter the entire language of a business, so to speak. And Badri Seshadri’s New Horizon Media, a regional publishing house based in Chennai, has begun to do just that.

While biggies like Penguin and HarperCollins have scratched the surface of regional publishing opportunities via Hindi and Marathi books over the last two to three years, no other MNC in India has really dug deep. “The regional publishing space is disorganized in India,” says Seshadri. “This gave us a model.”

Seshadri is also the brain behind Cricinfo. Launched in 1996, Cricinfo came about when a bunch of Cornell University students realized the true dearth of information on their favorite sport, cricket. This time around, Seshadri realized there isn’t enough focus on the regional publishing space. “There are so many people waiting to gather knowledge, but language has been a problem,” he says. Cricinfo was sold to the Wisden Group for £5 million in 2003, and Seshadri decided to set off on his own—that’s when the huge potential presented by publishing in regional languages enticed the entrepreneur.

New Horizon Media was started with a small investment of less than Rs. 2 crore gathered from friends and family, primarily to test the model’s market potential. In ten months, Seshadri and cofounders K. Satyanarayan and R. Ananthkumar had an answer. “We started out with Tamil publishing, and in about a year I knew we had something interesting going on,” says Seshadri. By the time the company was registered in February 2004—with four people on board—the team had a solid, workable model in place.

So what gives New Horizon Media its own shelf space in a hugely fragmented and neglected segment? Quite clearly, it’s its distribution and retailing model. Unlike publishers of English books who work with distributors that identify bookshops for them, the regional publishing segment has no distributors. Thus, every publisher must deal directly with retailers. “We have a well-organized team that visits potential towns and villages to push our books at various outlets,” says Seshadri.

Now, wait a minute. Do the words ‘villages’, ‘books’ and ‘outlets’ in the same sentence sound like a mistake? It did to me, too, at first. But I stood corrected. The marked absence of bookstores like Crossword or Landmark in these regions did not deter the team; instead, they decided to tap department stores, restaurants, grocery stores, paan kiosks and other corner shops as points of sale.

Today, the firm earns half its revenues from these eclectic outlets. Rs. 2 crore from non-book outlets and another Rs. 2 crore from regular bookstores, and you have the company’s top line figure for fiscal year 2008-09. “Of course, 90 percent of our revenues still come from publishing in Tamil,” admits Seshadri.

So far, the company stocks books on self improvement, healthcare, biographies, current affairs, economics, popular science, children’s books and fiction. Among translation rights to books by Barack Obama, Ramachandra Guha, Narayana Murthy, Jeffery Archer and non-curriculum children’s books. “We acquire translation rights to any interesting title, in addition to the books that New Horizon Media commissions on its own,” he states. The firm especially believes in identifying and striking deals with authors.

No doubt, this is an innovative and aggressive business model. But is it viable in the long run? “I feel it is an experiment,” says Dilip Kumar, author and owner of Dilip Kumar Book Sellers and Exporters. He points outs that Seshadri’s books are reasonably priced and the discounts are attractive. But since he has a vast range of categories, the company’s marketing costs and overheads are likely to keep rising as he expands to other cities. Moreover, for regional books, over–the-counter sales have always been a problem, offering low profit margins. So, whether or not he can break even is cause for concern. “Regional publishing doesn’t make sense unless you can print and sell 5,000 copies per title, as the cost per unit is very high,” says Kumar, referring to reasons why MNC publishers have previously failed at the attempt.

Having said that, Kumar adds, “The regional market, though, has never been approached systematically until New Horizon Media came into being. Therefore, the success of this formula is yet to be seen. Seshadri’s biggest strength is his range of books.”

Interestingly, New Horizon Media’s sales team has made its way back to school via book fairs. Schools offer huge potential and an easy point of entry. A school library, for instance, is a ready reckoner for a publishing company. In addition, half-day book fairs at schools and colleges are another medium that New Horizon Media plans to tap extensively. “Kids in colleges have access to cash, while 25 percent of students in Tamil Nadu attend private schools,” reasons Seshadri, pointing out the purchasing power of this demographic.

In 2008-09, New Horizon Media tapped about 100 schools; it aims to multiply this number by five this fiscal. By 2009-10, Seshadri expects a third of the company’s revenues will be generated from schools; the rest would be from bookshops and other outlets. The entrepreneur is optimistic that schools will contribute up to 40 percent of its top line in fiscal 2010-11. Its college count, on the other hand, was between 30 and 40 last fiscal, but is likely to touch 200 by 2009-10. As for this fiscal, the company’s total revenue target is Rs. 6.5 crore.

The company, however, has not touched the educational space with textbooks as yet. Among its best-sellers are knowledge-based coloring books for children and it recently added low-priced recipe books to its catalogue.

Starting next year, the firm plans to publish books in all four South Indian languages (Tamil, Kannada, Telugu and Malayalam) and then gradually move on to Gujarati, Marathi and Hindi. “You cannot leapfrog with publications in new languages,” says Seshadri. “It will take at least two to three years to generate decent revenues.”

In fact, New Horizon Media started publishing in Malayalam two years ago, but results have been hard to come by. “It is not easy to identify variables, as books are a strongly cultural model,” Seshadri explains. In addition, he admits that focusing primarily on the Chennai office when he should have been dividing his time between Chennai and Trivandrum didn’t help matters. From here on, however, Seshadri plans to centralize operations in Chennai. “If [employees at other branches] see interesting things happen with our Tamil language publications, they will get motivated,” he assures.

Kumar, however, is of the opinion that a centralized office may not give the company the visibility it requires at this juncture. Also, from the point of view of logistics, editorial tasks, and negotiating with authors, regional offices are a must in order to tap other languages. “Seshadri should also modify his range according to each region,” says Kumar.

Once bitten, twice shy. The founders now plan to build each of their verticals slowly by acquiring rights to older titles first. “Although you need blockbuster titles every year to draw people, books that are two to four years old give you 50 to 60 percent of revenues,” he said. While a front list gives any publisher mileage for the first three years, Seshadri feels a backlist is just as important.

The last five years have written the start of New Horizon Media’s success story in a highly underutilized segment. “Most players in this segment have had no faith in the potential of this business,” he says. “Even Hindi publishers are doing only Rs. 10 crore worth of business.” In the future, the popular North Indian language, too, will be brought under the company’s ambit.

Withstanding risks and realities, New Horizon Media still has plans of rewriting the landscape of this segment.

New titles + good sales team + distributors + information on potential sales + crunch data + attractive prices (30 to 40 percent lower than original prices) = a success formula. Business sounds simple, then, doesn’t it?

New Horizon Media Investors:
2003-2004: Rs. 2 crore from friends and family
2006: Rs. 3.5 crore from Rajesh Jain
2008: $1 million from venture fund Beacon India

©Entrepreneur December 2009

Tags:
Badri Seshadri, books, Chennai, colleges, distributors, entrepreneur, funds, languages, library, price, publishing, regional, retail, schools, South India, venture