Beyond its true colours

From the Sixties through the Eighties, Camlin had its own stores. “No stores were ready to stock Indian art material, so we had to have them,” says Chandra Shekhar Ojha, a long-time Camlin employee. “We had our own art gallery also. Company-owned stores are not an option now because the right locations come at high prices, but the stationery company is thinking of Camlin shelves in the top 100 retail outlets to gain greater visibility.

A. Srikanth, CEO, Kokuyo Camlin, says the traditional stationery store is still critical to his business. “The modern trade format is not mature in this category,” he says, explaining that a store’s capacity to stock a wide variety of products is important. This is especially true for companies in the art supplies business where products need to be vast and varied.

The company’s current priority is to build a supply chain for its notebooks, which it launched earlier this year. Camlin, which entered into a joint venture with Japan’s Kokuyo in 2011, expects this segment to be a big growth engine. It has also launched Kokuyo’s Campus brand of notebooks in the medium price range. A 160-page notebook costs Rs 65, for instance, while a Camlin brand one in the lower end will cost Rs 45. These products will supplement Camlin’s school range of pencils, pens and geometry boxes.

A big chunk of Kokuyo’s stationery business comes from paper and accessories such as files and adhesives, but its presence in art and writing products was minimal. To fill up that blank and prepare for a global presence, it needed a partner in emerging markets, which it found in Camlin. This is reflective of a trend in the Indian stationery market where foreign companies are keen on tie-ups or even a presence in India. Luxor has a stake in Pilot, Mitsubishi in Linc, Reynolds with GM Pens, and so on. Faber Castell is here on its own.

Vishwadeep Kuila, Founder Director of the Chennai-based Brand Vectors, a marketing consultancy, says the distinguishing feature of the writing instruments industry in India is that it is very fragmented. Kuila, who worked with GM Pens for 12 years, says that while the organised sector accounts for 70 per cent of the production, barriers to entry are very low. In pens, for instance, it’s easy to procure nibs and then all one needs is a small plastic injection machine. What needs to happen, he says, is that these barriers should be raised either through product innovation and technology or, when products cannot be easily differentiated, through huge investments in marketing, as in the case of Coca-Cola or Pepsi. Art products are the top contributors to Camlin’s Rs 453-crore turnover, followed closely by non-art school stationery. Srikanth says the focus has been on improving these products both in range and through innovation. So there are now upto 50 shades in a pack of colour pencils and innovations such as water-soluble colour pencils, where the colour can be filled in with pencils and painted over with a brush. Research and development to innovate as well as reduce costs is a priority. So is getting a CE certification for all its products, which has implications for safety as well as the longevity of art.

Srikanth is upbeat about the future of the stationery market. The chunk of market that Camlin operates in, across segments, is guessed to be about Rs 12,500 crore. Though there is greater use of IT and technology in offices, the demand for paper is outshooting supply. “Parents are in for a surprise next academic year, prices are going up by 20-25 per cent,” he says. As filing requirements in companies increase, and schools, at least in urban areas, move from exam-driven to experiential learning which calls for projects and assignments that students have to work on, the market for stationery is bound to grow. In fact, the rise in the use of computers and tablets by school children has increased this kind of activity, he says. However, being a low-margin business, it is difficult for stationery companies to advertise widely, he adds.

But Kuila says stationery need not remain a low-margins business. People can very well afford to pay for products, they want new stuff every second day but manufacturers do not innovate or strategise so they play the margins game, he says. What could change the situation is the entry of a major with deep pockets into the Indian business. “But it’s a dog-eat-dog market, some of it reserved for the small-scale sector, and who would want to make such a move for a market that’s just about Rs 4,500 crore,” he says.

Camlin, though still has an advantage – it is virtually uncontested in art supplies and it would be better off focusing on converting consumers to buying from the organised segment and creating different needs for its products. “Its chances are much higher in art material than anywhere else,” Kuila says, explaining that Camlin will find it hard to make inroads into stationery where players such as Cello, ITC and Hindustan Pencils have the advantage of years of experience, in-house manufacturing strengths and will thus defend their turf vigorously.

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