Camlin scripts premium strategy for better margins

Stationery stalwart Camlin intends catering to the premium end of the market with a strategic partner who can help it tide over its sourcing needs and also cater to the demands of modern trade.

Mr Anil Singhvi, Director of Camlin Ltd and former MD of Ambuja Cements, is advising the stationery company on picking up a foreign partner to make its presence felt at the premium end of the market. Of late, Camlin has been planning to move from a mass range to a more premium portfolio of products in the future to improve its margins.

Currently the company has a series of distribution tie-ups and this includes brands such as Zebra (for writing pens) and Kokuyo (for notebooks). Speaking to

Business Line , Mr Dilip Dandekar, Chairman and Managing Director, Camlin, said, “Today modern trade outlets want to stock superior products and we are looking at bringing in more high-end products. We already have a distribution tie-up with the Japanese company Kokuyo for notebooks for a year now.''

But a distribution tie-up does not necessarily end with the brand getting the right push and with de-growth in the Japanese market, it is likely that Kokuyo will pay a huge premium to buy a stake in the home-grown stationery company such as Camlin.

In fact, today, sourcing for premium components in the high-end writing instruments segment is the biggest challenge for the stationery major.

“Prices have gone up in the Indian market and today we have to look at countries such as China where we can get wholesale prices for sourcing components for high-end items like mechanical pencils,” says Mr Dandekar, who is currently in China.

Keeping in mind the need to expand its premium offerings, industry observers say that sooner or later Camlin has to find a foreign partner who can give it an edge in the premium segment.

According to Mr Chand Das, Chief Executive, ITC's stationery division, “The stationery segment is getting global and more competitive. Most of the players have found foreign partners such as Cello (Bic) and Linc (Mitsubishi). If Camlin get can a valuation of an FMCG company, there is no reason why it should not sell stake to a foreign partner.''

Currently the promoters of Camlin (the Dandekar brothers) have a 38.1 per cent stake and analysts predict it would be a matter of time when all the brothers should come to a consensus to sell stake in their 80-year-old company.