Kokuyo Camlin Ltd formerly known as Camlin Ltd, is an Indian stationery manufacturing company based in Mumbai. The company shares profits with Kokuyo of Japan, which holds around 51% stake in Kokuyo Camlin after buying it in 2011. The company commercializes a wide range of products related to art materials, writing implements and office goods. Like the Kokuyo group, camlin has been existence for more than 80 years with a rich legacy and a proud history. Starting its operation in 1931 camlin started manufacturing Horse brand ink powders and tables followed by camel ink which eventually led to the creation of its flagship brand camlin in 1946. Over the years camlin has expanded into art materials, scholastic materials, hobby materials, office stationery products and corporate gifts. Camlin today is one of the most trusted and renowned brands in India with over 2,100 products and reach extending to over 5.5 crore households. The kokuyo group is a Japanese business house that’s over a century old, founded in 1905 in Osaka, Japan. It started as book-cover makers for wacho (Traditional Japanese Account Book). Kokuyo today is a 17,600 crore group with businesses spread all over Asia and Europe and offices in China, Hongkong, Thailand, Singapore, Malaysia and Vietnam. Their main products include office stationery notebooks, office supplies and office furniture. The company is officially listed on the Osaka and Tokyo Stock exchange. Their flagship brand is Kokuyo, a house hold name in Office stationery products in Japan. Kokuyo Camlin has a manufacturing plant at Patalganga where company manufacturers stationery products and scholastic products. At Tarapur plant company manufacturers fine art and hobby colours, scholastic colours and stationery products. At samba plant company manufacturers fine art and hobby colours. At Taloja plant Company manufacturers all types of stationery products. The patalganaga plant is spread across 14 acres and was build with an investment of approximately Rs 100 crore. It happens to be one of the biggest stationery plant in the Kokuyo group, with producing over 250 SKUs annually. The plant is equipped with latest Japanese Machineries. 60 year old Tarapur plant is under renovation to increase the production . Company’s priority has been to focus on creating value for customers and in turn, create a sustainable growth for all its stakeholders. In order to improve the overall profitability, emphasis is given on innovation and efficiency. This has led to creation of innovative products like 2 in 1 geometry box, brush pens, child grip crayons, adult colouring book and triangular colour pencils. Stationery is such a product segment which is required by everyone from schools to organizations. With the increasing numbers of schools being built, the education sector is rapidly becoming an important target group. Also, with companies expanding their presence, it is essential that they provide their workforce with the proper tools to make their jobs easier. Right from providing them with desk organizers, document holders, planners and stick notes to pens and highlighters, permanent markers and other stationery products to suit their requirement and aid in improving their efficiency. The stationery industry is in brand creation era whereby competition will turn from pure price competition to multifaceted brand competition consisting of service, management and shopping environment. With majority of the market moving from the un-branded to branded segment, the outlook for the stationery industry in India continues to remain positive and the total market share of the organized players are expected to rise substantially in the years ahead. Consumption of India may triple to US$5 trillion by 2026. This will lead to a huge value migration play in the distant future.
Different type of stationery offerings:
| School | Office | Writing Instrument | Computer |
| It includes popular stationery products like notebooks, erasers, pencils, rulers, sharpeners, writing boards, exam boards, graph book, pencil boxes, geometry boxes, notebooks cover, glue sticks, maps, children paper clips and binders, pencil grippers, calculators and many more. | It includes products such as white board markers,paint markers, permanent markers correction products, book/ magazine racks, business organisers, card holders, cash boxes, clip boards, dampers, desk calendars, desk organisers, document holders, glues, glue sticks, letter openers, message pads, stick ups, plastic paper clips, paper trays, paper weights, pen holders, trays, stands, pen holders, cases, pocket planners, punches, rubber bands, scales, rulers, scissors, stamp pad inks, stamp pads, staple removers, staple pins, staplers, tapes and dispensers, telephone diaries and many more | This category includes ball pens, correction fluids, pens, tapes, synthetic, PVC Erasers, fountain pens, gel pens, highlighters, inks, markers, pencils, micro tip pens, pen refills, pen sets, pencil leads, roller pens, sharpeners, marking pens. | It comprises printer toners, computer CDs, computer paper, printer ink, printer cartridges, CD covers. |
Kokuyo Camlin has a widespread network through its association with more than 1,500 active dealers and distributors who in turn supplies directly and indirectly Camlin’s product to more than 3,00,000 retailers across the country. The deep rooted distribution network of the company covers all the states of India and union territories. The stationery Industry is a mixed group categories catering to schools colleges and offices. It includes both paper as well as non-paper stationery. The overall stationery market in India is expected to grow at 10.5% CAGR during 2019-2025. Indian stationery market is valued at around Rs 20,000 crore. Out of this 10,000 crore is contributed by paper stationery and remaining Rs 10,000 crore is contributed by non paper stationery.
Market size of the various product categories:.
| Category | Size Rs 20,000 crore | Growth10% p.a |
| Notebooks | 4,000 | 11% |
| Pens | 3,000 | 9% |
| Other Papers | 3,000 | 6% |
| Pencils & Pals | 4,100 | 18% |
| Office Products | 4,000 | 12% |
| School colours | 500 | 16% |
| Markers | 350 | 20% |
| Files & Folders | 350 | 3% |
| Adhesives | 250 | 10% |
| Technical Instrument | 250 | 10% |
| Fine Art & Hobby | 200 | 8% |
India’s overall non paper stationery market is expected to grow with a CAGR of 8% during 2019-2024. India’s art stationery market is expected to grow at a CAGR of 13.8% during 2019-2024. Crayons and pencil colours dominates the Indian art stationery as these products are primarily used by the school going population of the country. More than 240 million students were enrolled in 2 million elementary schools of the country. The government of India is also promoting the expansion of the visual arts industry and several international art auction companies such as saffronart, Christie, Sotheby and astaguru are also expanding their footprint in India. Oil and acrylic colours are expected to register the highest growth during 2019-2024. The global school stationery supplies market is expected to grow at a CAGR of around 3% during 2019-2024. Indian stationery market is highly unorganized, the share of organized players in the industry is lesser than the unorganized players. There is a great opportunity for organized player to expand its business. Kokuyo Camlin is market leader in the products category of fine art colours, colours for school children, and stationery products like mathematical sets and mechanical pencils. The company is a market leader in the category of products related to office stationery.
PRESENCE ACROSS VARIOUS CATEGORIES:
| Category | Players |
| Office Products | Staples, Kores, Kokuyo Camlin, 3M, Others |
| School Colours | Kokuyo Camlin (70%), Faber Castle (20%), Navneet (10%) |
| Markers | Kokuyo Camlin (40%), Reynolds (25%), Luxor (10%),Others (25%) |
| Files & Folders | Solo, Deli, Sundaram, Others |
| Adhesives | Pedilite (70%), Kokuyo Camlin (10%), 3M (5%) Others (15%) |
| Technical Instruments | Kokuyo Camlin (40%), ITC (10%), Omega (8%), Others (42%) |
| Fine Art & Hobby | Kokuyo Camlin (50%), Pedilite (40%), Other (10%) |
The company has the employee strength of more than 1300 employees. Company has 39 C&Fs associated with them. The company’s colour contest has been mentioned in Guinness World Records for being the largest art competition that attracted a total of more than 48.5 lakh participants from around 6,600 schools across India.
Growth Drivers for Stationery In India:
1) Large student base: The Indian stationery market holds tremendous growth potential as the country has nearly 22-24 crore students studying and requiring notebooks and other stationery materials. Quality education is the top priority for parents. The number of premium schools is increasing rapidly. School enrolment has reached to around 93.4%.
2) Growing Importance of education: India is one of the fastest growing markets with rising per capita expenditure on education. Besides, the government has also been laying equal importance towards spend in this segment.
3) Emergence of start-ups: Several start-ups have emerged across the nation, leading to considerable increase in demand for office stationery.
4) Improvement in Literacy rate: Continuous improvement of literacy rates coupled with development of distribution channel in rural areas marks great opportunity for the segment. Current literacy rate in India is around 74%.
5) Changing demographics and consumer preferences: Growing urbanization, improving living standards coupled with shift in consumer preference towards superior quality products will drive the growth for Indian stationeries. The products of Kokuyo Camlin are available at every nooks and corner in the country. The company aims to reach a top line of Rs 1,000 crore. The company is also planning to expand its operation at international levels. The stationery segment has its end users, influencers and purchasers with children having little say in which brand and what design of books or type of pencil that he/she would take to school. However, now with pester power from children, they are often both the influencers and end users. Youth has begun to infuse their own individual style into the stationery they purchase. Notebooks are not as boring as they used to be earlier. Now notebooks comes with fancy covers, selfie upload options and different cover textures available to those who want to get noticed. School teachers and art instructors are also emerging as key influencers. The rise in digital content surrounding stationery products and its use has introduced an entirely new breed of influencers and reviewers who often sway purchase decisions. Increasingly, as buyers evolve and premium products are developed to suit the consumer needs, things such as better quality, a richer and wider range of pigments in paints and crayons, environmentally friendly materials etc are gaining popularity. Seeking value for money and not satisfied with cheap local brands, the Indian stationery customers is gradually shifting from inexpensive to quality products which they can connect. Awareness of good brands in stationery was a hurdle in the past as the customer and retailer were both unaware, but the business is evolving rapidly through the use of marketing tools, many of them digital. The treatment for stationery when it comes to communication has also been going through big change. Brands today portray their products and USPs with the consumer and their aspiration in mind. India’s student population in higher education grew by 8,00,000 in 2019 as against previous year taking the absolute number of such students to 37.4 million. The gross enrollment ratio has increased from 25.8 to 26.3, while in absolute terms the enrollment increased from 3.66 crore to 3.74 crore. In terms of increase of universities, they have grown from 903 in 2018 to 993 in 2019 and total higher educational institutions from 49,964 in 2018 to 51,649 in 2019. The number of teaching staff increased from 13.88 lakh to 14.16 lakh. India will be a home to the largest domestic higher education market by 2025. India will have the largest 5 to 24 year old population in ten years. All this will help to increase the demand of stationery since education is highest contributor of stationery sector. The Indian startup ecosystem has really taken off and come into focus on its own. India has around 11,000 startups. This will help to boost the office stationery sector. The stationery market is constantly coming up with an array of colourful items, which not only attracts children but also adults. Many people tend to hoard exciting and beautiful stationery items even if they don’t actually need it. The stationery business offers moderate profit margins, but the high demand balances it out. Brand gives out a margin of approximately 30% to 40% to the distributor. Products as sold at a profit margin of 25% to 35% to the end retailers. Company’s margin would basically be an average of 5%. However, the bulk and repetitive orders on stationery items make it lucrative. The government expenditure on education has gone up from 3.8% of GDP to 4.6%. The government aims to allocate 6% of GDP to education. In recent budget government allocated Rs 99,300 crore for education. This will definitely boost stationery sector. In school colours, there are so many products. But the general perception among the people is that all crayons are same. Kokuyo camlin introduced an innovative concept called brush pen. Today, children want to colour but they have less time and colouring is cumbersome using water and colours. To tap into this segment company came up with a product that gives a feeling of using a brush colour. It colours like brush. In artist category as well company has wide variety. There is no other brand that competes with camlin in this segment. There are some international brands that are present but there are no Indian brands. As these internationals brands are available through the import channel. There is no organized presence of these international brands in the country. Camlin is the only one that manufactures the product and has an organized supply chain. The best global brands in fine arts products Winsor and Newton is also marketed by Kokuyo Camlin in India. About 80% of the artists use Camlin products. Colour category is the largest category for Kokuyo Camlin. The school colour category contributes the highest to the topline. Company is a serious player in all segments of stationery whether it is school kids, artists, hobbyists or adults. Company has a R&D that looks after it. After kokuyo came in it have helped Camlin to improve its products. Japanese are known for their immense quality and the kind of checks they have in place. Any complaint received by company is attended by its top team. Kokuyo camlin has its strong presence in South and in West India. The northern market is weak. Company has big exception from Bengal which is very good with colours. Company is looking at areas of opportunity in the North. In Kerala, company is a dominant player with a market share of 90%. Earlier kokuyo Camlin provided 15 days credit period to its distributors but now company provides only 7 days credit period. This will free up working capital of Kokuyo Camlin. Company was the first one to launch pen-pencils in the country. Earlier price of pen-pencil was Rs 30 and price of wood pencil was Rs 5. So the sale of pen-pencil did not increase. But now company introduce pen-pencil in Rs 5. This will remove the price barrier. The company have sold more mechanical pencils than wooden ones. Kokuyo Camlin is the only player to do that, as it is good for the environment and for children too. Company supply wooden pencils because there is a market for them and company don’t want to ignore it but the industrial promotion is going towards mechanical pencils because company want to be a responsible marketer. Being the oldest player company is the first movers in almost every segment of stationery and have dominated those segments, except few like notebooks. Company is new entrant in notebook segment but that is also being strengthened with the tie-up with Kokuyo, which in Japan is the oldest stationery brand and their forte is notebooks. By tie-up with Kokuyo company has grabbed 10% market share in notebook segment. Company has a very niche segment strategy for Kokuyo products. Kokuyo are very innovative, premium quality products, but expensive. In the mass segment, company is going to further grow Camlin on a large scale while Kokuyo is getting established in India as premium segment. This is how company is managing these two brands. Company spend around 60% on TV, 30% on digital and 10% on BTL activities for marketing its brand and products. Company is number one brand for all types of marker in India like whiteboard marker, permanent marker, DVD marker, multipurpose marker and paint markers. Nobody realizes this because camlin is associated with colours and stationery products. People consider company as a children only brand but actually in most offices and mass retail shops it is the Camlin markers that are used. Company is market leader in markers. Company sees a flourishing growth in marker segment because schools are shifting from blackboards to whiteboards and so are coaching classes. As marketers company realize this and have a whole plan to encash it. Company even sells its all products on all online platforms. The big schools have outlets called duck shops which also have kokuyo Camlin’s products. This is a business opportunity for company. At present 10% schools in India have tie-up with camlin but in future this number will go on increasing. Such schools mostly buy at start of the back to school season while the students are left out to replenish based on their need. Kokuyo Camlin’s school network is the biggest in the country. Kokuyo Camlin’s consolidated revenue for FY2018-2019 stood at Rs 688.77 crore an increase of 10.76% compared to previous year. Its net profit in FY18-19 stood at Rs 15.20 crore an increase of 55% compared to previous year. Company’s income from operation grew to Rs 688.77 in FY2018-2019 from Rs 331.02 crore in FY2009-2010. Company has cash in hand of Rs 105 million and receivables of around Rs 1.18 billion. Company has total liabilities of around Rs 1.78 billion after deducting cash in hand an receivables. Company has debt to EBITDA ratio of 3.26% and its EBIT covered its interest expense 2.91 times. But EBIT of kokuyo Camlin increased by 56%. This is a great positive sign. By all this I prefer buy call on KOKUYO CAMLIN at CMP of Rs 72.25 on 21 February 2020.