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Shifting State of Affairs in Notebook Industry

The notebook industry is the real indication of a country’s industriousness. More notebooks sold means more people are reading, writing and learning. Ironically, India’s notebook industry, though pressing forward in a tide of education, lacks order within its own ranks. Government’s thrust on education is giving push to the growth in the notebook industry.

A demographic of small and regional manufacturers supplies the nation with books, their demographic unfazed by the emergence of big companies like ITC and Ballarpur. Their steadfast consistency was buoyed by personal touch, one of the most visible hallmarks of small business. On the other hand, large corporations have created distinct signatures all over India.

The vital aspect of this interaction was to understand the hitches for the community and at the same to bridge gap between paper manufacturers & notebook manufacturers communicating their grievances and expectations from paper mills. The major expectation which came out from the interaction was stability in prices. Moreover, the industry talks about unorganized & organized sector, but it is really difficult to analyze the basis on which it is said so. Here are the opinions of notebook industry experts.


chand dasMr. Chand Das, CEO

ITC Ltd (Education & Stationery Products Business)

Views on the notebook industry

It is a high growth industry driven by investments in education at the primary, secondary and tertiary level. The GOI is the prime mover through its various flagship schemes like the Sarva Shiksha Abhiyan.

Technological developments and marketing strategies

Sophistication in manufacturing process using in-line notebook manufacturing technologies, improvement in paper quality, innovative and informative cover designs, trade marketing & distribution practices like other FMCG products.

Challenges

High seasonality resulting in high working capital being tied up in inventories. Another challenge is the lack of standardization across different regions, which has resulted in a large number of SKU’s.

Demographic distribution

There is room for both small, local, regional players and large national players. The large players help to market the notebooks being manufactured by small scale units.

Changes foreseen, suggestions

The near future may mark the end of small scale reservation for notebook manufacture, leading to modernisation and growth of existing units currently limited by a plant & machinery capital of Rs 5 crores. These modernised units will also be able to compete in the international market resulting in export growth.

AMRUT SHAH
Mr. Amrut Shah, Chairman

Sundaram Multi Pap Ltd.

Views on the notebook industry

The government’s thrust on education and literacy has boosted the consumption of notebooks. Further, India’s high population has yielded over 22 crore students with the buying capacity of Rs. 9000-10000 crore and having constant positive growth. UNICEF and other organisations are undertaking great efforts to achieve 100% world wide literacy by 2012-15. The availability of low-cost, high quality books has created more avenues for export.

Technological developments and marketing strategies

Currently, the industry is somewhat labour oriented. However, few well known organized players are now equipped with fully automatic machines. Due to low profit margins promotion campaigns are not possible. A strong distribution channel, from the metros to the villages, with consistent quantity and quality, alongwith reasonable price are essential part of the industry’s marketing strategy. Besides this direct school contact program for betterment of education, creating presence and brand value by activities such as sponsoring school activities. Using local media is also an important method of brand creation.

Challenges

The unorganized sector’s 90% share disturbs the business strategies of organized players. Other challenges are low profit margin, high investment in raw material & debtors. Additionally sudden entry & exit of new players from related sectors badly affect the channel of existing branded and organized players.

Demographic distribution

Major unorganized sector control the distribution of their own local area, due to lower expenses and seasonal sale.

Expectations from paper manufacturers and the government

Stability in prices is expected from paper manufacturers. Though the government is striving hard for literacy, the notebook industry doesn’t get any real impetus from the government. We also anticipate concessions and subsidies for our industry.

Changes foreseen, suggestions

If established manufacturers uphold manufacturing and marketing strategies sustainable, the future will see the survival of the premium quality notebooks.

CHOCKALINGAM

Mr. R. Chockalingam,

Chairman, Srinivas Fine Arts Pvt Ltd.

Views on the notebook industry

Previously, only small scale and cottage industries were in the note book industry but due to economic growth, even big corporates have entered this segment, and are playing an important role.

Technological developments and marketing strategies

The industry is using in-shop promotions, continuous technological upgrades and merchandising to create brand value and quality.

Challenges

Un-healthier competition and high material price are the key challenges ahead the industry.

Demographic distribution

Small and regional players’ spoils the market potential that educational institutions create, by supplying poor quality notebooks with lesser grammage.

Expectations from paper manufacturers and the government

Government shall announce a special subsidiary scheme and exemptions/concessions over central excise and sales tax.

Changes foreseen, suggestions

The grammage, quality of note books should be improved, at the same time it should be informed. The industry should practice healthy competition as well.

SHAILENDRA
Mr. Shailendra Gala,

Vice President – Stationery DivisionNavneet Publications (India) Ltd.

Views on the notebook industry

The notebook industry has immense potential, and is witnessing a sea change by moving away from the commodity market, and towards the branded product market. With the government’s emphasis on education, the number of student enrollments is increasing annually, and the industry is growing in sync. Brand, quality, price and strength of distribution play a major role in a fiercely competitive market.

Technological developments and marketing strategies

Full size, improved binding and better paper quality are the few improvements. Most of our products use bagasse based (eco-friendly) paper, and have attractive cover design concepts appropriate information to the consumer. Standardization in packing, availability at the nearest store, consumer offers and advertising.

Challenges

The major challenge is to overcome the unorganized market so that every child will get consistent quality products at the right price.

Demographic distribution

Small and regional players are seen in every state and have a strong hold on their territory.

Expectations from paper manufacturers and the government

We expect paper manufacturers to keep the prices and supply of paper consistent throughout the year. Retailers should allow the consumer to choose between different brands and not push brands most beneficial to them. The government should remove the notebook category from SSI, and exempt VAT on this product.

Changes foreseen, suggestions

With an influx of organized players, the industry is expected to stabilize. Organized retail has helped in display, a key area that was lacking for many years. This has enabled consumers to make a fair choice. Through constant efforts of notebook manufacturers, the consumers have now started becoming more brand conscious.

JAI BHAGWAN

Mr. Jai Bhagwan Goel,

CEO, Haryana Traders Pvt. Ltd.

Views on the notebook industry

Buoyed by the Sarva Shiksha Abhiyan, this industry is growing at a very good pace.

Technological developments and marketing strategies

The industry is using the best possible technology and marketing resources available in the market. All manufacturers are using the best quality of paper as per their market, and as much technology as is affordable. Marketing is only in hand of medium & large scale manufacturers.

Challenges

Major challenge for the industry ahead is to fulfil national requirement. The entry of large players will ruin the establishment of small and medium players.

Demographic distribution

Due to heavy transportation cost, regional manufacturers prefer to serve their own areas.

Expectations from paper manufacturers and the government

Timely supply with good quality will help the industry. The 8% excise on paper products will hamper the growth of the paper stationery industry. As notebook manufacturers also make paper products, it should be withdrawal immediately. The manufacturers, without sufficient education and resources will not be able to manage

excise procedures.

YOGESH MEHTA
Mr. Yogesh Mehta

Arihant Industries

Views on the notebook industry

It’s a growing industry compared to other sector and there is no death for this industry. Domestic market has contracted sharply due to the current economic crisis.

Technological developments and marketing strategies

There is a definite improvement in technology for the notebook segment, reducing the number of man hours utilized, and optimizing production. However, small entrepreneurs, due to their lack of awareness are unable to use technology to their advantage. A direct approach, i.e. supplying quality at low prices to educational institutions is the best strategy to create a brand. The next priority should be to appoint dealers.

Challenges

Hike in price, shortage of raw material, increase in excise duty on paper, and drastic reduction on capital employed are some of the major challenges that we have to face.

Demographic distribution

It plays an important role in the industry. Since the notebook industry is an unorganized market there will be short term overcapacity in the industry, creating pressure on the pricing. Such aspects have to be looked at critically. You have to monitor your operations very closely and see where you can make the improvements in the value chain in order to minimise costs.

Expectations from paper manufacturers and the government

Required more variety of paper for notebooks, more products in copier field. Credit facility, a strong distribution network, and a suitable pricing scheme for notebook manufacturers. Till date, the government has not shown support to notebook manufacturers.

Changes foreseen, suggestions

The notebook industry requires fully automatic machines for manufacturing premium quality notebooks with minimum prices, and optimum production. Once we have achieved such standards, these notebooks can be exported.


AJAY GUPTA
Mr. Ajay Gupta

Everest Paper Products Mfg. Co. Pvt Ltd.

Views on the notebook industry

The notebook industry is an unorganized business with less than 6 – 7 notebook companies having operations across the country. Though the industry’s growth cannot be quantified in numbers, the local market is steadily growing and maturing, with nascent focus towards good quality paper and manufactured books. The earlier concept of low cost, cut sizes and poor binding quality is gradually being phased out by buyers keen on quality.

Technological developments and marketing strategies

There are few German manufactured equipments bought into the country. Manufacturers are mostly focused on their local sales network, which is normally within 100 to 250 km radius. Book manufacturers have never focused on any kind of branding except for referential generic terms like ‘Deluxe’, ‘Gold’, ‘Export’, ‘Super’ etc. Companies like ITC and BILT outsource their production from factories using entry level technology, manual labor, primitive equipment. They entered the industry only on the basis of their management skills, distribution network and financial strength, without any real contribution to manufacturing technology.

Challenges

Major challenges can be pointed out as lack of financial support, poor payment recovery, lack of standardization. Moreover due to outmoded technology & equipments, the quality and production output is usually very poor, especially when compared to the books available overseas. There is lack of marketing skills & exposure to overseas markets which has resulted in poor capacity utilization.

Demographic distribution

The small and regional players may have presence in couple of districts, while big players enjoy presence in few states. A major factor is transport cost, distribution network, collection & servicing the sales outlets. Also there are few companies who have presence in many states.

Expectations from paper manufacturers and the government

We expect from paper manufacturers to help us in maintaining lower inventory levels of paper. Moreover cluster formation close to paper mills or proximity to major population area would help streamline operations and business execution to a major extent and facilitate growth and competitiveness.


PRAHALD AGARWALMr. Prahlad Agarwal

Variety Papers

Views on the notebook industry

The government is spending huge amount of money in every budget on education for underprivileged children. Copy manufacturers, who used to start production months before the school session now they have to work throughout the year. It shows that notebook industry is growing at a good pace.

Technological developments and marketing strategies

The arrival of new machines has also optimized production and reduced labour related problems and overheads. Fully automatic machines have replaced manual work, and yield enhanced value. Better quality of paper and modern methods of packaging has created a better looking final product.

Challenges

However, the copy industry still faces many hurdles. Though a company has to buy the paper in cash, notebooks have to be sold on credit and make huge investment in manufacturing set-up, raw-materials. The entry of big paper companies in this field has created insecurities amongst the small copy manufacturers.

Expectations from paper manufacturers and the government

Initially tax free, notebooks now suffer a 4% VAT. If the government aspire to provide education to all, tax should not be imposed on this industry. Also to prevent a future stronghold of metropolitan industrialists in small cities, the government should take legal action to prevent the entry of paper manufacturers into copy manufacturing area or else the business will be restricted amongst few big players.

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