Stationery Market forging ahead with newfangled Ideas!
Though the paper stationery market has seen a growth of 5 to 15%, this year with the 8% excise levied by the government on all stationery products except for exercise books one might see fluctuations in prices of products in this sector in 2006. However the school stationery does not fall into this category and so has comparatively less to worry about.
The ever growing market and it's threats
The stationery industry is growing very fast. The organised sector is estimated to be roughly over 500 crores and if you include the unorganised sector as well, it will be approximately over Rs. 5,000 crores. Thus, the challenge lies in creating, communicating and capturing value in a market dominated by local players. The paper stationery sector is a very essential sector in the stationery industry, which are further bifurcated into school and office stationery. It is comprises of many products like exercise books, diaries, planners, organizers, hard bound note books, subject note books, drawing books, plastic cover note books, composition note books, filler papers, scratch pads, memo books, memo sheets, legal pads and spiral note books etc. Where Diaries, organizers and planners are yearly salable items, note pads, exercise book, long book, etc are daily used items. In gifts too the focus is on paper-based products like autograph books, slam books, bookmarks and party invites. Tissue papers and envelopes also constitute as part of the paper stationery industry since they have also now become important products in offices and schools. No schools and office can do without envelopes. Also one needs tissue papers to keep one clean in office and schools. Even toilet paper roles and other such products contribute to this industry. The demand for paper stationery is said to be rising and the market enjoys a growth of 5 to 15%. As per resources this year India's notebook market recorded the strongest year-on-year growth among Asia Pacific countries at 167 percent in July-September 2005. As per Mr.Amrut Shah - Chairman & Managing Director of Sundaram Multi pap Ltd., manufacturers of school stationery products "The School Paper Stationery industry has a flourishing future in it's coming years and is currently growing at 10 to 15% p.a with a turnover of 6000 crores. However the only drawback is that a major share of it comes from the unorganised sector." The 10% organized sector faces a lot of competition from the 90% unorganized sector. At National level there is no brand ruling this market, only there are regional organized well known brands like Navneet Publications (India) Ltd. and Sundaram Multi Pap Ltd. in the west zone, Pioneer in the east zone, Lotus, Neelgagan and Sona in the north zone and Vidya in the south zone with a number of other respective regional manufacturers and suppliers. Also other promising upcoming brand in paper stationery is the ITC brand with it's new range of school note books etc. Resources say ITC is planning to tab only the top 4,000 schools in the country and is sure to immerge among the next market leader very soon.
Every year the school paper stationery sees a 15% growth and with the government's plan of achieving 100% education the demand of school stationery is on it's peak.
Local and unorganized players are the biggest threat to the industry as they are known to provide cheap goods in large quantities which are further affecting the demand of local entrepreneurs who are producing good quality products but at slightly higher cost as they have to incur the burden of tax and other government policies. However Mr.Amrut Shah is also of the opinion that if all the traders join hands and become part of the organised segment of the School Paper Stationery then Indian School Paper Stationery Industry slowly and gradually with the right kind of input, approach and with government support can not only survive from it's competition but also put it's first step into achieving total growth and development.
The changing tax structure by the government has really known to affect the Industry. The patchy implementation of VAT also had caused some temporary confusion in the market, as the vendors, channel partners and buyers tried to understand the nuances of the new tax regime. The vendors had to bear with the further postponement of the buying decisions in the industry. The manufacturers had just learn to bear with the VAT implementation and worked out figures on those basis but again the government have come out with a new rule in 2006 Budget where all the paper stationery products except for exercise books will be excisable at the rate of 8% which are bound to show approximately 5% percent effect on the overall price structure. Mr. Pravin Patel -Proprietor of Maharashtra Book Manufacturing Company, manufacturer of paper stationery and other related products under it's Jagruti brand says that "Though the industry for paper stationery will never die as there will always be a need of paper in the office and school sector the 8% excise on paper stationery products is bound to increase the prices of the goods which might affect the growth of the industry. Resources even say that this excise rate is said to affect the small-scale industries more than the big players in the market. The market is as it is competitive and excise is sure to bring a tougher time for the manufacturers. However Mr. Ashok Jain- Managing Director of Akar, a company manufacturing a variety of school, personal and office stationery products emphasized that "The only tools with which the Indian manufacturers can survive in today's competitive market are good marketing strategies, innovative designs and products and effective sales promotion activities".
India needs to improve it's shortcomings in the Global Market
Indian paper stationery Industry suppliers are basically converters by nature i.e they buy paper and then convert it into other paper stationery products. They have to buy paper from the paper mills in India. Since globalization, the Indian paper stationery industry is growing at a phenomenal rate internationally but then it has to face global competition as the rate at which the paper stationery manufacturers have to buy paper in India is 25% more than the International price as declared in the last budget. Though the Indian government in order to boost education reduced the excise in paper to 4% unfortunately many paper mill manufacturers and suppliers did not pass on this benefit to the converters and thus there was no favourable price changes done by the converters. Also they have to face international competition quality wise as Indonesia, Brazil and many other countries are known to supply much better quality products at much lesser rates than India. Internationally the quality of Indian paper is not up to the mark and is even costly than others. There is scope of very thin profit margin due to which even big holders cannot survive in the market and new players restrict themselves to enter the market.
Though the paper stationery manufacturers and exporters are now revising on their prices to improve their imports. This year in 2006 they have even requested the government to reduce the import duty due to the increase in paper prices so they can survive in the international market. Also long term agreements with major suppliers ensure competitive rates, even strong brands enable the company to pass on cost escalations. Though it is moving towards upward curve the Indian paper stationery industry still needs to cope with several bottlenecks to compete in the global scenario, especially with internal market competition, global threats and technological advancements. Also market demands and supply trends play an important role. Though India has one stand in the international paper stationery market as it is known to supply good quality products in small quantities, which best suits the requirement of the major importing countries like America and Africa.