Paper firms high on branding

Paper companies are increasing their thrust on branding for a strong footing and help de-risk from the cyclical affect of the commodity's prices, as Harshpati Singhania, managing director of JK Paper, puts it.

Ballarpur Industries is increasing its product offerings under the Matrix brand and has launched Youth Series and Ten-on-Ten, as ITC is increasing its spread with brandname Classmate. JK Paper is working on extending the reach of its Copier brand.

BILT's president (paper business) Yogesh Agarwal said, "Our branding and premium pricing will help make us the last ones to take the hit when the raw material prices tumble down the years". The pulp prices, cyclical in nature, have risen significantly over the last 18 months.

Notebooks, an estimated Rs 5,000-crore segment growing at 10 per cane per annum, has seen a strong influx from the organised sector, which comprise mere 10 per cent today.

"The category has sizeable gaps, especially with respect to quality, and this is being filled by the organised sector at various price points," said Chand Das, chief executive with ITC Ltd's Greetings, Gifting and Stationary segment.

While ITC and Navneet Publications are at the affordable price point starting Rs 5, Bilt is focusing firmly on premium pricing.

Navneet, in its tenth year of operation, is gearing up to fight the major players, Bilt and ITC. Working on expansion in its distribution network, Navneet plans to increase sales by about 30 per cent in the current fiscal. At present, it has presence in about 50,000 retail shops and over 500 distributors.

ITC is busy leveraging on the group's distribution channel and raw material support from its paper-manufacturing unit ITC Bhadrachalam.

"Building on quality product, we intend to grow over 100 per cent in the current financial year," said Das. ITC targets to sell 100 million notebooks in current financial year compared with 40 million units last year.

Leveraging its status as number one paper company, Bilt too is busy expanding its retail base from current 20,000 to 25,000 outlets this year and is targeting retail sales of Rs 100 crore.

"The focus on B2C will remain and will drive our entry into other stationary segments," said Agarwal.

The company will enter 'files and folder' segment in next month and followed by pencils, tapes and adhesives in the next six months, thereby completely its stationary expanse.

BILT has a 40 per cent marketshare in the writing and printing segment and JK Paper Ltd follows with about 23 per cent. While working to increase its focus in photocopier segment from current 40 per cent, JK Paper is working to touch down the end-consumer.

"We intend to reach our customer's customer. With a large increase in consumer base and printers reaching many homes with computers, demand for Copier is rising," said Singhania, while adding that the company has found an economical path of advertising in radio.

With an increase in focus on branding, "we are working towards decommoditisation in a commodity market," said Singhania.

Paper companies are expecting rise in domestic demand to continue despite rising commodity prices and spiralling input costs (for instance, energy, freight, etc).

"India needs an annual growth of 4-4.5 lakh tonne in capacity to meet the rising demand," said Singhania.

The current annual capacity is about 65 lakh tonne. Indian per capita demand is mere 6.5 kilograms per annum compared with about 25-30 kg in China and Indonesia.