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(Updates) Kokuyo completes of 51% buyout in Camlin

Stationery firm Camlin said its Japanese joint venture partner Kokuyo S&T has completed acquisition of 50.74% stake

in it and the firm has now been renamed as Kokuyo Camlin.


The company also said the new joint venture has chalked out plans to achieve a turnover of Rs 1,000 crore in the next five years.

Consequent to the completion of acquisition by the Japanese firm, the company said its board of directors has adopted "a new resolution on the new management and company name, along with the new corporate logo".

On May 30, 2011, Camlin and Kokuyo had entered into a joint venture agreement and started the procedure for acquisition of Camlin shares.
Kokuyo Press Release http://www.kokuyo.co.jp/ar/news/20110530_camlin.pdf report.

The Dandekar family, the promoter of Camlin Ltd, decided to offload a lion’s share of its stake to Japan’s Kokuyo Co Ltd, according to two independent sources aware of the development. Kokuyo is a 100-year-old stationary, furniture and design group with a $3-billion annual turnover.
The 80-year-old Camlin is known for pencils, pastels, inks and geometry boxes. It has 2,000 products, from pencils and paint brushes to pastels, pens and permanent markers.

Kokuyo, listed on Japan’s exchanges, will get a 51 per cent stake in Camlin through a series of staggered transactions. "Kokuyo S&T Co now holds 50.74% of the paid-up equity share capital of the joint venture company," Camlin said in a statement.
The company said it had now been re-christened as 'Kokuyo Camlin' and its new board consists of both the partners and new independent directors. The joint venture firm will go ahead with an aggressive expansion plan to enhance its reach across the country, and enter new categories like notebooks.
Besides, the new entity will jointly explore selling Camlin's existing and new products through Kokuyo Channels, especially in Asia. The goal is to reach Rs 1,000 crore topline with healthy operating margins, thus ensuring a strong leadership possibility in the Indian stationery market, it said.

Stationery JVs

Camlin had not been on a strong earning path due to the low margin in the industry. But it still managed to hit a record net profit of Rs 11 crore during 2009-10. But for the quarter ended December, 2011, the firm had a net loss of Rs 63 lakh on revenues of Rs 69 crore (at a standalone level). A possible motive for a sell-out could be to allow a bigger firm to put in money to expand the product portfolio in turn, thus providing a boost to the business. Of late, Camlin has been planning to move from a mass range to a more premium product portfolio to improve its margins.

Currently, Camlin has a series of distribution tie-ups and this includes brands such as Zebra (for writing pens) and Kokuyo (for notebooks). But a distribution tie-up does not necessarily end with the brand getting the right push. Also, analysts feel that considering the de-growth in the Japanese market, the home-grown stationery maker can actually fetch a premium.

Sourcing for premium components in the high-end writing instruments segment is the biggest challenge for the stationery major. The move was expected by market observers in the wake of the stationery segment getting increasingly global and more competitive.

In 2009, France’s Societe BIC (BIC Group) acquired 40 per cent stake in Cello Writing Instruments & Containers Pvt Ltd for $162.4 million. The transaction included a payment of approximately $44.2 million to the promoters and also a call option in 2013 to increase the stake to 55 per cent at a price based on a formula tied to earnings. Cello Writing Instruments & Containers manufactures, supplies and exports ball pens, gel pens, refills and other writing instruments in India. It is a bigger firm than Camlin. In the same year, Linc Pens & Plastics, a manufacturer and exporter of writing instruments, got into a joint venture with Japanese company Mitsubishi.

Camlin, almost synonymous with stationery products in India, was founded in 1931 by the Dandekar family. It started as a single-product company, but currently features more than 2,000 products. The company’s flagship brands are Camel and Camlin, which are the leading stationery and art brands in the country. Dilip D. Dandekar is executive chairman of the board and managing director of Camlin Ltd.

Source: BS