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ITC rejigs non-notebook stationery business model
The Hindu - 13 Feb 2012

To develop a strong domestic vendor base

ITC has re-jigged its strategy for non-notebook stationery business.

The company has now embarked on a major exercise to develop domestic vendor base to source non-notebook stationery items.

Hitherto, ITC was importing non-notebook education stationery items such as colour pencils, erasers, sharpeners, geometry boxes et al from China.

A combination of factors ranging from rising labour cost in China, unfavourable fluctuation in Chinese currency and duty on import of stationery items have all forced ITC to dump the Chinese import and look for options within the country.

In an interaction with this correspondent, Chand Das, Chief Executive of the Rs.600-crore Education and Stationery Products Business of ITC, said the company was at present engaged in a 'massive project' to build strong vendor network in India. "We are looking at entrepreneurs who have domain knowledge. This will also help source quality inputs," he added. ITC was hoping to develop over half-a-dozen strong vendors in the space soon.

Mr. Das said the supply-side vendor base in India in these stationery items was bad. China, he pointed out, was a global leader in stationery items. India, he said, was a major consuming market for stationery items in the world. The aforementioned factors, however, had made ITC to fork out over 20 per cent extra cost to import Chinese products. "It's triple whammy for us," he said.

Mr. Das felt that the education stationer business was undergoing a major transformation with many a top player getting into complementary or adjacent categories, intensifying competition, in the process.

ITC, he asserted, would aim to become a top player in the field by 2013 and scale Rs.1,000 crore in two years. "This industry (education stationery business) has been sleepy for long. It's now coming of age. We are seeing lots of global interest," he said. ITC would focus on superior and differentiated products to stay ahead of competition, he pointed out.

A second wave of diversification in 2000 saw ITC get into the greeting cards space. It exited greetings cards four years ago in the wake of spurt in mobile telephony and rising challenges in the technology area.

Its entry into the notebook space subsequently had changed the face of the business. "We are able to create a notebook product portfolio that satisfies different regions and requirements," Mr. Das said. Notebook still was reserved for small-scale industry.

With a vendor base of 20-odd SSI units, ITC had now created a 700-strong distribution network reaching out to 75,000 retail outlets across the country.

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