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An expression of faith
The Hindu Business Line - 25 Aug 2005

Mohan Padmanabhan

ITC, which is establishing itself as the second largest player in the greeting cards and stationery market, is betting on innovation and quality for success.

THE greetings, gifting & stationery business (GGSB) of ITC Ltd, contributing in its own small way to the steadily growing non-cigarette businesses of the group, is now consolidating its position as the second largest player in the Rs 200-crore (consumer spend) Indian greetings cards market.

As per ITC's five-year vision plan, the strategy is to grow the cards business through value and stationery and gifting through both value and volume to fight competition from electronic media such as Internet and messaging. The GGSB, according to the ITC top brass, creates over 4,000 new designs every year at a staggering 400 and more designs per month to suit every conceivable occasion. Brand acquisitions are now very much on the cards for ITC, especially in the greetings cards segment where retail margins are as high as 45 per cent, essentially owing to high level of unsold stocks. Market niche also plays a significant role.

The company has some dozen vendors/converters (in the SSI segment) across the country for greetings cards, with 50 per cent of them located in southern India. ITC supplies the paper, cover designs, inner designs and the covers. According to Chairman Y. C. Deveshwar, the company is also ready for new acquisitions to emerge as market leader in all its new businesses as long as value is brought to the table. ITC top brass, however, clarified to Catalyst that the group's interest as far as the greetings cards business is concerned remains strictly confined to brand acquisitions and not takeover of company managements.

According to R. Srinivasan, Member, Corporate Management Committee, ITC, the real challenge is to grow the GGS business, particularly in the larger Rs 5,000-crore stationery space. One market view, of course, is that as the value-driven greetings cards business could get saturated quickly, real opportunities lie only in the stationery business.

He clarified that the group's strategy of "creating multiple drivers of growth leveraging the diverse competencies residing in the portfolio of businesses" has succeeded, even after factoring in the revenue charge towards product development and brand-building costs. He said the key was to effectively leverage the specially created GGSB channel to greater advantage for the company's new and innovative stationery products. ITC now aims to take the business turnover to nearly Rs 300 crore by 2010.

Chand Das, the Chennai-based CEO of the GGS business says greetings cards, now increasingly referred to as `social expression products', lend newer opportunities to create innovative theme-based designs to bring in discerning browsers. He said the company has put together a dedicated 60-member executive marketing team for GGS business, with distribution fully handled by the battle-scarred ITD. The true challenge lies in churning out new designs with differing contexts and visuals unceasingly for that perfect shelf throw, he said. Das said the company has moved from some 5,000 images in 2000-01 to 20,000 finished designs today, all preserved in the digitised format.

"We also need to constantly move up the paper value chain, with superior printing. While there is value in cards, the volume is in stationery," he said. One of the latest offerings from the Expressions stable is the decorative `Rakhi' cards with colourful motifs to attract customers of all ages. "A greeting card, over whose selection precious time is spent, requires high involvement and the key is to catch the eyeball through new designs, for which we scout every nook and corner of the art world." Festive and general greeting cards are now available under the Expressions brand in many Indian languages, in prices ranging between Rs 5 and Rs 30 each, says Das.

ITC recently launched "Expressions Regalia" - a new corporate gifting item - a premium collection of 15 big greeting cards and five small ones in five different designs for the connoisseur, priced at Rs 300. This product will soon be available in Wills Lifestyle Stores across the country. In the stationery segment, the Classmate brand of notebooks for students has caught on through growing retail presence, and customised orders are now being executed for a number of top schools around the country, like Padma Seshadri (Chennai), Delhi Public School and Parkwood School (Bangalore).

Bulk orders for notebooks are also booked from State Governments for free distribution among school children under the Government's Sarva Siksha Abhiyan programme. Das said talks were now on with several States for a steady supply. Das said as part of a brand-building exercise, a `Classmate Young Authors Contest', a creative story writing competition, was successfully conducted across 2,000 schools in 12 cities across the country in 2003-04, reaching out to some 40,000 students. The ITC-GGSB is also nurturing an NGO-partnership for charity work with SOS Children's Villages of India and produces a wide range of greeting cards with themes like Sparkling Joys and Merry Moments, priced between Rs 4 and Rs 10.