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India Exercise Notebook Market Report 2020

: Ken Research

How the India Exercise Notebook Market Is Positioned?

The market for exercise notebooks in India has been traditionally dominated by the
unorganized segment. From the endpoint of marginal retailers to independent sellers,
all have been dependent on imports from China. However, the market has developed
to achieve a substantial valuation which was not there until 2000. The evolvement of
organized brands such as ITC Classmate, Navneet and others have added premium to
the market, discerned by the fact that the prices of exercise notebooks have grown 5-6
folds and even more than that in some cases in the last decade. The exercise notebook
market in India has been expanding at a decent pace in the wake of growing economy,
high literacy levels, burgeoning middle-class and enhanced scale of initiatives in the
education sector. There has been a marked shift in the preference from cheap local
brands to quality products. Aesthetically and functionally improved notebooks

Which come with innovative 3D covers, had witnessed increasing demand in the recent
years. The market size in terms of consumer expenditure on exercise notebook was
evaluated at INR ~ billion during FY2015 with the organized segment contributing
for ~% of the market revenue. Heavy capital investments in setting up manufacturing
facilities and expansion of retail outlets are a clear indication for the future prospects
of exercise notebooks in India in the coming years. Notably, Shachihata Inc. invested
USD 5 million in its Chennai plant in 2014. Kokuyo Group has already been there
since 2011 after purchasing a majority stake in Camlin which is a well known
stationery brand in India. The demand in the domestic market is huge in itself
whereas rapid improvement of the industrial infrastructure and strengthening of the
manufacturing capabilities has boosted the export prospect as well.

Which Segments have Driven Changes in Exercise Notebook Market?

The usage of recycled paper is more prevalent in India currently accounting for around ~
% of the overall paper required in manufacturing exercise notebooks. The primary
reason behind this has been low cost of production and heightened governmental
push towards integrating pro-environment manufacturing processes. Retail sales
accounted for the largest chunk (~ %) of the revenue generation through exercise
notebook sales in India during FY2015. The sheer number of retailers being far more
than the number of schools or colleges translates into higher sales ratio in favor of
retailers. ITC had approximately ~% of its sales coming through retailers whereas the
figure was ~% for Navneet. By type of usage, notebooks (including long books)
accounted for the highest revenue and volume sales amongst all the product types
envisaging ~% of the market sales volume in FY2015. While ~% of the sales came
from the 54-56 gsm categories, 65 gsm variants accounted for ~% of the sales.
Practical notebooks and drawing books were the next highest selling items envisaging
revenues worth INR ~ billion and INR ~ billion respectively in FY2015. 60 gsm

Practical notebooks chalked out a share of ~% in the practical notebooks category in

FY2015 while ~ gsm was the highest seller for drawing books constituting for ~% of
the sales volume in the same year. A5 accounted for ~% of the overall notebooks sold
while A4 had countered a share of ~%. 41-100 page notebooks accounted for ~% of
the overall sales volume in the notebook and long book category during FY2015. 60
page notebooks are one of the most popular items being consumed in the Indian
market under this category. The price-sensitive aspect coupled with optimal usability
of the exercise books has been supporting the sales of this variant. Flexible covered
notebooks accounted for the majority of the sales in the overall market. Flexible
covered notebooks are marginally cheaper and also light-weighted and easier to carry.
High usage of writing exercise notebooks as compared to drawing notebooks
indirectly leads to greater demand of white paper exercise notebooks which accounted
for ~% of the overall volume sales in the market in FY2015. Tier-II cities (~ %) and
urban geographies (~ %) accounted for the highest revenue generation for the market
in FY2015. Tier-II cities contributed for INR ~billion in FY2015.

Which all Factors have Appreciated the Market Prospect

There has been higher emphasis on increasing primary literacy levels and improving
enrollments in primary, secondary & higher education to sustain economic growth. In
2015, youth literacy rates were posted at 90.2% which indicates a positive outlook for
the exercise notebook market. 58.3% of the population in India is aged below 30 years
which indicates a larger chunk of population is either in school or some sort of
educational or research institute, which indicates a promising growth for exercise
notebook market. Both the central as well as state governments in India have been
equally vocal about the educational upliftment in the country. Free and compulsory
education for every child belonging to the age group of 6-14 years and launch of
Rashtriya Madhyamik Shiksha Abhiyan to universalize secondary education has been
a strong stimulant for the growth of exercise notebook market in the country. The
average middle class has been allocating an aggregate of 13.2% of its annual
expenditure on education and stationery which is a strong reflection of the
educational aspiration that this group possesses. Moreover, rising replacement rate of
notebooks has also provided stimulus to the market growth. There has been a steady
rise in the number of organized retail chain stores like Starmark, Crossword and
Oxford Bookstore across the country which has been instrumental in augmenting the
demand for branded notebook for exercise notebooks especially in the organized
segment. Consumers bundle up stationery items alongside purchase of books.

WhAT are the Major Challenges Hindering the Market Growth

India has been reported to have the second highest number of online course enrollments
with more than 155,000 students from the country. The rise in usage of tablets, smart
classes and prevalence of notebooks has been proved detrimental to the growth of
exercise notebooks. The business for exercise notebook is highly seasonal with
majority of the demand emerging in peak season vis--vis average monthly sales. This
trend of high seasonality discerns multiple pressures on supply chain which resulted
into substantial amount of working capital being tied up in inventory. Highly
fragmented industry due to presence of numerous organized and unorganized
notebook manufacturers has insisted manufacturers to offer sales incentive to
retailers by offering credit sales. This credit sale period usually accounts for 90 days.
Though a company has to buy paper in cash, notebooks have to be sold on credit,
which involves huge amount of working capital requirement. Competition from
international manufacturers is a major challenge for the exercise notebook market.
Chinese manufacturers, with their massive production capacity, liberal export policy
and simple taxation regimes pose an inherent advantage over local players.
Furthermore, providing branded quality products at competitive prices is poised as
the biggest challenge for the organized sector

What is the Trade Scenario for Exercise Notebooks in India

The import market for exercise notebook in India has grown at a decent rate over the
period FY2010-2015. In fact, there was a steep rise of ~% during the period FY2015
which saw the import value reach INR ~ million. The import size was INR ~million in
FY2014 and INR ~million back in FY2010. China and USA were observed as the
major import destinations for the registers, account /note /order /receipt books and
other similar article categories during FY2015. In the other category that includes
import of exercise books, Malaysia and China claimed the major share with Malaysia
accounting for the lions share of ~% and ~% respectively in FY2014 and FY2015
among the top 5 countries. China stood as one of the major importing nations for
exercise notebook in India. It is easy to source goods like packaging materials,
chemicals and machineries that are required to manufacture notebooks in China.
Additionally, easy availability of cheap labour has resulted into the lowering of the
overhead costs by as high as 40 to 50%. Large scale of production advantage is the
primary reason for importing from USA. German imports are preferred on account
of better paper availability in the country.

The export market for exercise notebooks in India was pegged at INR ~billion in FY2015
showcasing an exemplary CAGR of ~% over the period FY2010-2015. Besides, a
healthy domestic market, the export demand has been quite promising which has
resulted in a large number of local and national players aligning their businesses to
suit the foreign demand. In the export category of registers, account /note /order
/receipt books and other similar article, The US and UK have been the major
destination in FY2014 as well as FY2015. US accounted for an export value of worth
INR ~billion in FY2015. Manufacturers readily customize their portfolio and laying
out additional SKUs to cater to this growing market. Suppressed pricing is a major
factor that has stimulated the demand for Indian stationery items. USA and UK are
the two prominent export destinations for the market. These two countries offer high
value realization on notebook sales. Also, wide availability of modern retail trade and
better distribution network in these developed countries encourages export sales.

Is it worth setting up an Exercise Notebook Business?

The installed capacity of the unit proposed is ~ note books of standard 192 pages note
books and 92 page notebooks. The daily production will be ~ note books. It has been
estimated that the fixed cost incurred on plant & machinery as well as furniture and
fixtures will be around INR ~ It requires INR ~ as the monthly raw material cost for a
~ notebook manufacturing plant at an annual level. The manufacturer has to incur
monthly cost of INR ~ towards employee compensation and remuneration.
Considering rent as a working capital for 3 months, wages and salary for 2 months
and raw material for 4 months the manufacturer requires INR ~ million as working
capital. The total finance requirement has been recorded at INR ~ million. Out of this,
80% contribution will be made by promoter, while 20% finance has to be borrowed
from bank at an interest of 12% p.a. for 5 years.92 pages and 192 pages notebook are
the most selling notebooks in India. The selling price is assumed at INR ~ per note
book, which is the selling price to dealer. The profitability analysis portrays that
exercise notebook manufacturing plant will report INR ~ million as annual profit.
Return on Investment on notebook manufacturing plant will be ~%, with a breakeven
level of ~%.

How Is The Exercise Notebook Market Valued In The Future?

Private schools are set to emerge as the major formal education providers in India.
Owing to high spending capabilities of households seeking admissions for their
children in private schools, the market will have a significant push in the near
future. Sturdy population growth among children and adolescents and wider
access to education is expected to stimulate the market in the short run. The
market is expected to witness a rise in the volume of premium office as well as
school and college notebooks as companies widen the offering of their premium
brands to realize the high margin in this segment. Pro-environmental initiatives by
the Government will propel the usage of more recycled papers in exercise notebook
production. The market is also tempting for foreign brands that will look forward
to grab a share of the unorganized pie. It is projected that the market will reach
volume sales of ~ billion envisage revenues worth INR ~ billion by FY2020. The
average exercise notebook price would reach INR ~ by the same period.

What have been the Government Regulations and Pricing Structure in the
The Bureau of Indian Standards (BIS) has specific guidelines pertaining to production
of exercise notebooks to be used in educational institutes. There are strict stipulations
with respect to notebook size, page denominations, binding, and ruling, quality of
paper and cover that the manufacturer needs to abide by for its products to be used in
Specifications for Exercise Books for Schools Size: The size shall be ~ mm (C5). It may be obtained from ~ mm (RC l Standard)
getting ~ pages or from ~ mm (RC2 Standard) getting ~ pages per sheet respectively.
Denominations: Must be composed of 32, 48, 64, 80, 96, 112 and 128 pages
excluding the covers.
Binding: Exercise books of ~ pages need to have one stitch and ~ and ~ paged books
shall have two stitches on the spine of each exercise book. The size of stitch (staple)
need to be ~to ~mm in length.

Ruling: The ruling is done in accordance to the agreement between the purchaser
and the supplier. If required, the copy rule shall be done in blue color and the top and
side margin shall be in red color. For copy rule, the distance between horizontal lines
needs to be 9 mm and for margin, whether it is on the top or on the side, the distance
from the end shall be ~ mm. There shall be 21 blue lines on each page.
Cover: Colored cover paper of minimum ~ g/m2 substance shall be used.
Apart from specific BIS regulations for the exercise notebook specifications, there are
other general regulations pertaining to industrial, environmental, labour and
intellectual property laws which the manufacturers need to abide by in order to
operate in the market. The pricing structure for exercise notebooks is essentially
based upon the target group of customers that the brand is supposed to address. For
instance, most of the companys portfolio can be segmented into 3 broad offerings- a
general brand catering to the mass customer having a mid-level price, one premium
offering targeted at the relatively elite demography and a third category of products
addressed to the economically weaker section. The prices are set according to this
segregation wherein the cheapest brand of the company are marked ~% lesser than
the mass category. On the other hand, premium offerings carry a higher price of ~%
more than the mass products.

With respect to pricing differential, all the major companies like ITC, Camlin and
Sundaram have almost competitive pricing and there is a difference of not more than
INR ~ on similar range of products. For instance, a soft bound, unruled ~ cm, ~ page
Classmate notebook costs INR ~ while a notebook with similar specification from
Kokuyo Camlin cost INR ~.
Again, an ~ sized notebook, ~ page soft bound notebooks from Camlin which costs
INR ~ whereas Brijlaxmi charges INR ~ for a product with similar specification.
However, Navneet has a slightly deflated pricing compared to brands like ITC and
Camlin. This is because of the affordable product image of the brand category.
How is the Competition Structured in India Exercise Notebook Market?
The market for exercise notebooks in India is highly fragmented with a dominating
unorganized segment and only a handful of players having a regional or national
presence. Domination of low-cost Chinese and local brands has catapulted several
firms into constraining their supplies over a limited territory.

However, the gradual consumer shift towards brand acceptance and proliferation of online
retail has encouraged notebook manufacturers to explore and probably convert the
unorganized demand in their favor. As far as the competitive landscape is concerned, ITC,
with its collaborative links with SMEs coupled with a strong product portfolio is currently
the unanimous leader in the market. ITC had a ~% market share in FY2015 followed by
Navneet that churned out a ~% share in the organized manufacturers revenues from
exercise notebooks in India. Brijlaxmi Paper had the third highest share of ~% owing to its
phenomenal growth in FY2015 because of its heavily expanding retail network including
modern trade channels.
Company Profile of Major Players in the Market
The company profiles have extensive coverage of the key business indicators of the major
companies in the market. The parameters include detailed company overview, the
business USP, business strategies implemented by the firms, developments and future
plans. Other quantitative performance indicators like production capacity, distribution
network, SKUs, split of Retail/Institutional sales, sales by major regions, turnover,
margins are also mentioned in company profiles. Key financial ratios like PBIDTM,
PBITM, PBDTM, ROCE, RONW and CPM has also been mentioned. Company genesis
and other key factor have also been showcased in the company profile section.

Ken Research
Ankur Gupta, Head Marketing & Communications

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