“Print won’t go away and paper is not dying," says Rajesh Kejriwal of Kyoorius

Ramu Ramanathan in a tête-à-tête with Rajesh Kejriwal of Kyoorius, who organises one of India’s foremost design conference - DesignYatra and publishes the Kyoorius Communications magazine

13 Feb 2013 | By Ramu Ramanathan

Ramu Ramanathan (RR): Let’s talk about the year 2012, Drupa, and ofcourse Paperworld, which was the show for you...
Rajesh Kejriwal (RK): There are always two aspects to visit any show – networking and learning/business opportunities. Till about 2006, both Paperworld and Drupa were the event where you had to go to. There was an immense focus from paper mills on both these events and vast space occupied by all the prominent paper mills of the world. However, now Paperworld has become more stationery and very few paper mills. But Drupa provides brilliant networking opportunities especially with our key customers – printers.  
RR: Earlier one hall was dedicated to the paper players and spilled over parts of the neighbouring hall. However, now it’s only one floor of a hall.
RK: Most of the paper mills do not find it lucrative to participate in Paperworld. Having said that, the Paperworld in China has more paper mills at the show than the one in Germany.
RR: And Drupa?
RK: From a pure paper perspective, it was the same at Drupa too. There were only one hall and one floor. Except for Stora Enso, Mohawk, Gmund, and few commodity players – I don’t think fine paper players find these shows interesting.
RR: What are the reasons for this diminishing interest?
RK: I think it’s the slowdown in the fine paper business globally, not just Europe, that’s one reason. Two, the coverage or market that they had is no longer there to explore. For example, they needed to connect to new markets like India, Middle East, Indonesia – and that project is done.

RR: What about commodity paper?
RK: Unlike commodity, where you could talk to about 100 paper merchants in India, there is limited market for fine paper. Hence it makes more sense for the commodity players to participate in Drupa or Paperworld shows because you could still connect with the dealers. With fine papers, the mills tend to connect with one dealer per country, and they have already done that.
RR: How do you define fine paper?
RK: There are companies and paper merchants selling premium commodity also as fine paper. I am not talking about this overlap and will talk here only of premium or creative fine papers.

RR: What are the numbers in this segment?
RK: The global market today is roughly about seven lakh tonne. The USA at one point of time used to account for 50% of the fine paper consumed, but today it has come down to 35 or 40% - three lakh. Asia (minus Japan) was at about 10-12%, but has gone to 20% with the rest being shared by Europe, Japan and Australia. Of course Middle East is catching up very fast because they have the money and the customers are buyers of very premium fine papers. For Gmund I guess, the most lucrative market is probably the Middle East. They have paper which has gold and silver in them and who other than the Sheikhs can afford to buy these fine papers?

RR: And the Asian countries?
RK: If you look at the Asian countries, Singapore’s fine paper market is 7,000-8,000 tonnes, and Singapore is the size of Bengaluru. India’s consumption in the organised sector is around 6,000 tonnes. So if Singapore is 7,000 tonnes, one can say that India’s should ideally be at 30,000 tonnes. But then Singapore started using fine papers in 1965 and India started using fine papers in 2000, the time we began our operation. In the recent past the market has declined and countries like USA, Europe and Singapore are seeing declines. However, because India has a small base and a large unorganised sector which may vanish, I think their exists an opportunity and market growth. Even accounting for the decline of paper usage, and the global decline in fine papers, India should touch about 20,000mt in a few years.
RR: And when do you anticipate that?
RK: It depends on how the economy reverses. Let’s say, if the economy reverses by mid-year, then we should achieve the figure of 20,000 tonnes by 2018. Singapore took 35 years to get to 7,000 tonnes; we should be allowed 15 years.
RR: But the world is moving faster ...
RK: But on the reverse side, there was a time when paper was the primary means of communication. Now a lot of fine paper business – about two-lakh tonne of fine papers – will be washed out because 40% of fine paper was stationery, and that no longer exists except for the hotel industry. The stationery market is totally thrashed but other avenues have gone up. So overall usage remains the same, the segment where it is used changes.     
RR: I was at an event recently and at a digital panel discussion, and I was expecting print to be thrashed left, right and centre. To my surprise, three panellists from eBay, FlipKart and Nokia, came out strongly in support of print.  
RK: I think one of the reasons that India is still print heavy is because of the infrastructure. Print will not go away. The paper industry is not going to die. The medium for which paper is used will keep changing. And if you look at India, we completely bypassed the carbonless phase and in some ways we also bypassed the fax phase. In India we did not touch it but in most countries carbonless was a huge business. Paper mills used to have two million tonnes capacities, which are now almost zero.

RR: What are the trends you’re picking up on your radar?
RK: I feel, the fine paper for stationery will move away but there is a growing market for stationery products. Look at rubber-band and similar products and this will only grow massively. People have larger disposable incomes and like to now carry designer stationery than the usual long books. Similarly, mass mailers are out. Likewise annual reports production is on its way out. But customers are looking at using fine papers for brochures and other collateral. However, special edition of annual reports are happening on fine papers. Stationery market has declined but the multipurpose or copier paper market share has increased ten fold.  

RR: What’s happening with your company? Why have you given away market share of specialty papers to your competitors? That too on a platter?
RK: (laughs) Nobody willingly gives away market share and our tonnage never dropped. However it did not increase during the last few years. The design community has been very good to us and we maintained our turnover. While we are currently not the biggest, we are still a major player. Our acquisitions in Singapore and Malaysia in 2006 have been good for us and contribute substantially to our turnover.

RR: Around late 2008 and early 2009, we saw a shift in consumption trends and a pattern emerging which also saw the decline and subsequent closure of fine paper mills. Did that impact you?
RK: Sometimes its essential to take two steps backwards to be able to leapfrog ten steps ahead. We have been trend setters and visionaries. Paper mills stopped experimenting and also stopped catering to local needs and wants. So we were limited by choice of what we had on offer to our Indian clients – it was much-more of accepting what the paper mills had to offer. And then you had the huge risk of paper mills closing.

India and particularly Indian customers had evolved and the time now was to offer products that the community wanted and not just products that we had with us. So we decided to move away from certain mill brands and then go across the world and source products that are more relevant to India.

RR: Is that why you launched your brand – Papers By Kyoorius?
RK: Yes. I can proudly say that we are the first ones to now have an extensive range of products manufactured to our specifications and for us. Having said this, one must realise that it was an extensive exercise which took almost two-three years in the making.

RR: What were your findings?
RK: From the printers and designers we realised we are not supplying what they want but what our mills are producing and what the mills want us to sell. And if there’s a market need for some other type of paper, I am not able to supply it. Suddenly we realised we are not market-friendly. Hence we decided that we will not sell mill brands, but will consolidate and sell under our own brand. That’s when Papers by Kyoorius, the brand happened. In the interim, we gained expertise in paper manufacturing technology, chemicals used, and grasped quality. So in October 2009, we left agencies of paper mills and in October, 2011, we launched the Papers by Kyoorius brand.

RR: So now you manufacture paper under your specifications and brand from over 12 paper mills across seven countries?
RK: Today we have launched two series – The “K” Series and “O” series – both address different segments of the industry. Later in the year we will launch the “V” series. Now, we have 200 varieties of paper in different series sourced from 11 different paper mills across the world. We buy from Japan, Korea, Indonesia, Europe and US. It’s not as though we are buying products off-the-shelf, but look at their products then look at the Indian market, and change a few things like coatings, to suit our customers.

RR: You did a survey? What was it?
RK: Yes, we did a study, through our branding and consulting company. We used our team as well our customers’ specialists to work on it. We worked on price points, usage of paper, applications and the whole categorisation. We looked at our brand through the eyes of the consumers.

RR: This looks like a good initiative to get Indian printers engaged into knowing their customers.
RK: I think everybody should look at this model. The rules of the games have to change. Earlier, you had brands telling people this is what I am and these are the benefits. And  people would listen to that and buy it or not buy it. But today, people like to listen to what other people are telling you about a particular brand and then buy it. Similarly, in the printing industry, I think the printer community should introspect, interact with consumers, evaluate future trends and change the way they do business.

RR: What about the modalities you have adopted, i.e. how much of storage, stocking process, inventory cost, etc?
RK: Fine papers is a costly business. You place an order and by the time the stock is delivered, it’s about two-plus months. This means any stock you need has to be ordered two months in advance, and that’s a huge cost of inventory. Plus we get most of our stock manufactured to our specific requirements and that means you give the paper mill a minimum making order quantity.

RR: And so, one cannot buy one pallet off the stock ...
RK: Yes, fine papers do not sell like commodity papers. Coated is coated and 185gsms is 185gsm, and you can’t do anything about it. But with fine paper, there are factors like texture, an uncertain factor because you do not know what the designer will choose nor know what the printer will. Hence you end up having large stocks of all the range that you have. The average turnaround in fine papers is four to six months. A very good turnaround is four months.

RR: Also quite unlike commodity paper, customers of fine papers keep asking at every visit, “what’s new?”  
RK: That is why, one of the biggest challenges in fine papers, therefore, is planning inventory and a range of papers where you can add something every four to six months. Hey – we just got this! Check this new colour that we are introducing!

RR: ... Distribution is another challenge?
RK: Globally, people are happy having one warehouse and distributing from there. Agencies in Europe and US can do so, because their infrastructure allows them to service even three countries from one location. And two, their printers don’t order their requirement of tomorrow, today night. India is akin to six countries put together and hence you need multiple stocking points, all with a large minimal quantity and hence your overall investment is stocks and infrastructure is heavy.

RR: What is the profile of people who use specialty papers?
RK: From 2000 to 2005, we had only about 50 printers who would buy fine papers, because others were reluctant to print on these papers. I don’t blame them because printing on these papers means using different inks, more drying time and a whole lot of quality conscious requirements that go with the paper. And fine papers are costly.The greatest fear a printer had at that time was: “if I print on this paper, and it gets rejected, I am gone.” With coated paper, this fear was less because of the cost ratio of coated paper and print. But today, 80% of evolved commercial printers in India are using fine papers.

What they lack vis-a-vis their counterpart abroad is the rate card. It cannot be same for both, and this is a drawback. If the customer is willing to pay a certain extra amount for fine paper, why would they not pay a little more for printing? Without a different rate card for printing on commodity and fine papers, printers will continue to lose margins for jobs done on fine papers.  

RR: There would be 1,000 printers using specialty papers?
RK: Easily. We have about 780-800 printers on our database who are regular users of specialty papers. I would put it this way. Our first turn out of swatch is 4,000-4,500 because we have that many on our database, including printers and designers. Without accounting for follow-ups and duplicate swatches being supplied, I have to have that many swatches done. Including a few dormant users of fine papers, there are 1,200 printers on the database. I must add that among the regular users are printers from tier-b and tier-c cities, and this is because of the real estate players, who want posh brochures and are big users of fine papers.

RR: When you started in 2000, you had six offices and 85 people and sold 14 tonnes ...
RK: ... this meant our expenses were more than our sales revenue. This was the bleed that we had to deal with at that time. By 2006, we printed a thank you card because we were at 1,400 tonnes. So, the jump from 14 tonnes to 1,400 tonnes was a huge achievement, which needed to be acknowledged. In 2009, we notched ,600 tonnes. That was the period  we initiated the shift in the business model. In 2010, our sales dropped to 1,200 tonnes because we were revamping our business, but we had stock and smaller swatches. Now we are at 1,000 tonnes, and once we have launched all the three series of papers; we should be back at 2,000 tonnes.

RR: Today, the fine paper market has become a little messy.
RK: The premium commodity paper is being sold under the garb of fine papers. There’s also an increase in fine paper players. Initially, nobody wanted to touch fine papers business because there was no market. By 2004-05, everybody saw the flourish. Players came into the market place. This was nice, because it boosted the market. However, in order to garner market share and dispose-off stock, they sold at a ridiculously low prices. Now there is a realisation that this market is a challenge and players are retreating. A consolidation will happen in the next 3-4 years and by 2016, I see three to four serious national players in India.