Eyes on the market, hands on paper: The rise of Shah Devji Shivji

From waste paper to Galgo, the story of the rise of the Shah Devji Shivji & Co is a story of chance, opportunity and business acumen. Noel D’Cunha gets two of the company’s owners, Rajesh Savla and Hiren Karia, to spill the beans

15 May 2015 | By Noel D'Cunha

Mumbai has many rags to riches stories, which never cease to make us wonder. Take, for example, the Shah Devji Shivji & Co, the dealers, stockists and indenters of coated and uncoated paper and boards. Did you know it all started with waste paper?
Shah Devji Shivji & Co was started by Devji Shivji Karia in 1960, as a waste paper (raddi) trading company, where he unexpectedly stumbled into the potential of paper business. He was later joined by Harakchand Savla.
It so happened that along with the raddi, some printers started disposing unprinted reams of paper at his shop. The smart trader as he was, Karia saw an opportunity in the blank reams of paper, something other than raddi. He started sorting the good quality papers he received as raddi and started to sell them back to the printers, of course, at a cheaper rate. Gradually, he had more people wanting to buy paper from him than people selling him paper waste. This led him to graduate into retailing sheet form papers like colour paper and maplitho paper. Slowly, as the market started to develop, the company moved to wholesale trading.
“In the beginning, the operation was conducted from a 900 sq/ft space in Mumbai’s Bora Bazaar. It wasn’t such a big operation that one would need a warehouse,” says Rajesh Savla, one of the owners of Shah Devji Shivji. Besides him, the company is managed by Laxmichand Karia, Jayesh Savla and Paresh Gala. As business grew, and the economy opened up, the company started importing papers. “It was a gradual transition from one level to another,” Savla adds.
In 1997, the company started Jay Raj Trading (later renamed as Jay Raj Fine Papers), which, for the first couple of years, distributed coated art paper from Century Mills. “In 2000, Jay Raj got an opportunity to distribute Arjowiggins fine paper to the print industry for the West zone. JK Papers was representing Arjowiggins then. That’s how Jay Raj came into play as far as fine papers is concerned. Today, we supply fine papers, textured and metallic papers, for premium print jobs from a variety of companies, including Galgo,” explains Hiren Karia, a member of the Karia family, who joined the business in 1997. Sandeep Karia and Kewal Karia have since joined Karia in managing Jay Raj. 
He argues that no printer used fine papers to print real estate brochures or boxes, as they do now, until Arjowiggins made its entry. “It was a new thing. Printers were rather surprised with the pricing of the fine papers, which was then sold at Rs 200 per kg. It was also sold per sheet basis. Printers used to tell us, ‘Yeh rates… aap kya sona beech rahe ho?’ (This kind of rate, are you trading gold?). That said, it was an unorganised market – never a prime market, but purely a stock-lot market,” he adds.
The business of paper
As far as the sourcing of paper was concerned, Shah Devji Shivji did not have any dealership per se. “We sourced our paper from the agents or what we call the distributors,” says Savla. In the paper supply system, there were four layers – the mill, a distributor, dealer and retailer. The printer was the ultimate consumer of the paper product.
So, from where would printers ideally source their stock? Savla says a printer of the scale of Repro would source it directly from the agent. “But in those days, the whole business was credit driven. The agents then were so powerful that they never used to give any kind of credits, including the wholesalers. It was a seller’s market,” he says.
In those days, Fort and Khadilkar Road had many printers, and they would source their paper from us. We used to stock the paper, add our margins and supply the paper giving a reasonable credit period. The margins then used to be better than they are now. On a small trade, one could easily do well and grow.
While the company started fine papers in the recent years, it continues to supply special papers in the commodity segment, for example, the papers used for letterheads, visiting cards, brochures, labels, book papers, for those who do not have budget for fine papers. These range from 80-160gsm. “For example, we import art paper called Magno from Sappi. For visiting cards, we import a Japanese paper, Kentex ivory card. For letterheads, we have the Alabaster papers,” he says.
For Shah Devji Shivji, fine papers are not volume-based business at present, but are gaining in volume. “If we talk about the structure of the business, around 15% of it is fine paper and rest is premium commodity papers like art paper, art board and other varieties of paper and paperboard. The commodity grade helps your topline, while fine papers help the bottomline. Between both, the company’s total business will be around 8,000 to 10,000 tonnes,” Savla says.
Yet, it is the fine paper that excites Savla and Karia more. He says printers are now becoming more aware about quality papers. “Though print runs of jobs like annual reports have declined, the corporate are now more inclined to produce fewer copies but are using premium papers to reaching out to promoters and financial institutions. There’s a bigger budget for printing fewer copies. Annual report is just one example of the corporate marketing collaterals,” he says. He, however, believes that fine papers will grow more than the industry average.
Reaching out to printers
How does a paper supplier interact with printers? “There’s a set pattern when printers demand premium commodity papers,” he says. “There isn’t much of an interaction. However, when it comes to fine papers, even printers are excited. They want to know more.”
Karia adds, “We have a marketing team and a sample swatch book, a new edition of which was launched during the Galgo Calendar event last month. Using the swatch book, we recommend the type of papers which can be used for a particular job. We also interact with designers and freelancers, who at times are the source of the print job.”
He added that as a paper trader, the company is looking for opportunities to supply better grades of paper.
But, printing is not just about papers. It’s a complex process. Savla agrees. “In the old day, your duty ended the moment you receives the order and delivered the consignment. Today, even a dealer is supposed to know about the printing processes. Some 15 years ago, no one asked whether it’s a long grain or short grain paper or the grain direction. These aspects of the paper have gained importance now,” he says.
Then there’s the certification of papers like FSC, and certification of paper for use by different print companies. For example, HP has its own certification. “As a paper supplier, we are now required to know the chlorine or acidic elements of papers,” he adds. “As a dealer, we are supposed to know details and specifications, such as drying time and so on.”
He agrees that all the trainings and interactions do help in the business. “For example, we know that if a printer needs 200gsm paper for HP Indigo printing work, the grain has to be short,” he explains.
Changing trends in printing
When the company launched Jayraj in 1997, India had just opened up the economy. Import of paper started to pick up, but was in the hands of very few select companies. It was a good trade with good margins.
Over the years, print has changed the form. IPOs are out, annual reports are not printed the way they used to, letterheads are printed on desktop printers in the office, writing printing is on the decline, while packaging and copier is growing.
“As a paper trader, in terms of consumption of paper, I can say, from six to seven kilograms per capita, it has grown to 10kg and is expected to be 20+ kg by 2020,” says Karia,
The paper industry should grow. Fine paper has seen maximum growth, because players using it have increased. When we started, there were just two or three prime fine papers suppliers, including us. Today, the number has more than doubled. 
Savla adds, “I must say, with the increase in number of fine papers suppliers, printers have an easy access to fine papers, and there are more options to source their requirement. This has helped growth in the fine paper market in India.”
In this context, how has Jay Raj positioned itself? Karia answers, “What is unique about us is that we work as a Galgo fine paper group, a trader tie-up. In West zone, it’s Jay Raj; in North and East it’s Kraftile; and in South there’s Fine Paper World. We do common varieties of fine paper and focus on our own zones.”
The company supplies two grades of fine papers, Galgo and Tango fine papers. Galgo is sold pan-India under the four zonal arrangements. Tango, on the other hand, is industry specific paper. Karia says the company’s critical markets in the West Zone include Mumbai, followed by Pune, Surat, Ahmedabad, Vadodara, and Nashik.
“Now, we are focussing on markets in Indore, Nagpur and few other smaller cities, especially for the fine paper variety,” says Savla. “We have seen the tier-two markets like Nagpur using more and more fine paper. We used to sell five packets a month, a year-and-a-half ago. Today, it has grown to 50 packets a month.”
Savla adds that printing is no longer a domain of metro printers. “We have seen maximum press installations in Ahmedabad in the last two years. There are smaller cities which are upgrading their presses and using better quality papers,” he says.
Profit margins
With margins shrinking and the market expanding, how does a paper trader continue to do profitable business? Savla charts the future: “Gone will be the mill-agent-wholesaler-retailer business model. The chain will become shorter. The price and credit are two factors which will help a printer decide which commodity paper/layer he should select. In fine paper, it depends on application.”
Karia adds, “We import premium commodity paper and fine papers and supply directly to printer, or in smaller cities, through our agents. We believe that is the way to grow.”
What about the growth of paper and paperboard in the next few years? “Segment-wise, fine paper will grow. We are in this segment and we expanding our varieties of fine papers. Packaging board is something that we see as a growth segment. We plan to enter this market. We think publishing, at least in India, is growing. And the special kinds of paper (high bulk) which can be imported for publishing, especially from Stora Enso, which we import but are looking to expand. Stora Enso is also a player in the packaging segment,” says Savla.
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