KOKUYO reaches agreement on M&A of an Indian Notebook Manufacturer

Obtained first production capabilities in the Indian Market and expanded export sales route

OSAKA, Japan, September 6, 2013 - KOKUYO Co., Ltd., reached an agreement with Indian notebook manufacturer Riddhi Enterprises (RE) on an M&A contract (all tangible and intangible assets such as property and buildings, production equipment, sales routes, employees, and licenses)(Shareholder value: USD 8 million). After a two-month period to fulfill requirements, such as permits and licenses, in October 2013, the transfer of business to a wholly owned subsidiary (KOKUYO Riddhi Paper Products Limited (tentative)) established in India by a KOKUYO Group company (expected to be KOKUYO S&T Co., Ltd.) is scheduled to be completed. Once transfer to the new company is complete, the executive and organizational structure will change, but the current management and employees will be transferred in order to continuously maintain the local business promotion structure.

In the KOKUYO Group, KOKUYO S&T Co., Ltd., obtained majority shares of Camlin, a major, established stationary manufacturer in India, and entered the Indian stationary market in October 2011, and acquired business infrastructure including sales and logistic network that covers the whole of India, production sites and ink technology of five factories (no notebook factory), a strong brand with a history of over 80 years, well-developed human resources, systems, and an IT system. In the two years since then, efforts were made to modernize management and strengthen existing products under KOKUYO Camlin while conducting deliberations towards obtaining production capabilities for notebook paper products, which are KOKUYO’s specialty, so as to place those products on the company’s logistics and sales network.

RE has a Head Office and notebook manufacturing factory in Maharashtra, the same state as KOKUYO Camlin (starting manufacturing notebooks in 2002), exports all products to the United States, Central and South America, the Middle East, and Africa as an OEM manufacturer (without having its own brand) and does not have sales routes in India. These characteristics coincided with KOKUYO’s aims for this M&A. With this M&A, the KOKUYO Group will achieve its biggest goal of obtaining the notebook manufacturing capabilities of KOKUYO Camlin for domestic sales in India (the current equipment is mainly for the market in Western India where KOKUYO Camlin has a strong foothold), as well as obtaining sales routes to the United States, Central and South America, the Middle East, and Africa, which will all be new markets for the KOKUYO notebook business and expanding new markets from India where we can maintain cost competitiveness (scheduled to mainly export KOKUYO Camlin products using this sales route in addition to other non-notebook products). The factory site (total area of 22,400 m2) owned by RE that will be acquired includes property that is not being used. For the time being, we will aim to maintain stable factory operations for the existing export business while scheduling the expansion of the factory as sales within India expands.

Currently, “stitch-less binding notebooks,” a specialty of KOKUYO in Japan in which notebooks are bound with glue, do not exist in the notebook market in India and market is for stitched notebooks. In order to become a major player in the Indian market, the existing notebook products are essential. At the factory to be acquired, we plan to start by developing stitched notebook products for domestic use, improving production and procurement, and raising quality, and in the future, based on the volume obtained we plan to develop a new market for “stitch-less notebooks.” Additionally, for the brands to be sold starting from the next quarter, products with high added-value will be named “Campus,” and products priced for diffusion shall use the “Camlin” brand name.

With the acquisition of this Indian notebook factory in India, the KOKUYO Group now has notebook factories in four countries worldwide (Japan, Vietnam, and China, which was acquired in 2012).

§ Reference
■Overview of Riddhi Enterprises
  1. (1)Location of Head Office: Mumbai, Maharashtra
  2. (2)Promoter and CEO: Kamal Parekh
  3. (3)Established: 1985 (Began manufacturing notebooks in 2002)
  4. (4)Capital: (Currently a partnership so there is no Capital)
  5. (5)Employees: Currently 206 employees (86 full-time employees, approx. 120 contract workers)
  6. (6)Location of Factory: Manor, Maharashtra (Close to the KOKUYO Camlin Factory in Tarapur)
  7. (7)Factory site area: Total area 22,400 m2
  8. (8)Sales destination: USA over 30%, Central and South America a little under 60%, Other (Africa, Middle East) around 10% (Exported to 25 countries)
■Overview of new company, KOKUYO Riddhi Paper Products Limited (tentative)
  1. (1)Location of Head Office: Mumbai, Maharashtra (Scheduled to become the Head Office of KOKUYO Camlin)
  2. (2)Stockholders: KOKUYO Co., Ltd., or a subsidiary designated by KOKUYO Co., Ltd. (Scheduled to be KOKUYO S&T Co., Ltd.)
  3. (3)Representative: Scheduled to appoint Takeo Iguchi (KOKUYO S&T, Executive Officer, KOKUYO Camlin, Director and Senior Executive Officer)
  4. (4)President: Scheduled to select all board members from within the KOKUYO Group (Number of board members not yet determined)
  5. (5)CEO: Kamal Parekh (Current Promoter and CEO)
  6. (6)Established: October 2013 (scheduled)
  7. (7)Capital: Not decided
  8. (8)Employees: After establishment, scheduled to take on all employees of Riddhi Enterprises
■Overview of KOKUYO Camlin Limited (Currently processing allotment to shareholders and capital increase)
  1. (1)Location of Head Office: Mumbai, Maharashtra
  2. (2)Stockholders: KOKUYO S&T Co., Ltd. 50.5%, Dandekar Family (Founder) 13.4%, other general stockholders 36.1%
  3. (3)Representative: Chairman Dilip Dandekar
  4. (4)Board members: Chairman Dilip Dandekar, Senior Deputy Chairman Takuya Morikawa (KOKUYO S&T, President & CEO), Deputy Chairman Shriram Dandekar, Nobuchika Doi (Stationed in India, KOKUYO S&T, Senior Executive Officer), Takeo Iguchi (Stationed in India, Executive Officer at KOKUYO S&T), Hirofumi Iwatsu (General Manager at KOKUYO S&T), R.C. Bhargava (Outside board member, Chairman of Maruti Suzuki), Deven Arora (Outside board member), Hisamaro Garugu (Outside board member), Noriyuki Watanabe (Outside board member), R Sriram (Outside board member), Shishir B. Desai (Outside board member) (Total of 12 board members)
  5. (5)CEO: Ayyadurai Srikanth
  6. (6)Established: 1931 (Camlin established), name changed to KOKUYO Camlin in 2011
  7. (7)Capital: 68.92 million rupees
  8. (8)Employees: Approx. 1,000 employees
  9. (9)Sales: 4,384 million rupees (About 6500 million yen for sales of general stationary and art supplies)
  10. (10)Factories: 5 locations
  11. (11)Shipping warehouse: 29 locations in all states in India
Link to “Contact us” (https://www.kokuyo.com/en/contact/)

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