FRENCH CO INKS RS 800CR DEAL WITH MUMBAI-BASED CELLO PENS

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FRENCH pen and stationery manufacturer BIC has bought a 40% stake in Mumbai-based stationery products maker Cello Pens for Rs 800 crore ($160 million). The two companies have also agreed that in 2013, BIC has the option to increase its stake to 55% in the privately-held Indian firm, its founder and managing director Pradeep Rathod said.

The deal will enable Cello Pens to expand its existing global distribution network and give BIC a foothold in the Rs 2,000-crore Indian stationery market, which is growing at 20% annually. The alliance will allow the two companies to forge together a marketing and research strategy for Cello.

Cello recently hived off some properties and idle cash on the balance sheet into a new company. “Recently, we sold some real estate properties located in Mumbai and demerged idle cash together valued at about Rs 375 crore from the company. The rest of the company was valued at Rs 2,000 crore, which is 18 times our profit after tax,” said Mr Rathod.

The 12-year-old Cello claims to have revenues of Rs 450 crore with a 37% share of the local market. With a presence in over 35 countries, it sells over 4.2 million pens annually, of which 85% is sold locally.

BIC was established in France around 60 years ago. Today, it is one of the largest suppliers and manufacturers of stationery products in France and has a turnover of around € 170 million (Rs 1,100 crore).

Its stationery products include pens, pencils, highlighters, markers, crayons, and correction products, which together constitute 43% of its overall sales.

The company later diversified its activities by launching lighters and shavers in the early ‘70’s, which currently make up for the remaining 49% and 8% of its sales. BIC is present in many countries, including the US and Europe, where it claims to have captured over 13% and 22% of the market share, respectively.

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