Camlin JV with Kokuyo to boost product portfolio

In a move that paves the way for Japan’s Kokuyo Co Ltd to become a strategic investor, Mumbai-based Camlin Ltd has entered into a joint venture (JV) agreement with the company’s wholly-owned subsidiary Kokuyo S&T Co Ltd.

Kokuyo, which has an annual turnover of $3.2 billion, will acquire close to 51 per cent stake in the JV in three tranches. Ten per cent will be acquired at Rs 85 a share, while 20.3 per cent will be acquired at Rs 110 per share. The mandatory open offer would be triggered at Rs 110, Camlin said. The total size of the deal is Rs 367 crore. Camlin’s enterprise value had been pegged at Rs 700-730 crore, which was nearly twice its estimated 2010-11 sales of Rs 370 crore, people in the know said.

Kokuyo was advised by Kotak Investment Banking, while Camlin was represented by Shriram Dandekar as a member of the promoter family.

The Dandekar family will retain 13 per cent in the JV, with Dilip Dandekar, chairman & managing director; and Shriram Dandekar, the executive director; continuing in their existing positions. Kokuyo would have the right to nominate four directors on the board, Camlin said.

Commenting on the deal, Dilip Dandekar said: “It has been our stated intent to scale up revenues and increase our product portfolio through line extensions. We believe both Kokuyo and Camlin have complementary product portfolios and this joint venture will facilitate faster rollout of products.”

Kokuyo would use the venture to unveil its product portfolio in stationery only. It would not introduce products from its other line of businesses, such as furniture, people in the know said.

The Camlin and Camel brands, meanwhile, will be retained in the JV, even as products like Campus notebooks, which were being distributed by Camlin earlier, are formally introduced in the portfolio.

“The JV will also open opportunities for joint exploration of increasing exports for Camlin products to other countries, and sharing know-how in marketing and technologies,” Camlin said.

Camlin’s shares were trading up 0.81 per cent on the Bombay Stock Exchange (BSE), at Rs 80.80, on Monday. It hit the day’s high of Rs 85.90, but slid to Rs 79.80, the day’s low, in afternoon trade.