Luxor Writing Instruments Private Limited - Marketing Pens in India

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The Future

According to analysts, the major reason for LWIPL's success was its focus on offering superior products to its customers. However, in spite of LWIPL's current leading position, analysts felt that the company would face tough competition in future from other leading brands such as Reynolds, Rotomac and Today's (Refer Exhibit I).

According to analysts, LWIPL lagged behind in tapping the full potential in certain categories. For example, in the ball point pen category that contributed to around 50% of the total sales in the pen industry, LWIPL had just 5% share. Moreover, in the fast growing gel pens segment, the company had negligible presence. Analysts also felt that excessive dependence on the Parker brand, which primarily catered to the premium segment of the market, may not be fruitful for the company in the long run. But most importantly, analysts seemed concerned about LWIPL's decision to diversify into the packaged food and hospitality industry. In 2001, LWIPL established Hazel Foods Pvt. Ltd. with an intention to enter the packaged foods segment and launched dry fruits and spices under the 'Hazel' brand. In 2002, Luxor Hotels and Resorts Pvt. Ltd. along with the Hyatt group27 acquired Qutub Hotel in Delhi from the Indian Tourism Development Corporation28 (ITDC).

The company also had plans to launch packaged water and enter into the convenience foods segment. For packaged water segment, LWIPL planned to tie up with an international company.

Explaining the rationale behind these moves, D.K.Jain, MD of LWIPL and Vice Chairman of Luxor Hotels and Resorts Pvt. Ltd. said²⁹, "Investments in categories which show promising potential for growth and family interests" prompted this move.

Analysts felt that these industries demanded a different set of expertise and a totally different type of customers to be catered to. They felt that due to unrelated diversification, it would be difficult for LWIPL to focus on the writing instruments business, where its core strength lay.

Exhibits

Exhibit I: Advertising in the Pens Industry in India

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27] The group is owned by the Pritzker Family of Chicago, Illinois. It owns or controls, a number of interests in the hospitality industry, including Hyatt Hotels Corporation, Hyatt Equities LLC and Hyatt Vacation Ownership.
28] It is an Indian public sector undertaking which had been established to coordinate tourism related activities in the country.
29] In an article titled "Luxor scripts a new plan," by Ratna Bhushan dated December 19, 2002 posted on www.blonet.com.

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