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Flair Writing Industries Ltd Management Discussions

237.06
(5.32%)
Apr 1, 2025|12:00:00 AM

Flair Writing Industries Ltd Share Price Management Discussions

Management Discussion and Analysis

GLOBAL ECONOMY

The global economy grew at 3.2% in CY 2023, and is projected to sustain this pace for CY 2024 and CY 2025. This forecast was lower than the historical annual average of 3.8% from 2019 primarily due to restrictive monetary policies, the withdrawal of fiscal support, and low underlying productivity growth. As for advanced economies, they are expected to see a slight increase in growth, mainly driven by a recovery in the Euro Area. Emerging markets and developing economies are forecasted to experience stable growth, with certain regional variations.

In advanced economies, growth is anticipated to rise from 1.6% in CY 2023 to 1.7% in CY 2024 and 1.8% in CY 2025. On the other hand, emerging markets and developing economies are likely to register a stable growth rate of 4.2% in CY 2024 and CY 2025. This stability might be affected due to a moderation in emerging and developing Asia, and an offset by increasing growth in the Middle East, Central Asia, as well as sub-Saharan Africa. Low-income developing countries are likely to witness a gradual increase in growth, from 4.0% in CY 2023, to 4.7% and 5.2% in CY 2024 and CY 2025, respectively. This projected trend can be attributed to easing constraints on near-term growth.

Global Economic Growth (In %)

Year-on-Year (YoY)

Estimates

Projections

(In %) CY 2023 CY 2024 (E) CY 2025 (E)
World Output 3.2 3.2 3.2
Advanced Economies 1.6 1.7 1.8
USA 2.5 2.7 1.9
Euro Area 0.4 0.8 1.5
Germany -0.3 0.2 1.3
France 0.9 0.7 1.4
Italy 2.5 1.9 2.1
Spain 1.9 0.9 1.0
Japan 0.1 0.5 1.5
United Kingdom 1.1 1.2 2.3
Canada 1.1 1.2 2.3

(Source: International Monetary Fund (IMF), World Economic Outlook (WEO) Projections, April 2024) E* - Estimate Global headline inflation is expected to fall from an annual average of 6.8% in CY 2023 to 5.9% in CY 2024 and 4.5% in CY 2025. However, many countries are witnessing elevated price pressures, and further escalation of geopolitical conflicts that could pose risks risks of a renewed increase in inflation. There is persistent uncertainty regarding the extent of slowdown in USA, including concerns that the situation in Europe and China could intensify. At the same

time, downside growth risks have eased to some extent and the forecasts project improved growth conditions by the end of the year.

In an effort towards reducing inflation, major central banks raised policy interest rates to restrictive levels in CY 2023. This step resulted in high mortgage costs, challenges for firms refinancing their debt, tighter credit availability, and weaker business and residential investment. However, the ease in inflation has led to market expectations of a decline in future policy rates, in turn reducing longer-term interest rates and fuelling a surge in equity markets.

(Source: https://www.imf.org/en/Publications/WEO/ Issues/2024/04/16/world-economic-outlook-april- 2024#:~:text=Global%20recovery%20is%20steady%20 but,same%20pace%20as%20in%202023.)

OUTLOOK

The global economic scenario presents a cautiously optimistic outlook for the coming years. The growth forecasts for CY 2024 and CY 2025 hover around 3.2%, reflecting a stable trajectory amid challenges such as restrictive monetary policies and the withdrawal of fiscal support measures. The relaxation of certain near-term growth constraints for low-income developing countries promises gradual improvement in their economic prospects. However, the potential escalation of geopolitical conflicts could disrupt this trajectory, highlighting the need for resilience and adaptability amid the uncertain situation. As economies navigate these waters, there is a necessity to maintain a balanced approach, foster investment and innovation, and encourage strategic collaborations. These steps will prove to be crucial for sustaining momentum and unlocking long-term sustainable growth opportunities.

INDIAN ECONOMY

The real GDP growth for 2023-24 stands at 8.2%, marking the third consecutive year of growth at 7% or higher. This robust economic performance can be attributed to several factors, including a rebound in private consumption, increased investment activity, and a recovery in exports. Furthermore, the revisions in GDP growth reflect enhanced capital expenditure by the Government and strengthened manufacturing activity. Urban consumption demand has demonstrated considerable resilience, as reflected in high GST collections, rising auto sales, consumer optimism, and strong credit growth. Additionally, expanding manufacturing and services PMIs signal sustained solid economic momentum on the supply side.

(Source: https://www. indiatoday. in/business/story/

rbi-mpc-gdp-growth-projected-at-7-percent-

for-2024-25-2523565-2024-04-05)

Indian Economy GDP Growth Rate (In %)

Year 2019 20 2020 21 2021 22 2022 23 2023 24
GDP Growth Rate (%) 4.2 (6.6) 8.7 7.2 8.2

(Source: Ministry of Statistics & Programme Implementation, 29 February 2024)

Indias investment cycle is gaining momentum, propelled by a sustained emphasis on the Governments capital expenditure. Such efforts have brought forth higher capacity utilisation, resource mobilisation for the commercial sector, and enhanced policy support through the Production Linked Incentive (PLI) and other schemes. As of September 2023, investments worth nearly 95,000 crore have materialised under the PLI schemes. This bolstered investment has resulted in the production of goods valued at 7.80 lakh crore and the creation of over 6.4 lakh direct and indirect jobs. Furthermore, the PLI schemes have stimulated exports, which have amounted to over 3.20 lakh crore. Notably the sectors contributing significantly to the exports include large-scale electronics manufacturing, pharmaceuticals, food processing, and telecom and networking products. There are emerging signals of revival in private corporate investment, with both services and infrastructure firms exhibiting optimism about the overall business conditions. External demand is on an upswing, leading to a narrowing merchandise trade deficit. The RBI has projected the countrys inflation rate, based on the Consumer Price Index (CPI), at 4.5% for 2024-25 in the backdrop of an aboveaverage monsoon expected this year and the easing of supply chain pressures.

Complementing these trends, the Government has allocated substantial resources for infrastructure development in the Interim Union Budget for 2024-25, proposing an infrastructure capital outlay of 11.11 lakh crore. This strategic move aims to catalyse private investments across crucial sectors such as railways, roads, and renewable energy, thereby reinforcing the growth momentum. (Source:https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/ SPF8705042425182A580CFE4F51A4247AA97D5EF40B.PDF https://economictimes.indiatimes.com/news/economy/policy/ interim-budget-2024-25-rs-11-11-lakh-crore-allocated-for- infrastructure-creation/articleshow/107316381.cms?from=mdr)

OUTLOOK

Looking ahead, the Indian economy is poised for continued & robust growth. This trend is likely to be underpinned

by resilient domestic demand, a resurgence in private consumption and investment activity, and a supportive policy environment. As per India Ratings, private consumption expenditure is expected to grow by 6.1% in 2024-25, compared to 4.4% in 2023-24 due to normal monsoon and moderating inflation is expected during the year. The upward trajectory is likely to be propelled by the Governments thrust on infrastructure development, capacity expansions in the manufacturing sector, and a recovery in exports. While global economic uncertainties pose potential challenges, the Indian economys inherent strengths, adaptability, and focus on innovation position it well to navigate obstacles and capitalise on emerging opportunities, ultimately paving the way for sustained economic expansion and enhanced competitiveness.

GLOBAL WRITING INDUSTRY

The market for writing instruments was USD 16.6 billion in 2023, and is estimated to register a CAGR of over 5.8% between 2023 and 2032. The demand for writing instruments is closely linked to the education sector. Additionally, the corporate and business sector is another significant demand driver for the market. There is a consistent need for pens and other writing tools for daily tasks and communications in workplaces. Added to this, stylish and aesthetically pleasing writing instruments tend to drive the interest of consumers. Individuals who value both functionality and fashion often opt for luxury pens and designer writing instruments. The rise of e-commerce has made writing instruments more accessible to a global audience. Online retail platforms offer a wide range of options, allowing consumers to explore and purchase writing instruments conveniently.

(Source: https://www.gminsights.com/industry-analysis/writing- instruments-market)

MARKET TRENDS

• Brands offering options for engraving, unique designs, and personalised features

• I ncreased popularity of customised and personalised writing instruments

• A growing demand for eco-friendly writing instruments

• Increased consumer consciousness about the environmental impact of disposable pens

• The development of pens made from recycled materials

• The rise of biodegradable pen alternatives

(Source: https://www.gminsights.com/industry-analysis/writing-

instruments-market)

THE INDIAN WRITING AND CREATIVE MARKET

The Indian Writing and Creative Instruments industry in CY 2023 was valued at 96.8 billion, and is expected to reach at 140 to 145 billion by CY 2028. The industry is estimated to record a CAGR of 7.7% to 8.4%. Notably, pens constituted 65% to 75% of the exports (value terms) from 2017-18 to 2022-23.

The writing instrument industry is likely to receive an impetus due to several significant trends. Firstly, the country has witnessed rising focus on education, which is also reflected in its rising literacy rates.

The skill development programmes for Medium, Small and Micro Enterprises (MSMEs), coupled with growth in the sector, may also contribute to this increased demand.

(Source: https://www.gminsights.com/industry-analysis/writing-

instruments-market)

GOVERNMENT INITIATIVES Rising literacy levels

The Government has taken various measures to improve literacy over the years, such as the Right to Education Act, 2009 (RTE), Sarva Siksha Abhiyan (SSA), and the Mid-Day Meal Scheme. In addition, over the past few decades, the Gross Enrolment Ratio (GER) has been improving across the K-12 segment due to the Governments efforts to spread elementary education.

Increased Government Spending on Education

In addition to various initiatives, the Government has increased the budgetary allocation of 6.8 % for 2024-25, which signifies the Governments commitment towards advancing the education sector. The Government has outlined a comprehensive and forward-looking plan that

emphasises the importance of education, employment, and skill development by allocating an impressive 1.48 lakh crore for these crucial areas.

NEP to Aid Demand Growth

The New Education Policy 2024 signifies a transformative step in the educational trajectory of the nation. This policy was introduced to bring various changes in the Indian education system, and proposes reforms in school education and higher education, including technical education. From the pre-school to the secondary level, the NEP aims to achieve a 100% GER by 2030 and in vocational education it targets a 50% GER by 2035.

Increasing Share of Private Schools

According to the National Sample Survey Organisations (NSSO) 75th round of survey, the average spending for a student in private schools (private unaided) till class X is 7-8 times higher than that in public schools and 1 -2 times higher than that in private aided schools.

(Source: Ministry of Commerce, CRISIL MI&A)

GLOBAL STEEL BOTTLE INDUSTRY

The global market for stainless steel water bottles is likely to witness substantial growth. This growth is primarily owing to the increasing awareness of the adverse environmental impact of single-use plastic bottles. The global market for stainless steel water bottles was valued at USD 5.2 billion in CY 2023. Further, it is expected to harness a market value of USD 9.3 billion by CY 2033, reflecting a CAGR of 6%.

Consumers are increasingly turning to stainless steel water bottles due to concerns regarding the presence of chemicals like BPA in plastics, which are linked to health risks including cancer and cognitive disorders. The growing awareness of health and environmental issues among consumers is a key factor propelling the demand for stainless steel water bottles. Additionally, the trend towards healthier lifestyles, including the consumption of warm water and drinks, is expected to fuel market growth.

Technological advancements, such as mobile-operated temperature control systems for water bottles, are contributing to market expansion. Such functionalities ultimately enhance the utility of the products, and drive consumer interest. Smart insulated bottles also present significant growth opportunities in the stainless-steel water bottle market.

(Source: https://www.futuremarketinsights.com/reports/stainless- steel-water-bottles-market)

INDIAN STEEL BOTTLE INDUSTRY

The Indian Steel Bottle Industry is estimated to be valued at 38.4 billion in 2023 and is expected to grow to 75 to 80 billion by 2027-28, expanding at a CAGR of 14% to 16%. There has been a continuous increase in the demand for steel bottles in India on account of a rise in the target population, specifically students and professionals, and gym and travel enthusiasts. India has surpassed China to become the worlds most populous country. The continued population increase, coupled with a growing interest in sustainable products and healthier lifestyles would aid further penetration of steel bottles in India.

(Source: CRISIL MI&A)

GLOBAL HOUSEWARE MARKET

The global houseware market is estimated to reach USD 343 billion in 2024, increasing from USD 332 billion in 2023. This market is expected to demonstrate robust growth from 2024 to 2034, with a CAGR of 4.1%. By 2034, the market size is anticipated to increase significantly, reaching USD 856 billion.

Enhanced disposable income and evolving lifestyles are driving a desire among people to equip their kitchens with premium houseware and essential home appliances. The growing prevalence of smart homes is further boosting the houseware market, with consumers increasingly preferring appliances that integrate seamlessly into their living spaces. Despite disruptions in supply chains and distribution caused by the pandemic, the resulting shift towards home-centric lifestyles prompted greater focus on home appliances. Consumers are becoming more inclined to invest in upgrades and enhancements for their houseware.

(Source: https://www.futuremarketinsights.com/reports/

houseware-market#:~:text=The%20global%20houseware%20 market%20is,expand%20by%20US%24%20513%20billion.)

Market Trends

• Manufacturers are recognising the sustainable inclinations of consumers and are focussing on bringing out sustainable houseware

• An increasing number of nuclear families has led to the growing trend towards houseware that is compact and convenient to use, saving space and time.

• Consumers are more willing to spend on houseware, influencing the growing demand for personalised or customised appliances tailored to suit the individual needs of households

(Source: https://www.futuremarketinsights.com/reports/

houseware-market#:~:text=The%20global%20houseware%20 market%20is,expand%20by%20US%24%20513%20billion.)

THE INDIAN HOUSEWARE INDUSTRY

The houseware market in India is poised for sustained growth and is expected to cross 507 billion by 2027 due to rising urbanisation, a growing middle class population and changing consumer preferences.

Additionally, e-commerce platforms have broadened the market reach, making houseware products more accessible to consumers across diverse regions of India. The Indian houseware market presents significant opportunities for both domestic and international players, with ample room for growth and innovation across various product categories within the homeware industry.

(Source: Industry CRISIL MI&A)

BUSINESS OVERVIEW

Flair Writing Industries Limited (also referred to as Flair, Our Company, or We) specialises in designing and producing a diverse variety of writing instruments. We are ranked prominently among the top three leading companies in the writing instruments industry and are the largest manufacturer of pens in India.

Our Company has a comprehensive product portfolio that includes a diverse range of writing tools and an array of stationery items. Beyond writing instruments, we manufacture and distribute calculators under the Flair brand. Furthermore, we have diversified into houseware products, as one of our subsidiaries has recently started manufacturing steel bottles. Showcasing a total of 770 different products, Flair is dedicated to meeting the varied needs of our customers, providing quality and innovation in every aspect of writing and stationery.

Our Company operates from its 11 manufacturing plants (including subsidiaries) located strategically across India. These include 3 plants in Valsad, Gujarat, 1 plant in Naigaon, Maharashtra, 5 plants in Daman, and 2 plants in Dehradun, Uttarakhand. We have the largest installed capacity of producing over 2.20 billion pieces of writing instruments annually. This extensive network of manufacturing facilities enables the efficient production of our vast range of writing instruments and stationery products. For each of our offerings, such facilities ensure quality and timely delivery to our customers nationwide and beyond. Our extensive distribution network across the country comprises over 150 super stockists, 8,000+ distributors and serves more than 3,30,000+ wholesalers and retailers over 2380 cities and towns in India.

Our Company is the largest exporter of writing instruments for major part of last 40 years and has once again recently been awarded as the largest exporter by PLEXCONCIL for 2021-22 and 2022-23.

OUR PRODUCT PORTFOLIO Writing Instruments

Our Company manufactures and distributes writing instruments for sale in India and abroad, under our flagship brand; Flair and principal brands Hauser and Pierre Cardin. We have also recently introduced the brand "ZOOX" in India. Apart from this, we also manufacture writing instruments under contract on an OEM basis, both for export and for sale in India. Pens is the largest, fastest-growing and most margin-accretive segment of our Company and contributed to 81.21 % of our Companys revenues in 2023

24. The segment includes products like ball pens, fountain pens, gel pens, roller pens and metal pens.

Our Strategy Forward

• Constant Innovation in pioneering pens with unique features for wider acceptance

• Continue on the premiumisation strategy in our product mix with new product innovation and launches in the market to maintain our leadership position in India

• Refocus on 5 pens for large volume growth, by leveraging expanded capacity and existing moulds apart from introduction of new models

• Increasing automation in the assembly line to raise capacity and improve efficiency.

Stationery Products

In 2021, Flair launched a range of creative and stationery products under the brand Flair Creative, primarily for sale in India. In just two years of launch of Creative range Flair Creative became a 100 Crore+ brand reflecting huge faith by the market in its innovative range and ability to leverage the brand equity and its vast distribution network. We have recently commenced export of these products under this brand. Additionally, we manufacture and distribute calculators under the Flair brand. In 2023-24, the creative and stationery products segment contributed 14.78% to of our Companys revenues. The assortment of items under this segment include school kids stationery, pencils, mechanical pencils, highlighters, correction pens, markers, gel crayons, and specialised kids stationery kits, among others. All these products are designed with the aim to spark creativity and productivity for users of all ages, making them essential tools for school, work and creative projects.

Our Strategy Forward

• Creative products will be made available in about 20% of current distribution network providing good headroom for growth.

• Focus on building a robust portfolio for pencils and colouring products.

• Increasing the in-house manufacturing of the major part of product range in Creatives segment with aim to offer large suite of products including entry level products as part of its marketing and distribution strategy

Steel Bottles and Houseware Products

Our Company recently commissioned the manufacturing of steel bottles through one of our Subsidiaries, FCIPL and 2024-25 will be the first major year of operations. As part of our range of steel bottles, we offer variants with single and double vacuum layers, which are available in various designs and sizes. Flairs steel bottle segment is expected to encompass three manufacturing lines over the next two years. Our Company has started exporting to our OEM customers and has made a breakthrough with major modern trade players in India. Our Companys plant also made a breakthrough by achieving the BIS certification , now mandatory for the sale of steel bottles and has given it a distinct edge to trade in India generally dependent on imports.

Our Strategy Forward

• Capitalising on BIS Approval for market entry as an import substitute.

• Expanding the catalogue with a wider range of products.

• Partnering with modern retailers for its creative range of products to enhance market presence.

OUR BRANDS

We have consistently dedicated substantial resources to fortify our flagship brand Flair and principal brands like Hauser. Our focus is on enhancing the visibility of our Flair Creative products and extending the reach of our Pierre Cardin and Zoox brands both in India and globally. We understand that a strong, recognisable brand is crucial for attracting and retaining customers, instilling confidence, and influencing purchasing decisions. Leveraging mass media channels-including brand ambassadors, celebrity endorsements, television, print, and social media campaigns-alongside direct outreach efforts like billboards, posters, and catalogues, we aim to strengthen brand awareness and foster customer loyalty.

Our Strategy Forward

• Celebrity endorsements will play a vital role in enhancing brand visibility and driving revenue growth.

• Collaborating with Disney for its creative range of products to capture market share among the Disney Audience in India.

FINANCIAL PERFORMANCE - On a Consolidated Basis

In the fiscal year 2023-24, the number of writing instruments sold by our Company increased to 181.28 million from 180.74 million in 2022-23. Furthermore, we expanded our distributor/dealer network to 8,000+ during the fiscal year from 7,754 in 2022-23. Our network of wholesalers/retailers was expanded to 3,30,000+ in 202324 from 3,15,000 in 2022-23, owing to a strong market penetration and wider product availability.

Flairs revenue from operations, including domestic and export sales, experienced a surge to 9,787.25 million from 9,426.60 million recorded in the previous year. This growth can be credited to our ability to capitalise on emerging market opportunities. Our operational efficiency and more controlled material costs compared to 2022-

23 led to an increase in the gross material margin from 4,338.90 million to 4,930.30 million in 2023-24.

The EBITDA increased from 1,835.12 million in 2022-23 to 1,912.41 million in 2023-24, while the EBITDA margin rose from 19.47% to 19.54%. The PAT grew to 1,184.81 million from 1,170.39 million in 2022-23.

Sr. No. Metrics 2023-24 2022-23
1 Number of Pens Sold (in millions) 1321.32 1,303.60
2 Number of Distributors/Dealers 8,080 7,754
3 Number of Wholesalers/ Retailers 3,30,000 3,15,000
4 Revenue from Operations (in million) 9,787.25 9,426.60
5 Revenue from Domestic Operations (in million) 7,928.80 7,499.86
6 Revenue from Export Operations (in million) 1,858.45 1,926.74
7 Gross Material Margin (in million) 4,930.30 4,338.90
8 Gross Material Margin (%) 50.37 46.03
9 EBITDA (in million) 1,912.41 1,835.12
10 EBITDA Margin (%) 19.54 19.47
11 PAT (in million) 1,184.81 1170.39
12 PAT Margin (%) 12.11 12.42
13 Return on Capital Employed Ratio (%)(Profit before Tax and finance costs/Capital Employed) 17.32 29.55
14 Return on Equity Ratio (%) (Net Profit after Taxes/Average Total Equity) 17.84 31.12
15 Trade Receivable Days 72 61
16 Inventory Days (based on COGS) 112 104
17 Trade Payable Days 47 39
18 Working Capital Cycle (Days) 137 127
19 Debt-Equity Ratio 0.08 0.28
20 Net Debt/EBITDA (0.05) 0.63
21 Sales & Marketing Expenditure Ratio (%) 2.36 1.48
22 EPS (in ) 12.19 12.54

RATIO ANALYSIS - On a Consolidated Basis

2023-24 2022-23 % Change & Comments
Inventory Turnover (Cost of Goods Sold/Average Inventories) 3.26 3.50 (7.04)
Current Ratio (Current Assets/ Current Liabilities) 5.08 2.23 127.66 Increase due to repayments of borrowings and increase in cash and other bank balance
Debtors Turnover (Revenue from Operations/ Average Trade Receivable) 5.08 5.94 (14.46)
Operating Profit Margin (Profit before Interest and Taxes/Net Sales) 15.78% 16.57% (4.76)
Net Profit Margin (%) (Net Profit after Tax/Net Sales) 12.11% 12.42% (2.50)

 

2023-24 2022-23 % Change & Comments
Return on Net Worth (%) (Net Profit after Tax/Average Net Worth) 17.84% 31.12% (42.68) Decreased due to increase in shareholders equity due to Initial Public Offering
Interest Coverage Ratio (Earnings before Interest and Taxes/Interest Expenses) 16.65 18.64 (10.68)
Debt-Equity Ratio (Net Debt/Net Worth) 0.08 0.28 (73.01)Decrease due to the repayment of borrowings and a corresponding increase in shareholders equity due to Initial Public Offering

RISK MANAGEMENT

At Flair, we regard risk management as a critical aspect of our business operations. Our Company employs a comprehensive risk management framework to identify, assess, and mitigate potential risks across various domains, including strategic, operational, financial, regulatory, and legal risks. Our approach to risk management involves continuous monitoring of internal and external environments, ensuring compliance with all relevant laws and regulations, and implementing robust internal controls and governance practices. We foster a culture of risk awareness throughout the organisation, encouraging proactive identification and escalation of the risks faced from time to time. In addition, we strongly focus on business continuity planning, ensuring our ability to respond effectively to unforeseen events and minimise disruptions to our operations.

Risks Risk Description Mitigation Measures
Raw Material Risk Flair may face disruptions or shortages in its supply chain owing to global economic issues and geopolitical tensions. Our Company closely monitors price changes closely and manages inventories to respond to market dynamics and mitigate risks. Our efficient inventory management system helps optimise our production processes.
Economic Risk Flairs business may be affected due to a decrease in consumer spending and the demand for houseware products in the event of a recession or economic downturn. We mitigate this risk by keeping strong balance sheets, cutting costs, diversifying product offerings, and implementing dynamic strategies.
Seasonal Volatility Flairs operations and production can be impacted due to seasonal sales patterns and temporary demand surges in the industry. In such cases the rest of the year is likely to witness low-to- moderate market demand, which can affect our business further. We have expanded our product range, grown our customer base, and enhanced our ability to meet industry demands throughout the year.

 

Risks Risk Description Mitigation Measures
Brand Image It refers to the potential impact on a companys reputation, image, and customer perception due to factors such as product failures, or delivery on brand promises. We are ensuring effective organisation management and maintaining competitiveness to protect our brand from potential harm due to changes in customer preferences or negative experiences.
Quality Risk Our business could be impacted in case of an inability to deliver the quality expected by customers. We have established a solid reputation for offering superior-quality products and have created a positive perception across our customer base.
Cyber Attacks and Cybersecurity Potential threat of cyber attacks leading to loss of sensitive data, operational disruptions, compromise of customer information, and defacement of Flairs website and social media profiles. We have implemented a robust cybersecurity framework and deployed advanced defense technologies, complemented by regular assessments and proactive incident response planning.

HUMAN RESOURCES

At Flair, we recognise that our human resource is the key driving force behind our success. With a total workforce of 5,704 employees, we strive to create an environment that fosters growth, encourages innovation, and promotes a culture of excellence. Our Company is committed to attracting and retaining the best talent by offering competitive compensation packages, opportunities for professional development, and a supportive work environment that values diversity and inclusivity. Our human resource policies are framed with the approach to empower our employees, cultivate leadership skills, and ensure a healthy work-life balance. We believe that investing in our human capital is crucial for achieving long-term sustainable growth and maintaining a competitive edge in the industry.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Flairs CSR Policy aims to demonstrate our concerns for the community and our commitment to creating social value. We view our CSR strategy as a means of aligning our business further with the agenda of global sustainable development. The CSR activities undertaken by our Company are focussed on education, vocational training, and basic healthcare and hygiene. As part of these efforts, we have provided donation support to several organisations, including the Child Protection Society towards Dadra and Nagar Haveli and Daman and Diu Juvenile Justice Board, and KK Wagh Education Society, Nashik, Maharashtra for constructing a school building.

INTERNAL CONTROLS

Flair maintains a rigorous framework for implementing internal control measures, which is overseen by the Board of Directors and Executive Committee. Our comprehensive internal control system has been continuously improved

over the years through investments towards enhancing the control framework and process. This is in addition to the existing embedded controls, standards, and monitoring controls that have been applied to maintain operational stability.

The control criteria ensure the orderly and efficient conduct of our business, including adherence to its policies, the safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

CAUTIONARY STATEMENT

The statement made in this section describes our objectives, projections, expectation and estimations which may be forward looking statements within the meaning of applicable securities laws and regulations. Forwardlooking statements are based on certain assumptions and expectations of future events. We cannot guarantee that these assumptions and expectations are accurate or will be realised by our Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of our Company. We assume no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments.

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of our Company have been prepared in accordance with the Indian Accounting Standards (IndAS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 read with Section 133 of the Companies Act, 2013.

OUTLOOK FOR THE FINANCIAL YEAR 2024-25

At Flair, we are strategically advancing for the year ahead with a primary focus on fortifying our core pen business while strengthening entry into new segments like Steel Bottles with better penetration and keeping the focus on high growth momentum of Creative products as well. Our emphasis on continuous premiumisation strategy of product mix to maintain higher margins comparatively, and increase capacity utilization. The Company will continue to offer higher credit to the market to its extensive range of products from mass-market to mid-premium and premium categories. This strategy, driven by better margins, will support our ongoing efforts to gradually reduce the overall working capital cycle. Although our potential working capital requirements may be higher, our strong cash position

and near-zero debt-to-equity ratio reinforce our financial strength. We have achieved a net debt-negative status following successful debt repayments, with our debt-to- equity ratio improving from 0.28 in 2022-23 to 0.08 in 2023-24.

To strengthen our operational capabilities further, we are expanding our manufacturing footprint with a new facility in Valsad, Gujarat, slated for completion by 2025-26. While we acknowledge challenges such as subdued demand from OEM partners and geopolitical uncertainties affecting exports, our proactive approach in product innovation, expanding distribution channels, strong presence in exports market as a leading player, proposed addition to OEM players to increase exports further, and diversifying into new segments reflects our optimism for 2024-25.

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