Linc Ltd Management Discussions

Global writing instruments industry overview

The global writing instruments market, valued at US$ 22.5 billion in 2022, is expected to reach US$32.9 billion by 2032 at a compound annual growth rate (CAGR) of 3.9%. In the United States of America, a market value of US$ 4.7 in 2022, driven by a surge in demand for eco-friendly writing instruments, reflecting the global trend towards sustainability. APAC is estimated to contribute 57% to the growth of the global market during the fore-cast period of 2024-2028. East Asia is predicted to hold a significant market share of 39.8% by 2034, driven by the cultural significance of handwriting and personalised writing instruments. China is expected to reach a market size of US$ 8.7 Billion at CAGR of 14.7% by 2030, Japan and Canada, are each expected to grow at 4.6% and 7.7% respectively over the 2022-2030 period, while Germany is expected to grow at 5.6% CAGR.

The global writing instruments market is poised for substantial growth, driven by escalating literacy in underdeveloped and developing nations due to increased access to education initiatives. This growth will be cataysed by the growing popularity of handwriting, calligraphy and hand lettering, widening the demand for diverse writing instruments. The popularity of writing instruments as fashion stationery is also a prominent trend.

Corporate demand for writing instruments is on the rise, evidenced by companies investing in gifting to enhance brand awareness. Customisation is prominent, with major players offering personalised writing instruments to enhance a consumer need for uniqueness and emotional attachment.

The global ball point and gel pen market size is estimated US$ 6.1 billion in 2022 and expected to reach US$ 15.7 billion in 2030 at a compound annual growth rate (CAGR) of 12.5% from 2022 to 2030. Pens dominate the market, especially in the student segment, accounting for 33.8% market share in 2022. The economic segment leads in terms of price point, while the premium segment is anticipated to experience the fastest growth.

The global luxury pen market is expected to grow from US$ 2.3 billion in 2021 to US$ 3.8 billion in 2030 at a compound annual growth rate (CAGR) of 5.8%.

Share of relevant market

Indian writing instruments industry overview

The Indian writing and creative instruments industry is thriving with a market value of US$ 96.8 billion in FY2022-23, it is expected to reach US$ 140-145 billion in FY2027-28 at a compound annual growth rate (CAGR) of 7.7% - 8.4% Pencils, predominantly used by students up to class 5, continue to hold sway, with wooden pencils dominating despite innovations like mechanical ones. Expected to grow at a CAGR of 4.5% - 5.5%, the pencil market is estimated to reach RS.23 - 24 billion in FY2027-28 from RS.18.2 billion in FY2022-23.

The marker and highlighter segment, favoured by office workers and students alike, is anticipated to grow at a CAGR of 5% - 6.5%, reaching RS.6.5 - 7 billion in FY2027-28 from RS.5.1 billion in FY2022-23.

The Indian pen market, with a market share of 65% in the writing instruments market in FY2022-23 and is expected to reacRs. 68% by FY2027-28. The pen market is estimated to grow from a market value of RS.43.1 billion to RS.62-65 billion in FY2027-28 at a compound annual growth rate (CAGR) of 7.5% - 8.5%, driven by factors like rising literacy rates and increasing student and working populations.

With massmarket pens driven by volume and premium pens by brand leverage, the industry offers options across various price levels, catering to different consumer segments.

Several factors drive the growth of the writing instrument market, including Indias sizable population, with a significant portion in the 5-24 age group. Government initiatives like Sarva Shiksha, aimed at achieving 100% literacy by 2025 and increased educational spending, with the government allocating

RS.1.12 lakh crores for education in FY2023-24, signal growth prospects. With over 250 million school-going students and a rising literacy rate, the sector stands to benefit from policies like the National Education Policy 2020, which aims for 100% Gross Enrollment Ratio (GER) by 2030 and increased public investment in education to 6% of GDP by FY2023-24.

(Source: verifiedmarketresearch.com; www.indiabudget.gov.in; hindustantimes.com; www.ibef.org; www.prnewswire.com; www. mbarendezvous.com; 1: www.imarcgroup.com; 1:GER: Gross Enrollment Ratio Crisil: An assessment of writing and creative instruments industry and steel bottle industry in India, linkedin.com)

Global stationery market overview

The global stationery market, valued at US$ 192.2 billion in 2020, is projected to grow steadily, reaching US$ 217.9 billion by 2027. This growth is primarily fuelled by increasing literacy rates and a rising number of youths pursuing higher education, alongside government initiatives to expand educational infrastructure worldwide. The corporate gifting market and the colouring instruments demand, especially for highlighters and markers.

However, rapid digitisation poses challenges, with initiatives like green schooling limiting traditional stationery use. Despite this, the enduring belief in pen-and-paper education is likely to sustain growth. In emerging markets like India, government support for international companies aids growth. Adapting to consumer preferences and technology is vital for continued market expansion.

(Source: factmr.com, timesofindia, prnewswire.com)

Financial review, FY2023-24 and outlook

Revenues for the year increased to RS.502 crores compared to RS. 487 crores in the previous financial year.

PAT for the year was RS.34.1 crores compared to RS.37.4 crores in the previous financial year.

The Company is projected to generate profitable and sustainable growth in foreseeable future.

Internal control systems and adequacy

The internal control and risk management system is structured and applied in accordance with the principles and criteria established in the corporate governance code of the organisation. It is an integral part of the general organisational structure of the Company and involves a range of personnel who act in a coordinated manner while executing their respective responsibilities. The Board of Directors offers its guidance and strategic supervision to the Executive Directors and management, monitoring and support committees. The control and risk committee and the head of the audit department work under the supervision of the Board-appointed Statutory Auditors.

Human resources

Linc places a significant emphasis on its workforce as a key source of competitive advantage. The Company values its employees for their diverse sectoral experience, technological proficiency and domain knowledge. Lincs human resources culture is characterised by a commitment to challenging traditional norms to boost competitiveness. Decision-making aligns with both professional and personal goals, fostering an optimal work-life balance and instilling pride in association. As of 31 March. 2024, the company had 1063 on-roll employees, compared to 1026 in the previous fiscal year.

Key financial ratios for the Company

Change in operating profit / Net profit margin and return on net worth as compared to the preceding year was due to higher earnings from operations and reduction in finance cost.

Change in debtors and inventory turnover as compared to the preceding year was due to an increase in revenue.

Change in interest coverage ratio as compared to the preceding year was due to higher earnings from operations and reduction in finance cost.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward– looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the 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 the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments