Global writing instruments industry overview
Amidst the COVID-19 pandemic, the global writing instruments sector was
valued at US$ 15.9 billion in 2020 and was estimated to reach a market size US$ 20.6
billion by 2027, growing at a CAGR rate of 3.8%. The industry is set to increase by US$
758.48 million over the time spanning 2021 to 2026.
The ballpoint and gel pens market is estimated to grow at a 5.7% CAGR
from US$ 5.8 billion in 2020 to reach US$ 8.5 billion by 2027, while the roller pens
segment, currently accounting for 9% share of the global instruments market, is
anticipated to rise at a 4.2% CAGR during the time spanning from 2021 to 2027. Schools and
educational institutions all over the world were shut down due to the COVID-19 lockdowns.
With these institutions reopening over time, the school stationery supplies market has a
growth potential of US$ 15.12 billion from the time spanning 2020 to 2024, the growth
momentum of the market is expected to accelerate at a 3% CAGR.
The global writing instruments market is expected to be on a growth
momentum with the demand for luxury writing instruments on a rise and corporate gifting in
the offices being a growing trend. The global writing instruments market is dominated by
USA with a market share of 27%. The size of the writing instruments market in USA is
estimated at US$ 52 billion and Chinas writing instrument market size is expected to
reach US$ 33 billion, growing at a CAGR of 3.6%, over the analysis period between 2020 to
2027; Japan and Canada are among the other significant markets growing at a CAGR rate of
0.2% and 1.3% respectively. Within Europe, Germany is expected to grow at a CAGR rate of
1.8% while the rest of the European market is expected to reach US$4.5 billion by 2027.
Over the past few years, in spite of digitisation, the print media continues to be
dominant for readers which augurs well for the writing instruments and stationery market.
The rising online sales of writing instruments and ease of raw material
availability are anticipated to offer growth opportunities for the writing instruments
market. During the COVID-19 crisis, the global stationery products market was estimated at
US$ 24 billion in 2021 and forecasted to reach US$ 30 billion during the period 2021 to
2031, growing at a CAGR of 4%. The Asia-Pacific region has the largest contribution to the
global stationery industry and is expected to reach US$ 29.2 billion by 2027.
(Source: Globenewswire. com, prnewswire, Technavio, researchandmarkets,
factmr.com)
Indian writing instruments industry overview
The Indian writing instruments industry consists of a non-paper based
stationery industry comprising pens, pencils, markers and highlighters. Ball pens and gel
pens account for the largest share in this market. The Indian stationery market enjoys
growth potential as the country has over 25 crores students studying and requiring writing
instruments and other stationery materials. On account of rising preference for products
throughout India, the writing instruments industry is demonstrated by an increase in
premium product designs. In spite of the enhanced utilisation of computers and
smartphones, the public continues to use writing instruments, marked by design
advancements in the use of raw materials, ink and metal.
As the COVID-19 pandemic resulted in remote learning and work-from-home
situations, there was a decline in demand for writing instruments as studies and work that
was earlier being conducted through the use of writing instruments shifted to digital
devices. In order to tackle this change in consumers buying behaviour, writing
instrument manufacturers came up with new products and added innovation to their
offerings.
The Indian writing instruments market is forecasted to report a growth
on account of increased literacy, incomes and aspirations. The writing instrument market
size is about H10,000 crores expected to grow at over 8% per annum Writing instruments
have experienced a growth in the corporate gifting segment following enhanced design,
present ability and price-value proposition. (Source: 6Wresearch, Research and markets)
The stationery industry in India is fragmented into paper and non-paper stationery with
the latter comprising the larger share in the market. India is one of the biggest
stationery markets in the Asia-Pacific region.
On the basis of distribution channels, the stationery shops are
anticipated to acquire a fair portion of market share, with the demand rising on account
of wide availability of products like colour pencils, cartoon rubbers and glitter pens
that have become the ideal choice for children and are expected to secure growth of the
segment. The reopening of schools is a major growth driver to the school stationery
supplies market. The stationery market is expected to increase at a CAGR of 6.2% between
2019 and 2025.
India has over 250 million school-going students, more than any other
country. The school stationery segment consists of pencils, sharpeners, erasers,
notebooks, pencil cases and sketch pens. This plays an integral part in the education
system and is crucial for students of all age groups.
As per a survey by the Ministry of Education, India has a total of
1,043 universities, 42,343 colleges and 11,779 standalone institutions as of 2021. Under
the Union Budget 2022-23, the government of India has allocated H104,278 crores in the
coming fiscal year on education. (Source: Globenewswire.com, IBEF, 6Wresearch, IMARC,
Business Insider, NDTV, business-standard, ibef.org)
Growth drivers
Rising population: The population of India stands at 1.40 billion
in 2022 and is expected to surpass the Chinese population by 2023. The largest Indian
population of ~ 580 million in the age bracket of 5-24 years. This rise in population is
anticipated to have a positive effect on the Indian stationery and writing instruments
market.
Urbanisation: The countrys urban regions are witnessing a
population shift from the rural areas. This shift in population will be complemented by an
increase in demand for education and, in turn, for stationery and writing instruments.
Demographic dividend: The median age of India is 28.9 years as
against 30 years of global average. A younger population will have a higher preference for
education, a boost for the writing instruments sector.
Rising literacy: Government initiatives such as Sarva Shiksha
Abhiyaan and mid-day meal programmes have been strengthing Indias literacy from 65%
in 2001 to ~77.70% in 2021. The objective of attaining 100% literacy levels by 2025 could
have a positive impact on the writing instruments sector.
Education spending: The budget estimates for 2022-23 show that the
Central government could spend H104,278 crores in the coming fiscal year on education.
(Sources: Business Today, Statista, NDTV, Hindustan Times,
business-standard)
Financial review, FY2021-22 & Outlook
• Revenues for the year increased to H355 crores compared to H257
crores in the previous fiscal year.
• PAT for the year was H8.13 crores compared to H0.04 crores in
the previous fiscal year.
The Company is expected 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 believes that its competitive advantage lies within its people.
The Companys people bring to the stage a multi-sectoral experience, technological
expertise and domain knowledge. The Companys
HR culture is rooted in its ability to subvert age-old norms in a bid
to enhance competitiveness. The Company always takes decisions in alignment with the
professional and personal goals of employees, achieving an ideal work-life balance to
enhance pride for association. There were 881 people employed with the Company as on 31st
March, 2022.
Key Financial Ratios for the Company
|
FY22 |
FY21 |
| (i) Operating Profit Margin (%) |
3.3 |
(0.4) |
| (ii) Net Profit Margin (%) |
2.3 |
0.0 |
| (iii) Debtors turnover (days) |
36 |
56 |
| (iv) Inventory turnover (days) |
98 |
154 |
| (v) Current Ratio |
2.1 |
1.9 |
| (vi) Return on Net Worth (%) |
5.9 |
0.0 |
| (vii) Interest Coverage Ratio |
33.3 |
4.2 |
1. 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.
2. Change in Debtors and Inventory Turnover as compared to the
preceding year was due to increase in Revenue.
3. 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.
Risk management slowdown may have a negative impact on the
Companys growth.
Mitigation: Linc strives to gain from a rising penetration in the
domestic and global markets, expanding its presence in a way that relative weakness in any
one or few markets does not pull down the overall performance.
Competition risk: The market share of the Company could face a
decline/ restriction in growth because of competing forces.
Mitigation: Linc has been differentiating itself from competitors
through design-led products, generating a superior price-value proposition. The Company
was amongst one of the three largest players in the countrys writing instruments
sector in FY2021-22.
Quality risk: An inability to provide quality products could affect
the Companys brand.
Mitigation: Linc is one of the most renowned writing instrument
brands in India. Its brand name is in correspondence with superior quality and customer
receptivity. The Companys commitment of quality was protected through integration,
ISO 9001-2008 certification, utilisation of superior polymer quality and compatible
design.
Raw material risk: Over 50% of the total raw materials used by the
Company are crude oil-based; a rise in the crude oil prices can increase costs. Mitigation:
Linc focused on developing value-added products with a wider buffer for the absorption of
increases in cost influenced by crude oil.
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