Sumit Rathod, Whole-Time Director, Flair Writing Industries Ltd

21 Nov 2023 , 10:43 AM

There are two other listed peers of the company. Why should retail investors subscribe to the IPO?

Flair is the largest pen manufacturing company in India with a capacity of 200 crore pens annually. We offer a wide range of 700 products consisting of ball pens, gel pens, fountain pens, metal pens, highlighters, markers, mechanical pencils and other stationery products. We are also the largest exporter of writing instruments from India. We are currently exporting to 97 countries. All our brands be it Flair, Hauser, Pierre Cardin have been growing consistently over the years and have a very good penetration in the Indian markets. We have one of the strongest and the largest distribution network, catering to 3,15,000 retailers and wholesalers. The leadership position that we enjoy in the writing instruments category is the distinguishing factor for us. We have 18% market share in the writing instruments category. We have been growing consistently historically at a CAGR of 14% and with a healthy bottomline compared to our peers, because of our product mix and the distribution network of our company. Leveraging on that, going forward as well we would be growing consistently in this category as well as our new category of creative and stationery range of products. We have ventured into this new category about 2 years ago and we have already crossed revenue of Rs. 115 Crore. Overall, our company’s future looks quite promising both operationally as well as financially.

With emergence of digital and modern trade, has there been any change in your company’s distribution strategy?

We have a strong presence on digital platforms as well. Online sales and modern trade sales have not hampered any general trade sales for our company. This is largely because when you go online and if you have to buy a product of writing instruments, basically there are very few customers who would buy a pack of 30, 40 or 50 pens at a time. Till date, people in India prefer to buy 2-3 pens at a time. Hence they prefer to buy from a general retail store. Before buying any product they still write and check.

One of the objectives of the IPO is to expand into newer geographies. Can you provide us more details of the same?

Our distribution network in India is very strong with 130 super stockists, 7,700+ dealers & distributors and 900 salesmen on the payrolls of our company. These salesmen cater to 3,15,000 retailers and wholesalers. Currently, we are present in 2,400 villages, towns and cities across the country. In India, we also have a sales app through which we manage and understand the pulse of our distribution partners across channels. This app helps us in not only penetrating but also in understanding which products are doing well in which geographies. That helps us manage and distribute in a much better manner in all corners of India. Going forward, we will expand this distribution network globally as well. We have already appointed 54 distributors worldwide who are selling our products. 

In terms of partnerships with global brands – give us on overview of the strategy.

Overall, from a brand perspective, we own all our brands. We own Hauser and we have the global rights. For Pierre Cardin, we own the rights for writing instruments in the class 16 for Indian markets. So, we look at the advantage and brand value of these products and see how it will help us penetrate both in Indian as well as global markets. 

Help us understand the growth strategy of the company.

We would like to maintain the strong growth momentum in all categories, namely, writing instruments and creative & stationery division which is going to grow at a much faster pace compared to others. At the same time, we are also entering into the steel bottle category where we will be manufacturing steel bottles and vacuum bottles. So all these 3 categories combined will put us on a very healthy and robust growth trajectory.

Help us understand how are you managing the various factors impacting the margins? Especially input costs, overall costs and advertising spends?

We have one major advantage of economies of scale. Our robust and penetrated distribution network helps us in covering our sales expenses. Overall as a combination of both we are in a win-win situation and we are looking to increase the per outlet sales in terms of volumes as well as value.  

So when we talk about our margins, the combination of products we offer spans across different price points. We are one of the few companies in India offering a healthy mix of products in across the premium, mid-premium and mass segments. We maintain a balance there and the bottomline is taken care of and when there is a fluctuation in the raw material prices, we often play with the rebates and schemes we provide to our distributors or the prices at the distributor level. Our focus is on maintaining our EBITDA margin within the range of 19-20%.