About the Company:

Incorporated in 1986 as a partnership firm, the company is among the top three players in the overall writing instruments industry with a revenue of ₹915.55 crores in Financial Year 2023 and occupy a market share of approximately 9% in the overall writing and creative instruments industry in India, as of March 31, 2023, according to CRISIL.

Products of the company are sold under “Flair” brand, “Hauser” and “Pierre Cardin” and it has recently introduced “ZOOX” in India. “Flair” and “Hauser” offer mass-market and premium pen and stationery products, “ZOOX” focuses on mid-premium and premium writing instruments, and “Pierre Cardin” brand offers premium pen and stationery products.

The product range includes a variety of pens (ball pens, fountain pens, gel pens, roller pens and metal pens), which is the largest category in terms of number of products offered, stationery products (mechanical pencils, highlighters, correction pens, markers, gel crayons and kids’ stationery kits) and calculators. The company launched a range of “Flair Creative” products in Financial Year 2021 which include water colours, crayons, sketch pens, erasers, wooden pencils and geometry boxes, fine liners, sharpeners and scales.

The brand wise revenue of the company is captured in the below table:

It can be observed that, the company’s more than 50% of the revenue is generated from a single ‘Flair’ brand.

The details about production capacity and capacity utilization of the company can be summarised as below:

The company has recently forayed into manufacturing a wide range of houseware products including casseroles, bottles, storage containers, serving solutions, cleaning solutions and basket and paper bins, through its subsidiary, FWEPL.

Industrial Overview:

The writing and creative instruments segment comprises of writing equipment such as pens, pencils, markers and highlighters; and art and hobby equipment such as crayons, sketch pens, colour pencils, brushes, and accessories such as erasers, sharpeners. Among the writing and creative instruments industry pens account for a major share.

Indian writing and creative instruments industry to grow at 7.7 – 8.4% CAGR over Financial Years 2023 – 28 as the focus on education is rising, which is also reflected in the rising literacy rate for the country, coupled with the rising trend of parallel education in recent years, characterised by the emergence of coaching classes, training programmes, etc. is expected to provide impetus to the industry. Apart from this, with the return to offices, demand from the office-going population is also expected to contribute to the growth of the industry going forward.

The Indian writing and creative instruments industry has many small, unorganised players, as well as organised players. The smaller players typically offer low-value products and operate in specific geographies. Organised players, on the other hand, have wider product portfolios, a pan-India presence and multiple manufacturing facilities.

IPO Objectives:

1. Setting up a new manufacturing facility for writing instruments in District Valsad, Gujarat (New Valsad Unit)

2. Funding capital expenditure of the company and its subsidiary, FWEPL

3. Funding working capital requirements of the company and its subsidiaries, FWEPL and FCIPL

4. Repayment/pre-payment, in part or full, of certain borrowings availed by the company and its Subsidiaries, FWEPL and FCIPL and;

5. General corporate purposes.

Financials

The Company’s revenue from operations increased from Rs. 297.99 crores in FY 2020-21 to Rs. 942.66 crores in FY 2022-23 indicating a CAGR growth of 77.86%.

The company's EBITDA expanded from Rs. 23.00 Crores in FY 2020-21 to Rs. 183.51 Crores in FY 2022-23, with a CAGR of 182.59%. Also, the company’s EBITDA margin has increased from 7.72% in FY 2020-21 to 19.47% in FY 2022-23.

The company's Net Profit expanded from Rs. 0.99 Crores in FY 2020-21 to Rs. 118.10 Crores in FY 2022-23, with a CAGR of 992.77%. Also, the company’s Net Profit margin has improved from 0.33% in FY 2020-21 to 12.53% in FY 2022-23.

The company's ROCE has significantly improved from 0.14% in FY 2020-21 to 31.24% in FY 2022-23.

The ROE has significantly increased from FY 2020-21 to FY 2022-23 being 0.37% in FY 2020-21 to 31.17% in FY 2022-23.

As per Management, the growth of EBITDA and Net Profit of the Company is primarily due to cost optimization and increase in sales as compared to cost. With the increase in sales, the costs were distributed leading to an increase in EBITDA and Net Profit. The increase in Revenue from Operations is primarily because of increased sales reach due to an increase in the number of employees in the sales department, deeper penetration in existing markets, increase in the realization and introduction of a new range of products.

Valuation:

The company's price-to-earnings ratio stands at 24.01, while the industry's PE ratio is 45.16, suggesting that the issue price is undervalued. Additionally, the company's price-to-book ratio is 6.48, whereas the industry's PB ratio is 6.18, signifying fair valuation of the issue price.

Peer Comparison

Key Risks:

1. An increase in the cost of or a shortfall in the availability of raw materials from the suppliers could have a material adverse effect on the business, operations, prospects or financial results. The company does not have long term contracts with their suppliers and depend on a limited number of supplier for certain raw materials.

2. The company derives a significant portion of the revenue from the sale of products under the “Flair”, “Hauser” and “Pierre Cardin” brands, and any harm to such brands or reputation may adversely affect the company’s business, financial condition, cash flows and results of operations.

3. The company is dependent on the distribution network in India and overseas to sell products and any disruption in the distribution network could have a material adverse effect on the business, operations, prospects or financial results.

IPO Details