Thank you. Good afternoon everyone, and welcome to the Flair Writing Industries Limited Q4 and FY26 earnings conference call.

Today on the call, we have Mr. Vimalchand Rathod, the Managing Director; Mr.

Mohit Rathod, the Whole-Time Director; Mr. Sumit Rathod, Whole-Time Director; and Mr.

Alpesh Porwal, the Chief Financial Officer. A short disclaimer before we start this call: this call will contain some forward-looking statements which may be based upon our beliefs, opinions, and expectations of the company as of today.

These statements are not a guarantee of future performance and will involve unforeseen risks and uncertainties. With that, I would now like to hand over the conference call to Mr.

Vimalchand Rathod od, the Managing Director, for his opening remarks. Thank you, and over to you, sir.

Good afternoon, and welcome to everyone. Thank you for joining Q4 and FY26 earnings call.

I hope everyone had the opportunity to go through our investors presentation and press releases that have been uploaded on the exchange. We are pleased to conclude the year on a strong note, delivering 15.8% top-line growth year-on-year, achieving our stated guidelines of 15% growth.

Our new growth engine delivered outstanding results during the year, with Creative rising 74% year-on-year, and steel bottles and houseware recording an exceptional 94% growth for the year. FY26 has been a defining year in our transformation journey.

We have evolved from being a largely pen-centric business into a more diversified enterprise, building strong momentum in high-growth categories in Creatives and steel bottles and houseware. These two categories now contribute 31% of overall revenue.

This marks a strategic shift towards a more scalable and future-ready and sustainable business model. At the same time, we have continued to strengthen our own brand sales, which contribute 91% of our business in FY26, a clear reflection of our growing strength and trust in our brand portfolio.

We remain committed to deepening the mix further in the years ahead. Operations at our new Valsad facility are scheduled to commence from Q1 FY27, with capacity ramp-up expected by Q3 FY27.

This expansion will significantly enhance our manufacturing capabilities across the pens and creative segment, supporting increased production volumes and enabling us to cater to growing demand across segments. In line with our strong performance and positive outlook, the Board of Directors have approved a final dividend of Indian Rupees 50 paise per share, representing 10% of face value of our equity shares, aggregating 20% of FY year 26, similar to previous year.

As we look ahead, we remain firmly focused on driving innovations and further deepening our brand leadership. This will position us to deliver enduring growth, creating long-term value and reinforce our leadership in the industry for years to come.

I now hand over the call to Mr. Alpesh Porwal, our CFO, to discuss in detail about our Q4 and FY26 financial performance.

Thank you.

Thank you, MD sir. Let me begin with the financial performance for the fourth quarter of FY26.

Revenue from operations for Q4 FY26 stood at INR 322.9 crores, an increase of 8.4% year-on-year. The gross profit for the quarter was at INR 165.3 crores, which increased by 14.1% over the corresponding quarter of the previous year.

The gross profit margin improved by 258 bps year-on-year to 51.2%, driven by a favorable shift in the company's product mix. Also, the increasing contribution from the own brand sales has strengthened pricing power, resulting in an overall improvement in gross margins this quarter.

EBITDA for the quarter was at INR 57.7 crores, registering a growth of 23.3% year-on-year. EBITDA margin stood at 17.9%, an increase of 217 bps year-on-year.

As mentioned in our previous calls that we are seeing operating leverage come through the through this year. This reinforces our confidence in the effectiveness of our ongoing business transformation initiatives, including increased automation, managing our human capital, and strengthening distribution relationships to support our expanding portfolio of innovative products.

Profit after tax for the quarter was at INR 36.5 crores, increasing by 18.4% on a year-on-year basis. Profit after tax margin, that's PAT margin, for the quarter stood at 11.3%, expanding by 96 bps year-on-year, supported by disciplined finance costs.

The stronger PAT growth was driven by a broad-based improvement in profitability, supported by expansion across gross margin, EBITDA margin, and overall PAT margin. Moving to our FY26 financial performance: revenue from operations for FY26 was at Rs 1,250, that's 1,250.1 crores, an increase of 15.8% year-on-year.

As mentioned by our MD sir, we achieved our revenue guidance of 15% this year. Gross profit for full year was Rs 637.8 crores, which increased by 16.4% on year-on-year basis.

Gross profit margin came in at 51%. The gross profit margin grew marginally this year with 30 bps expansion.

EBITDA for the full year was Rs 224.5 crores, increasing notably by 21.5% year-on-year. EBITDA margin also improved marginally by 85 bps to 18%.

Profit after tax for the period was at Rs 141.3 crores, an increase of 18.7% year-on-year. Profit after tax margin for the year was at 11.3%, increasing by 28 bps.

As reflected in the full-year performance, margins across all levels expanded meaningfully. Talking about our working capital: our inventory days stood at 97 days in Q4 FY26.

It was similar compared to other quarters as we stocked up more inventory in advance during the quarter, anticipating further price in crude oil and its byproducts. On the other hand, our debtor days stood at 78 days, it reduced by four days quarter-on-quarter, and our creditor days stood at 37 days, a decrease of three days quarter-on-quarter.

Hence, our working capital for Q4 FY26 stood at 139 days, which is also the same for full year. We regularly launch new products, maintaining higher inventory during the initial demand discovery and feedback phase.

Based on market responses and sales forecasts, inventory levels are then adjusted to complete the product lifecycle. Coming to our business segment results: our own brand sales.

Our own brand sales have continued their strong upward trajectory with consistent growth across the domestic market. Overall domestic own brand sales grew by 17% year-on-year to Rs 264 crores.

For full year, this number stands at 1,017, that is 1,017 crores, registering a 20% growth year-on-year. Domestic market has been a constant source of strength and underscores the favorable market positioning of all our products.

Our own brand exports contributed Rs 34 crores to the total revenue in Q4 FY26, an increase of 31% year-on-year, while for the full year, it was at Rs 122 crores, an increase of 29%. We have consistently focused on increasing our own brand sales and reducing reliance on OEMs, and we are steadily delivering on this objective.

Our own brand sales now account for approximately 91% of the total revenue in FY26, marking a steady and consistent consistent rise from 87% in FY25, 86% in FY24, and 80% in FY23. About our OEM sales: the domestic OEM declined from Rs 15 crores in Q4 FY25 to 9 crores in Q4 FY26.

As highlighted earlier, our domestic OEM business has been fully phased out with legacy OEM relationships reduced to zero. Nonetheless, we are pleased to share that new customer engagements through our Flowmax subsidiary have created an incremental revenue stream within the domestic OEM segment.

Our export OEM business declined from Rs 32 crores in Q4 FY25 to 17 crores in Q4 FY26. It was mainly because of persistent inflation and subdued demand being experienced domestically by our clients, further aggravated by West Asia crisis.

As the macro environment stabilizes, we expect export OEM to recover meaningfully, driven by normalization of supply chains, improved logistics, and a gradual revival in demand across key export markets, supported by enhanced customer engagement and execution capabilities. Coming to our product segments results: first, our high-growth segments of Creative and steel bottles and houseware.

The Creative segment achieved impressive growth of 80% year-on-year growth for Q4 FY26 and 74% year-on-year for FY26, the whole year. The revenue contribution stood at Rs 86 crores for the quarter, that's Q4, and Rs 298 crores for the full financial year.

We expanded our product portfolio by introducing six fresh offerings under the Creative range during the quarter and overall 29 new products during the financial year. We recently incurred a capex of 20 crores FY26 for the Flowmax facility in Surat, mainly invested in the new building and plant and machinery, and has already emerged as a revenue accretive driver for the Creative segment.

We recently operationalized wooden pencil manufacturing at this facility, a major category expansion in Creative segment. We continue to scale the steel bottles and houseware segment as a revenue contribution for the quarter increased by a stellar 76% year-on-year in Q4 FY26 to Rs 22 crores as compared to Rs 12 crores in the corresponding quarter of the previous year.

On full year, the segment generated sales worth Rs 85 crores in revenue, which is a substantial increase of 95% year-on-year year-on-year in financial year 2026. We sell 24 products in this segment with multiple SKUs.

Our growth strategy in this segment is driven by two key levers: expanding the product portfolio and deepening distribution reach, particularly within general trade. Moving on to our pens segment: the total revenue for the quarter declined 4% year-on-year from 221.66 crores to 213.44 crores.

The overall decline is entirely attributed to attributable to our pen OEM segment, which contracted 65%. Here, we also want to highlight that our own brand business in pen grew 9%, a high single digit growth.

This is a direct testament to the company's strategic focus on building and strengthening our own brand portfolio, which continues to deliver consistent growth. To summarize: while the pens business grew in FY26 with focus on quality and our revenue mix showing a significant shift towards own brand sales, which now represents 95% of our pens revenue versus 80% a year's ago a year ago.

Coming to the geopolitical situation currently which we're facing: despite the West Asian crisis and uncertain uncertainty looming over it, we would like to maintain the revenue guidance of 15% FY27. We remain confident about the upcoming year with a positive outlook driven by broad-based growth across all segments, supported by new product launches, enhanced manufacturing capabilities, and stronger distribution enabling deeper market reach.

However, the ongoing West Asia crisis has inflated crude oil prices drastically, leading to a corresponding increase in crude-linked derivatives, which are one of the important components of raw materials. While Q4 margin remain insulated due to pre-stocked inventory as we typically maintain inventory buffers over multiple months, we expect a margin impact in Q1 FY27 as higher cost inventory begins to flow through.

Cost of such raw material have gone up from 10% to 50% on an average, we are expecting an impact of about 13% increase in the consumption ratio. To mitigate this, we are strategizing a combination of rationalization of schemes and discounts.

In household and steelware, we have also increased the selling price for all the products. With sustained focus on premiumization, with a consistently rising share of mid-premium and premium products in new product launches, we expect to further offset the negative margin impact.

Reflecting on the quarter: we take pride in delivering overall strong performance despite challenging macroeconomic conditions, and we extend our sincere appreciation to all our stakeholders for their continued support. Building on this momentum, we remain focused on sustaining our progress and driving the next phase of growth.

Thank you. I would now like to hand over to the moderator to open the floor for questions.

Hi, thank you for the opportunity, and congratulations on delivering a steady operating performance despite the volatile macro environment that we are in. My first question is how much is the salience of crude on our raw materials, and you mentioned that the prices have increased to around 10% to 15%.

If you could throw some light of how much has the price hikes been taken during the quarter or even after that, and which SKUs would have seen the most price hikes, and did we witness any channel stocking ahead of the price increase that happened? That's my first question.

Hi Aradhana. When we say 13%, it's on an average for direct and indirect kind of materials which we use, the impact.

Now, when I say I calculate this 13%, it's on an average of raw material, tips, ink, packing, packaging, and other

decoration.

Now, overall this range is actually from say 0% in certain of these products, from 5% to 50%. The weighted average comes to 13% today.

That is why I said 13% is going to be the impact of the raw material price due to crude

in Q1.

Like I said, we also have these raw materials stocked up. Which also kind of averages out the increase, the impact of increase in the raw material prices.

How much is the salience of crude on our raw materials? Is it 30%, 40% of our raw materials is crude derivatives, or how is it, if you could?

35%.

35%. Did we witness any channel stocking ahead of the raw material increase that was happening?

Sorry, can repeat your question?

Was there any channel stocking that happened ahead of the raw material price increase before basically the West Asia?

What happened, Aradhana, as the war started, as the raw material prices started increasing. There was something that we averaged out our purchase cost out here by buying in at the dips out there and also stocking in.

Now what we see is that the pre-stocked material, which is going to have my average cost not dipping down so much as it would be had I been purchasing the raw material at the current prices.

Understood. You also highlighted that we might see some bit of dip in our margins because of the inflation in the prices.

If you could throw some light on how much could the dip be there on our margins on account of the increase in the raw material prices?

Everything averages out, and the impact will be in Q4 a total of 13%, which would net up to something like a 4% or something in Q1.

Okay. Okay.

Second, I wanted to understand... Sorry?

No, no,

no, Aradhana, just to add, this 4% when I'm looking at is I'm looking at which will eventually go down over the next three quarters. As to end of FY27, probably we do a recalibration or two and we'll be kind of at the same levels of margin which we are today, maybe a percent of difference out here which we see.

Okay. The second question I wanted to understand is on the pen segment.

If you could throw some light on how is the outlook going to be over the next two to three years? We were guiding for high single digit kind of growth in the pen segment.

We've closed the year at around 2%, while I understand that our own brand has grown at 9%, but going forward how should one look at the mix between pens and steel bottles and creatives? Obviously, if you see last year, we were at around 77%, 78% of pen contribution, which has come down to around 68% this year.

Going forward, what is the outlook on pens? I understand the growth levers will be creatives and steel bottles, but if you could just help us understand what is the outlook going ahead?

Yeah. Aradhana, what we are targeting for the coming years is the writing instrument which is pens would be growing at a 5% on a annual basis.

Also to add the high-growth category which is Creative, we are targeting a 50% growth this year as well. For steel bottles, we continue to grow at 40%.

Overall, if you look at the ratio will come out to around 15%.

Understood. During this quarter, our steel bottles revenue has moderated a bit if we compare that to say second quarter or third quarter.

What is the reason for that, and how should one look at the growth in the steel bottles, that 22, 23-odd crores of quarterly revenue? What is our outlook on that, how do we plan to increase that, and what are the steps that we're taking towards it?

If you look at the Q4 when we compare to Q3, of course, Q3 there was an impact of festivals. Obviously the sales was high that time.

Going forward, we are strengthening all three fronts, which is to do with our GT, general trade, also the modern trade and e-com business along with the quick-com.

Understood. Thank you so much.

I'll join back the queue for follow-ups.

Thank you.

Hi, good afternoon team, and congratulations on great numbers. Few couple of questions from my end.

What is the impact that you're now estimating in terms of margins going ahead, and for how long do you think that it will take to normalize? The reason I'm asking is you've already started taking actions in terms of reducing discounts and probably even increasing prices, but let's say if the situation continues with respect to polymer prices, it continues to remain volatile, when do we see our margins normalizing?

Hi Sneha. Sneha, like I said, when we look at a max of 4% in my Q1, this is the impact which I see.

If the war continues and this situation continues to linger, then what you are asking is how do we kind of manage it. Today we are not there in a lot of segments, we're not even touching the pricing, and the entire economics of the market would undergo change if this war continues, because the rising prices obviously has to stabilize and we have to pull it for some.

In nutshell if I say, it will have an impact, the inflation will come in and it will have an impact on every product, including our products out here. The ultimate thing is the rise in MRPs is what everybody will see.

Today we don't envisage that this crisis would continue beyond next one, no, two, three months, when it starts stabilizing by that time. Even if the thing ends by the next week, what we are expecting or predict, the stabilization will take some time.

Noted. Did I hear it correctly that for pens division now we're expecting around 5% sort of a growth and rest are the segments will lead to driving of overall 15% growth?

Yes. Overall we look at 15%.

What Mohit just said, it's 5% growth is what we expecting in pens, and 50% and 40% in creative and steel bottle, which comes to 15%.

Got that. Lastly, just wanted to take your views on the inventory days reduction.

Now we've been targeting that for over a year or so. What is the progress that we are making and what are the actions that we are taking, and FY27 what's the probable reduction that we'll be able to see in the working capital cycle?

The entire working capital if you see our inventory days went up from 87 in the previous year to 94 in this year. Over the period what we see is just a marginal improvement quarter-on-quarter also, today we stand at 97 days.

This is majorly because of the pre-stocking, as I said, which we anticipated and just to safeguard our interest, we insulated with stocking a little extra. However, if you see my debtors and all, the numbers have started coming down in spite of these markets.

It has come down by two days as I stand today, and so is my creditors the number of days have reduced. That means we have started paying the creditors much faster, the cycle has become shorter.

This entire impact would work out to almost nine days of increasing my working capital.

Going forward.

Going forward, we will streamline the inventory. Now inventory pre-stocking was a one-time event which we say.

This is not what is going to repeat. With the entire West Asia crisis moving in a direction, we see around 5 to 7 days of improvement in inventory in the coming two quarters.

Understood. Thanks a lot, team, and all the very best.

Thank you.

Thanks for the opportunity. Sir, you mentioned that you have prestocked certain inventory in anticipation of price rise.

Can you just highlight how many months of cover do we have as far as 1Q is concerned?

In my inventory, when we are saying raw material and packing material, which makes up to around 40% of my inventory. Talking about the inventory, it's around 4 to 5 weeks of inventory raw material which we stock up.

Understood. Sir, I just want to understand our export revenue growth trajectory a bit better because if I look at our own brand sales, it has grown quite handsomely in 4Q, but our export OEM revenue is down, if I'm not mistaken.

Given the fact that we are facing headwinds in export markets due to logistical challenges, ideally it should impact the OEM revenue on the export side as well as the own brand revenue. There is some kind of divergence.

One category is reporting a growth whereas other is declining. If you can just explain this bit.

Hi.

If you see in the export market, in the OEM segment, there are many factors and recently due to the West Asian conflict that was going on, that impacted the overall route, even the freight cost and even the route towards the exporting market. When I say the own brand growth, we had a significant growth and even control on our brand and our strategies in those countries.

Hence that's grow significantly in overall in the export market. I think going forward, we continue to maintain that strategy.

Now as we have also opened up four new countries, and overall we are 100-plus countries now in the overall export market.

Can you share out of the total export revenue, what is the share of these troubled countries at this point in time, and what has been the fall within that category as such?

The overall export to the Middle Eastern countries is about 25%.

The extent of fall that we have seen in this quarter, is it possible to kind of give some color on that? See,

past few weeks or past couple of months, we have not been able to export there mainly because of the route is closed. Anyways, when we talk to our buyers and our distributors, they're very, very positive because the back-to-school season is coming there as well.

They are very, very optimistic about the future business in this year.

Okay. Sir, just wanted to understand this growth guidance of steel bottles and creatives a bit better, wherein we are seeing a 50% growth for creatives and 40% for steel bottles.

I think we launched about 59 new products in both these categories in FY26. What is our plan for FY27 in terms of new launches and any touchpoint expansion that we are planning, especially on the steel bottle side?

Because I believe on creatives, we are at about 65 to 70,000 in terms of touchpoints. What exactly is going to drive the growth in these two categories?

Also within steel bottles, are we planning to add the fourth line anytime soon?

When we talk about creative, as we have seen in last six to seven quarters, we have continued the growth momentum. All the categories in the creative, we are getting a good traction.

We will continue to launch new products this year as well because still we feel a lot of the categories we have to increase the depth of offerings of the products. The new launches will continue for this year as well.

When we talk about the overall coverage in creative, I would say we would maintain the same and reiterate that we would be increasing the depth and our throughput in each and every outlet rather than increasing the number of outlets. To answer your other question in steel bottles, yes, we are launching a lot of new ranges in the coming year as well to increase the overall variety in the bottles.

Since the base is small in all three categories, which would be general trade, modern trade, and e-com, the growth is going to be all across.

Fourth line, sir? Any plans to add fourth line within the steel bottle?

We are planning to expand our steel business by adding one more line.

Sure, sir. Thank you so much and all the best.

Thank you. My questions have been answered.

Thank you.

Please go ahead. Thanks for the opportunity, and congratulations on a good set of numbers, more specifically doing exceptionally well on the creative side and the bottle business.

My first question is, sir, with regards to the capex which we have done in last three years, gross block has almost gone up from about 200 crores to 450 crores plus. The cash flow capex, which I can see from last three years cash flows, is roughly around 350 crores.

Two questions related to the capex part: one is what further capex we plan to do in the current year, that is FY27? Based on the capex which we have done till now, and also the commercial start of operations at Valsad and Surat, the 20 crore capex, typically with this kind of infrastructure, what kind of peak revenues are achievable?

Just to add to this and give you a perspective, we capitalized we had a capex spend of INR 104 crores in the previous financial year, as in Q4 itself near 40 crores. The major part of this capex is like you, I think probably you tried to say, is the plant and machinery and molds.

That's our capex spend out here. What we see in the coming year in this quarter when we capitalize the new Valsad facility, we have another outlay of probably 60 or 70-odd crores, and the total capex for the year would be around 80, 90 crores.

Having said this, when it when we historically also if you'll see, the number of times of revenue which we generate from our capital assets is around three three times. When I say it's more than three times, the similar revenue is what we expect from all the capital expenditure.

Now if I were to put the capital expenditure give you a proper perspective, annually we have a replacement, etc. of around 40 crores.

Now with this another 72 crores of capex coming in, another 72 crores which we capitalized in Valsad over the period of 2 to 3 years where we see we'll reach the optimum level of capacity levels and it would give us a three times of this expenditure.

Just to understand this clearly, based on the current capex plans, which is one which is completed till 31st March, and one which you spoke about the Valsad, we'll have about further around 70 crores. With this Valsad thing done completely, what kind of peak revenues are possible with this existing infrastructure?

Do we...

Peak revenue facilities what you're talking about or the total?

I'm talking about the peak revenue of the total because we have been doing capex for last two, three years now continuously.

We have been doing capex and we're also building up manufacturing facility. What we see that the peak revenue from the assets which we would have would come to around 1,750 crores of sales which we can do from these facilities which we are building up.

Okay. Including the Valsad new 70 crores addition, it will be 1,750 crores.

Yes. That's the capacity which we will ultimately build and operate over the period of time.

Right. Okay.

As we go forward, do we plan to reduce this intensity of capex? Reason being that somewhere due to the capex, or can we go to in terms of some kind of asset-light model so that our return ratios go beyond, say, 20-25%?

We're not thinking about any asset-light at this point of time. The way we are functioning out here by our capital outlays and we're going to continue with that.

It's not that we are saying that we're going to have a lot of capital outlay, but as need basis and the opportunities at a given period of time, we plan these capex outlays.

Okay. Within creatives, we have done exceptionally well last year and again we are expecting about 50% growth in the current year FY27.

What top two or three product categories are driving this growth, and where do you feel still there is a maximum potential to grow at this speed of 40-50% for another two, three years to come?

The maximum revenue growth what we have seen in last couple of years is in the pencil category, and also in the kids category. Pencil is going to grow further for next two, three years, and also we will be adding new categories in terms of the coloring range, the geoboxes.

We will strengthen our position there as well. When we talk about the pencil, it is all the pencils I'm talking about, which is the mechanical pencil, the wooden pencil facility which we just added in Surat, and as well as the 2 mechanical pencil which we recently launched.

Sir, with regards to the rationalization of schemes which you have done and the price increases which you have taken across our product categories, as we speak today and we are entering the school season, schools about to start, how is the demand scenario as we speak today?

The demand is extremely positive when we talk about the back-to-school season. It's very, very positive.

There is no dent on the demand post the price increases which we have taken?

No, no, no. Sure.

Last question, sir, just to clarify on the margin impact. Last year our operating margins have been somewhere around 18% for the full year, and you did indicate that of course due to a crude impact there will be some dent, but for the overall year you said we should be back to around 18% margins for the year as a whole.

Is that understanding correct?

Last year EBITDA if you talk about is 17.11%, and this year we're closing almost close to 18% EBITDA. Are you talking about these EBITDA margins or are you talking about the consumption ratio?

I'm talking about EBITDA margins, sir. Yes.

Exactly. Last year also at the beginning of the year when we had the meet, we had said that we'll do anyways more than what we did the previous year, which was 17.11%, and throughout in the all the four quarters we have kind of had a higher margin.

Very true. Very true.

Now I'm talking about the year the current year FY27. You said there is some impact which margins will be there in quarter one, but for the whole year probably you feel that as we go forward, the overall margins for the full year can be around 18%.

I think looking at the global scenario right now, I think the overall impact that we maximum see right now is a maximum of 1% up and down based on the targets that we have set.

The range can be 17% to 19%.

That's my last question. I'm just clarifying, that's my last piece.

The margins will be around 17% to 19%, is that understanding right?

Like we said that our target was towards 18, we might see a impact of 1% looking at the global scenario.

Sure. Thank you so much, sir, and best wishes.

Thank you for the opportunity. On the receivable days improvement, I wanted to understand what exactly drove that and whether it's sustainable going forward.

Yeah.

See, in terms of receivable where we have shown an improvement, marginal improvement, it's a simple thing with the process which we have started about the collection and addressing the needs. See, also

as you see as the overall impact of the steel and the household and the creative category grows, this impact will further correct itself going forward, because the strategies that we have put in place for these two particular segments are in a better manner as compared to the overall history of pen's credit segments that we were maintaining. I think going forward as we have like Alpesh said that we have improved marginally, I think going forward with this ratio we will further improve our numbers and number of days.

The receivable days will continue to improve, is what you're saying?

Yes, for sure.

Got it. Thank you so much.

Thanks for the opportunity. Mohit sir, congratulations for the good set of numbers.

Sir, the result could look much better if the standalone also has performed the better and contributed, because since last two years, standalone profit is at the operating level it is the stand still. Rather it is reduced from the 2024.

What are the reason why the standalone profit is not increasing, though the revenue is growing, but the operating profit is not growing? It is the only the subsidiary which is generating the higher profit and so that at the console level the profit and revenue looks good.

What are the steps company is taking to improve the profitability of the standalone level?

Across all the companies, whether they are from the main company or the subsidiaries, the production of the writing instruments, creatives are spread over. It is not specifically to any particular company that the margins will improve.

It is the overall turnover that happens, the way the expansion and the capex has happened in various categories in the new company, the subsidiary company, where in 2017 when the tax regime had gone down, major expansion is happening there. You understand?

The output of the subsidiaries always be higher at overall level while the holding company continues to maintain its growth.

Sir, our revenue is growing at the standalone level and I think at the standalone level we are operating the pen business. That business is growing, the revenue is growing, but the operating profit is not growing.

It was 176 crore in the FY24, now it is 155 crore when we are reporting the 1,000-plus crore rupees of the revenue at the standalone level. My question is why it is from 176 crore to 155 crore rupees and the revenue from 900 to 1,000 crore rupees?

Firstly, let me just kind of clarify over here that when we are looking at pens business, creative business, we use molding machines which are fungible between these things. As legal entities where we are spread out over Daman, Valsad, Dehradun, and Surat, what we do is a specific product is manufactured in a manufacturing facility.

Now this can be either of these companies, legal entities where we manufacture, depending on the product mix again and also on the market of that product, the sales kind of is affected. However, if I were to look at it from the consolidated levels, you will see the improvement, the best way to look at is consolidated levels.

When you're talking of standalone legal entities, I would say that these are the byproducts of the product mix which we have manufactured and sold from those manufacturing units.

Okay. Sir, if we talk about the consolidate level, there is a GP growth of 16%, from 547 crore to 637 crore rupees, the GP grew, it is in absolute term it is 90 crore rupees.

Our operating profit at the console level grew by 40 crore rupees. Why?

Because the employee cost has grown by 43 crore rupees. If any year where we could not maintain such GP, and because the employee cost is more of a fixed nature of cost, we will take a hit at the operating level.

Will it be a continue process of the employee cost is increasing, I think the faster than our GP growth? What is your thought on the employee cost and particularly at the operating level, how it will look if there will be no GP maintenance or GP growth?

I'll say employee cost if you look at the absolute number, it might grow, but so does the sales grow. If I look at the console level, my employee cost is same

percentage-wise it is

same as 20%

to 21% and

that's consistent over there. Yeah.

Employee cost if you see is a line item over there, that plus job work which is included in other expenses, if you were to total those numbers, then my employee cost remains between 20% and 21% throughout. Like your fear of it would have an impact on my profit, no, it's only the other expenses are decreasing if you see the numbers as a part of percentage.

Okay. Thank you, sir.

Thank you, that's all from my side. Thank you, sir.

Thank you for the opportunity. Am I audible, sir?

Yeah. Yeah.

Sir, first question is on the competitive landscape. Now, you've mentioned that we can do about 50% growth in our creative segment.

If you look at the creative segment, there are already players that are there. We have DOMS, we have Faber-Castell, we have Cello, we have Kokuyo Camlin, etc.

Now, to achieve such a high rate of growth, will it be driven by capture of market share, or do you think this market itself is growing at a high rate, and then we can capture and grow at that rate? If you can talk about the competitive landscape in general, and how we are positioned, and which way to grow there.

That's first. What we expect from the growth is we will grab the market share from the existing players in the category, and the main reason why we have been growing at such a high speed is the innovative products what we have launched in last two years.

The pipeline of the new products which we are planning to launch in the coming years is quite exciting. Based on that, we are super confident that we would be able to grab that market share from our existing competitors.

Primarily driven by capturing market share.

Yeah.

Sir. Of course, new innovative products.

Sir, second question on the Valsad facility. Now, previous quarter presentation said that it will be partially commissioned in the quarter four.

Now you are saying it will be commissioned or it will start in Q1 FY27. Has there been a delay in commencing the facility?

I think, yeah, looking at the Q4 overall global scenario, there's a slight delay, but I think in Q1 it has already started functional. Already the machinery, the raw material that was partly delayed, but I think Q1, like mentioned, it has already started.

Yeah. Sir, our understanding was that once Valsad starts, a lot of the work that we outsource today on the creative side will come in-house, and that should also help us in improving our margins.

Is that understanding still correct, and have you taken that into account, because we're saying that we'll lose a certain margin because of the volatility, but still guiding for 17-18% end of the year? That improvement in margin that we'll get from Valsad is accounted, I'm assuming, in the whole equation?

See, as you see, the overall impact is much higher, but considering that also, like what you just mentioned, the Valsad facility and bringing a lot of these outside products in-house, that will help us maintain, and that's why we are restricting ourselves to that percentage, and we're still continuing with the guidance that we are putting in place despite the global scenario. Yes, definitely it will help us in sustaining and maintaining the numbers that we have targeted despite the global scenario.

Focusing. Great.

Sir, one last one on the marketing spend. Now, a large part of our customer base is students or school and college-going students.

Now, given that, what is our marketing strategy? We have a brand ambassador and then I think we do school reach outs where we try to increase visibility of our products and promote.

Given that, the buyer is young and school going, what are the other things? Are we active on social media, and going forward, what will be our incremental marketing spend towards which channel?

If you can talk about our strategy a bit.

The strategy would remain the same. We would be actively promoting our products on social media, and as well as schools promotion will be actively on, and a lot of BTL activities in terms of using a good POP display stands and acquiring a big shelf space in each outlet.

All right. Yeah.

This has been our strategy in the last few years as well. What I'm trying to understand is has there been a change in the strategy or...

No, it's the same.

All right, thank you very much.

Thank you.

We would like to thank you all for taking out time for this call. For any further queries and questions, you can reach out to our MUFG and Orient Capital, our IR advisors.

Thank you.