Flair Writing IPO is a book-built issue totaling Rs 593.00 crores. It comprises a fresh issue of 0.96 crore shares valued at Rs 292.00 crores and an offer for sale of 0.99 crore shares totaling Rs 301.00 crores.

The Flair Writing IPO bidding commenced on November 22, 2023, concluding on November 24, 2023. Allotment results were confirmed on Wednesday, November 29, 2023. Shares were officially listed on both the BSE and NSE exchanges on December 1, 2023.

The IPO price range is fixed at ₹288 to ₹304 per share with a minimum lot size of 49 shares. Retail investors need to invest a minimum of ₹14,896. For sNII, the minimum lot size investment is 14 lots (686 shares), totaling ₹208,544, and for bNII, it is 68 lots (3,332 shares), totaling ₹1,012,928.

Nuvama Wealth Management Limited and Axis Capital Limited serve as the book running lead managers for the Flair Writing IPO, with Link Intime India Private Ltd acting as the registrar for the issue.

Objective of IPO.

The issue consists of both offer sale and fresh issue.

Offer For Sale: INR 301 Cr. (0.99 Crore shares)

Fresh Issue: INR 292 Cr. (0.96 Crore shares)

The fresh funds will be used in the following sections:

• Setting up a new manufacturing facility for writing instruments in District Valsad, Gujarat.
• Funding capital expenditure of Company and its Subsidiary, FWEPL.
• Funding working capital requirements.
• Repayment/pre-payment, in part or full of certain borrowings either by the company or its Subsidiaries, FWEPL and FCIPL.
• General corporate purposes.

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About Flair Writing Limited

The company manufactures and distributes writing instruments including pens, stationery products and calculators. It is among the top three players in the overall writing instruments industry occupying a market share of approximately 9% and 7.1% in the export of writing and creative instruments industry. The company has seen faster growth in revenue as compared to the industry growth rate, i.e., while the industry grew at a CAGR of 5.5% between FY17-23, They grew at a CAGR 14%. Leveraging on manufacturing capabilities, it has diversified into manufacturing houseware products and steel bottles.

Company had the largest distributor/dealer network and wholesale/retailer network, comprising approximately 7,700 distributors/dealers and approximately 315,000 wholesalers/retailers. The company has 11 manufacturing plants located in Valsad, Gujarat; in Naigaon (near Mumbai), Maharashtra; in Daman, UT of Dadra and Nagar Haveli and Daman and Diu; and in Dehradun, Uttarakhand. The company’s ability to manufacture quality products with distribution and retail capabilities, it is able to partner with various international brands in the writing instruments industry.

Brands:

• Flair
• Hauser
• Pierre Cardin
• ZOOX

Product: The company offered 727 different products as of June 30, 2023.

• Pens: Ball pens, fountain pens, gel pens, roller pens and metal pens
• Stationery Products: Mechanical pencils, highlighters, correction pens, markers, gel crayons and kids’ stationery kits
• Calculators
• Flair Creative products: Watercolors, crayons, sketch pens, erasers, wooden pencils and geometry boxes, fine liners, sharpeners and scales.
• Houseware products: Casseroles, bottles, storage containers, serving solutions, cleaning solutions and basket and paper bins. (through FWEPL)
• Steel Bottles (through subsidiaries FCIPL)

Competitors:

Our principal competitors in the Indian writing and creative instruments industry include BIC Cello, Camlin, DOMS, Hindustan Pencils, Linc, Luxor and Reynolds, according to CRISIL. Our key competitors in the Indian homeware industry include Borosil Limited, Cello Household Products Private Limited, Hamilton Housewares Private Limited and Placero International Private Limited, according to CRISIL. Certain such competitors may have greater financial resources, technology, research and manufacturing capability and greater market penetration, and their brands may be more well-known than our brand in some segments.

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.

Industry in India has experienced consistent growth between FY18-2020, driven by product innovation, design modifications, brand development by leading players, and high demand. The industry has witnessed a shift in its structure, with large, organized players gaining market share over unorganized, smaller players. Large, organized players have been able to grow faster than the industry average by diversifying their product portfolios and expanding distribution channels. However, in FY21 due to the Covid-19 pandemic there was closure of schools and institutions resulting in a subdued demand for products, leading to a 39% decline in FY21. As offices reopened and schools restarted, the industry started witnessing a pick-up in demand in FY22, with industry surpassing pre-pandemic levels, in Financial Years 2023.

Overall, the industry expanded at a CAGR of 38.3% between FY21-2023. Over FY18-23, the writing and creative instruments industry experienced price growth across various segments. However, the extent of price increases varied among these segments. Notably, pens demonstrated the highest growth in prices, closely followed by the art and hobby and marker segments.

Indian writing and creative instruments industry to grow at 7.7 – 8.4% CAGR over FY23 – 28. The rising focus on education, which is also reflected in the rising literacy rate for the country, coupled with the rising trend of parallel education in recent years, characterized by the emergence of coaching classes, training programs, 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 steel bottle industry in India is projected to grow at a CAGR of 14-16% between Financial Year 2023 and 2028.

Risk Analysis.

1. In this competitive environment success of the company depends on our ability to respond and adapt to consumer needs and maintain an optimal product mix in terms of production volumes and profitability in the writing instruments industry, which is also driven by volume. Another risk is that the company donot have any R&D segment for the same.
2. The company needs to maintain or renew the statutory and regulatory licenses, permits and approvals required. An increase in the cost of or a shortfall in the availability of raw materials from suppliers due to various reasons could have a material adverse effect on business operations.
3. The company had not placed an order for the machinery which is to be bought from the net proceeds. Any delay in the payment from customers may lead to working capital investment.
4. Approximately 80% of revenue comes from “Flair”, “Hauser” and “Pierre Cardin” brands. And to face the industry consolidation, the company might need to increase the prices.
5. A slowdown or shutdown in manufacturing operations, including due to labour unrest, or any inability to obtain adequate electricity, fuel or water with respect to such operations could have a material adverse effect.
6. The company is dependent on certain third-party vendors from whom they procure certain components on a non-exclusive basis and any significant loss or disruption of production or deterioration in product quality from third party vendors for any reasons could have a material adverse effect on business, operations, prospects or financial results.
7. Under-utilization of manufacturing capacities and an inability to effectively utilize expanded manufacturing capacities could have an adverse effect.
8. The company faces foreign exchange risk as well.