Flair Writing Ind files paper with SEBI to raise ₹745 cr via IPO

Pen maker Flair Writing Industries has filed its draft red herring prospectus (DRHP) with markets regulator SEBI to raise ₹745 crore via initial public offering (IPO) route. The public issue comprises fresh equity shares of ₹365 crore and offer for sale (OFS) of ₹380 crore by existing shareholders. The price band and the lot size will be decided by the company later.

As per the paper filed with the Securities and Exchange Board of India (SEBI), Khubilal Jugraj Rathod and Vimalchand Jugraj Rathod (promoter groups) to offload shares worth ₹76 crore and ₹57 crore, respectively, through OFS route. Among others, Nirmala Khubilal Rathod, Manjula Vimalchand Rathod, Rajesh Khubilal Rathod, and Mohit Khubilal Rathod, Sangita Rajesh Rathod, Sonal Sumit Rathod, Shalini Mohit Rathod and Sumit Rathod, will also ape their stakes in the company.

Owner of over 45 year old flagship brand “Flair”, the homegrown company proposes to utilise the net proceeds of the fresh issue for setting up a new manufacturing facility for writing instruments in Valsad district in Gujarat at an estimated amount of ₹95.62 crore. The firm intends to use part of the capital for funding capital expenditure as well as for loan repayment of the company and its subsidiaries, Flair Writing Equipments (FWEPL) and Flair Cyrosil Industries (FCIPL). The balance amount will be used to meet general corporate purposes.

According to a CRISIL report, the company is the largest player in the pens segment with a revenue of ₹754.18 crore in financial year 2023 from the pens writing instruments business in India. It holds a market share of approximately 9% in India's overall writing and creative instruments industry, as of March 31, 2023.

The company is among the top three players in the overall writing instruments industry with a revenue of ₹915.55 crore in the financial year 2023. It is also among the top two organised players which have seen faster growth in revenue as compared to the overall writing and creative instrument industry growth rate. The industry grew at a CAGR of 5.5% between the financial year 2017 and 2023, it grew at a CAGR of approximately 14% during the same period.

The company has reported the highest operating and net income margins of 17.8% and 9.6%, respectively, in the financial year 2022 among other key writing instruments players, according to CRISIL.

As per the report, the writing and creative instruments industry in India has experienced consistent growth between financial years 2018 to 2020, driven by product innovation, design modifications, brand development by leading players, and high demand. However, in the financial year 2021 due to the Covid-19 pandemic, there was a closure of schools and institutions resulting in a subdued demand for products, leading to a 39% decline during that year. As offices reopened and schools restarted, the industry started witnessing a pick-up in demand in the financial year 2022, with the industry surpassing pre-pandemic levels, in the financial year 2023. Overall, the industry expanded at a CAGR of 38.3% between financial years 2021 and 2023. The Indian writing and creative instruments industry is expected to grow at 7.7-8.4% CAGR over the financial years 2023-28.

Nuvama Wealth Management Limited (formerly known as Edelweiss Securities Limited) and Axis Capital Limited are the book running lead managers to the IPO issue.

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