Flair Writing Industries Limited (FLAIR) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Flair Writing Industries Ltd. Q2 and H1 FY27 earnings conference call. As a reminder, all participants will be in the lesson-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aryan Sabnani from MUFJ in time. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. Welcome to Flair Writing Industries Limited Q2 and H1 FY27 earnings conference call. Today on the call, we have Mr. Mohit Rathur, Old-Time Director, Mr. Sumit Rathur, the Old-Time Director, and Mr. Alpesh Vorwal, 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, opinion 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 for Mr. Sumit Rathur, the whole-time director, for his opening remarks. Thank you and over to you, sir. Thank you, Aryan. Good afternoon, everyone, and a warm welcome to Flair Writing Industries Limited Q2 and H1 FY27 Earnings Conference Call. Thank you for joining us today. I hope I hope you have had an opportunity to review our financial results, investor presentation, and press release which have been made available on the stock exchanges. To begin with, I would like to share some perspective on the broader business environment and the development that shaped our operations during the quarter. We are pleased to announce revenue from operations for Q2F527 grew sequentially to 6.5% at Rs.340 On a half-yearly basis, domestic sales grew by 11% to 568 crores in H1 F527 from 513 crore in H1 F526, despite facing a combination of internal and external challenges during the quarter, including temporary disruption to a manufacturing operation due to the floods in Valsad and Zaman facilities. These numbers reflect the underlying strength of our brands and distribution network and the continued demand for our products in the domestic market. With temporary setbacks during the quarter, we have been able to sustain our growth momentum, which is encouraging. The continued focus on building a more balanced portfolio by strengthening our co-writing instruments business, while expanding our presence across creative products and steel bottles and houseware, with continuous endeavor to increase the composition of the business between pen and non-pen categories, targeting to 60 and 40% respectively. We have taken necessary steps in expanding our manufacturing facilities for creative, insurat, and upcoming Malsar facility. We also expect to commence commercial operation at Y27, continued efforts towards enhancing governance standards, transparency, and institutional processes as we grow the business. We are pleased to inform you that the Board of Directors have approved an interim dividend, 50 Paisa per share, as part of distribution strategy for our shareholders. Second-term challenges are part of our business, expansion, and growth. We are looking for potential acquisition in the creative segment. I would like to thank all our shareholders and stakeholders for their continued trust and for being part of Flair's growth journey. Now, I hand it over to our CFO, Mr. Alpej Porwar, to take you through the update on broader business and company financials.

The business and financial performance of the company for Q2 and H1 FI27. The first half of FI27 has been characterized by a challenging and evolving operating environment with a combination of domestic and international factors influencing business activities. Our gross profit and EBITDA margins have been impacted by elevated raw material costs, primarily arising from the ongoing geopolitical situation in West Asia, along with the resulting supply-side disruptions and price volatility. Despite these pressures, we have remained focused on protecting our margins through a combination of cost rationalization, operational efficiencies, targeted promotional schemes, and selective price increases across our product portfolio. These initiatives have helped us partially mitigate the impact of input controls of the Indian consumer products and stationary industry remain encouraging. The second quarter witnessed certain exceptional developments that temporarily affected the normal course of our operations. One of the key challenges during the quarter was the exceptionally heavy rainfall and flooding in parts of western India, particularly Gujarat, which impacted our manufacturing facilities at Valshad and Daman. The intensity of the rainfall resulted in temporary disruptions to manufacturing activities, employee movement, and the broader supply chain. Our Valshad and Daman facilities remained non-operational for an average of approximately 15 days and 7 days, respectively, during the quarter. The situation was further compounded by a temporary workforce to resume work following the floods, resulting in delays in restoring normal production levels, resulted in a revenue loss of approximately 25 crores during the quarter. In the absence of these exceptional disruptions, our quarterly revenue growth could have been approximately 7-8% higher than the reported clearly exceptional circumstances, largely beyond our control, which had a temporary bearing on our operating performance. Our team responds to operations and that manufacturing activities at both facilities have now returned to normalcy. Our immediate priority is to improve production efficiencies and recover the business momentum through the coming quarters. The normalization of operations will support a stronger performance in Q3 and the second half of FY27. Alongside these domestic challenges, continuing geopolitical uncertainties, particularly in West Asia, have also influenced the broader business environment. These developments have impacted international trade flows, logistics arrangements. Given our presence across multiple international markets, including the Middle East, these developments have created additional complexities in managing export operations and servicing customers across geography. Certainties may continue to pose near-term challenges. We remain committed to diversifying our geographical national market reach. We are witnessing increasing traction of foundation for long-term value for all stakeholder operations, while our newer categories are progressively expanding our addressable market and broadening our overall consumer products portfolio. The visionary and arts material industry continues to offer meaningful long-term opportunities, supported by increasing consumer preference for branded products, continuous product innovation, and the gradual expansion of organized, deeper penetration across consumer segments. While the broader Indian and global writing instrument markets are expected to grow at relatively modest, low single-digit rates, our writing instrument business continues to outperform the industry, driven by the strength of our established brands, diversified product portfolio, and extensive distribution network. The segment has maintained a consistent growth trajectory, delivering 7% growth during H1 FY27. This performance reinforces the resilience of our core business and our ability to gain market share and grow ahead of the underlying industry. Our strategy remains centered on building a more diversified consumer products company with creative products and steel bottles and houseware emerging as important growth drivers alongside our established writing instrument business. H1 F527, reflecting sustained consumer traction and continued expansion of our product portfolio. We remain focused on accelerating this momentum through regular new SKU launches, innovative product introductions, and a wider range of offerings aligned with evolving consumer preferences. We believe that product innovation, portfolio expansion, and deeper market penetration will continue to be the key drivers of growth in this segment. The fourth stainless steel bottle manufacturing line is expected to be ready for commercial production by Q4F527. The additional capacity will further strengthen our manufacturing capabilities, ability for product and portfolio expansion, and position us to capitalize on the growing opportunities in this category. Building a diversified consumer products business with multiple growth engines contributing I would now like to take you through our financial performance for the quarter and the first half of F527, weather-related disruptions at our manufacturing facilities, along with the prevailing geopolitical environment and associated operating challenges. Withstanding these factors, we continue to register growth in our top line. Revenue from operations for Q2 F527 stood at 340.1 crore, 6.5%. In Q1 F527, revenue from operations grew by 8.2% year-on-year to 659.4 crores, an EBITDA margin of 14.9%. Sequential improvement in our profitability, with profit after tax increasing by 9.1% quarter-on-quarter This was primarily driven by an increase in inventory and debtor days to take advantage of lower raw material prices. At the same time, debtor days increased from 78 to 84 days the collections in the export market and working capital management. Looking ahead, long-term growth prospects and emerging product categories. With certain exceptional challenges, we believe the underlying growth drivers of our business remain firmly in place. With manufacturing operations now normalized, new categories are confident of delivering 12% or higher. In Our guidance of approximately 15% year-on-year-writing instrument business, accelerated expansion of creative products and steel bottles and houseware, wider geographical penetration, and continued investments in manufacturing and distribution capabilities.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchroom telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.

First question is from the line of Jinesh Joshi from PL Capital.

Please go ahead. Jinesh, your line is unmuted. Please go ahead with your question.

Am I audible?

Yes, please go ahead.

Yeah, thanks for the opportunity. Sir, my first question is with respect to our EBITDA margins, which declined from about 16.7% to about 14.9%, which prima facie indicates that in 1Q, we had the benefit of low-cost inventory, and hence to that extent, we were shielded by the RM inflation inventory to some kind of increase in the inventory days. So, I just wanted to understand how to think about margins from here on, given the fact that the RM volatility continues to remain high.

Thank you, Jinesh. Like you said, we did stock up, we took the advantage of lower prices at times, and we continue to do so, even now. So whenever we get an opportunity to procure at a lower rate, if I were to, because of the higher cost, but then returning to your question about the margins and the expectation of margins in the coming days, we, our endeavor is to kind of maintain the margins, not kind of, you know, to kind of maintain the margins with all the cost efficiencies and the discipline which we're following in the financial operations in our organization. So, if the volatility of the price increases, we will continue to monitor it and quantify

out of the 393 crores of inventory that we have on our balance sheet, how much of it is the low-cost one? And also, if you can quantify out pertaining to raw material inventory.

So, it's always a mix. So, I'll tell you, when we say raw material mix, we don't have a standard kind of structure where we say this is the percentage of raw material and finished goods. But as the production grows, and as we kind of continue to grow, the entire stage changes, right, from raw material to semi-finished to finished. So, to give you a percentage today of what is the percentage today, it will be a different percentage tomorrow.

Okay, but nevertheless, let me switch to the other aspects. One is, what is the progress on the new inventory measurement system that we were about to introduce? I think this is what we had highlighted in our last call to bring down the inventory days. And secondly, you also mentioned in your opening comments with respect to selective price increases that we have taken. If you can maybe just quantify what that number was.

So, regarding the inventory day control, so we have switched to a new ERP, but I think it's too early for the impact like we had discussed during the last call also. The impact is too early. It needs at least two or three quarters for the real impact to come in the business cycle. But we are strongly going forward toward it and trying to control the inventory. But looking at the volatility of the raw material prices and the availability, based on the demand, we have been stocking up little raw material at our end. And I think we continue to, you know, monitor these levels of raw material and, you know, its impact on the raw material it has on the, you know, product. And overall, if you see, it is increased by working capital now, increased by six days. But to control that, I think by another 15 to 20 days control that we aim to control, it will take at least, you know, five to six quarters to bring that into perspective.

And the quantum of price increase, is it possible to kind of give out the number?

See, the price increase in terms of, you know, in the market on a product, it's a combination of multiple things. We sometimes try to increase the price in the sense of reducing the discounts and the schemes on the product. And sometimes we also do value engineering at the factory level to decrease the prices. But the way the conditions of the market is today, at least for the new launches, we are able to, or we are targeted to launch them at the new price input that is coming from the market, and that's how we will overall balance the pricing in the market.

Sure. Two small clarifications required. One is with respect to our growth in the pens business. While we highlighted that the overall revenue loss because of the disruption was about 25 crores, we see steel bottles and creatives getting impacted in terms of growth, while in the case of pens, the growth is relatively intact. So, I think if I heard you right, you mentioned that for FY27, our revenue growth guidance, which earlier I think was 15%, is now 12%. If you can just confirm whether I heard that right or not.

So, I will break your question down. So, first, I would like to mention regarding PENs. So, PENs, as you see, there is no major impact because of the, you know, monsoon effect. We have grown in Q2 by 5%. And overall, if you see H1 numbers, it is grown by 7% in H1, FI27. There is also because, you know, there are other facilities of Flair, for example, the facility in Uttarakhand and also the facility in the outskirts of Bombay and also a little bit of Gaman, which helped us in maintaining the demand of the pen category in the market during that monsoon period. So, we were able to deliver as much as possible. Of course, it was little affected, but not as compared to the steel bottle and creative. The steel bottle and creative overall was impacted more because, as you know, steel bottle was majorly in Daman and Valsar as a facility, and Valsar's facility was almost 15 days unproductive due to the floods that happened over there. So, overall, if you see, even in steel bottle, as you are mentioning, there was, if you see the fewer numbers, we had grown by almost 54%. It was majorly because of this flood that we were not able to supply the demand of the market. But going forward, the steel bottle category looks to be very positive. And in fact, now that the operations are back in track, and we have also added recent customer additions, the demand of creative and household category continues to be strong. And with the new facility for creative in Malsad and the new Q4 and Q4 FY27, the new fourth line for the steel bottle, which we plan to, you know, start with commercial production, which also help us for, you know, achieving the target of overall guidance that we have as a target.

And that revenue growth guidance figure, if you can just clarify that part.

So, based on the current market situation and the geopolitical situation, I think we have, even in the last call, we have corrected ourselves to a 12% growth guidance, and we strongly remain to that number for FY27. And going forward, we are targeting with the current, with the projects and the, you know, in the pipeline, the manufacturing facility that we have, we are targeting almost a 15% growth from FY28 onwards.

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

Thank you. Next question is from the line of Risham Mehta from GreenEdgeWell.

Please go ahead.

Thank you for the opportunity. I have a couple of questions. So, you know, one is I think in your opening remarks I did hear that we are looking at inorganic opportunity in the creative side. So, I think we are growing very handsomely on the creative side organically. So, you know, what's the thought process or the rationale, you know, behind thinking about inorganic growth in this category?

So, for the inorganic growth, for creative as a segment, as you know, creative as a segment is a very massive segment. And of course, you are right that we have a lot of products that we have brought in-house for manufacturing, but there are still a lot of to have that quick growth expansion in the market for this year and also for the coming years. We are looking for a great opportunity, who has a good manufacturing base, which will help us expand, you know, drastically in this category for the coming years. So, I think that's the clear call for looking for good opportunities in the market.

Got it. The other is, you know, on the export side of the business. So, for obvious reasons, you know, it's been muted. But do we have Do you have any plans, one, to, you know, kind of mitigate, you know, the loss of sales from this disruption on the export side? And on the second side, can we, you know, you know, have some compensatory sale by, you know, you know, increasing our domestic revenues? Or how do we basically think of making up for the loss of export revenues?

One good positive note about export market is that we have seen a 13% growth quarter on quarter, if you see the current numbers. And being one of the leading exporters from India, I think it remains an important part of our long-term growth strategy. While overseas demand is a little subdued, you are right, but I think we are exploring newer opportunities in the newer geographies and also trying to penetrate the existing market by giving more categories from our portfolio. So I think as the geopolitical situation gets a little more settled, I think we will be We're back on track for the, you know, export presence overall in the market.

So, just to call off here, when you say, you know, exploring more categories for exports, so have you received any approvals, you know, for exports in, say, the creative side or, you know, the bottom side of the business, maybe on the B2B export side, or even if you could talk about the B2C exports for these two categories?

See, as you know, we are trying along since a couple of years now, we are trying to push our brand sales more in the export market. And when you talk about approvals, I think we have very strong relations with our distributors in a lot of these countries, where even for them, creative is a natural diversification product for that particular market. And I think through those strong channels, we are trying to penetrate even that category. And also, we are trying to push more of those pen products, which are more concept or innovative products in those particular areas. So, I think overall, pens and stationery is something which is what we are concentrating on, majorly in our own brand, for the export market as well.

So, let's say before the West Asia crisis, were we doing any exports of creatives and bottles?

Yes, we were doing exports, but I know the number was very small, and I think along with time and as the market situation settles, I think we are going to see a growth in these numbers along the years.

And just one last bit on the margins. So, I think to one of the previous participants, you said that we would maintain our margins. So, let's say crude remains at the current level. When you say maintain your margins, meaning maintain the Q2 margins of around 15% EBITDA, is that understanding right?

Right.

So 15% is what we are looking to maintain at, assuming crude remains at current levels, right?

Certainly, yes.

And, you know, sorry, just one last one, you know, on the price hike side, right? So while I understand that price hikes could be in the form of discounts, reduced discounts and promotion as well, right? But, you see, I think the other peer, though pens is very small for them, I think they have adopted a clear strategy of, you know, in these inflationary times, they want to gain market share. And hence, maybe, you know, they've not passed on the price hikes in the market as would have been desired to maintain margins. So, would you say that we are also being forced somewhere down the line, you know, to kind of adopt this strategy of, you know, not passing on, you know, the inflation to the consumer just to maintain our market share because of competitive pressures? If you could just comment on this.

See, competition will always remain where it is, global crisis or no global crisis. But I think for us as a strategy, like we said, we have a certain threshold where we try to maintain the pricing through discounts and schemes and by doing little value engineering at the manufacturing end. But overall, we try to maintain this balance of margins because we are also in the all three categories of mass, premium and premium. So we try to balance it also through the, you know, quantities that we sell in each of the segments. Also, I think going forward, if the raw material prices remain to be volatile and in an upward trend, we have a strategy of increasing the price of certain products in the market. And we will continue to, you know, monitor the impact of it in terms of manufacturing also at the same end.

So, have we maintained our market share in the last six months, or have we grown? If you could just comment on that, especially on the FEN side.

See, overall, as you see, yes, we have been one of the leading in the FEN instrument category. And even currently, today, we stand at almost 18-plus percent as a market share. And we will continue to monitor this and try to, you know, gain more market share and make sure that we are not losing any market share to competition.

Sure. Thank you and all the best.

Thank you so much.

Thank you. Next question is from the line of Sneha from Nuwama. Please go ahead.

Hi, team. Thanks a lot for the opportunity. Just a couple of questions from my end. So, one is on your revised guidance. Now, we have already brought down the guidance from 15% to 12%. What I wanted to understand is that it still entails you second half growth of about 15%. So, what is the expectation? Because first quarter, you know, we grew by about 11%. Second quarter, we grew by about 6%. So, what are we banking on for the second half to grow by 15%?

See, I think, as you know, second half has always been strong. And last year also, if you see in H2, we have grown by 17, 18%. I think as in Q2, I think as the manufacturing facility has resumed back, we will continue to focus on the creative and the steel bottle segment to penetrate in the market as the demands. Still very strong, and with the new facility coming up, especially for the steel bottle in Q4 of this year, I think our push in the market for that particular category will be even more stronger. And I think that's what will help us, you know, sustain the 12% growth guidance that we are strongly, you know, focusing upon.

Any color on October month that you would want to give, which also substantiates the growth is in line for second half?

So, we would not be able to give you the October number, but let's say that things are very positive in the market and demand is still high, and with the manufacturing base coming back to normalcy, we have been able to fulfill the demand of the market.

So, I just wanted to understand the second part was on the OEM front. What would have been the sales overall for the OEM this particular quarter, and the split between the domestic and the export? So, is something moving there?

So, Sneha, OEM number, we will get back to you, but as you know, our focus is still very strong on our own brand, and we continue to do so. But yes, on the export front, there is an OEM contribution. I think we can provide you with the numbers.

Understood. And lastly, just because now your growth is likely to accelerate from first half being 11 and 6 odd percent to about 15 odd percent, why are we still talking about margins being maintained at a level of 15 percent? The reason I'm asking this is, you know, your operating leverage, you know, will start kicking in because of much stronger growth, or is it because the raw material cost has been, in fact, even more substantially higher than what we passed on in the market? Just some more clarity will be helpful there.

So, when we say that we'll maintain the margin in spite of a higher growth in the second half, when we sit to calculate or estimate the raw material, increasing raw material, it's a volatile market out here. And to kind of, it's always prudent to kind of, you know, factor in more volatility and say that, okay, this is the margin which we're going to maintain. Be sure about the margins out here. It can move northwards if the prices gives us a benefit of cost of production.

Understood, team. All the very best.

Thank you so much.

Thank you. Next question is from the line of Moks Morbiya from Prosperatory. Please go ahead.

Thanks for the opportunity, sir. Sir, my questioning may be repeated. Just now, the previous participant asked about the future acquisition in the field of the creative segment. So, can you share some lights on the size, timing, or benefits of such acquisition, or have you identified any particular acquisition opportunity, or it's only we are open for the acquisition? What is the thought on acquisition, sir? Please tell you.

So, the thought is open for acquisition. We are looking for greater opportunities and a good partner in this particular creative segment. And I think it's too early for us to announce anything. I think as the time is right and we are a little more closer to reality, I think we will be able to give you a little more depth of which category and how we are doing. So, I think we just have to wait.

Can you say at least the size, what size we are supposed to acquire, the amount-wise or the revenue-wise, anything?

No, I think we are open to opportunities. I think size is secondary for us, is a great partner with a good manufacturing base, who has an experience in quality manufacturing, and which will add for value-added products to a portfolio. It's something what we are aiming at.

So, because we are acquiring something, are we lacking some products or we want to expand? That's why we are acquiring? And what is the logic for the acquisition, sir?

I think it can be a combination of both. As you know, there are a lot of categories in creative and stationary as a segment. So, I think it can be, as a good opportunity comes, it can be also a category expansion or it can be a new category as well.

So, another question is, again, somebody has asked, because on quarter-on-quarter basis, our GP margin is down by 1%, but our operating margin is down by 2%, in spite of the higher revenue compared to the quarter one. And generally, whenever there is an increase in the revenue, it generates the operating leverage and improves the operating margin. But in our case, the operating margin is down by 2%, and GP is down by only 1%. So, why? And will it be reversed in the future quarters?

So, this is a temporary feature which we see outside when it comes to operating margin. GP margin is explainable and which you all understand that it will increase raw material prices. Operating margins happen because we also saw some destruction out here where the cost was accumulated. We could not kind of, you know, allocate the support or spread it across the entire production which we did in this quarter. So, that is where we see the little kind of lower operating margin. But yes, certainly in the coming quarters, you will see it going back to the previous numbers.

Okay. Is there anything, one-time expense is included in the other expense or anything because of the weather disruption?

No, no, there is nothing different out there. It's just that the costing, so had we not lost 25 rows of, due to the monsoon and the flooding, our growth would have been the same numbers. So the operating margin would have spread.

And, sir, about the steel bottle segment, our quarter two revenue is, quarter two or quarter one revenue from the steel bottle segment is lower than the quarter four, and generally before the Diwali, the steel bottle may be given as a gift also. So, have we lost something for the Diwali opportunity, or we will recoup the whatever we lost during the quarter two?

See, as you know, if you see the Q1 numbers, the steel bottle in the household category had grown strongly by 54%. But Q2, as you know, the segment was highly impacted due to the destruction of the operations in the Valsas facility, which was almost around 15 days of no operation. This was, you know, because of power outage issues in manpower movement And time taken for, you know, to resume the operations back on track. But I think now as the operations are back on track, I think we remain optimistic and recovery of, you know, customer base and the demand is already there in the market. So, I think we will come out strong in the quarters to come. And as you know, as mentioned earlier, the new expected production line, which will be operation in Q4, should also help us achieve the overall steel bottles and houseware growth guidance.

Okay, okay. Thank you. Thank you. That's all from my side. Thank you and all the best, sir. Happy Diwali in advance, sir.

Thank you. Happy Diwali to you, sir.

Thank you. Next question is from the line of Prateek Kothari from Unique BMS. Please go ahead.

Hi, good afternoon, and thank you. So, sorry, again on inorganic. Well, you touched upon that we're looking for a great partner. So, this would be not a complete buyout or JV of sorts. And just manufacturing base, I mean, so brand is something that we don't intend to? I mean, we'll continue with Flair and this is only some manufacturing expertise?

See, like I said, we are very open to partnership. We are definitely looking at a more stronger manufacturing base. As you know, the presence of a brand in India is highly, you know, accepted by the larger audience. So, we would like to continue to make our brand stronger in these particular categories. But I think as I said earlier, I think it's too early to mention or drop down anything more precise. I think as the time comes, we will be able to give you more detailed information. We would just like to say the opportunity that we had explored in Surat from our Flomax as a subsidiary, I think looking for a strong manufacturing partner in the category is where the expertise lies with the new partner is where we are looking at, you know, as an opportunity.

Right. So, the bank stays ours, I mean, correct. And second, sorry. Okay. So, second question, while I mean this, I take your point on the inventory, but even receivables seem to have gone much higher or so, this is our intent of bringing this down. So, I mean, obviously, one is inventory and maybe that will kind of solve for it over a period of time once the volatility abates. But on the receivables, I mean, still not seeing, at least in numbers, the intention that we have. If you can just highlight what is happening there.

So, on receivables, what happened is this quarter, because of the entire kind of, you know, whatever disruption is happening across the international markets, the global markets, we saw the receivables increasing, the number of days increasing in case of our export receivables. That has contributed largely to the receivables moving up northwards. And in the coming time, we are factoring all these things, we are working on kind of the entire status. So overall target for bringing down the working capital is by 20 days over the next five, six quarters. So we see the export demand is also high and that also contributes to the higher receivables as of now. So, domestic market, we are not seeing, in fact, the numbers going on. We are controlling those things.

Correct, correct. And lastly, this, I mean, creatives, I mean, our intention at the start of the year was to grow much, much faster. So, this is just controlling of margins and being disciplined about that, which is bringing our growth down, or is there something else that's playing out?

I think it's a combination of both, because as you see, the raw material prices have also increased a lot. Also, we have seen little disruption in our manufacturing facility, which contributed to a little lesser growth, because we were not able to provide the goods to the demand that the market had expected us to fulfill. But I think going forward as the manufacturing facility is also, you know, back on track, and even the raw material prices could be the new raw material prices. And based on that, how we are managing and controlling the market prices along with time with new launches and also correcting the prices with the schemes and discounts. I think in the coming two quarters, you'll see a much better number.

And how has been the acceptance in market? Because like Rish also mentioned, the P.L. has not taken as much price like what we have. So, how is the acceptance on the ground?

So, I think it happens with certain categories and certain products in each of those categories. It's not an overall price list, you know, upgrade. So, based on the market demand and each of the product category, we balance how we increase the price in the market so that our growth is not affected and, you know, we don't lose a market share. So, we will continue to monitor and push the prices accordingly. And we balance, you know, the overall scenario.

Great. Thank you and all the best.

Thank you. Hello. Next question is from the line of Shraddha Kapadia from Smith Limited. Please go ahead.

Hello. Yeah, am I audible?

Yes, please go ahead.

Yeah, so I just wanted a very bookkeeping question. So I needed the numbers in terms of, you know, volumes and realizations for the pens. Hello, am I audible?

Can you repeat the question please?

Yeah, so I needed the volumes and the realizations for the pens. So, there is a 4.5% growth, right? So, how much is from your volume, and how much is from the ASP growth?

Only for pens is used to ask, right?

Yes, yes, yes.

So, in pens, our volumes and value, both have contributed almost equally, and volume is a little on a higher side, I would say. So, when you talk about premiumization, you connect the DOS, the premiumization is where we are also having competition from a lot of new entrants who are entering through the lower price pens.

So, if you could quantify maybe the ASP number, would that be possible?

We'll get back to you on the numbers, ASP numbers, please.

Okay, sure, no problem. And if you have the capacity utilization for each of the categories? And so creative and the steel bottle.

So steel bottle and creative overall as a category, we are almost at around 75%. And I think looking, as you know, in the history, 70-75% as we are reaching, we try to, you know, set up a base for new manufacturing facility. I think with the fourth line that we are expecting in Q4, I think that will help us increase the, you know, and fulfill the steel bottle demand for the market. And for creative as well, we are, you know, planning a new facility in Valsad, which will help us with the future growth that we are expecting.

Sure. I'm sure about PEN.

Pens, as you know, the creative segment is more or less the facility that in Valsad will be more or less fungible. So, I think that the facility will help us in the creative as well as pens as a category.

Okay, okay, okay, sure. Yeah, thank you for answering my question.

Thank you. Next question is from the line of Sohani Singh from ROS Capital. Please go ahead.

Hello, good afternoon. So, I'm curious to ask, what would our portfolio balance look like at the end of the year after the slow start, sir?

So, currently, we are almost at 37.30 and 70.

By the end of the year, as the new categories which is the creative and households and steel bottles contribute more, we will see the increase in the revenue. It will end the year to up to 68.32. 68 will be pending in 32 years.

Okay. And how are we planning to recoup the loss incurred in the current quarter? How are we planning to? Sorry? You know, we covered the loss incurred in the current quarter.

No, that's what we're going to grow at a higher rate, and that's how the loss in terms of revenue is going to be covered. So we'll close the quarter, we'll close the year by 12% plus.

Okay, sir.

There's a loss in the opportunity lost, but...

Understood, sir. So, the employee turnover ratio as per the annual report. So, there seems to be a 40% churn. So, why is that attrition quite big?

It's an anomaly out there, right? When it comes to printing. So, we'll come back to you because we also noticed that there's an anomaly in printing somewhere which has gone wrong. But the numbers are quite lower than what you see out there on the paper.

Okay, okay. Understood. Thank you.

Thank you. Ladies and gentlemen, that would be the last question for the day. I now hand the conference over to the management for the closing comments.

Thank you, everyone, for taking time out for this conference call today. If you have any more queries, feel free to contact our IR team, MUFG.

Thank you very much, sir. On behalf of Flair Writing Industries Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.