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Linc Pen & Plastics, the country’s third largest writing instrument maker, is expecting current year’s sales to be at around 70-80 per cent levels of FY20 even as schools and colleges remain closed due to the pandemic.
Online sales though have more than doubled and, gifting categories are gaining traction too.
April and May sales have been a washout because of the lockdown. In June, the company saw sales come back at 50 per cent levels of what it had reported a year-ago.
According to Deepak Jalan, MD, Linc Pen & Plastic, while there was pent-up demand in June, the first full month of operations since unlocking began, it too early to envisage the levels of demand picking up, especially, in the second half of the fiscal.
“Schools and colleges remain closed and exams have been postponed. We saw some pent-up demand in June. Although there is still uncertainty in the market (about schools and colleges reopening), we can end up with at least 70-80 per cent of last year’s sales for FY21,” he told BusinessLine . Resumption of offices will see some additional traction for stationery items.
All its three factories – one in Gujarat and two in Bengal – are operational at 60-70 per cent levels.
Margins improve
The Kolkata-based Linc Pen & Plastics, listed on the bourses, reported ₹400 crore turnover for FY20, a nine per cent increase, year-on-year. Net profit saw a near 280 per cent jump YoY, to ₹19 crore.
EBITDA margins improved to 10.7 per cent, yearly expansion of 250 basis points, primarily on account of higher volume sales, better product mix and slight moderation in polymer prices.
Linc competes with Cello, Classmate (ITC), Flair, Luxor and others in pens. Japanese major Mitsubishi Pencil Co also has a minority stake of 13 per cent, in the company that markets and sells “Uni-ball” branded pens in India.
Shoring up distribution
According to Jalan, the company is planning to expand distribution beyond the 70,000-odd stationery shops, where its offerings are available. This will be done to partially offset loss in sales through these stores. A consultant has been roped-in and pilot projects had begun before the lockdown.
Linc is targeting kiranas and mom-and-pop stores with a set of pens under Pentonic brand (launched in FY19). The brand has been amongst the highest contributors in terms of value (and margins) to Linc’s overall portfolio.
Typically, India has seen a flourish of pens in the ₹5-7 price brackets. Margins on most of these are negligible and brands compete on volume. Linc, through Pentonic (priced at ₹10 & upwards) is looking to shore up volumes and margins.
“One out of every three kiranas has shown interest in stocking Pentonic. The target is to add another 250,000 outlets by the end of this fiscal. This will help us recover some sales volumes,” he explained.
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