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Linc Pen & Plastics, the country’s third largest writing instrument-maker after Cello and Flair, is banking on its improved distribution reach and push for offerings under the flagship ‘Pentonic’ brand as it eyes recovery in sales. E-commerce sales have grown substantially with daily orders increasing by over 76 per cent.
The absence of any immediate price hikes – despite rising polymer and packaging costs – could also help regenerate demand.
Pre-Covid, sales to schools, colleges and educational institutions accounted for 70 per cent of the topline, the remaining being sale to offices. Post covid, sales have been equally distributed between segments.
Protecting margins
According to Deepak Jalan, Managing Director, Linc Pen & Plastics made a conscious push for ‘Pentonic’ into offline stores as it sought to protect its bottomline with an offering that had better margins over similar priced offerings, including its own.
This apart, the pens have also helped improve average prices – to ₹7 a piece against an industry average varying between ₹5 and ₹6.
The company has upped its distribution network to 1,50,000; against 1,10,000 till December 2020. Another 40,000 new points of sales are expected soon.
On the e-commerce front, at least 3,000 orders are being dispatched per day, against a previous 1,700 units, driven primarily by brands like Uniball – a premium offering – and Pentonic (at both ₹10 and ₹20 price points). The average price per online order has been upped to ₹200-250.
“In Q4FY21, improving ecom sales and a distribution push had led to recoveries to the tune of 94 per cent of pre-Covid level sales despite education institutions being closed,” he told BusinessLine .
Outlook
“Costs are up, but it is unlikely that we will hike prices for at least two to three more months. It may hit demand. Plus loose change in the market is an issue. Moreover, there is too much competition in the sub-₹10 price point. Instead, we will look to push the Pentonic brand of pens at ₹10 and try to upgrade users to ₹20 offerings, both of which have better margins,” Jalan added.
Polymer prices, he says, are expected to soften by the end of 2021.
According to him, sales took a hit partly in the first quarter (April - June) due to the second wave of Covid and resulting regional lockdowns. However, recoveries were witnessed as markets started opening up.
“In June, sales were back up to 70 per cent of pre-Covid levels. Overall we may end Q1 at 55-60 per cent levels of Q1FY19,” Jalan said, adding that plants are operating at 70 per cent capacities.
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