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Salient features of the IPO:

• Flair Writing Industries Ltd. (Flair), a stationery products manufacturing company is coming up with an IPO to raise around Rs. 595cr, which opens on 22nd Nov. and closes on 24th Nov. 2023. The price band is Rs. 288 - 304 per share.

• The IPO is a combination of fresh and OFS portion. From the OFS issue, the company will not receive any funds. From the fresh issue net proceeds, it will be utilizing Rs. 56cr for setting up a new writing instrument facility at Valsad, Gujarat; Rs. 86.7cr will be used to fund the capital expenditure at the subsidiary level; Rs. 77cr for funding the working capital requirement and another Rs. 43cr will be utilized to prepay/repay borrowings.

• On 10th Nov. 2023, Flair in consultation with the BRLMs has executed preferential allotment of 0.24cr shares (to Volrado Venture Partners Fund, a fund managed by Enam Holdings) at Rs. 304 per share. Total amount realized was Rs. 73cr. As a result, the fresh issue was reduced to Rs. 292cr, compared to Rs. 365cr proposed while filing the DRHP.

• Couple of promoter & promoter group (P&PG) entities are participating in the OFS and offloading 0.99cr shares (considering the higher price band). Post-IPO, P&PG will have 79.21% stake in the company, compared to 97.49% earlier. Consequently, public shareholding will increase from 2.51% to 20.79%.

Key competitive strengths:

• Among the top-3 players in the overall writing instruments market in India

• Diversified range of products across various price points catering to a wide spectrum of consumers

• Largest pan-India distributor/dealer network and wholesale/retailer network in the writing instruments market and strong presence in targeted markets abroad

• Ability to partner with international brands in the writing instruments market and one of the largest exporter of writing & creative instruments from India

• High quality manufacturing at a large scale coupled with innovation capabilities

• Historical track-record of strong financial performance with sectorleading profitability

• Experienced promoters supported by professional senior management team

Risk and concerns

• General slowdown in the global economic activities

• Unfavorable government policies & regulations

• Changing consumer demand and preferences

• Delay in the commissioning of new facilities

• Unfavorable product-mix and forex rates

• Volatilities in the raw material prices

• Difficulty in maintaining the profitability

• Competition

Below are the key highlights of the company:

The writing & creative instruments market comprises of writing equipment such as pens, pencils, markers & highlighters; and art & hobby equipment such as crayons, sketch pens, colour pencils, brushes and accessories such as erasers, sharpeners etc. Among the writing & creative instruments market, pens account for a major share (i.e. 44% in value terms). Over FY17-23, the market seems to have expanded by 5.5% CAGR to reach a size of around Rs. 9,680cr. Organized players accounted for 78-80% of the total market in FY23. Going forward, organized players are poised to experience significant faster growth, compared to unorganized players. The higher organized market growth rate would be attributed to the continued market share gains from the unorganized sector and secondly, the expansion of product offerings across various categories and age groups.

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SEBI Registration no.: INZ 000160131