Ladies and gentlemen, good day, and welcome to the Q1 FY 2026 Earnings Conference Call of DOMS , hosted by ICICI Securities Limited. Before we begin, a brief disclaimer: the presentation which DOMS Industries Limited has uploaded on the stock exchange and their website, and the discussions during this call, contains or may contain certain forward-looking statements concerning DOMS Industries Limited's business prospectus and profitability, which are subject to several risks and uncertainties, and the actual result could materially differ from those in such forward-looking statements. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing * then 0 on your touch-tone phone. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities Limited.
Thank you, and over to you, sir.
Yeah, thanks, Shruti. On behalf of ICICI Securities , we welcome you all to Q1 FY 2026 results conference call of DOMS Industries . We have with us today senior management represented by Mr. Rahul Shah, Chief Financial Officer. Now I hand over the call to Mr. Rahul Shah for his initial comments on the quarterly performance, and then we will open the floor for question and answer session. Thanks, and over to you, Rahul. Bye.
Thank you, Aniruddha and Shruti. Good morning, everyone. It is a pleasure to welcome you all to the earnings conference call for the first quarter ended June 30, 2025. Joining me on this call is the team from Marathon Capital, our investor relation advisor. I hope everyone had an opportunity to go through the investor presentation and the results that have been uploaded on the exchanges and our company's website. Our results for Q1 FY 2026 reflect a sustained growth trajectory with continuous positive momentum in sales. This performance also reflects the enduring benefits from our timely capacity addition, strategic initiatives, and the deepening trust in our brand, DOMS. During the quarter, we witnessed growth across our balanced and diversified product portfolio, supported by renewed positive sentiment in the domestic market and encouraging international demand trends.
During the quarter, we have continued to expand our product portfolio with the introduction of new products across all our product segments. Notable additions were made in our core categories of Scholastic Stationery, Scholastic Art Materials, Kits and Combo Packs, Paper Stationery, and Office Supplies. We have also witnessed an encouraging response for the new products introduced in the Hobby and Craft segment, Baby Hygiene segment, and the Back to School segment. Further, we successfully completed the acquisition of Super Treads Private Limited, strengthening our delivery capabilities in the eastern India region, and enhancing our Paper Stationery production capacity by getting us closer to our customers in that region, allowing us to capture larger market share in the paper segment.
We remain steadfast in our forecast of growth and are progressing steadily on our expansion trajectory with our 44-acre project positively on track, featuring timely construction milestones, including the delivery of buildings by end of Q3 for installation of plant and machineries. This is complemented by a timely brownfield expansion initiative within the adjustment areas, as well as the new land and building purchased during March and April of 2025, which will help us increase capacity, positioning us strongly to capitalize on the latest demand for our products. Export of our own brand products has also contributed positively to our growth, with our existing markets responding favorably to our product offerings. Our partnership with FILA for international distribution is also gaining traction, with promising feedback from markets when we are leveraging their network for distribution of DOMS-branded products.
We would like to thank our consumers and channel partners who have been our driving force, continuously inspiring and motivating each and every one of us. We continue to work towards strengthening our connection with our consumers, and we are proud to have grown our YouTube family to 3+ million subscribers and our Instagram follower base to over 100,000 followers, showcasing our strong social media engagement. Our channel partners have also been instrumental in our growth, effectively showcasing our products to our consumers. We are optimistic about the domestic demand on the back of growing optimism around consumption-driven growth. While we remain watchful of external uncertainty, we are positive about the optimism in the international markets for DOMS products.
Our strategic efforts lay a strong foundation for medium to long-term success, and moving forward, we continue to focus on our core strengths of broadening our product portfolio, boosting our production capabilities, and [audio distortion] profitable growth. Now, coming to the details of our financial performance for quarter ended June 30, 2025, consolidated operating revenues for Q1 FY 2026 stood at INR 562.3 crores, a growth of nearly 26.4% compared to the same quarter last financial year. This increase in sales was predominantly on account of volume growth, aided by a marginal increase in average selling prices due to a change in product mix. Sequentially, we saw growth in our operating revenues. Operating revenues grew by 10.5% from [INR 508.7] crores in Q4 FY 2025. This growth is attributed to an increase in volume due to capacity addition and a growth in export sales.
The consolidated EBITDA for Q1 FY 2026 grew by 14.3% to INR 98.7 crores as compared to INR 86.4 crores in Q1 FY 2025. The EBITDA margin for the quarter stood at 17.6%. Profit after tax for the quarter stood at INR 59.1 crores, with 10.5% PAT margins. This performance, alongside EBITDA margins of 17.6%, trending towards the upper end of our guided range of 16.5% - 17.5%, demonstrates the strengthening of our business model and our ability to maintain operational efficiency. During the quarter, we have done a CapEx of approximately INR 70 crores, including capital advances, and full-year CapEx is expected to be in the range of INR 210 -INR 225 crores. These investments were primarily towards the purchase of additional land building adjacent to our current flagship plant, ongoing construction activities for the 44-acre project, and purchase of plant and machinery across different product segments.
These investments are expected to drive growth in the current and upcoming financial year. As mentioned earlier, our performance for the quarter was in line with our expectations, and we believe that we will be able to achieve our goal guidance of 18 %- 20% on FY 2026. With this, I would now request to open the floor for question and answer. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sneha Talreja from Nuvama. Please go ahead.
I recently seen when we set up the numbers, just a couple of questions to mind. Just wanted to understand what would be our share of exports from the U.S., and are you seeing any impacts on the tariff side on the items to low ticket items? Do you basically see any impact? Any color on this would be helpful.
Hi, Sneha. So, Sneha, basically, our exports to the U.S., you know, is roughly about 5.5% - 5.8% of our gross sales. You know, the current tariff on one of the core products that we export to the U.S. is about 6.5%, which is, you know, now expected to grow to about 50.65% once the additional 25% tariffs also kick in. Considering the sales is only about 5.8% of our total sales, we do not see any significant impact of our, you know, sales to the U.S. on our overall sales. The potential decline in sales to the U.S., we believe, shall be offset by an increase in exports to other countries where DOMS is witnessing growth, growing brand acceptance. Also, we are positive about the demand scenario in the domestic market, and hence, we do not see a significant negative impact of U.S. tariffs on our business performance.
Thanks for that. The second thing I just wanted to understand, of course, you know, you believe in conservatively guiding, and even in this particular quarter, what we've seen is you've grown by 26% against your guidance of 20%, and your margins are also coming against 17.6% against, you know, 16.5% - 17.5% that you guide for. Do you think any reason of, you know, revising this upwards? Along with this also, you, you know, in your opening remarks, you highlighted that, you know, market around is uncertain. Could you explain how it is in terms of demand and how are you able to get this amount of pull in the market? Thanks. Thanks for this.
Sneha, we mentioned that we are uncertain about the export markets, especially with respect to the U.S., but otherwise, in the domestic market, we are seeing a positive demand scenario being built up for our products. We are confident that we'll be able to achieve our, you know, guided range in terms of overall sales growth to about 18%- 20%. This quarter, particularly, you see the growth numbers being a little higher is primarily on account of Uniclan acquisition, where, you know, in the base quarter previous year, the Uniclan numbers were not consolidated. In terms of margin, we always believe that the range of 16.5% - 17.5% is something which we are confident of achieving and therefore would continue with this guiding range at least for, you know, a quarter or so more.
Once we have a little more visibility of how the year is progressing, if required, we'll revisit our guidance. As of now, like I said, we are confident of achieving our FY 2026 range or sales growth range of 18% - 20% with EBITDA margins of 16.5% - 17.5% and a PAT margin of 10% - 10.5%.
Thanks, Rahul. That was helpful. All the best to you.
Thanks, Sneha.
Thank you. Our next question is from the line of Aradhana Jain from B&K Securities. Please go ahead.
Hi. Thank you for the opportunity and congratulations on the good set of numbers. A couple of questions from my end. First, I wanted to understand what is the reason for the muted performance in Scholastic Stationery and the Scholastic Art Materials category. I mean, we've added capacity, I believe, in these two categories. In spite of that, there's been a muted performance across both these. In fact, in the last quarter also, there was a degrowth. What is the reason behind that? That's my first question.
Yeah. Hi, Aradhana. Good morning. Aradhana, basically, if you see, Scholastic Stationery has shown a low growth of about 2% while Scholastic Art, when compared to the previous year's same quarter, has been flat. There are primarily two reasons for this. First and foremost, there has not been any significant capacity addition in these categories that could drive an increase in volumes and thus growth. Second, as we mentioned in our previous discussion also, the performance of Scholastic Stationery and Scholastic Art should be evaluated along with the performance of Kits and Combo segment as well. If you see the sales of Kits and Combo , which are over 50% compared to the first quarter FY 2025, and if you combine the overall growth of [audio distortion] .
Sorry to interrupt, sir. Sorry to interrupt. Rahul, sir, your voice is muffled. Your voice is dropping.
Okay, can you hear me now? Is this better?
Yes, I can hear you. Yes, yes, it's better. Please go ahead. Thank you.
Aradhana, if you combine the overall gross sales of Scholastic Stationery, Scholastic Art Materials, and Kits and Combo Packs together, Q1 FY 2025, these three segments accounted for around INR 347.2 crores of gross product sales compared to INR 369.5 crores of gross product sales in the current quarter, which is a growth of roughly 6.4%. Like I said earlier, there have not been any substantial capacity additions in this segment, and hence, the growth has been a little lower than the overall growth in sales.
Do we expect capacity addition during this year? The INR 210, 215 crores of CapEx that we are planning to do, will that also lead to some addition in this category in terms of capacity?
Yes, definitely. Like we mentioned earlier, we are in the process of increasing the capacity of our core product, which is wooden pencils. Like we mentioned earlier, the capacity, you know, wooden pencils is a slightly complicated manufacturing process where you need to add capacity that would be different processes, significant processes. Out of that, we've already done the additions for two of the processes. The only capacity addition pending to be completed is for finishing of the pencils. This is expected as soon as the first building from our 44-acre project is handed over to us, which is expected by Q3 FY 2026, and about 90 days from there on to start the commercial production. We are targeting to at least have the new [audio distortion] a substantial capacity addition coming in wooden pencils to drive growth of these segments.
Understood. Just two more questions from my end. One is on the Office Supplies. That's grown phenomenally at like 77% year -on- year. How much of the contribution in the Office Supplies has been because of pens? Within pens, what is the revenue mix of INR 5 and INR 10?
Aradhana, while we take stock on a very granular detail, in the Office Supplies segment, the key growth drivers have been pens. Along with that, we are also seeing a positive response to the range of highlighters that we've launched under this segment. Both these products are driving growth of the Office Supplies segment with some more capacity additions coming in this financial year also in this segment. We believe this segment to continue to perform well for us. In terms of the price point, we continue to sell majorly our pens at the INR 5 MRP segment, but there have been new SKUs which are launched in the INR 10 segment as well.
Understood. Just last bit from my end, on the Uniclan business, I just wanted to understand the seasonality aspect of that business a bit more. While the business was not there in the last year, this quarter, there's been a sequential decline in the revenue growth in this quarter. Given that monsoon came early, wouldn't that have led to better numbers? Given that winter was the reason for fourth quarter to have done well for Uniclan, wouldn't first quarter as well should have been good from that aspect? Secondly, in terms of EBITDA margins, if we were to see for Uniclan, what would be the steady-state EBITDA margins that we can consider? Last year, again, it was around 8.5% - 9% closer to those numbers. This year, it's closer to a 7%. On a steady-state basis, what would be the margins to be considered?
That's it from my side. Thank you.
Uniclan clocked in revenues of about INR 36.1 crore in Q1. Q1 is structurally a weak quarter for diapers, but as you mentioned, because the onset of monsoon was a little earlier, definitely we saw a little bit of positive view to that aspect on our Baby Hygiene business. While Q1 FY 2025 sales of Uniclan were not consolidated, if I could just shed some light on it, we've grown our business compared to FY 2025 by about 40% in Uniclan. This has been because of both some capacity additions that have happened, especially in the wet wipe segment, which was commercialized in Q4 FY 2025, as well as season setting in a little earlier in some parts of India. Both these factors helped in achieving higher growth for Uniclan on a year-on-year basis.
From an EBITDA margin perspective, we still believe that in business, the right EBITDA margin for this business would be 8% - 9% because right now the focus would definitely be on ramping up sales and the distribution network. I will be comfortable with the company doing about 8% - 9% EBITDA margin on a per-year basis.
Understood. Just one last question on this distribution network bit. On a sequential basis, if I look at your Uniclan brand network, there's been a decline in the retail outlets and the sales personnel number on a sequential basis. Any reason for that? What could be the aspiration for the full year in terms of reaching out in terms of the retail outlets for Uniclan?
Yeah, Aradhana, at Uniclan, like I said, we are in the process of building a robust domestic distribution network for Uniclan. There have been some changes taken by us to right-size the network, ensuring that we effectively reach our consumers. The focus has been more on driving more secondary sales than just primary sales. It is a process that we are doing right now. There would be some right sizing also that might happen in terms of the sales team as well as our distribution and retail outlets reach. We believe it's to grow gradually. Some existing channel partners of our stationery segment have already been appointed as channel partners for the hygiene segment also. Slowly, we'll focus on strengthening this network, but it will be a gradual process.
We would not want to put any sort of a target in terms of where we want to reach because we've never followed that even for DOMS. We just want to maximize the throughput through each of our channel partners before getting into that number without increasing the channel strength.
Understood. This was helpful. I'll join back in the queue. Thank you.
Thank you. Our next question is from the line of Jinesh Joshi from PL Capital . Please go ahead.
Thanks for the opportunity. Sir, I have a question on our revenue mix. If I look at the northern [belt], I mean, historically, the contribution used to be at around 30% +, but in this quarter, it has come down to about 28%. Is there any specific reason for the fall to come through? Also, if I look at our MT channel, the revenue is up by about 90%. I just wanted to know, have we penetrated newer stores or is it that we are able to extract more throughput from the existing stores? Yeah, these two questions [if you can help me] .
Hi, Jinesh. Jinesh, I heard the first part of your question clearly, which was why the proportion of sales from North India has come down. The second part, I couldn't hear well. Let me first answer the first part of the question, and then if you could please repeat the second part. Jinesh, basically, I see what has happened is, you know, almost 35% of sales of Uniclan comes from e-commerce. The company sells all of these sales from their plant in Jaipur, Rajasthan. All these sales currently get absorbed in the western part of India. That is the primary reason why you are seeing the western part increasing. Also, certain merchant exports done by DOMS have increased. This is also accounted in our factory sales from Gujarat. These are the reasons why the western region is showing stronger.
Otherwise, if you look overall at the customer level, the sales are pretty much in line with what they were previously, where North accounts the highest, followed by West, and then South and East.
[Audio distortion] empty channel growth, the modern trade channel growth.
Sorry to interrupt, Jinesh sir. Could you please repeat your question because you were not audible to us?
Yeah. Am I audible now?
Yes, you are. Please go ahead.
Yeah, my question was on your modern trade channel growth, which has come up at about 90% in this quarter. I just wanted to know, have we kind of penetrated newer stores, or is it that the throughput from the existing stores has increased meaningfully?
The year-on-year growth in modern trade e-commerce performance that you've seen is, again, linked to Uniclan. In the base quarter, Uniclan was not consolidated. Like I said, almost 35%+ of Uniclan sales comes from e-commerce. That is the reason why you are seeing that the modern trade has grown significantly when compared year -on- year. That's the primary reason. Having said that, modern trade e-commerce is something which within the stationery segment also is witnessing growth because our existing relationships, the demand for these products on these channels also continues to increase. There's nothing other than that that we've primarily seen degrowth in other segments and therefore focusing more on modern trade e-commerce. It's not that it's just primarily on account of the Uniclan acquisition.
Got that. Secondly, you mentioned in your opening remarks that we have started selling branded products in the export markets via the distribution agreement with FILA. Can you just talk a bit about the.
Sorry to interrupt, Jinesh sir. Could you please distance your device from yourself so that we can hear you clearly? Your voice is sounding muffled.
Is it better now?
Yes, sir. Please go ahead.
Yeah. The question was on the branded product sale in export markets via the distribution agreement with FILA. I just wanted to know if you can just talk a bit about the opportunity signed towards here. I mean, what was FILA's revenue when it was dealing in these markets on its own via white-labeled products? Is it a new market for FILA as well, whereby now we have got a lead to sell our own products versus their own products?
Jinesh, the distribution agreement with FILA was happening only for those markets where FILA has an existing network infrastructure and has continued to do business. It's not new markets for FILA also. These are existing markets. Like I said in the opening remarks also, we've started selling DOMS branded products in a couple of markets where FILA is already present. It's still early days. It's where the goods have reached the destination countries and the marketing and sales activities have started. We still need to understand the response from the end consumers, what it has been before we can say and think about what is the potential of the business in these regions. In terms of FILA doing sales in this market, honestly, we've not looked at those numbers because DOMS products are not going to be competing with FILA 's products.
We are selling in as a secondary brand along with the FILA brand where both the brands are going to be consistent differentially. It wouldn't be correct to look at the opportunity or perspective of the sales that FILA is doing in the existing markets from FILA products. This is going to help FILA also to expand their sales in these geographies.
Understood. Just one last question from my side. Given this quarter was the Back to School season for us, is it possible to share what would the revenue be in one FY 2026 and where are we trending in terms of the annual run rate?
Jinesh, I'm absolutely not able to understand the question. We do the year [audio distortion ]. It was a Back to School season.
Okay, I'll get back in the queue. No problem.
Sir, [that was your last question]. Please rejoin the queue.
Yeah. Okay. Okay. Thanks, Jinesh.
Thank you so much. Next question is from the line of Kunal Vora from BNP Paribas. Please go ahead.
Yeah. Thanks for the opportunity and good quarter always. On the pen business, what is the market share you are at now? Is the competition reacting in any way to your market share gains? At what level of sales would you expect a slowdown in the pen business?
Hi, Kunal . Basically, you know, we are still a new entrant, relatively a new entrant in the segment. You know, we started with the conventional ballpoint pens about two years back. It's been just two years, but we are happy with the response that we've got from our consumers, which has helped us scale up the business to a pretty decent level. From a market share perspective, I don't have the exact number, but my feeling is that we'll be still lower. We'll be about 3% - 4%, which gives us a big runway to grow in this segment. We see the opportunity being there, you know, with the capacity additions that are expected to come in this segment coupled with our, you know, pipeline of the new products that we are going to launch. We are excited about this segment.
I think we'll be able to, you know, grow our market share in these segments quite well.
Understood. Understood. Any reaction from the competition so far? Would you aspire for a double-digit market share here?
Aspirations-wise, definitely. DOMS has always, whenever we've entered any category, we've always entered with the intention of being amongst the top players. For almost most of the categories that we are present today, we pursue that seat. Not only in Pens or Office Supplies, but in all the new categories that we are entering into, that's the aspiration. We hope we'll be able to come through to our aspiration. In terms of competition, Kunal , you study DOMS very well. As a company, we look more at ourselves in terms of where we want to be, how we want to reach there. We really don't look at what the competition is doing or not doing for a factor.
We believe we should continue to focus on our own core strengths, which is product, product designing, product engineering, and if we bring the right product to our consumer at the right value, I think we'll face success in all the segments that we are present and intend to get into.
Understood. Thanks. Second one is, can you talk about Hobby and Craft ? There seems to be a sharp increase led by diesel sales. How large is the market? Like, whether we should expect the current run rate or further acceleration? How should we look at Hobby and Craft ?
Kunal , [I think] Hobby and Craft basically for us constitutes of modeling material, craft material, glues, adhesives, gums. During the previous year, we had added capacity, primarily in the adhesive segment, introduced a product with a very differentiated sort of a product, which slowly, gradually is seeing positive response from the market. Hence, you see that the Hobby and Craft segment has grown significantly both from a, you know, compared to the previous year as well as sequentially. It's just the size of the adhesive market because, you know, our focus there is mainly on scholastic adhesives and glues. We don't intend to get into the P2B adhesive segment. That bifurcation is not available.
Having said that, we believe in the scholastic adhesive segment, considering the differentiated product offering, our distribution reach within the stationery segment, and our, you know, deeply trust from our consumers will help us to grow this business to a decent level.
Understood. There is no one-off in this quarter, and we should be building in further improvement in sales sequentially from here.
Yes, now the capacity utilizations are improving in this segment because there were new capacities that were added in the previous year. Utilizations are improving, so we should expect this gradual increase in this segment as well.
Understood. In terms of the new plant, I would assume that benefits will only start coming in the fourth quarter. With that, what are the early estimates for how does FY 2027 look like? You will have continued new capacity additions coming in starting fourth quarter. Any thoughts on how we should be looking at FY 2027?
Basically, we intend, we target to have the first billing for the new plant happening in the fourth quarter. Real capacity addition, impact on meaningful impact on sales will start building in from quarter one of FY 2027. It would be a little too early to determine how much we would get benefits in FY 2027. Historically, we've tried to maintain our growth rates at that range, about 18% - 20%. Given the capacity additions that are planned, as well as the market sentiment, we believe that we should be able to reach it. We'll come back to you all with the proper guidance once a couple of quarters closes.
Sure. Lastly, domestic retail outlets, there was a slight dip last quarter. This time, it looks like you added 10,000 outlets. Also, you added 1,000+ .
Kunal , to be a little honest here, the numbers which were given in the domestic distribution network for DOMS in the last quarter, there was a typo error in it. The number of retail outlets have [audio distortion]. That could be also Q4 also and Q1 of FY 2026.
Understood. Okay. That's it from me. Thank you.
Thank you.
Thank you. Thank you. Our next question is from the line of Jaiveer Shekhawat from Ambit Capital. Please go ahead.
Sure. Thanks a lot for taking my question. Rahul, my first question is with respect to Office Supplies. I think we have consistently seen the way you have grown the revenues there. Could you just talk about, in terms of distribution network, how well spread is that at the moment? Have you covered all the retail outlets that you supply the rest of the stationery with via these Office Supplies? What kind of throughput increase do you expect from the existing distribution channel, possibly by the end of the year?
We've not been able to still ramp up our sales in Office Supplies to the entire network. There are still quite a few regions where we are still to enter because we still have a constraint in terms of capacity. Once the new capacity additions, which are planned for the current financial year, come into production, we'll be able to ramp up our production, our sales, and distribution of writing instruments sales to the entire universe that we are servicing today. It should happen by the end of this year or probably with the new capacity that are planned for the coming year. If you could repeat the second half of the question.
I think it was just in terms of the throughput increase that you expect from the same channel. As per your understanding, will it be 50% of the channel that you've covered, 60%? Is there any number in your mind that you have covered in terms of distribution networks?
No, there's no specific number or a target in mind. It is going to be a gradual process. As and when the capacity additions happen, we'll want to increase our reach, you know, with the pens and a lot of other new products that we have launched. Definitely, the focus continues to remain on increasing our throughput in each of the current stores that we are selling. We will gradually start selling pens and other items, new products in these existing stores as and when new capacities come.
Sir, my second question was in respect to your Scholastic Stationery, Scholastic Art Materials, and Kits and Combo . If I say sequentially, I think there has been a good growth that has come in. I was under the impression that there was not a lot of capacity that has been added on the Stationery and Art Material segment. Has there been some outsourcing that has happened, or is there a demand pickup from those segments that have happened? Could you explain what has been driving that sequential growth versus the last fourth quarter to first quarter?
Sequentially, there's a little bit of impact that happens because of the Back to School season. You tend to see a little more sales picking up in the first quarter for these categories. What happened was certain export orders which were partially ready in the fourth quarter were serviced in the first quarter because there was this slide at a product mix level. When you see specifically at a product mix level, this impact was seen. Also, what we see sequentially, Kits and Combo s have done a little lower, and individual items of Scholastic Stationery and Art Materials have done slightly better. These are the key reasons why you see the sales growing. It's not that there have been any meaningful capacity additions that have come in.
Sure. I think that's helpful. Last question is in terms of your new capacity expansion for the 44-acre one. What sort of a headcount increase overall approach would you expect? Also, the overall employee cost that you would expect for possibly for the next year once it comes online?
I think basically, 44 acres is going to be a large project where eventually we'll have an operational area of about 1.8 million - 2 million sq ft . When this entire project comes in, we believe we'll require about 12,000 - 13,000 people, similar to the workforce that we have right now. It's going to actually double once the project is completely operationalized. It will be gradual. As and when new buildings come under production, you will gradually increase your workforce strength. Our employee cost right now is close to about 14%, we believe. If you see historically, this number has been coming down slightly. That's primarily because of economies of scale. That benefit will continue to get, but we will continue to have a large workforce also. It's going to be a significant cost for the company.
Got it. Got it. Thanks a lot and all the best.
Thank you.
Thank you. Our next question is from the line of Aniruddha Joshi from ICICI Securities Limited. Please go ahead.
Yeah. Just two questions. In terms of pen business, we see there is a vacuum at the medium end or the top end of the market. I mean, there are brands like Pilot or to some extent Parker or Montblanc, but still, there is a good amount of vacuum and potential to grow in the top end of the market too. Any strategy that DOMS has got to, in a way, expand in this medium end or the top end of the market for pens, that is one. Secondly, if you can indicate about the current distribution structure of pens and how it will shape up in, let's say, FY 2027 and beyond also. That is question number one. Then question number two, the way DOMS is growing obviously means like literally doubling revenues in three years.
The company will definitely require a lot of investments in new management bandwidth as well as technology also. What is the strategy over here to invest in terms of or strengthen the management as well as strengthen the internal technology spend also? Yeah, that's it. Two questions from my side.
Thanks, Aniruddha. Aniruddha, firstly, to answer your first question, if you look at DOMS, you'll appreciate that our primary customers, consumers, are scholastic children and college students. If you look at the demand or the products that they use, it's mainly your entry level INR 5, INR 10, INR 20. This is going to be the primary segment that we'll be focusing on in the near to mid term. Going forward, it might be a little early to say when we will enter the premium segment. In the premium segment also, at what price points? Something like a Montblanc or something with a very, very high price point pen, which is also sold in a very different sort of a distribution network. Our product strategy will revolve around our consumer and our distribution channel where we are already present.
Gradually, we'll definitely move up in terms of introducing products at a higher price point. INR 5 and INR 10 pens would predominantly be larger shares in the overall sale. To answer the second part of your first question, in terms of the distribution of pens, like I mentioned earlier, there are certain regions where we've still not introduced the pens because of the constraints that we have in terms of capacity. As and when new capacity additions come in, we'll want to introduce this throughout the country. In terms of the distribution channel, these are sold in the same distribution channel where we are present right now. It's going to be the same distribution network that we leverage for growing our pen business further.
To answer your second question, definitely with the increase in the production capacities, we are also mindful of the fact that we require higher manpower, higher management, and active steps are being taken in terms of identifying people within the current organization structure, taking them to a higher position to manage activities efficiently. Also, what will happen is once you start having a larger manufacturing base in a single location, the efficiency of the people also improves because it's easier to oversight the operation. We are in that process of continuously hiring from outside and promoting people from within the organization based on their performance. With respect to systems, that is something which is an ongoing process. This is not only for the production activities, but even for market activities, even from our DMS and the sales force automation software that we use.
We are continuously enhancing all these systems to meet our requirements. The systems that we already use are something which is best available in the market. For example, SAP for our other ERP. It is a scalable platform, you know, with increasing overall turnover and overall volume, these softwares will be able to scale up. The company continues to improve and enhance the features of the existing systems to meet our requirements.
Okay, surely this is very, very helpful. Many thanks.
Thank you. Our next question is from the line of [Parsi] from IIFL Securities. Please go ahead.
Hi, Rahul. Congrats on a good set of numbers. My question is on the 44-acre land. What is the total CapEx that we have done till date, till, let's say, 30th of June ? What is the total CapEx? It might not be showing up in the gross block because it might be in CWIP. What is the total, excluding land, the gross block plus CWIP, if you can tell me for the 44-acre plant?
First of all, what we would have done for the 44-acre plant can be bifurcated into two parts. One is for the construction activities, and the other is for ordering of plant and machinery. Some of those plant and machinery, we've also got in our factories and started production at some alternative location in between. Having put all together, the CapEx that we would have done for this would be close to over INR 150 crore.
Okay. Got it. How much more will happen in the next nine months?
The total CapEx outflow that we've planned for this financial year is about INR 210 -INR 225 crore. Out of this, like I said, we've already invested about INR 70-odd crore. The balance of about INR 160, INR 2 60 crores, you know, predominantly will go into the 44-acre project.
Okay. By the end of this year, we would have invested about INR 300 crore in the 44-acre project. Do you expect this entire INR 300 crore to be capitalized, or would there still be a material part in CWIP?
There will still be a material part in CWIP because there are multiple buildings which are being constructed together. Only the buildings which we get possession, that will be capitalized one by one. The way the entire project is planned for CY is once we get the possession of the first building, we would want to get the possession of the next building in another three months because that is the time that we will require, the 90-day period in between two possessions, to set up the commercial production of that particular first building. The way the activities are planned is every quarter keep getting [one, one, one] building. That is why not everything would get capitalized.
What I'm trying to understand is that, like, how much turnover you can generate from the new plant in FY 2027. Let's say about INR 150 crore or INR 200 crore would be, let's say, capitalized by the end of this year, putting a 3x sort of asset turns on that. Can we say roughly about INR 500 crore can be at least from supply side? Demand side is a different thing. From a supply side, you are prepared to supply INR 500 crore worth of products in FY 2027 from the new plant. Would that be a fair estimate?
What is also happening in the new CapEx that is happening for 44 acres, a lot of CapEx is happening towards the building of the utilities and infrastructure for the entire plant. Let's say utilities in terms of power and all, as soon as we start using power, we'll capitalize the entire amount that has been invested. This is going to be invested till that size and extent, which will fulfill the requirement of the entire project. On that, you will not be able to see like a 3x on the year first also, year one also. It wouldn't be like 3x. Eventually, we would want to reach like a 3x sort of a number. To start with, I think it would be fair to assume we'll start with like a 2x, 2.25x and gradually move towards 3x.
The construction project.
When there is existing projects where we continue to do capacity addition in terms of modernization slides in the early part, April and late March 2025, we added some infrastructure also. All these things would aid in terms of achieving our growth target for FY 2027.
Understood. No, the only reason why I'm asking is because at the time of the IPO, we had come to the plant. Our understanding was that already the old plant is very near to reaching full capacity, and even the empty spaces in the new plant were not that much that we can do a lot of greenfield in the old plant. I'm saying we did not see that much empty space that there can be a huge amount of greenfield in the old one. I am just concerned that if basically the new plant does not start contributing soon, then will there be a capacity constraint to growth? We need by FY 2027, FY 2028, we need let's say, INR 450 -INR 500 crore of, I mean, at least INR 450 crore of additional turnover on a YOY basis.
We need that to come, and assuming that the 26-acre plant does not have much more in terms of expanding capacity, that will have to come from the new plant only, right?
First thing, your plant visitors now, you should come to the plant sooner because I think from the time of the IPO till now, joining our current flagship plant where you visited during the IPO, we were able to acquire more space, some on lease and a large portion we purchased. In March of this year, we were also able to purchase land in GIDC very close to our existing plant, which has a ready building of about 120,000 sq ft . Right now, we are just doing some renovations and changes there which are required for our system. All this is also going to aid. It is not that from the IPO till now, the CapEx has happened only towards 44 acres. There have been capacity additions that have happened at other parts also. In our subsidiary company, Pioneer, we've added a production of paper stationery capacity.
When you'd visited Pioneer, you would have seen two lines of automatic book manufacturing companies that have almost doubled. We've acquired Super Treads recently where we are getting more capacity, which will help us in increasing our paper stationery business also. Everything planned when I'm saying that we will aspire to continue growing at this level going forward also. For that, the required CapEx and planning already happened. Probably my request to you would be to plan a plant visit very soon so that you could also see, in addition to the 45-acre project, additional enhancements and increases that we've done from a physical infrastructure perspective.
Understood, Rahul. Very helpful. Last question from my side is, can you tell me what is your capacity utilization in Paper Stationery and in pens?
First of all, our capacity utilization is something we don't track from that perspective because Paper Stationery, for example, is slightly sort of a seasonal business. Plus, it's a very modernized, fully automatic manufacturing process, which during season can be operationalized for additional time also. In the pen segment, like I said, we continue to remain constrained with capacity. We are utilizing what we have right now, and there are capacity additions which are already planned, which are gradually [audio distortion].
Hello? Hello? I think we lost Rahul.
Oh, sorry. We have Rahul on line. Can you hear us?
Yeah, sorry, Rahul. I could not hear you. Yes, please continue.
Yeah. First of all, like in Paper Stationery, I explained that capacity additions came in. It's a slightly seasonal business. Once the new season starts, I think we've got enough capacity to meet the anticipated target that we have for that segment. For pens, our utilization would be near optimal right now, but there are new capacity additions which are happening as we've seen. Every quarter, we'll see some capacity additions happening in our existing infrastructure for the pen segment also. When I say existing, it means what you've visited plus what we've acquired adjacent to our current operations.
The line for the current participant has been disconnected. Our next question is from the line of Priyank Chheda from Vallum Capital. Please go ahead.
Hi, Rahul . Thank you for the opportunity. I just had a question if we can call out the volume growth and the ASP for the core stationery business that we mentioned in the last quarter.
Sorry, we cannot hear you well.
Hello, am I audible?
Yes, sir, you're audible.
The lines are not very clear. Rahul , can you hear me?
Hello?
Shruti, can you hear him well?
Yes, sir, I can hear him loud and clear. Sir, just read your question slow so that management could understand it.
Sure.
Priyank sir, thank you. Please go ahead.
Sure. Rahul , my question is, would it be possible to call out the volume and the ASP growth in the core stationery business for this quarter like we called out in the last quarter?
Priyank, very difficult to give from an overall perspective because, you know, right now, like we saw in this quarter, sequentially, if you see the volume of Kits and Combination Pack, the value plus volume has come down a little because being a Back to School season, a lot of individual demand for individual products increases a little. We have that flexibility in terms of meeting the requirements of the market accordingly. Having said that, the majority of the sales growth that we see sequentially at an overall level is predominantly because of, you know, volume growth, with some part being aided by increase in average selling prices.
Very clear. My second question is on expansions in the existing plot area, not the new 44-acre land. We were coming up with a pencil expansion from, I think, 5.5 million per day to 8 million. By when is that expected? If you can also touch upon the books capacity addition that we were planning to add another 15% capacity over there, the pens capacity also we were planning to add by 50%. What is the status of all those capacity expansions outside the 44 acres? If you can call out, it would be helpful.
Basically, the pen capacity addition, like you rightly said, will be expected to increase from 5.5 million - 8 million. Some of the parts in that expansion have already happened. The finishing from where we'll be able to make the finished product is something which will happen in Q4 of FY 2026 and Q1 to mid of Q2 FY 2027. Probably by, you know, same time next year when we'll be talking, we'll see a substantial part of this capacity addition coming in. In terms of pens, like I mentioned earlier, there are capacity additions that are happening as we speak. This is going to be a gradual process. You should remember that a lot of our capacity, especially at the molding part, is very fungible. Depending upon the market dynamics and requirements, we will adjust ourselves to the requirements of the market.
In addition to pens and pencils in the new expansion, we believe we'll be adding a lot of capacity for other aspects of the writing instrument segments like markers, highlighters, some of the pencil accessories like erasers, sharpeners. Across the board, as and when we'll gradually keep getting additional infrastructure, we'll keep adding capacity, looking both in terms of the demand of the market, both in India as well as internationally.
Got it. For Pencil, which is Scholastic Stationery, till the time.
We'll need to interrupt , Priyank, sir . We have lots of people in the queue waiting. I request you to rejoin the queue.
Thank you.
No more questions. Thank you so much. Our next question is from the line of Akash Shah from UTI Mutual Fund. Please go ahead.
Hi, sir. Am I audible?
Hi, Akash. Good morning.
Yes, sir, you're audible.
Thank you. Thank you for the opportunity. Sir, just wanted to ask, what are the key risks that you are worried about in the business? I mean, we understand certainly the growth potential as well as healthy margins. What are the key risks that you see and how you mitigate those?
Akash, basically, we've had this question earlier as well, and probably our response continues to be the same. We believe that the key foremost risk that we see in the business is our ability to timely increase our capacity. We believe that the market and the demand both in India and internationally is strong for our product, and we would want to capitalize on this demand as best as an efficiency as possible. This will be, we'll be able to achieve this only if there is a timely capacity addition that happens. This, in our view, continues to be the foremost risk that we see in our business.
Sure, sure. Sir, and on the demand front, you are reasonably confident that the market will be able to absorb the incremental capacity that we are going to come up with?
Yes. We continue to be very positive about the demand scenario. DOMS as a brand continues to see increasing exceptions not only in India but in international markets also. As soon as our capacity increases, we'll be able to service that demand better. Demand doesn't seem to be a challenge right now, it's more of when we'll be able to service that demand, and that's where the capacity additions will come in handy.
Sure. Thank you. Thank you, sir.
Thank you. Our next question is from the line of Mosam Shah from Wealth Guardian. Please go ahead.
Hello. Am I audible?
Yes, ma'am. You're audible.
Yes, yes.
Go ahead.
Congratulations on a good set of numbers. I just wanted to know, recently, there was news there was a shortage of poplar wood, that is the primary raw material for wooden pencils. Are we facing any sort of shortage?
As of now, as we speak, Mosam, not really. I think that when there was some war-like situation because the valley was entirely shut that time, you know we did face some challenges. As we've always said, for some key raw materials which we believe are sensitive to our business, we have significant stocks, sometimes as high as six months of production requirement in stock. We are not seeing any challenge. Plus, we believe that the product, the poplar wood that we use, which comes from the Kashmir Valley region, where a lot of government initiatives are being taken to empower the farmer there to farm this cultivated wood, we believe that supply should not be a challenge. Also, in terms of our pencil, there are different types of wood that we use. Poplar is definitely one of them.
There is [fir] wood also that we use, which comes from the southern part of India. There is also a birch wood, which we import from Europe. There are multiple purchase destinations also which are there. We do not see that as a challenge right now.
Okay. Good. That's helpful. The second question was related to bags because after introduction, this was the first year where we have introduced bags in. What is the demand scenario and how we have conquered that?
First, we launched the DOMS branded bags in time for the Back to School season. It was started with a minimal sort of product offering because, like I said, we still want to test the markets to understand what products work. Bags, in terms of SKUs, are always defined in terms of their volume capacity, plus number of zips, number of sections, the holders that they have. We've introduced multiple SKUs. We are getting feedback, what is working, what changes they would like to see in terms of the product. We are getting encouraging feedback from retailers that they're saying they want the product packaging to be changed a little so they can probably sell bags also as a gifting article. We're getting those feedback. We are working on it. We are trying to improve our SKUs further. This business also will continue to grow.
I think a couple of years more come then, then we'll be able to cross, especially the Back to School segment.
Okay. Okay. Lastly, we are assisting FILA. in terms of sourcing quality products at competitive prices. Are these raw materials or the products that DOMS make?
No, no. This is products that DOMS manufactures and sells to FILA and FILA Group companies across the world.
Doing any raw material sourcing for them, right?
No, no, no. We don't do that trading sort of a thing like buy here and sell to FILA. There might be certain times where, you know, for testing purposes and factory purposes, we would have done it, but that's not like a business segment or anything like a key business driver.
Okay. Thank you so much and all the very best.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
Thank you, everyone. On behalf of DOMS , I would like to thank you all once again for joining us on this call today. We hope we've been able to answer your queries. Please feel free to reach out to our investor relations team for any further clarification of queries that you may all have. We'd also request all of you to, you know, probably make some time out to visit our facilities in Umbergaon to see what new additions and new infrastructure is being built up there. Once again, thank you so much. Wish you all a good day. Thank you once again.
Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.