Ladies and gentlemen, good day and welcome to DOMS Industries Limited Q2 FY25 conference call, hosted by ICICI Securities. 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 the conference call, please signal an operator by pressing star 100 on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you and over to you, sir.
Yeah, thanks, Zico. On behalf of ICICI Securities, we welcome you all to Q2 FY25 results conference call of DOMS Industries. We have with us today senior management, represented by Mr. Santosh Raveshia, Managing Director, and Mr. Rahul Shah, CFO. Now, I hand over the call to the management for their initial comments on the quarterly performance, and then we will open the floor for question and answer session. Thanks, and over to you, Santosh, bye.
Thank you very much, team. Good evening, everyone. It is a pleasure to welcome all the participants to the earnings conference call for Q2 and H1 FY25. Joining me on this call is Mr. Rahul Shah, our CFO, and the team from Marathon Capital, our investor relations advisors. Hope everyone had an amazing Diwali. We wish everyone of you and your family a very prosperous New Year ahead.
We are pleased to inform you that we have successfully completed the acquisition of 51.8% stake in Uniclan Healthcare Private Limited, a growing company engaged in manufacturing and marketing of baby hygiene products, mainly diapers and wipes. Our teams are now focused on expanding the distribution network of Uniclan. We recently held our annual sales conference in Jaipur, wherein we also took an opportunity to introduce our entire channel family to the management, products, and manufacturing infrastructure of Uniclan.
The response from our channel partners is expected, has been exciting. We are optimistic about our growth strategy in the baby hygiene segment and strongly believe that this acquisition shall have an overall positive impact on our growth plans. During the quarter, we have been able to achieve a year-on-year sales growth of approximately 20% in the first half of the current financial year, largely driven by increasing sales of writing pens, adhesives, and kits and combination packs, as well as the positive impact of the Uniclan acquisition.
We would like to thank our entire team and channel partners who, first, have helped us to achieve this growth in otherwise a difficult period with challenging demand conditions in the domestic market, as well as growing global geopolitical tensions, especially in the Middle East.
The growth is also reflective of strong acceptance and expanding reach of DOMS brand and its unique product proposition. DOMS domestic sales with an increase of 25% continues to be the main driver of growth and now constitutes 85% of our total sales. Leveraging our market network strength and following a technology and data-driven approach, we have been able to further strengthen our network in India, which has led us to this growth.
On the export front, owing to geopolitical tensions, especially in the Middle East, our export revenues have marginally got impacted, but we remain persistent, though watchful and vigilant to capitalize on the growth opportunities in the export markets as well. We foresee improvements in export business conditions and going forward, as we have started receiving encouraging feedback from most of our customers across all the territories we operate.
On the product development and new product launches, I am pleased to share that we continue to introduce innovative and fascinating offerings for consumers during the quarter. We have introduced new SKUs in writing instruments, marker pens, adhesives, kits and combination packs, fine art products, and other scholastic stationery materials.
As always, we have received very encouraging and positive responses from our consumers for these launches. With regard to our core stationery and art material business, we continue to focus on increasing our manufacturing capacities with multiple ongoing projects, including the construction at the adjoining 44-acre land parcel.
In the last few months, we have successfully increased the production capacities of mathematical boxes by 20%, paper stationery products by 20%, post-installation of the third automatic exercise book manufacturing line, and are on the way to increase capacity utilization of third pen plants to reach the capacity of one million pens per day additionally. Going forward, we are excited to kick off the upcoming back-to-school season with an increase in our capacity of pencils, ballpoint pens, and paper stationery products.
Further, the planned launch of school bags, which will be launched in the market starting from Q4 FY25, with attractive and interesting designs in all our sales verticals. Our business fundamentals overall remain strong with all the underlying metrics in place of a strong pipeline of new products, increasing capacities, targeted market expansion strategies, and a well-entrenched distribution network.
With this working seamlessly in tandem, we are on track of achieving our full-year target of close to 20% growth in revenues for our core stationery and art material business. With this, I would like to hand over the call to our Chief Financial Officer, Mr. Rahul Shah, for the update on Q2 H1 FY25 financial overview. Thank you very much and happy New Year again.
Thank you, Supervisor. Good evening, everyone. Wishing you all a great New Year. We would now like to highlight the details of our financial performance for the quarter and six-month period ended September 30, 2024. To begin with, a quick overview on the consolidated results for the second quarter financial year 2025. Consolidated operating revenues for Q2 FY25 stood at INR 457.8 crores, a growth of nearly 20% compared to the same quarter last financial year.
This increase in sales was predominantly on account of increase in sales from office supply segment on account of increase in sale volume of ballpoint pens, increase in sales of mathematical boxes and erasers in the scholastic stationery segment, increase in sales of adhesives and kits and combination packs. The EBITDA margin for Q2 FY25 stood at 18.8% as compared to 17.1% in Q2 FY24.
EBITDA grew by 31.7% to INR 85.9 crores as compared to INR 65.2 crores in Q2 FY24, with a margin expansion of nearly 171 basis points. This margin expansion year-on-year was on account of slight increase in ASPs as compared to the previous year's same quarter. Also, we have benefited from efficiencies playing out on account of increase in scale and size of operations, resulting in better fixed cost absorption.
As a result of these factors and on account of increase in other income and lower finance costs, on the PAT front, also, we saw improvement in our margins from 9.8% in Q2 FY24 to 11.8% in Q2 FY25. PAT for Q2 FY25 stood at INR 53.7 crores. Talking of our half-yearly results, our revenue from operations grew by 18.5% to INR 902.8 crores in H1 FY25 from INR 761.8 crores in H1 FY24.
EBITDA for the first half current financial year grew by 35.2% to INR 172.3 crores from INR 127.4 crores in HY FY24. Further, our PAT also increased from INR 73.9 crores in H1 FY24 to INR 108 crores in H1 FY25, a growth of approximately 46%. Sequentially, quarter on quarter, our revenues from operations have grown by 2.9% to INR 445 crores reported in Q1 FY25.
This sequential growth was primarily attributed to the consolidation of about INR 14.3 crores of revenues from Uniclan, which we started consolidating effective September 16, 2024. If we exclude the impact of the Uniclan acquisition, our revenues for the quarter were almost flattish compared to the immediately preceding quarter, which is in line with our historical trends as well, when our revenues in the second quarter have been similar to the revenues in the first quarter.
During the quarter, we saw an increase in our accounts receivable, accounts payable, and inventory cycle. The reason for these increases has been the increase in trade receivable on a standalone basis, as well as the impact of the Uniclan acquisition, which happened mid-month. Nevertheless, the working capital is still around 48.5 days, which remains within our targeted range of 45-50 days. On the CAPEX front, we continue to focus on expanding our manufacturing capabilities to capitalize on the growth potential during the first half of the current year.
Excluding the impact of the Uniclan acquisition at a consolidated level, the company has invested INR 57 crores towards capital expenditure, including capital advances. These funds were primarily invested for the construction activities and purchase of new plant and machineries. The CAPEX during the quarter was lower on account of halt in construction activities owing to the monsoon season.
However, construction activities at our 44-plus-acre facilities have now begun in full swing, and we are on track to have our first building ready by Q3 FY26. With this, I would like to open the floor for questions and answers. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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 comes from the line of Mr. Kunal Vora with BNP Paribas. Please go ahead.
Yeah. Thanks for the opportunity and good evening, Santosh and Rahul bhai. Congrats for a good performance in a weak market. I had a few questions. Can you give us a full quarter performance of Uniclan: INR 14 crores for 15 days? It looks like a better run rate compared to what you had when you acquired the business, maybe around INR 150 crores. And what's the outlook for the second half for Uniclan? And also, if you can provide some sense on, like you mentioned, that you got good response from the distributors, what kind of benefit should we expect in the near term from that?
Kunal bhai, hi. So Uniclan acquisition was completed on September 16, 2024. So it became our subsidiary effective that date. For the 15-odd days of consolidated numbers that we have in, we've had revenues of about INR 14.3 crores. From a run rate perspective, the monthly run rate of Uniclan is between INR 15 crores to INR 17 crores. But typically, what happens with their size, a lot of their revenues get booked during the later half of the month.
That's how typically that business operates. So from a current capacity perspective, also, we believe Uniclan will continue to have a run rate of between INR 15 crores to INR 17-odd crores. Like we mentioned earlier, currently, they have two automatic manufacturing lines with a total installed capacity of 40 crore diapers annum. The third line has already reached Indian shores. It is currently under clearing from the ports.
It should come to the factory in the next week or so. And commercial production after testing and all should start by the end of the current calendar year. So in the first quarter, we might see some increase in revenues due to this. But right now, this is where the revenue guidance is. And with respect to margin, like we highlighted in the previous call, Uniclan is, when compared to our other core business, stationery and art material, it's slightly lower with EBITDA margins close to about 5%-7%.
Understood. And what's the visibility you have for FY26 and FY27? Because new capacity will come on board. So current turn rate implies you'll be doing about whatever INR 180 crore kind of revenue. So how does that look like in FY26? And maybe if you have any visibility on FY27.
So Kunal bhai, right now, like Santosh bhai mentioned, we had our annual sales conference this year at Jaipur. The intention was to introduce our family of channel partners to the Uniclan team, the Uniclan infrastructure, their products. At this event, we also showcased the DOMS co-branded diapers packaging to all of them. The response from our channel partners was very exciting. I think, conservatively speaking, we should have close to about 50.
Kunal bhai, 50 of our channel partners have already confirmed their interest to participate with this particular new line. I think it should be if this 50 gets materialized, it's enough for.
So we should look at more from a utilization rate, capacity utilization of close to 85%-90% in the coming financial year.
Which was 60% when you acquired the business, right? And now it is what?
With the new plant for diapers, and also, they are installing a separate unit for manufacturing of wet wipes, which will have a capacity of about 1.72 crore packs a year.
Understood. Okay. And can you also explain the guidance of 20% growth that I believe excludes Uniclan, right? And which will mean that the core business, Uniclan, should have a stronger tracking graph compared to first half?
So Kunal bhai, yes, the 20% growth guidance that we have for the full year is excluding the impact of Uniclan. For the core business, we are having a revenue growth target of close to 20%. The key driver for this growth shall be the increase in capacity in our ballpoint pens, adhesives, fine arts products, and hobby products like fabric colors that we've recently launched. Further, we will also get a little bit of benefit from the increase in capacity of wooden pencils towards the last quarter of the current financial year.
These factors, coupled with improving market sentiments and the beginning of new back-to-school season, should help us in achieving the target growth of about 20%. Along with Uniclan being consolidated for the entire second half of the financial year 2025, our consolidated revenue growth for FY25 should be approximately 23%-25%. At Uniclan, we will be able to see increase in volumes also as the production capacity shall rise once their third line is installed and ready for commercialization.
Understood. Thanks. Paper business seems to have seen some decline. Is it because of decrease in paper price or anything else?
It's a mix of both two factors. One, like you rightly said, this segment saw a marginal decline of about 6.4% during this year, primarily attributed to a decrease in a little bit of paper prices where we passed on the benefit to our consumers and customers, and slightly sluggish demand, especially coming on the export front from the U.S. So as a result of these factors, we saw a slight decline, but we remain optimistic with launching new products.
The entire design philosophy of our books, we are changing them. The new designing and everything is something which is very fascinating. So we are optimistic for this segment, and with the new line that we've installed now, I think this business should see a significant uptake in Q3 and Q4.
Understood. Just one last question. After that, I'll come in the queue. On the pen business, how have you done? What kind of market share have you achieved? What's the industry doing? And as the new capacity comes on board, where do you expect to enter the year in terms of sales?
Kunal bhai, historically, also, we've never guided for any particular product or how much we will do. But we continue launching new SKUs within our pen segment also. Today, we primarily now have five different products within the ballpoint pen segment, which among them have 22-plus SKUs with different pack sizes and colors. We also recently launched our gel pens and have a strong new product pipeline to be launched as we increase the production from the new facility which got commercialized.
From our thought process for this segment, as you know, our most important customers have always been young kids, and consumption is more school-driven. The company believes in having a rationalized approach towards new product development as well as pricing. So we'll continue to focus on these segments, come out with new SKUs, attractive packs, attractive products, and we're hopeful that we'll soon be short of capacity for this segment also.
So currently, are you operating at full capacity or?
So currently, we are operating with almost 100%, I can say, capacity utilization. As Rahulbhai mentioned, we are mainly into INR 5 and INR 10 pens, which are mostly addressed to school kids. So as of now, we are out of stock each day.
Understood. Thank you, Rahul bhai. Thank you, Santosh bhai. I'll come back in the queue.
Thank you.
Thank you. The next question is from the line of Jinesh Joshi from PL Capital. Please go ahead.
Yeah. Thanks for the opportunity. Sir, just one observation on our distribution mix. So if I look at our distribution count, or rather the distributor count, it stands at about 4,750, which is similar to what it was in the previous quarter. But if I look at our retail touchpoints, it has increased by about 10,000 to 135,000 touchpoints. So if you can explain the reason behind this, and the quantum appears to be quite big if I talk about the sequential increase. So any thoughts on that?
So basically, Jinesh, this increase has happened basically at the retail level where we had about 125,000-plus retail outlets when we spoke last. And now we've increased it by just 30,000 sorry, by 10,000. This entire universe is huge, close to 300,000-plus retail outlets. Our current partners within the network, which are stockist and distributors, are well invested and capable enough of handling this larger volume from a retail expansion purposes.
And therefore, we've not found the requirement to increase the distribution strength or the super stockist strength. This is something, as we grow, we keep evaluating if we feel that our current channel partner for that particular geography is not being able to do significant justice. Then only we try to open a new partner in the ecosystem until the time they are able to do justice, keep investing as per the requirements and norms of the company.
If there is no such need, then this network expansion is really not required. Retail expansion, as we mentioned, we will continue to do it in a very concentrated way whereby we will ensure that the throughput each outlet is maximized and only then keep increasing. To meet the requirements of this retail universe, we've increased our sales team from 675-plus people to now that you see of 750-plus. This expansion will further happen.
Sure. Any specific geography that we have targeted? Because 10,000 appears to be quite big if I look at the last four or five quarters or rather three or four quarters.
So it's been almost planned in there. Nothing specific geography-wise.
Sure. Sure. And I just want to understand our top-line growth a bit better. So we reported about 20% growth, but obviously, a contribution of 3% comes from the hygiene product. And if I look at our like-for-like growth and knock off the hygiene product revenue, our growth will be at about 16% odd. And also, I believe that pens as a category is blossoming, and the contribution in Q2 will be much higher than what it would have been in the base quarter.
Although we are not sharing the numbers as such, which apparently indicates that the growth in the other core categories is perhaps a bit slow. I mean, paper is one example that you gave that witnessed some bit of a decline this time around. So are we seeing any kind of growth challenges in any other categories? Because apparently, it appears that newer categories are basically the key levers for growth for us.
So Jinesh, if I have to talk about category-level growth, Scholastic Stationery, which is the largest category for us, that witnessed a growth of about 12%. Scholastic Art business grew by 7%. But you need to understand a little bit why these two segments, you might think the growth was a little lower, but kits and combo packs sales grew by about 23%.
Now, kits and combo packs is something which is manufactured using products from all these segments, which is Scholastic Stationery, Scholastic Art. It's a combination of these products. So what happens is this was a season where this quarter we saw a little bit of festivals. Onam came in, the Durga Puja, the buying that happens for Durga Puja, that all came in this quarter. So kits and combo packs demand increases. So as such, across all our segments, we continue to see a strong growth, strong demand.
It's just that at an SKU level or segment level, it might change depending on festive season, non-festive season, exam season, back-to-school season. At that level, there might be a little bit of changes. But growth momentum has been strong. Definitely, like Santosh bhai highlighted, there were certain challenges in the market. But with the support of our team and partners, we've been able to do reasonably well. Given the capacities will increase going forward, our ability to serve the market would also improve.
So Jinesh bhai, I'm sure you're aware that we have a new pencil plant coming up with a massive capacity of around 2.5 million pencils a day. So once that is, the capacities are in place, I'm sure you'll see a significant growth for that particular period in scholastic stationery business as well.
Understood. So one last question from my side. In the opening remarks, you mentioned that we'll be kind of launching a new school bag in Q4 of FY25, and basically, that is the period when the back-to-school business will gain momentum. So any thoughts or particular aspirations that you have with respect to achieving some kind of a basically some top-line number that you have in mind?
And also, if you can share what kind of EBITDA margin does this category make? Because diapers is basically a margin dilutive category for us. But will this category have margins similar to what we are reporting, or will it be higher? Any thoughts on that? And also some numbers, any aspirations that you have to scale this business going ahead?
So Jinesh, right now, our key revenue from operations stood at around INR 1.8 crore in Q2 FY25. It was, as you see, a sequential growth. It was 26% up compared to Q1. So basically, I think this is a business where we are just taking very initial steps. For us, important is that we deliver a very excellent product to the trade primarily. And this business is absolutely going to be a business driven by enough margin in lines with the margins of DOMS. And we are sure that by another couple of quarters, we'll be able to give more light to your answers. So for us, for now, please wish us all the best wishes to graduate ourselves in this particular line as well.
Sure, sir. Thank you so much and all the best.
Thank you, Jinesh.
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Please, congratulations on a great set of numbers. Just a couple of questions from my end. First, regarding margins, now we've been driving for around 17% margin, and for consecutive two quarters, we were surprised. Apart from being surprised, even last year on a positive note.
They have cannot hear you well. It can be a little slurred.
Please use your handset. Your audio is breaking, ma'am.
Is it better now?
Yes, ma'am. Please go ahead.
Yeah, yeah.
Yeah. So my question was more related to margins. You've been surprising us on a positive note for consecutive two quarters, even as last year. Now you've guided for 17% sort of a margin. I understand, I mean, your Uniclan will come with a lower margin. But to achieve that 17% run rate, we'll have to go down to 15%, which is what we don't foresee going in the second half. So would you like to give any revised guidance for both FY25 as well as the coming times for the margin strength?
Sneha, the consolidated EBITDA margins for Q2 FY25 stood at about 18.8%. This margin expansion year on year was on account of increase in ASPs and also the benefit from efficiency. However, sequentially, if you just see the results, you'll see that margins have declined from 19.4% to 18.8%, a decline of about 60 basis points.
This decline in EBITDA margin is primarily due to certain raw material prices increasing and slight increase in selling and distribution costs and advertising spends, with Uniclan being consolidated. At Uniclan, the EBITDA margins are between about 5%-7%. If you see the entire second half being consolidated with sales of about a run rate of about INR 15 crores-INR 17 crores, we believe on average, the DOMS consolidated margin should come in the range of 17%-17.5%.
Also, on October 3rd, we distributed ESOPs to the eligible employees of the company. The accounting of ESOPs for this six-month period also should have an impact of about 0.2%-0.3% on the margins. Therefore, you can definitely do the math well. You'll see probably our margin coming to that range of about 17%-17.5%.
Understood, sir. That was helpful. Secondly, I would like to know, we have spoken a lot on the Uniclan acquisition. We just wanted to go back with some numbers. How are we doing with other acquisitions that we took place? These Skido, what are the plans at this point of time in those acquisitions? Or these ClapJoy? Some sense there would be helpful.
To start with, Santosh bhai already highlighted that Skido had a revenue of about INR 1.8 crores in the second quarter, which was a sequential growth of 26%. Currently, about 60% of the business of Skido comes from selling the products to DOMS, which DOMS utilizes in its kits and combo packs. Like we said, the product line is more or less ready.
We would be introducing these products to the market by Q4 2024, and this would be across all our sales verticals. Once the launch happens, once we start getting feedback from the customers, we'll have a little bit of a better idea. But this will be a slow and steady sort of a thing because we'll have to collect a lot of market intelligence.
Based on all the data that we receive, we will probably have a better sort of answer to your queries in the next or the call after that. With respect to ClapJoy, the revenues of ClapJoy in the second quarter stood at about INR 2 crore, which was a growth of about 12% sequentially. In ClapJoy, we are pleased to, if you see year on year, so being close to the full year numbers, what they achieved in the previous year, we are very close to achieving that in the first seven months of the current year.
There we are seeing good growth. Also, ClapJoy now has launched products which are co-branded with DOMS. This is resulting in improved acceptance of their products. A lot of our channel players have started selling ClapJoy products as well.
So both these companies, Skido and ClapJoy, are still on the learning curve. And probably over the next, I would say, about a year, 18 months, we would have a better sense of how these businesses will go on. In terms of our other key subsidiaries, Pioneer Stationery, we mentioned that this quarter, they had a little bit of a downward trend in terms of revenues, basically because of a decline in raw material prices, and hence the selling price will be passed on the benefits to the customers.
And also, there was a little bit of impact on export sales, primarily to the U.S. However, their EBITDA has increased by approximately 5% during the period because of, again, the raw material prices. In terms of capacity, currently, we are at about 70% utilization with the new plant coming in. Our capacity increases by about 20%.
We are hopeful with the new product launch that the redesigning that has happened, we'll be able to have a great back-to-school season for the paper stationery segment. Last is Micro Wood. Here also, like we said, we have capacity for mathematical instrument boxes increased by 20%. All these boxes get supplied by Micro Wood, the tin division, where we continue to increase capacity.
Even in the paper division, which supplies us primary packaging material, we continue to invest, increase capacities by almost 20%-25%. Overall, all subsidiaries are doing well. Some need to be nurtured. The nurturing is happening. Very soon, we'll have positive results from all of them.
Understood, sir. That was really helpful. All the very best.
Thank you.
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Resha Mehta with GreenEdge Wealth. Please go ahead.
Yeah, thank you. So the first one is on Uniclan. If you could just comment on the working capital cycle, how divergent it is from our core stationery business. And yeah, so that's the first question.
So basically, in terms of the working capital cycle, in terms of accounts receivable, yes, because they are a new and a growing company, they need to give an extended credit period. The credit period for them typically is close to about 60 days right now. But other than that, their accounts payable and inventories are pretty much aligned with our trend, which is about 25 days and about 40 days, respectively.
Okay. And since you had the new sales conference, right, so if you could just comment on how much is the overlap between the superstockists and distributors of Uniclan and the core stationery business?
So basically, there is no overlap as such. The entire perspective of doing this in Jaipur was to introduce our channel partners to the product and to the company management infrastructure. A lot of our existing channel partners in the stationery and art material segment have shown interest to become channel partners for the Uniclan product as well. So you may see the overlap going forward. The overlap will now come in, but the excitement levels are high. And like we said, more than 50 of our channel partners have shown interest in becoming channel partners for Uniclan as well.
Got it. And on the Skido business, I just missed this. So we are yet to launch products, and that happens Q4 FY25, current financial year onwards. Did I hear that right?
Yes.
Okay.
So this product is very, it's a little seasonal from a back-to-school perspective. Bags, you see, there's a very high demand comes during the back-to-school season. Our intention is to launch this new line of DOMS bags in the market during the upcoming back-to-school season. Hence, we planned the launch around the end of the third quarter, beginning of the fourth quarter.
Got it. And lastly, on the pen business, so would it be possible for you to quantify the pen revenues for the first half of this financial year versus what was it last year? And also, the revenue savings of INR 5 pen segment within the overall revenue.
So at the pen level, a little difficult, but if you see office supplies, which predominantly constitutes pen, we've seen a growth of approximately 97%. Our office supply business in the first half stands at about INR 96 crores compared to about INR 48 crores in the previous year, same period. And this increase has been primarily driven through the increase in volume of writing pens, volume and sales of writing pens.
Okay. And how much was it in the last first half, each one of FY24?
About INR 48 crores. That also included pen business, a significant amount of pen business. But the ballpoint pen business and all started, actually, we launched writing pens in June 2023.
Okay. And the revenue savings of INR 5 pens within the pen revenues?
Honestly, we don't have that. We actually don't have that figure of breakup. But like we mentioned, predominantly, our products are targeted towards kids and school consumption. Currently, maximum pens that we sell are under the INR 5 MRP segment and INR 10 segment. The new facility that we've started for pens, there the focus on INR 10 is slightly higher, while the current two facilities are more for the INR 5 segment.
Got it. Thank you so much, and all the best.
Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead, sir.
Yeah. So my question is, what is the three-year innovative business plan or five-year business plan in terms of the exports business? Because we are doing exceedingly well in the domestic part of the business. So whether the management will be investing more time in driving the domestic business more or how we should think about in terms of the exports business? Because it is not just one geography, multiple geographies. So some amount of management bandwidth in different geographies will also be required. So how should we think in terms of three to five-year window on that?
So basically, as of now, we are present in about 50-plus countries where we sell our DOMS products. To increase our presence to more countries, we are already in discussion with FILA subsidiaries across the world, where they have better presence. And we are likely to start our launch through FILA subsidiaries in those countries where we are not present right now from the beginning of the next financial year.
Here, the target is very simple that we would like to, as our domestic business is also growing very rapidly, we would like to maintain a balance of about close to between 15%-20% of business coming from exports. As we have always been a domestic-driven company, and still, we feel that there is enough space to occupy business and increase our business in domestic.
We would love to remain a little conservative in terms of growing our exports too much extensively. So you can expect a range of around 15%-20%, which will come from our export part of business in another three to five years.
Okay. Sure, sir. Understood. Second question is on the brands other than DOMS. So for example, we have some brands like C3 or even Fixy Fix, or to some extent, Neon is a sub-brand. Amariz is also one brand. So how is the performance of these sub-brands? And will we see more investment in the sub-branding or driving these brands relatively bigger from current levels? So as to diversify from DOMS brand also.
So I'll just explain here what brand does what. So basically, C3 is a brand which is more of a rural brand. Well, our non-wood pencils. This business is being growing not extensively, but in a gradual way. There is another brand which is Amariz, which is our finance brand. And this particular brand, we just started this around in the early this year. I'm sure you are, yeah.
So this is a sub-brand of DOMS. And the business from Amariz has just started seeing the light since last quarter. We are expecting a very decent and very aggressive results in another quarter to come. There is another brand which is Fixy Fix, which is, again, a brand related to our adhesive category. And we again started very early this year, and we are expecting the same results, very positive results.
The initial response from the market has been very well accepting. And I'm sure in another couple of quarters, we'll have more light on the results as well. Just to add, Fixy Fix, Amariz, are all sub-brands. So whenever we talk about the DOMS sales, it includes the sales of Amariz and Fixy Fix. Going forward, we'll have one additional brand which will become significantly Wowper, which will be for the baby hygiene product segment. But otherwise, the three umbrella brands, if you can call, would be DOMS, C3, and Wowper.
Okay. Sure, sir. Understood. Very, very helpful. Many thanks.
Thank you.
Thank you. The next question is from the line of Aditya Deorah with Divisha Investments. Please go ahead.
Good afternoon, sir. So what kind of capacity we are working for the school bag, which we plan to launch in quarter four?
For what product, Aditya bhai?
I'm asking what kind of capacity we are working for the school bag, which we plan to launch in quarter four?
School bags. Aditya, we would like to start with around 25,000 bags a month to begin with. Once we start getting the response and the more intel about the market, I think we'll gradually increase the capacity.
Perfect. Your bags are of really good quality, the ones you provide in the kit, and any other white spaces we are working on right now?
Not really. Sir, we are not something that you do, but as a company, we are always looking for exciting opportunities within our universe. We love partnering with technocrats, people who love their product, have good understanding of manufacturing capabilities, and if there is anything interesting, we'll always keep evaluating, but as of now, the focus is definitely on successfully implementing our growth plans for the stationery segment and at the same time doing justice to the Uniclan acquisition.
Perfect, sir. Thank you, sir.
Thank you, Aditya.
Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go ahead.
Yes. Thanks for the opportunity again. On pen, can you talk about the competitive intensity, your rapidly expanding capacity, and you would have gained market share? Are you seeing any response from the competition, especially in INR 5 segment, where you might have gained market share? And also, what's the distribution reach now versus the market leader?
See, Kunal bhai, probably when we entered with our INR 5 pen, probably most of the organized players had already withdrawn from this particular category, this particular price point. So right now, luckily, we have a first-mover advantage when it comes to organized players in writing instruments for INR 5 segment. Of course, we are expecting sudden comebacks. But still, we right now are enjoying first-mover advantage. And as I said, we are selling all the capacities we produce. And we are still working on more capacity for under in another certain month to come.
Understood. So far, you've not seen any response from the competition, and you continue to gain market share, especially in the INR 5 pen.
Yeah, I think yes. We are doing well, and we'll keep doing well because our products are unique. Our products are very distant from what is right now available. So it looks like we'll be doing good.
You are making decent margins in INR 5, and competition, which might be larger compared to you, is not able to make margins in INR 5. Is that how it's working out?
Kunal bhai, we've always worked on technology and high-tech solutions. So I'm sure if you've seen our plans, they are much more high-tech, and they are fully driven with automation and robotics. So with the help of this automation and technology, we are able to produce these INR 5 pens and also make a decent margin for the company.
Understood. Understood. And lastly, can you talk about the timeline of the new factories going live? Are you on track to get the first factory up and running in the new plot of land by end of 2025? Also, if the market remains like, you're not seeing weakness, but otherwise, the market is weak. Generally, consumer demand is weak. Would you look to postpone or spread out the capacity utilization if the market remains weak, or you are fully confident that there will be enough demand?
Kunal bhai, we are fully confident about the demand, and we are also confident about the pipeline of the innovation what we have in place right now. What we are just waiting for is that the start of the new plant, which is likely to start in FY 2026. And that's the only way we have. But still, with our existing capacities, we are trying to accommodate all the newness that we are bringing to this particular category right now.
Understood. Thank you a lot, Sundeshwar, and all the best.
Thanks a lot, Kunal bhai.
Thank you. The next question is from the line of Mosam Mehta with Wealth Guardian. Please go ahead.
Hello. Am I audible?
Yes, ma'am. Please go ahead.
Yeah, I heard myself.
Hi. Congratulations on a good set of numbers. Just wanted one bookkeeping question regarding the sales breakup for last year, September 2023 quarter.
So from a segment-wise perspective?
Yes. Product category-wise. Yeah. So Scholastic, stationery, and all.
In Q2, FY 2023-2024, scholastic stationery was approximately 44%. Scholastic art was about 28%. Kits and combo was 9%. Similarly, paper stationery. Office supplies was about 7%. Hobby and craft, fine art were close to 1%. And that time, we did not have anything in hygiene, so that was 0%. Others was some other trading and all such things.
Okay. Thank you so much.
Yeah.
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thank you everyone, for your precious time. And looking forward to meeting everyone again next year very soon. Thank you again. Bye-bye. Thank you very much.
Thank you.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect. Your lines.